Iran Turns to China's Yuan to Undermine US Sanctions

The go-to pressure tool for the US is running into a currency it can't easily touch. As the Trump administration again dangles sanctions relief in nuclear talks with Iran, Tehran has already carved out a workaround: China's yuan. Iran is moving much of its sanctioned oil through Chinese buyers and getting paid largely in yuan, the Wall Street Journal reports, then spending that money on Chinese goods and dual-use materials—transactions that don't pass through US banks and are harder to see or stop. A Chinese refiner recently sanctioned by Washington, Hengli Petrochemical, said future purchases would be settled in yuan instead of dollars.

Behind that shift is a broader Chinese project. The Beijing government has built alternative pipes for money flows, including its CIPS payments network and a fast-growing digital-currency platform called mBridge, both designed to operate outside the dollar system. The yuan's share of global trade finance has tripled in five years, and it now ranks behind only the dollar. China isn't trying to dethrone the greenback outright, analysts say, but to create protected channels for itself and partners such as Iran and Russia—blunting US sanctions today and potentially cushioning any future clash over Taiwan. China's efforts are being limited by demand: A Foreign Policy analysis points out that they're limited by demand, or lack of it.