Beijing (Somalia Today) – As the devastating war between Iran and the US-Israeli alliance enters its third week, Beijing has publicly kept a careful diplomatic distance, calling for an immediate ceasefire.
But behind the scenes, China remains the critical economic and logistical lifeline keeping the isolated Islamic Republic afloat.
Through clandestine oil purchases, complex shadow banking, and the steady supply of dual-use military components, Beijing is quietly helping Tehran survive its gravest existential threat in decades.
China’s longstanding support could prove increasingly decisive as the conflict drags on and Western sanctions tighten.
Here is a look at how Beijing sustains Tehran’s wartime economy and military apparatus.
The ‘teapot’ lifeline
China is Iran’s most important economic partner by a vast margin.
Roughly 90 percent of Iran’s 1.6 million barrels a day of crude oil exports go to China, providing Tehran with the equivalent of tens of billions of dollars in vital revenue each year.
Beijing buys the heavily sanctioned crude both to support its strategic ally and to secure energy at a steep market discount.
Analysts estimate that Iranian oil now accounts for roughly 12 percent of China’s total crude imports.
To shield its state-owned energy giants from crippling US penalties, Beijing channels these purchases through small, independent refineries clustered mainly in Shandong province.
Known as “teapots”, these private refineries have little exposure to the US financial system, making them largely immune to Western sanctions.
Traders routinely mask the origins of the crude through a sophisticated “dark fleet” of tankers that spoof their tracking signals and carry out ship-to-ship transfers at sea, often off the coast of Malaysia.
Shadow banking
To process these billions of dollars in illicit oil sales, Iran relies on a complex global shadow-banking network heavily facilitated by China.
US officials allege that teapot refiners pay for the sanctioned oil in the Chinese currency, the yuan.
Tehran then uses part of those funds to buy manufactured goods and technology in China, which are shipped back to the Islamic Republic.
The system also works as a massive barter arrangement.
Chinese oil buyers routinely move funds to state-backed Chinese construction companies contracted to build critical infrastructure projects inside Iran.
The remaining oil revenue moves through a labyrinth of front companies and Chinese financial institutions.
Much of this cash sits in bank accounts in offshore financial hubs such as Hong Kong, Dubai, and Singapore.
Iranian importers and exporters then trade foreign currency among their various front companies using internal ledgers maintained in Tehran, effectively bypassing the Western SWIFT banking system altogether.
Dual-use pipeline
While China officially stopped supplying major weapons systems to Iran before joining UN sanctions in 2007, it remains the backbone of Tehran’s domestic arms industry.
US intelligence indicates that Chinese companies are the critical suppliers of dual-use goods — commercial items with lethal military applications.
These exports include microelectronics, navigation systems, and the specific motors that power Iran’s notorious Shahed attack drones.
More alarmingly, China serves as a primary source for the chemical precursors needed to manufacture solid-propellant rocket fuel for Iran’s ballistic missile programme.
Last year, The Wall Street Journal reported that two ships linked to an Iranian state company left China loaded with 1,000 tonnes of a material used to make solid propellant for mid-range missiles.
By mid-2025, Iran had reportedly ordered thousands more tonnes of these highly volatile fuel ingredients from Chinese suppliers.
The pipeline appears to remain active even amid the current war.
Days after US and Israeli forces launched their initial strikes on Iran late last month, maritime data showed two more vessels connected to the Islamic Republic of Iran Shipping Lines (IRISL) leaving a Chinese port.
While the exact cargo remains unconfirmed, Western security officials fear the shipments contain more rocket fuel precursors needed to sustain Tehran’s retaliatory missile barrages.
China officially maintains that it strictly controls dual-use exports and denies any knowledge of specific illicit orders.
Diplomatic shield
Beyond economic and military components, Beijing has spent years helping Tehran break out of its diplomatic isolation.
In 2023, China shocked the world by brokering the restoration of diplomatic ties between arch-rivals Iran and Saudi Arabia.
While that detente has frayed badly because of Iran’s recent regional attacks, the deal marked a watershed moment for China’s influence in the Middle East.
Beijing and Moscow also successfully lobbied for Iran to join the BRICS group of emerging economies in 2024.
The year before, Tehran was admitted into the Shanghai Cooperation Organisation (SCO), a Eurasian security bloc led by China and Russia.
Through the SCO, Iran even hosted joint counterterrorism military exercises with Chinese and Russian troops in December 2025.
For Beijing, the strategy remains a delicate balancing act.
China wants to project the image of a neutral global peacemaker while ensuring that the regime in Tehran does not collapse under the weight of American military and economic pressure.
