Iran, China Use Secret Barter System to Evade Sanctions

Iran has established a secretive barter-like trading mechanism with China to circumvent U.S. sanctions on its oil exports and acquire goods, including potentially military equipment and medicines. The arrangement, reportedly operating since at least 2021, allows China to continue purchasing Iranian oil at discounted prices while shielding its banks and companies from U.S. sanctions. According to multiple sources familiar with the system, an estimated $2 billion to $2.5 billion moved through the mechanism over the past year. The funds are managed through entities linked to China's Ministry of Commerce and Iran's central bank, operating largely outside the international banking system. This process converts Iranian oil revenues into credits for purchases of Chinese goods. Approximately 70% of the funds handled through this mechanism are directed toward infrastructure projects in Iran, with the remainder used to pay Chinese suppliers for goods such as medicines, vehicles, and other essential products.