In what’s being described as an “unprecedented” move, China has ordered companies to disregard U.S. sanctions targeting Iranian oil.
According to Fox News, a directive issued through China’s Commerce Ministry invokes a “blocking statute” that prohibits firms from complying with foreign sanctions deemed illegitimate.
China directs companies to disregard U.S. sanctions on Iran, testing U.S. resolve to enforce them https://t.co/m5IrL8sHY6
— John Solomon (@jsolomonReports) May 7, 2026
“It’s a major escalation in terms of China’s response to U.S. economic statecraft. It is a measure of defiance by Beijing,” said Max Meizlish, a research fellow at the Foundation for Defense of Democracies, according to the outlet.
Fox News explained further:
The escalation comes as the Trump administration intensifies its sanctions campaign, targeting Chinese refiners and warning financial institutions they could face penalties for facilitating oil transactions between Iran and China.
Treasury Secretary Scott Bessent has accused Beijing of effectively financing Iran’s military activity through its oil purchases, arguing that Chinese demand is sustaining Tehran’s economy.
ADVERTISEMENT“China, let’s see them step up with some diplomacy and get the Iranians to open the strait,” Bessent said in a Fox News interview Monday.
“Iran is the largest state sponsor of terrorism … China has been buying 90 percent of their energy, so they are funding the largest state sponsor of terrorism,” he added.
China remains the primary destination for Iranian crude, with much of the country’s sanctioned oil exports flowing to Chinese refiners despite mounting U.S. pressure.
The directive comes before a highly-anticipated meeting between President Trump and Xi Jinping later this month.
President Trump said he and Chinese leader Xi Jinping would discuss the war in Beijing next week, praising the Chinese president as “very respectful.”
The remarks came despite anger in Beijing over sweeping U.S. sanctions targeting trade with Iran.https://t.co/UwMuVK1V8v
— The Washington Post (@washingtonpost) May 7, 2026
Fortune has more:
Within China, state media outlets and academics who advise the government sought to frame the retaliation as a forceful but calibrated response against U.S. overreach. A commentary on the People’s Daily app, the Communist Party mouthpiece, called it “a pivotal step” in using the legal instrument to restrain what it called the “long-arm jurisdiction” of the U.S.
Beijing’s move will test the U.S. sanctions system at a time when it’s already under pressure, as Washington vacillates on curbs against Russia, Venezuela and Iran. With Trump’s war against Iran straining its global alliances, China has seized the opportunity to defend a major piece of its economic system while expanding its arsenal of economic weapons.
Xi’s government has been progressively cranking up the use of alternative tools, from rare earths to technology. Beijing last week blocked Meta Platforms Inc.’s $2 billion purchase of AI startup Manus, moving to scuttle the deal even after it had already been sealed.
“They want to have as many levers as possible,” Ja Ian Chong, an associate professor of political science at the National University of Singapore, said of Saturday’s move to instruct defiance. “This should be seen in the context of increasing controls. It is not a one off.”
China is deploying a blocking measure introduced in 2021 that was aimed at protecting its firms from foreign laws it deemed unjustified. The refiners—including Hengli, and several other privately-owned processors—had been facing asset freezes and transaction bans.
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