May 6, 2024 | Policy Brief

China Lies About Its Oil Imports from Iran

May 6, 2024 | Policy Brief

China Lies About Its Oil Imports from Iran

The China Customs Organization states that in the first quarter of 2024, Beijing officially imported $1.26 billion worth of goods from Tehran. The unofficial value of Chinese imports from Iran, however, appears closer to $9.76 billion, 96 percent of which are sanctioned goods.

China is the primary customer of Iranian oil and purchases other sanctioned goods from Iran, such as petrochemicals and metals. According to Chinese official data, Beijing imported 11 percent more from Iran in the first three months of 2024 than what it had imported over the same period in 2023. China demonstrably underreports its figures, however. For example, Beijing reported it imported no crude oil and only $3 million of many products that derive from it, such as mineral fuels, oils, their distillation products, and other bituminous substances, from January through March of 2024. However, Beijing appears to have actually imported $8.5 billion of crude oil from Iran in that period, assuming a 15 percent discount on Iranian oil.

Adding Iranian crude oil exports to the Chinese figures, in theory, reportable under the same export category, suggests a 34 percent increase between January 1 and March 31, 2024, over Tehran’s total exports to China in the first quarter of 2023. Nor is trade limited to hydrocarbons. Iran has also more than doubled its exports of ores, slag, and ash to China, bringing the total to $510 million. Plastic product exports remain steady at $336 million. That said, trusting data from dictators is always tricky, and so it is impossible to know the true extent of China’s imports from Iran.

Regardless, China-Iran trade now appears to be surpassing its level prior to the Trump administration’s 2018 embrace of the “Maximum Pressure” campaign. Oil, petrochemicals, and metals, the trade of each of which the U.S. sanctions, comprise 96 percent of Tehran’s exports to China, and China’s oil imports are now almost double that of the same period in 2018.

To address burgeoning Chinese purchases of Iranian oil, on April 23, 2024,Congress passed the Stop Harboring Iranian Petroleum Act, or SHIP Act, to tighten enforcement of U.S. oil sanctions. The SHIP Act operates by empowering the U.S. government to sanction foreign port operators that enable Iranian oil imports, though its effectiveness relies on the willingness of the White House to enforce it.

Trade is also two-way. China exports industrial products to Iran, enabling the regime to acquire goods such as vehicles, boilers, turbines, and other industrial machinery Western sanctions block Iran from buying directly. While China’s official data shows exports to Iran decreased 5 percent in the first quarter of 2024 compared to the same period in the previous year, the nearly $3 billion trade is both problematic and may be underreported.

While both Tehran and Beijing might defend their bilateral trade as mutually beneficial and market-based, Western analysts should not be sanguine. States engaged in legitimate trade neither mislead nor trade almost entirely in sanctioned goods. Absent the enforcement of those sanctions, not only will malign Iranian power centers have greater resources at their disposal to fund repression and regional aggression, but also China’s exports will enable the regime to take its nuclear and military-industrial programs to a higher level.

Saeed Ghasseminejad is a senior advisor on Iran and financial economics at the Foundation for Defense of Democracies (FDD), where he contributes to FDD’s Iran Program and Center on Economic and Financial Power (CEFP). Follow Saeed on X @SGhasseminejad. For more analysis from Saeed and FDD, please subscribe HERE. FDD is a Washington, DC-based, non-partisan research institute focusing on national security and foreign policy.

Issues:

China Energy Iran Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance