Beijing reacted swiftly to a new round of US sanctions against Iran and entities that maintain business ties with it, warning that it will take all necessary measures to safeguard its rights and interests.
The response came after US Treasury Secretary Scott Bessent announced a new wave of secondary sanctions targeting not Tehran directly but its commercial partners in sectors including gold, technology, digital assets, aviation and maritime transport.
Beijing's position
Chinese Foreign Ministry spokesperson Lin Jian said during a regular press briefing that sanctions and pressure tactics do not solve problems but instead fuel tensions and conflict, with consequences that spread throughout the global economy.
He stressed that cooperation between China and Iran has always operated within the framework of international law and should not be obstructed.
Beijing has repeatedly characterised compliance by Chinese companies and citizens with unilateral US sanctions as unlawful, a position reiterated in Monday's statement.
Washington's dilemma
China remains by far the largest purchaser of Iranian oil, absorbing more than 80% of Tehran's exports before the war, making it particularly difficult for Washington to significantly reduce Iran's revenues without directly targeting Chinese companies and financial institutions.
Asked about potential targets, Bessent declined to identify specific entities, stating that no one is beyond the reach of US sanctions.
Instead, he referred to "quiet diplomacy" and the opportunity being given to countries and businesses to reduce their ties with Tehran before broader measures are imposed.
Despite the relative caution shown by China's large state-owned companies, smaller private refineries, commonly known as "teapot refiners", continue to import and process Iranian crude through alternative channels.
In May, Beijing instructed Chinese companies not to comply with US sanctions imposed on five refineries, placing the country's major banks between government directives and the risk of exclusion from the US financial system.
Risk of escalation
Analysts in Washington believe that a US decision to directly target a major Chinese bank or another significant financial institution could trigger a strong response from Beijing.
China possesses its own pressure tools, including further restrictions on exports of critical minerals that supply large parts of global industry.
The timing adds further complexity, as the United States and China seek to preserve a fragile trade truce, with Donald Trump and Chinese President Xi Jinping expected to meet in September.
A renewed economic confrontation between Washington and Beijing would likely extend well beyond bilateral relations.
It could affect global supply chains at a time when tensions involving Iran have already disrupted energy markets and shipping through the Strait of Hormuz.
Higher oil and natural gas prices have already increased transport and raw material costs, while rising insurance premiums and freight rates continue to weigh on international supply chains.
Lessons from Russia
The sanctions imposed on Russia following its invasion of Ukraine have become a key reference point for Washington's current strategy.
At the time, the United States and dozens of allies froze Russian assets and removed banks from parts of the international financial system.
However, they failed to trigger a collapse of the Russian economy, as Moscow redirected much of its trade towards China and India.
Analysts are now considering a similar scenario for Iran, as secondary sanctions could affect not only China but also India, Turkey and Gulf states that maintain commercial relations with Tehran.
For now, Washington appears to be keeping its options open, using the threat of broader sanctions as a pressure tool rather than immediately implementing the full range of measures available.
The key question remains whether the ultimatum will persuade companies and countries, led by China, to substantially reduce their dealings with Iran, or whether Washington will soon be forced to decide on the next, potentially riskier phase of its strategy.
