U.S. “economic isolation” operation begins to bite China’s financial chain: the real danger of the Xi Jinping regime is not to buy less of a few barrels of Iranian oil

The U.S. is launching a new financial siege against Iran, but if Beijing sees it as just another round of sanctions war between Washington and Tehran, it may underestimate the seriousness of the situation.

on September 4,U.S. Treasury announces sanctions against Turkish Gold Global Yatirim Bankasi and its two subsidiariesWhat really deserves China’s high-ranking warning is that it’s not another foreign bank on the U.S. sanctions list, but the U.S. Treasury has clearly written a highly politically sensitive line of funding in its official documents: the bank is used to help Iran transfer oil revenues from China to Turkey and then be converted into cash and gold by relevant exchangers.Reuters on the same day.and .

This means that the U.S. Treasury is now looking at not just how much oil Iran sells, but who is buying, how the money comes out, which bank takes over, which country helps with the conversion, and which financial pipeline eventually allows Iran to bypass sanctions to obtain disposable funds.

The first killing: not Iran's oil, but the financial basis of the Chinese "sanctions"

For a long time, Beijing hasined energy and trade ties with Western sanctioned regimes such as Iran and Russia, and one of the important strategic gains is to use the market space left after the Western withdrawal to obtain energy at more favorable prices, while expanding the settlement of the yuan and the influence of Chinese financial institutions.

For Xi, it’s not just business, it serves a bigger strategic vision: allowing China to gradually build an alternative network beyond the U.S.-led international financial system that can sustain energy imports, trade settlements and geopolitical partnerships.

Iran can accept yuan and Chinese companies can buy sanctioned oil, but the U.S. still has a huge leverage as long as these transactions ultimately require international banks, dollar counteraccounts, gold markets, insurance, shipping financing or third-country financial centers to complete value conversion.

The signals released by the Golden Global case are clear: Washington doesn’t necessarily have to take the first hand on China’s largest state-owned bank. It can start with Turkey, the UAE, Hong Kong, Southeast Asia and other intermediate nodes to break down a layer of funding networks. For every cut of a node, the cost of China’s transactions with the sanctioned country will rise; for every increase in a layer of secondary sanction risk, more banks, insurance companies, shipowners and intermediaries will exit.

The ultimate result was not to “prohibit China from buying Iranian oil” so simply, but to let China buy it, but it was increasingly difficult to pay; to pay it out, it was increasingly difficult to turn money into an international asset that Iran could really use.

Second killing: the internationalization of the RMB will encounter a cruel reality

Over the years, Beijing has continued to advocate “de-dollarization”, and has also embedded RMB cross-border payments and real-currency trade settlement into evidence of structural changes in the international financial system.But the U.S. action actually exposed a question that the Xi Jinping regime is reluctant to publicly acknowledge: can the currency settle, and can this currency bear global financial risks, are two things.

The question is, does a bank still need dollar liquidity after accepting the yuan? does it need to own assets in Europe and the United States? does it need an international counterpart? does it need dollar trade financing? does the management be willing to take the risk of being cut from the global business by the OFAC for Iranian business?

This is where U.S. secondary sanctions are most powerful.The U.S. doesn’t need to order the world to use dollars, it just needs every international financial institution to answer a question itself: Is it not worth losing the U.S. financial market to do a business with Iran?

Luther's News Agency on September 4 that the EU joined the "Operation for Economic Isolation"The title has a clear commentary colour, and it cannot be asserted that the US has formed a comprehensive blockade against the entire Chinese financial system.But if the US can pull the EU, the UK, the Gulf financial center and other major jurisdictions into the same set of sanctions and law enforcement system, Beijing’s years of propaganda “the RMB can help allies bypass American financial hegemony” will face a reality pressure test.

Third Killing: Beijing's worst fear is not the sanctions itself, but the big Chinese banks have started to actively evade.

If the United States directly sanctioned a small Chinese trade company, Beijing could carry out political propaganda; if sanctioned a shadow shipping company, Beijing could also continue to operate in a shell.

China’s major state-owned banks are not revolutionary organizations, they are first and foremost large financial institutions.They own U.S. dollar assets, overseas institutions, international customers, trade financing business and global liquidation needs.Once the U.S. Treasury begins to incorporate specific RMB accounts, agency banks and settlement channels related to Iran into law enforcement, the most natural reaction within Chinese financial institutions will not be political expression, but will be to massively strengthen compliance review, reduce high-risk transactions, cut intermediaries, and even proactively withdraw from related business.

This “self-sanction effect” is often more devastating than the fact that the U.S. is actually on the list. Because Washington only needs to punish a few typical cases, it could cause hundreds of financial institutions to retreat on its own. The sanctions on Golden Global are just demonstrating the consequences: if a foreign bank is identified as helping Iran handle the relevant funds, the risk is not just that a transaction will be frozen, but that it could lose a significant pathway directly into the U.S. financial system.

