China and SCO defy US sanctions on Iran — but Beijing's support has limits

The Shanghai Cooperation Organisation (SCO) concluded its annual summit in Bishkek, Kyrgyzstan, on September 1 with a joint declaration that directly challenges the US-led sanctions and military campaign against Iran. The so-called Bishkek Declaration, signed by leaders including Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi, condemned “military strikes on the territory of the Islamic Republic of Iran” and called for a new development bank independent of “the financial systems of the states which weaponize economic tools” Source: Al Jazeera.

Yet even as the SCO’s ten member states — which also include Iran, Pakistan, Belarus, and several Central Asian republics — rallied around Tehran, analysts caution that China’s concrete support for Iran has clear limits. Beijing’s broader geopolitical balancing act with the United States and Gulf states prevents it from becoming an unlimited lifeline for the Iranian leadership.

China’s oil lifeline

China has long been Iran’s most important economic partner, particularly in energy. According to reports, Beijing now purchases roughly 90 percent of Iranian oil exports, largely through a network of “dark fleets” — ships that obscure the Iranian origin of their cargo — and “teapot” refineries, small private facilities that process the crude Source: Al Jazeera. These evasive mechanisms have kept the Iranian economy afloat despite US sanctions.

When the US announced its latest sanctions package on August 31, a Chinese foreign ministry spokesperson responded bluntly: “China will do everything necessary to firmly safeguard its rights and interests.” The statement reflects Beijing’s view that Washington’s threats are “toothless” — China has fought several trade wars with the US to a standstill and developed a high tolerance for economic pressure Source: Al Jazeera.

The new SCO development bank

A key outcome of the Bishkek summit was the call to create a new development bank. Russian President Vladimir Putin described it as an institution with “maximum independence from the financial systems of the states which weaponize economic tools in order to obtain unilateral advantages in international affairs” Source: Al Jazeera. The proposal is widely seen as an attempt to build an alternative to US-dominated financial infrastructure, offering Iran and other sanctioned nations a channel for trade and investment outside Western control.

The limits of Chinese support

Despite the strong rhetoric and existing trade links, several analysts argue that China will not escalate its commitment to Iran into a full-blown confrontation with the US. Hongda Fan, director of the China-Middle East Center at Shaoxing University, told Al Jazeera: “China, with broader global interests, can only actively promote de-escalation of the US-Iran conflict, and cannot and will not engage in fierce confrontation with the US for Iran’s sake” Source: Al Jazeera. Fan added that the conflict “must be resolved by the two countries themselves.”

The asymmetry in the China-Iran relationship is stark: Tehran depends on Beijing far more than vice versa. While Iran’s President Masoud Pezeshkian attended the Bishkek summit and held bilateral talks with Xi, Chinese state media gave relatively subdued coverage to the Iranian leader’s presence. Meanwhile, Beijing must balance its ties with Iran against its relationships with Saudi Arabia and other Gulf states, as well as its ongoing economic engagement with the US.

Strategic implications

The SCO’s collective defiance underscores a growing challenge to US sanctions policy. Washington is finding it increasingly difficult to secure international compliance, particularly from China and other SCO members. The Bishkek Declaration’s condemnation of “US-Israel attacks on Iran” and its call for a new financial architecture signal a concerted effort to erode the effectiveness of Western economic pressure.

For Ukraine Desk readers, these developments matter because they illustrate how great-power competition over sanctions and financial systems is reshaping global alliances. The same dynamics that allow China to shield Iran from US penalties also complicate efforts to maintain a united front against Russia over its war in Ukraine. As the SCO moves toward creating its own development bank, the West’s ability to use economic tools as leverage — whether against Tehran, Moscow, or Beijing — may face its most serious test yet.