China a Challenge to Trump Iran Squeeze08/26 06:08

   Beijing is Iran's biggest trading partner and its leading oil buyer. While 
the U.S. is trying to isolate the Islamic Republic from its remaining economic 
partners, President Donald Trump also is preparing to host Chinese leader Xi 
Jinping next month to maintain a fragile trade truce.

   WASHINGTON (AP) -- The " economic onslaught " that Treasury Secretary Scott 
Bessent has declared on Iran's financial connections around the world may have 
one major caveat: China.

   Beijing is Iran's biggest trading partner and its leading oil buyer. While 
the U.S. is trying to isolate the Islamic Republic from its remaining economic 
partners, President Donald Trump also is preparing to host Chinese leader Xi 
Jinping next month to maintain a fragile trade truce.

   Absent from Bessent's remarks this week were specifics about how the Trump 
administration would target China, casting doubts on how effective the new 
campaign would be when the U.S. must balance putting maximum pressure on Iran 
and avoiding higher tensions with China that could be costly to the American 
economy.

   "The announcement yesterday was very careful in my view to avoid specifics 
(against China), which could have led to a disruption in the summit," Edgard 
Kagan, senior adviser and Freeman Chair in China studies at the Center for 
Strategic and International Studies, said Tuesday. "For Xi, a state visit to 
Washington is a big deal; and for Trump, hosting it is a big deal."

   That means both Washington and Beijing will have a dance to do, said Kagan, 
who served as U.S. ambassador to Malaysia from December 2023 until this 
February.

   "I think the real question is, is there room to push (the Chinese) to reduce 
what they're doing with Iran, to put more pressure on the Iranian regime in a 
way that doesn't lead them to say, 'This is unreasonable, and we're not going 
to comply,'" he said.

   China is likely to wait and see and do the minimum

   In response to "Operation Economic Outcast," which Bessent announced Monday, 
Beijing said its cooperation with Iran has always been "within the framework of 
international law." China receives more than 80% of Iranian oil shipments but 
usually through indirect channels.

   Lin Jian, a spokesperson for the Chinese foreign ministry, said China-Iran 
cooperation "should not be disrupted or undermined."

   "China is closely monitoring relevant developments and will take all 
necessary measures to resolutely safeguard its own rights and interests," Lin 
said. He repeated China's opposition to "illegal unilateral sanctions."

   Kagan described Beijing's remarks as "a holding response" and said Beijing 
will try to do the least to comply without openly confronting the U.S.

   "They've tended to be careful not crossing explicit red lines, but they 
haven't addressed the spirit of what the U.S. has sought," Kagan said, pointing 
to practices such as ship-to-ship oil transfers that obscure the origin of 
Iranian crude oil to evade American sanctions.

   Sun Yun, director of the China program at the Stimson Center, a Washington 
think tank, said China will not go along with the new campaign if the U.S. goal 
is to destroy the Iranian economy and seek the government's collapse.

   But "if the goal is to exert enough pressure for Iran to make concessions on 
the Strait of Hormuz and potentially ending the conflict, I think China can and 
will demonstrate its cooperation without having to completely sever ties with 
Iran," Sun said. "China only needs to do enough to demonstrate it is 
cooperating, such as cut back on its oil import from Iran."

   With a planned summit between Trump and Xi weeks away, "neither side wishes 
to have a major escalation bilaterally at this point," she said. "China needs 
to give U.S. something, and U.S. needs to understand and accept that it is not 
going to be everything U.S. asks for."

   US is not likely to act tough on China, analysts say

   So far, the Trump administration has refrained from imposing sanctions on 
major Chinese businesses or banks connected to the U.S. financial system and 
thus vulnerable to American penalties.

   The Treasury Department said Monday that it was penalizing nearly 60 
Iran-linked entities, accusing them of involvement in Iran's nuclear and 
missile programs, cyber activities and oil shipments.

   It targeted a number of entities and individuals based in mainland China and 
Hong Kong for supporting Iran's missile and nuclear programs. It sanctioned a 
China-owned crude oil tanker for transporting millions of barrels of Iranian 
oil to China this year as well as a Hong Kong-based business for its role in 
the shadow fleet that ships out Iranian oil.

   With Xi's visit coming up, Trump may not act tough on China now, said Ali 
Wyne, senior research and advocacy adviser on U.S.-China relations at the 
International Crisis Group.

   "Given how keen Trump has been to maintain both a trade truce between the 
United States and China and his personal rapport with Xi, he seems unlikely to 
do a volte-face just a month before Xi's state visit and adopt a highly 
confrontational posture," he said.

   Plus, Xi's visit to the U.S. could pave the way for Trump to return to China 
in November for the leaders summit of the Asia-Pacific Economic Cooperation 
grouping.

   In his second term, Trump has been less hawkish on China than in his first 
presidency and frequently touts his good relationship with Xi following a major 
trade war last year that featured back-and-forth escalating tariffs. The U.S. 
business community also welcomes Xi's visit, saying it's a good sign if the two 
leaders meet in person, even when any substantial deals may be elusive.

   "Beijing is betting that Washington will be reluctant to jeopardize the 
current leader-level dynamic by targeting major Chinese entities before the 
summit," said Craig Singleton, senior director for China at the Foundation for 
Defense of Democracies, a hawkish Washington think tank.