Reuters: Iran uses barter-like scheme to purchase goods from China
Iran is using a barter-like scheme to circumvent sanctions on oil sales and purchase billions of dollars’ worth of goods from China, including military equipment. This was reported by The Jerusalem Post, citing Reuters, two senior Iranian sources and three other people familiar with the situation.
According to the sources, Iranian oil is exchanged for credits to import Chinese goods. This mechanism allows Tehran to buy goods and services in China without making direct payments to Chinese companies through international banking channels. According to the information, Iran purchased medicines, cars and communications equipment from China.
Financial mechanism
A Western official and two other informed sources told Reuters that, at least until 2026, a buyer acting on behalf of Chinese state oil trader Zhuhai Zhenrong deposited hundreds of millions of dollars every month into the little-known Chinese financial entity ChuXin. They said the funds covered oil purchases from a Hong Kong-registered company linked to the National Iranian Oil Company.
The sources claim that ChuXin subsequently directed the funds to Chinese exporters and companies building infrastructure facilities in Iran, likely through other Chinese financial institutions. About 70% of oil proceeds passing through ChuXin were allegedly directed to infrastructure projects in Iran. The rest went to the accounts of a special purpose vehicle, or SPV, through which deliveries of goods to Iran were paid for.
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Iranian sources close to the country’s decision-making circle confirmed the existence of the SPV to Reuters. According to the sources’ estimate, between $2 billion and $2.5 billion passed through this structure over the past year. Reuters noted that it found no records of a financial institution named ChuXin in Chinese registries and was unable to independently verify the described transactions.
Supplies and reactions
Sources also said that at least once over the past year, the mechanism was used in connection with contracts to supply Iran with air defense systems worth millions of dollars. They provided no details of such alleged deals, and Reuters was unable to independently verify them.
China’s Foreign Ministry said in response to Reuters that it was unfamiliar with the described situation and reiterated Beijing’s position against unilateral sanctions that lack a basis in international law and have not been authorized by the UN Security Council. Iranian missions to the UN in New York and Geneva did not respond to requests for comment.
According to analytics company Kpler, China was the main buyer of Iranian oil in 2025, accounting for more than 80% of shipments, or an average of 1.4 million barrels per day.
