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Current Affairs

China vows payback for US Iran sanctions, testing stability ahead of Xi-Trump summit

Beijing has vowed to retaliate against Washington’s expanded Iran sanctions targeting Chinese entities, threatening a clash that could erode recent stability in the US-China relationship…

By Samantha Johnson / August 26, 2026
Beijing has vowed to retaliate against Washington’s expanded Iran sanctions targeting Chinese entities, threatening a clash that could erode recent stability in the US-China relationship and become a new flashpoint weeks before President Xi Jinping visits the US, according to observers.
But they say that efforts on both sides, such as this week’s Track 1.5 dialogue, could serve as a check on tensions and allow each side to understand the other’s concerns.

The US on Monday announced fresh sanctions against Iran and its trading partners, including entities in mainland China and Hong Kong, in its latest push to squeeze Iran economically after months of military strikes and diplomatic talks failed to resolve the six-month conflict.

US’ Rubio says it is in China’s interest to play a more ‘active role’ in Iran crisis

On Tuesday, Chinese foreign ministry spokesman Lin Jian dismissed the sanctions as “illicit” with “no basis in international law”, saying the US move would heighten tensions and disrupt the global economic and financial order.

“Economic warfare and maximum pressure provide no solution,” he said. “China’s cooperation with Iran is conducted within the framework of international law, thus should not be disrupted.”

Sun Chenghao, a fellow at Tsinghua University’s Centre for International Security and Strategy, said it was not clear if the latest sanctions would directly affect Xi’s planned meeting with Trump but that the sanctions development was “becoming a new risk point” ahead of the summit.

“The key may lie in whether the US expands secondary sanctions to major Chinese banks. If it’s limited to individual companies and intermediaries, both sides may still be able to keep the disagreement contained,” he said. “But if it touches China’s core financial institutions, the situation could become quite different.”

Xi is expected to visit Washington next month – his first state visit to the US in more than a decade – for talks with Trump.

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