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alarabiya – Despite tight US sanctions on the export of Iranian oil, China is regularly purchasing Tehran’s oil as part of a largely secret arrangement, according to a Wall Street Journal report citing current and former officials from several Western countries, including America.
In what can be described as a barter-like system, Iranian oil is shipped to China, and in return, state-backed Chinese companies build infrastructure in Iran.
The system reportedly involves two primary components – China’s large state insurance company Sinosure and a China-based financing mechanism called Chuxin, according to officials who put together their understanding of the system through financial documents, intelligence assessments and diplomatic channels.
As part of the arrangement, an Iranian-controlled company registers the sale of oil to a Chinese buyer controlled by state-owned oil trader Zhuhai Zhenrong, the WSJ report cited officials as saying.
In return, the Chinese buyer deposits hundreds of millions of dollars each month with Chuxin, the report added. Chuxin then delivers the funds to Chinese contractors who perform engineering work in Iran, in projects whose financing is insured by Sinosure. The insurance company holds the chain of projects together.
Meanwhile, Iranian crude reaches China via an indirect route to hide its origins by using ship-to-ship transfers and mixing in oil from other countries.
Sinosure
Formally known as China Export & Credit Insurance, Sinosure is a financial tool of China’s central government to support Beijing’s international development endeavors, according to the WSJ.
Sinosure had supported over $9 trillion in trade and investment activities around the world as of the end of last year, according to the report.
In Iran, Chinese infrastructure projects include airports, refineries and transport projects, managed by China’s largest state banks and engineering groups.
China made over $25 billion in financial commitments to build infrastructure in Iran between 2000 and 2023, according to a research lab called AidData. The US, which has used targeted sanctions against Chinese firms, has not blacklisted companies for doing civilian work in Iran, nor has it targeted a large Chinese bank.
This arrangement between Beijing and Tehran, has proved to be a crucial way out for Iran to sidestep US sanctions. According to some of the officials cited in the report, up to $8.4 billion in oil payments flowed through this funding system last year to finance Chinese work on large infrastructure projects in Iran.
