China Provides Iran With Infrastructure Investments in Swap for Oil, Lawmakers Told

An oil tanker is seen off the Iranian port city of Bandar Abbas on April 30, 2019. Atta Kenare/AFP via Getty Images

China’s communist leadership may be laundering money for Iran through the purchase of crude oil and bartered deals, Congress has heard.

The Chinese Communist Party (CCP) “has provided an economic lifeline” to Iran as it supports Islamic terror organizations, according to Gabriel Noronha, a fellow at the Washington-based Jewish Institute for National Security of America think tank.

The effort, he said, is vital to Tehran’s efforts to insulate itself from the effects of U.S.-led sanctions.

“The Iranian regime is seeking to isolate itself from U.S. and Western sanctions by deepening economic ties with Russia and China,” Mr. Noronha said in his written testimony to the House Financial Services Committee on Oct. 26.

“In 2022, China bought an estimated $30 billion [of crude oil from Iran] and is set to purchase even more in 2023.”

Chinese Companies Buy Iranian Oil

Iran’s economic partners have come under scrutiny following this month’s deadly attack in Israel by the Tehran-backed Hamas terrorist organization.

The Islamist regime in Tehran, Mr. Noronha said, has supplied more than $20 billion in support to foreign terror groups in the Middle East and provides Hamas with about 93 percent of its military budget.

Much of that money flows from oil sales to China. China began to import a record amount of Iranian oil after the imposition of international sanctions, according to a 2022 report.

The Biden administration didn’t enforce sanctions against Chinese individuals and companies at the time, as it sought to reestablish an Obama-era nuclear deal with Iran. When that deal fell through, however, the administration began to penalize companies known to be violating the sanctions but stopped short of penalizing the CCP regime itself.

The limited U.S. response hasn’t stopped the CCP from exploiting Iran’s need for cash flow.

The regime stopped publishing data about its imports of Iranian oil in mid-2022. Still, one intelligence report suggests that China is importing oil at a 10-year-high rate, according to a Bloomberg report.

China is able to import massive amounts of Iranian oil through privately owned “teapot refineries” that purchase about 95 percent of the Iranian supply.

That money could effectively help to launder funds for Iran through multiple non-sanctioned entities, allowing Tehran and also Beijing to profit, Mr. Noronha said.

“They may now be laundering that money through China to get rid of all humanitarian exemptions,” he said.

CCP Sidesteps Sanctions With Barter Deals

There’s some evidence that the CCP itself is helping Tehran with more direct, unsanctioned assistance.

Chinese state-owned entities appear to be making barter deals with Iran, circumventing the need for sanctionable currency transactions altogether.

For example, Tasnim News Agency, the media outlet associated with Iran’s Islamic Revolutionary Guard Corps, said in August that China would provide a 2.5 billion euro (about $2.64) modernization of Iran’s largest airport. Instead of being paid in sanctionable cash, however, the report said that China would be paid in oil.

“We are seeing evidence of major barter deals in which Beijing pays for this oil in the form of multibillion-dollar infrastructure projects, like a $2.7 billion redevelopment of Tehran’s international airport announced in late August,” Mr. Noronha said.

“The United States should apply economic, regulatory, and diplomatic pressure [on China] to force them to reduce imports of Iranian oil—including as part of broader bilateral trade and diplomatic negotiations.”