China has developed a covert payment system to purchase Iranian oil while evading US sanctions, using a barter-style arrangement where Beijing builds infrastructure in Iran instead of making direct cash payments, The Wall Street Journal reported Saturday.
The system relies on Chinese state insurer Sinosure and a little-known financial firm called Chuxin, according to current and former Western officials, the report cited. Under the arrangement, Iranian sellers conduct oil transactions with Chinese buyers connected to state trader Zhuhai Zhenrong. The buyers transfer money to Chuxin, which distributes payments to Chinese construction firms that operate in Iran on projects Sinosure insures.
The hidden channel facilitated roughly $8.4 billion in payments last year that funded Chinese-built projects in Iran, Western officials estimate. The system now provides Tehran a vital revenue source as Washington seeks to strangle Iran’s oil income.
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To hide its origin, Iranian oil travels to China via vessel-to-vessel transfers at sea, officials said. Roughly 90% of Iran’s oil exports go to China, according to US Energy Information Administration data.
China has committed roughly $25 billion in infrastructure investment in Iran since the early 2000s, with project volume increasing since 2021. Major Chinese state banks and construction companies oversee the work, which encompasses aviation facilities, petroleum processing plants, and transit infrastructure.
China’s Foreign Ministry said it was “unaware of the arrangement” and opposes “illegal unilateral sanctions,” the Journal reported. Sinosure and Zhuhai Zhenrong did not respond to requests for comment.
Neither Sinosure nor Chuxin currently faces US sanctions. The Treasury Department has intensified sanctions on vessels and companies involved in Iranian oil shipments throughout 2025, though the measures have not significantly reduced oil flows.
The payment scheme strengthens China-Iran economic cooperation despite Washington’s prolonged campaign to isolate the Iranian government over its nuclear activities and support of militant organizations.
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