Reports indicate that Iran relies on a secret mechanism with China, involving a barter-like arrangement to exchange oil for credits to purchase Chinese goods, in an effort to circumvent international sanctions imposed on it. Two high-ranking Iranian sources and three
individuals familiar with the matter told Reuters that this arrangement has enabled Tehran to bypass restrictions on its oil sales, allowing it to purchase billions of dollars worth of goods, including military equipment. According to the information, this mechanism has provided
a vital financial lifeline for Iran in recent years. It has also served the interests of China, the world's largest crude oil importer, by maintaining its access to discounted Iranian oil, while protecting banks and companies exporting to Iran from
potential scrutiny or international sanctions. Iran has utilized this arrangement to acquire medicines, vehicles, and telecommunications equipment from China, without the manufacturing companies needing to deal directly with Tehran. Last year, this mechanism was reportedly used in contracts worth millions of
dollars to supply Iran with air defense equipment, sources stated, without providing further details on these transactions or independent confirmation from Reuters. Sources revealed that a buyer acting on behalf of the Chinese state-owned oil trader Zhuhai Zhenrong was monthly depositing
hundreds of millions of dollars with an obscure China-based financial entity known as Chu Shin. These deposits covered agreed-upon purchases with a Hong Kong-registered company linked to the National Iranian Oil Company. Subsequently, Chu Shin transfers these funds to Chinese
exporters and companies engaged in infrastructure projects in Iran. It is noted that approximately 70% of the Iranian oil revenues managed through Chu Shin are allocated to infrastructure projects. The remaining amount is transferred to specialized special-purpose vehicle accounts, used to
pay companies supplying goods to Iran. This aforementioned vehicle is managed by two entities: one operating on behalf of the Chinese Ministry of Commerce, and the other linked to the Central Bank of Iran, as confirmed by the two Iranian
sources close to decision-making circles. In a related context, Reuters was unable to find any record of a financial institution named Chu Shin in Chinese company registries, or for the companies stated to be acting on behalf of the Chinese Ministry
of Commerce and the Central Bank of Iran. As of yet, the National Iranian Oil Company, Zhuhai Zhenrong, the Central Bank of Iran, and the Chinese Ministry of Commerce have not responded to requests for comment. For its part, the Chinese
Foreign Ministry stated it was "not aware of the described situation," reiterating its opposition to illegal unilateral sanctions.
