The U.S. Treasury Secretary Scott Bessent announced a crackdown on entities aiding Iran in evading sanctions, warning that those involved could be cut off from the U.S. financial system. This puts pressure on Chinese banks, which have historically been significant partners for Iran, as they must balance their operations with the need to maintain access to U.S. dollars.
China, which previously imported around 90% of Iran's oil, has expressed its opposition to unilateral sanctions and is committed to protecting its interests. Analysts suggest that while China is likely to resist U.S. demands, it will also seek to remain integrated into the dollar-based financial system. The ongoing geopolitical tensions are further complicated by an upcoming summit between U.S.
President Trump and Chinese President Xi Jinping, where broader issues, including Taiwan, may take precedence over the Iran situation. Additionally, China's Cross-Border Interbank Payment System (CIPS) is seen as a potential alternative to dollar transactions, reflecting China's efforts to diversify its financial dependencies.
However, the U.S. dollar remains dominant in global payments, accounting for over half of transactions, while the yuan's share is significantly smaller. The dynamics of this situation could lead to increased volatility in currency markets, particularly if major Chinese banks face exclusion from systems like SWIFT, which would pressure the yuan's value