Indian Council of World Affairs

ABSTRACT:  This paper argues that China has systematically supplied Iran with defence related technology and materials while publicly denying any involvement. China’s assistance to Iran represents one of the most critical yet least formally acknowledged challenges for the United States. 

INTRODUCTION

China and Iran’s military relationship dates back to early 1980s during the Iran-Iraq war when Iran required weapons. During this time China was developing its state owned defence companies. China supplied missiles, fighter jets, tanks and armoured vehicles to Iran between 1982 and 1987.[i] Both the countries signed a 25 year Comprehensive Cooperation Agreement in March 2021.[ii] Under this arrangement China invested heavily in Iranian infrastructure, energy and transport in exchange for a steady and heavily discounted supply of Iranian oil.[iii] China considers Iran as a critical pillar for its energy security. China had become Iran’s most important economic lifeline especially at a time when most of the world had cut Iran off through sanctions. By 2025, China was importing approximately 1.4 million barrels of Iranian oil per day which was roughly 13 percent of its total crude imports. [iv] Amid severe international isolation, Iran requires China for economic and political survival as well.[v] This dependency is mutual. By arming Iran, China is protecting an investment. For China, Iran is the source of cheap and steady energy and, even Iran’s ability to deter attacks from Israel and the US, directly serves Chinese economic interests.[vi]

CHINA’S DEFENCE ASSISTANCE

Over the years, China has shifted away from direct transfers of major arms sale to a more ambiguous dual use technologies.This grey area approach which components carry civilian labels but serve military purpose not only benefits China alone. This could also help Iran’s larger strategy to compete strategically with the US. China does not transfer tanks, fighter jets or missiles directly to Iran as it would be too obvious and traceable. Instead, China has consistently chosen to export dual use technologies. Dual use items are products or materials that have a legitimate civilian purpose but can also serve a military one. The perfect example for this is sodium perchlorate. A white crystalline compound with civilian uses and not classified as a controlled substance under Chinese export laws. Beijing has described its trade as a normal commercial activity. Chinese ports were seen loading Iranian ships with a chemical used to make missile fuel and Iranian weapons were being guided by Chinese satellite technology.[vii] Sodium perchlorate military value lies in what it becomes through a standard chemical process. After processing it becomes ammonium perchlorate, the oxidizer that powers the solid fuel propellants of Iran’s Kheibar Shekan and Haj Qasem ballistic missiles. [viii]

Shipments of this chemical have been consistent and substantial. During January-February 2025, two Iranian vessels transported approximately 1000 tonnes of sodium perchlorate to Bandar Abbas which is Iran’s principal commercial port.[ix] According to the CNN reports, the consignment alone was enough to make up propellant for around 200-260 ballistic missiles. As Tehran rushed to replenish its missile stockpile which was severely damaged during its 12-day conflict with Israel (13-14 June, 2025), an additional 2000 tonnes was transported by China between September-October 2025.[x] At least five more Iran affiliated ships had left Gaolan Port in Zhuhai by early April 2026. Analysts estimated the total cargo could support the manufacture of about 785 additional ballistic missiles. [xi] Although the US has accused China of transferring missile related technology and materials to Iran, sodium perchlorate is not a substance controlled by the Missile Technology Control Regime and the UN does not prohibits its export to Iran.[xii] So, China maintains that US is exaggerating the security risks of what is essentially a normal commercial trade.

Under the 2021 strategic partnership, Beijing also granted the Iranian military access to the BeiDou Navigation Satellite System, China’s alternative to GPS. This is a privilege, reserved for Beijing’s closest strategic partners. On 23^rd June 2025, Iran switched off GPS nationwide and moved entirely to China’s BeiDou Satellite System. The consequences in combat were significant, Iranian missile and drone strikes precision increased during the 2026 war.[xiii]

Chinese companies are openly marketing engines, batteries, fibre optic cables and microchips which is typically used in military drones. China is shipping them to Iran despite US sanctions. Payments are routed through shell companies which is situated in Hong Kong. These drone parts go from the Chinese company to the Hong Kong shell company and then from there to Iran. The US treasury tracked down the shell company and shut it down but it was replaced and an entirely new set of networks emerged within months.[xiv]

THE GAP BETWEEN CHINA’S POLICY AND PRACTICE

China’s Foreign Ministry consistently maintains that it does not supplies weapons to countries in conflict, opposes unilateral sanction and adheres to its export control obligations under domestic and international law. This position has not changed in years but what changed is the nature of trade. This is the shift from plausible deniability to what scholars now call implausible deniability.[xv] The denial is still being made by the Chinese, but the evidence states otherwise. China’s use of plausible deniability shows a larger geopolitical and strategic ambition. It seeks to increase its influence in West Asian regional politics without causing open blacklash. Beijing wants to secretly support its strategic partners while appearing neutral. The goal is to challenge western leadership, destabilise the US strategic focus and protect its own interests. Beijing aims to achieve all this by avoiding the risks and burdens of being openly aligned with any military force.[xvi]

