By Al-Fassel | 2025-10-21

Tehran has relied on a hidden payment system to trade crude oil for Chinese infrastructure projects, evading sanctions and securing as much as $8.4 billion last year, according to Western officials cited by The Wall Street Journal.

The mechanism involves state-owned insurer Sinosure and an unregistered financial channel known as Chuxin, which route payments through Chinese construction firms instead of international banks.

Western assessments suggest that nearly 90% of Iran's $43 billion in oil exports last year went to China.

Oil-for-infrastructure

In this setup, an Iranian-controlled company records oil sales to a Chinese buyer linked to the sanctioned state trader Zhuhai Zhenrong.

The buyer then deposits large monthly payments with Chuxin, which transfers funds to Chinese firms working on infrastructure projects in Iran insured by Sinosure, officials said.

Much of the crude is disguised through ship-to-ship transfers and blending with other cargoes to conceal its Iranian origin.

The system has provided Tehran with a crucial economic lifeline despite heavy sanctions.

President Donald Trump's maximum pressure campaign seeks to cut off these revenue streams to constrain Iran's nuclear program, regional proxy funding, and destabilizing activities.

On October 9, the US Treasury announced new sanctions on more than 50 individuals, companies, and vessels tied to Iran's oil exports.

Those targeted included a Chinese port and Shandong Jincheng Petrochemical Group, a teapot refinery accused of importing millions of barrels of Iranian oil since 2023.

Chinese customs have not listed Iranian crude imports since that year, masking the true scale of the trade.

Oil-for-arms arrangements

Iran's military establishment has sought to use oil shipments as leverage to obtain advanced Chinese weapons, according to information shared with Iran International.

A person familiar with the matter said officials from the Islamic Revolutionary Guard Corps (IRGC) and the Armed Forces General Staff have discussed with Chinese partners the possibility of acquiring missiles, drones, and air defense systems in exchange for crude.

Haokun Energy Group, a Chinese firm reportedly owing Tehran about $1 billion for previous oil purchases from IRGC-linked entities, has been identified as a key player in those talks.

One proposal under consideration, the source said, involves offsetting part of Haokun's debt through the delivery of military equipment.

Haokun was sanctioned by the US Treasury in 2022 for buying large volumes of oil from the IRGC's Quds Force.

If such an oil-for-arms deal were to proceed, analysts say it would reflect Beijing's pursuit of its own strategic interests by propping up a sanctioned regime accused of fueling regional instability.

For the Iranian regime, they add, these arrangements remain a means of survival that sustain its weapons programs and preserve what remains of its regional influence.