Relations between the United States and China face renewed strain as the U.S. intensifies economic sanctions targeting Iran ahead of President Xi Jinping’s planned visit to Washington on September 24. The latest measures, announced by U.S. Treasury Secretary Scott Bessent, aim to isolate Tehran’s economy by expanding sanctions against 60 entities worldwide, including mainland Chinese and Hong Kong-based companies involved in procurement, finance, and shipping linked to Iran. However, the targeted entities do not include any major Chinese banks or oil refineries.
The sanctions follow a protracted conflict between the U.S. and Iran marked by failed peace talks, a naval blockade, and reciprocal military strikes in recent weeks. After a temporary lifting of the blockade following a memorandum of understanding, the U.S. reinstated it citing alleged Iranian attacks on commercial vessels. The Biden administration’s strategy reflects an effort to pressure Iran economically without resorting to military confrontation, which officials acknowledge would carry high costs.
China, Iran’s largest oil buyer and a key trading partner, has responded with warnings of retaliatory actions should Washington impose further sanctions. A spokesperson for China’s foreign ministry emphasized the importance of dialogue and negotiation, cautioning that economic warfare risks escalating tensions and causing broader regional instability.
The recent developments coincide with a U.S. delegation’s visit to Beijing for the third session of the Track 1.5 Dialogue, a semi-official platform created in 2023 to facilitate communication between the two countries through both governmental and non-governmental channels. The delegation was led by John Thornton, co-chairman of the Asia Society think tank and former Goldman Sachs president, who has served as a diplomatic backchannel. During the talks, Liu Haixing, head of the Communist Party’s International Department, called for rejecting zero-sum approaches and advocated for stable, well-managed competition that balances differences with areas of cooperation. Thornton and other U.S. delegates also met Wang Huning, the fourth-ranked member of the Politburo Standing Committee.
The upcoming summit between Xi and U.S. President Donald Trump will address numerous bilateral issues, with Iran among the most challenging. Analysts note that maintaining engagement is crucial despite growing tensions, drawing parallels to the Biden administration’s early 2023 encounter with diplomatic setbacks following the interception of a Chinese surveillance balloon over U.S. airspace. That episode underscored the risks of allowing confrontations to derail broader diplomatic efforts.
As the United States seeks to deepen economic pressure on Iran by targeting its international partners, including China, the response from Beijing and the outcome of the September summit will be closely monitored. Both sides appear to recognize the need to compartmentalize conflicts such as the Iran dispute to prevent them from upending the wider relationship, which remains strategically significant for global stability.