This creates a structural security dilemma for the US. As Robert Jervis argued in his foundational 1978 work, Cooperation under the Security Dilemma, the security dilemma is most profound when states cannot clearly distinguish between offensive and defensive postures.[xvii] The US struggles to respond to this threat. Washington cannot have a direct confrontation with China as it risks turning a regional conflict into a far larger crisis between two nuclear armed countries. The US has sanctioned companies and networks which disrupts the supply chain, but new intermediaries appear instantly and the system rebuilds itself.[xviii]

CONCLUSION

China’s support for Iran’s military programme is both structural and a deliberate strategy. China exploits legal gaps in international frameworks and maintains a posture of denial while serving its purpose. Dual use chemicals have both military and civilian uses and satellite access is granted through cooperation agreements. As well as the payments are routed through shell companies. At no point there is a direct state authorised documentation of China’s arms transfer to Iran that could create a multilateral response against Beijing. China has helped Iran enhancing its ballistic missile accuracy, its drone capabilities and its ability to block maritime traffic in the Strait of Hormuz. China has constructed a method that allows it to support Iran’s military capability, influence the balance of power in the West Asian region and avoid any kind of formal accountability.

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*Nandini Sanjay is a Research Intern at the Indian Council of World Affairs.
Disclaimer: Views expressed are personal.

Endnotes

[i] David Pierson, "How China's Weapons Transfers to Iran Have Evolved Over Decades," New York Times, April 16, 2026, citing Stockholm International Peace Research Institute. https://english.aawsat.com/features/5262919-how-china%E2%80%99s-weapons-transfers-iran-have-evolved-over-decades

[ii] US-China Economic and Security Review Commission, China-Iran Fact Sheet, March 2026. https://www.uscc.gov/research/china-iran-fact-sheet-short-primer-relationship

[iii] Ibid.,

[iv] Pakizah Parveen, "Yuanization of Iran-China Oil Trade," Centre for Strategic and Contemporary Research, Month Day, Year of publication, https://cscr.pk/explore/themes/trade-economics/yuanization-of-iran-china-oil-trade/.

[v] US-China Economic and Security Review Commission, China-Iran Fact Sheet: A Short Primer on the Relationship, March 2026. https://www.uscc.gov/research/china-iran-fact-sheet-short-primer-relationshi

[vi] Kharon Research, "Behind Iran's War Chest, an Oil Lifeline from China," March 2026.

https://www.kharon.com/brief/iran-war-oil-china-trade-shadow-fleet-sanctions

[vii] Danya Saperstein, "Iranian Ships Leave Chinese Port with Suspected Missile Fuel During War — Report," Jerusalem Post, March 9, 2026. https://www.jpost.com/middle-east/iran-news/article-88929

[viii] Daniel Allen, Katherine Michaelson, and Marco Volpitta, "What Is Iran Doing With 1,000 Tons of Sodium Perchlorate from China?" The Diplomat, February 2025, https://thediplomat.com/2025/02/what-is-iran-doing-with-1000-tons-of-sodium-perchlorate-from-china

[ix] Foundation for Defense of Democracies, "Ship Carrying Chemical for Missile Development Docks in Iran," February 25, 2025. https://www.fdd.org/analysis/policy_briefs/2025/02/25/ship-carrying-chemical-for-missile-development-docks-in-iran/

[x] Natasha Bertrand, Katie Bo Lillis, and Tim Lister, "Western Intelligence Says Iran is Rearming Despite UN Sanctions, with China's Help," CNN, October 29, 2025. https://www.cnn.com/2025/10/29/middleeast/iran-rebuilding-ballistic-weapons-program-int

[xi] US-China Economic and Security Review Commission, China-Iran Fact Sheet: A Short Primer on the Relationship, March 2026. https://www.uscc.gov/research/china-iran-fact-sheet-short-primer-relationship

[xii] Danya Saperstein, "Iranian Ships Leave Chinese Port with Suspected Missile Fuel During War — Report," The Jerusalem Post, March 9, 2026. https://www.jpost.com/middle-east/iran-news/article-88929

[xiii] "Iran Abandons US GPS for China's BeiDou, Redrawing the Strategic Map of Middle East Electronic Warfare," Defence Security Asia, February 2026. https://defencesecurityasia.com/en/iran-abandons-us-gps-china-beidou-middle-east-security

[xiv] "China Keeps Supplying Drone Parts to Iran and Russia Despite US Sanctions," Iran International, citing Wall Street Journal, May 6, 2026. https://www.iranintl.com/en/20260506181

[xv] Linggong Kong, "Beijing's Plausible Deniability on Arms Supply is Quickly Becoming Implausible — and Could Soon Extend to Iran," The Conversation, July 22, 2025. https://theconversation.com/beijings-plausible-deniability-on-arms-supply-is-quickly-becoming-implausible-and-could-soon-extend-to-iran-26114

[xvi] Atul Kumar, “China's Arms Transfer to Iran”, ORF, Sep 24, 2024. https://www.orfonline.org/research/china-s-arms-transfer-to-ira

[xvii] Robert Jervis, "Cooperation Under the Security Dilemma," World Politics 30, no. 2 (January 1978): 167–214. https://doi.org/10.2307/2009958

[xviii] "U.S. Sanctions on Iran," Congressional Research Service, updated April 2026. https://www.congress.gov/crs-product/IF12452