If this model is used in the future by Chinese small and medium-sized banks, Hong Kong financial institutions, or peripheral financial entities that have been responsible for high-risk trade settlements for a long time, Beijing will have to face a very realistic contradiction: Xi could require companies to support the national strategy, but could not easily compensate for the entire loss caused by a bank losing international financial access.

Fourth Killing: Iran is not the end, the United States may be building a model for financial operations against the Chinese Communist Party

In April this year,The U.S. Treasury Department has specifically warned financial institutions to pay attention to the risks of sanctions posed by imports of Iranian crude oil from China’s independent “Tea Tuna” refinery.China purchased about 90 percent of Iranian oil exports in May.The US Treasury Department continues to impose sanctions on individuals, companies and ships involved in selling and transporting Iranian oil to China.The new action on September 4 revealed that the law enforcement chain is continuing to extend from tankers and refineries to banks and the way back to funds.

If Operation Economic Outcast could eventually prove that the U.S. could rapidly identify oil trade, shadow fleets, bank accounts, gold exchangers, offshore companies and third-country financial institutions to continuously compress the international financial circulation of a large sanctioned country, then the mechanism itself would be highly replicable.

It is aimed at Iran today, and may be aimed at networks that help Russia circumvent sanctions tomorrow.In the longer term, the same database, law enforcement mechanisms, financial intelligence capabilities and allied coordination systems could become the existing infrastructure of the U.S. against the Chinese financial system once Taiwan Sea or other major security crises break out.

China’s economy is far larger than Iran’s, and the United States cannot simply replicate Iran’s model of blocking China altogether.But financial warfare never requires a total blockade, it only requires control of key nodes.Energy payments, dollar clearance, maritime insurance, chip procurement, key equipment financing, offshore dollar debt, Hong Kong funding channels and overseas assets, any one node can become a lever.

Fifth Killing: China's so-called "anti-US Axis" economic maintenance costs may be increasing

Xi has tried to prove that the U.S.-led international order is no longer able to isolate regimes such as Iran, Russia and Washington, while China can rely on the size of the market, energy demand, diplomatic support and the RMB system to provide them with an alternative space.

But there is a fundamental weakness in this strategy: Beijing can provide trade, but does not necessarily provide a complete replacement for the global financial system of the United States and Europe.If the countries that cooperate with Beijing still need to import dollar pricing equipment, buy international insurance, get global financing, enter European markets or use international banking networks, then the RMB system will still have to reconnect the existing global financial system at some point.

The U.S. is now attacking this interface, which means that the cost of Xi’s establishment of a “anti-sanction economic circle” will be increasing.China may have to take on more credit risk, provide more policy loans, expand trade in easy goods, accept lower-quality mortgages, and allow state-owned financial institutions to take on risks that more and more normal market institutions are reluctant to take.

In the end, these costs will not disappear in vain.They will enter the balance sheet of Chinese state-owned banks, enter policy-based banks, enter the fiscal system, and eventually be borne by the Chinese economy.

The political risk of Xi Jinping himself cannot be ignored.

In recent years, Xi has raised financial security, energy security, internationalization of the RMB and anti-sanctions capabilities all to the level of national security.Therefore, once the United States continues to prove that the financial network between China and the sanctioned countries can be identified, cut off and punished, it is not only an economic issue, but also a matter of strategic judgment by Xi.

He demonstrated to the Party that China has the ability to compete with the United States for a long time, but if more and more Chinese enterprises actively withdraw from sensitive transactions in order to protect overseas business, and more and more banks refuse to implement arrangements that are politically beneficial to Beijing and commercially risky, then the so-called “financial autonomy” will expose a serious crack: the CCP can control domestic financial institutions, but can not order the global financial system to bear the cost of the CCP’s strategy.

Focus on China*

The real concern is no longer which Turkish bank the United States has sanctioned today, but the U.S. Treasury has publicly written “Iran’s oil revenues from China” into the enforcement documents of Operation Economic Outcast and announced the expansion of the risk of foreign financial institutions taking secondary sanctions.

This is equivalent to sending an early warning to all the Chinese banks and still involved in such transactions that the United States has begun to follow the money to China.

It is now impossible to assert that the U.S. is prepared to fully sanction major Chinese banks, and even less to assert that “the U.S. dollar and the euro have blocked China’s financial exports.” But a truly dangerous trend has emerged. Once the U.S. and Europe have institutionalized the financial intelligence, sanctions rules and transnational enforcement mechanisms formed against Iran, Beijing’s long-dependent grey trade, third-country banks, offshore yuan and shadow financial networks will become increasingly difficult to hide.

At that point, the U.S. is no longer struggling with just a batch of Iranian oil deals; it is struggling with whether another international economic order, which Xi is trying to build, can truly survive apart from Western financial infrastructure.

And once this dispute reaches the core of the financial system, Xi’s biggest question may not be how many Chinese companies the United States is willing to sanction, but how many Chinese banks and enterprises are willing to pay for his geopolitical strategy after seeing the cost of being kicked out of the dollar and the euro system.