China and Iran have quietly stepped up their mutual trade via barter transactions, Bloomberg reported, exchanging Chinese cars for Iranian copper and zinc to circumvent deepening international sanctions.
The Bloomberg report citing people familiar with the matter said Chinese carmakers are exchanging vehicles and auto parts for Iranian copper and zinc, allowing both nations to bypass US restrictions on dollar transactions.
At the heart of the arrangement are companies based in China’s Anhui province, including Chery Automobile and Tongling Nonferrous Metals Group.
Chery, which recently raised $1.2 billion in a Hong Kong IPO, sells parts and technology to another firm in Anhui that assembles semi-knocked down vehicles.
Those partially built cars are then shipped to Iran, where they are finished and sold under the Modiran Vehicle Manufacturing (MVM) brand — a local venture Chery established in 2004 that went on to become Iran’s most popular foreign car line.
In exchange, containers of Iranian copper and zinc are sent to China, feeding the country’s vast metals industry, Bloomberg added.
Tongling Nonferrous, one of China’s biggest metals producers, reportedly helps broker the trade.
None of the companies involved are accused of breaching sanctions, since they operate entirely outside the US or European financial systems and trade in local currencies — yuan and rials — rather than dollars or euros. Under Chinese law, such commerce remains legal.
Fragmented global trade
This barter system emerged as a creative response to the financial squeeze Iran faced after the US withdrew from the 2015 nuclear deal in 2018.
The reinstatement of US sanctions after President Donald Trump withdrew from a 2015 nuclear deal effectively cut Tehran off from global banking, making it nearly impossible for Iranian firms to pay foreign suppliers through conventional means.
Barter, once a relic of Cold War trade long plied by an isolated Soviet Union, offered a practical workaround.
The car-for-copper model underscores how sanctions have fragmented global trade and encouraged alternative systems that exclude the US dollar.
Similar arrangements have been reported between Iran and Sri Lanka, which swapped tea for oil, and even between China and Russia since 2022.
For Iran, these deals provide vital access to consumer goods and industrial materials that would otherwise be scarce under sanctions. For China, they secure steady supplies of raw materials while expanding its industrial influence in sanctioned markets.
Chery’s history with Iran reflects Beijing’s long-term strategy of using trade to deepen ties with isolated economies.
When Chinese President Xi Jinping visited Tehran in 2016, Chery’s CEO accompanied him — a symbol of how industrial cooperation forms part of China’s Belt and Road Initiative.
Despite pledging in its IPO filings to reduce exposure to sanctioned markets, Chery’s enduring presence in Iran demonstrates how resilient and adaptable this trade relationship remains.
While modest in scale compared with China’s overall $9 billion annual exports to Iran, the revival of barter trade highlights a broader geopolitical trend: as Western sanctions proliferate, countries like China and Iran are forging parallel economic systems that operate beyond Washington’s reach.
