Iran International
As Iranian consumers grapple with inflation and shortages, the country’s mid-tier car market which is dominated by Chinese automakers faces growing uncertainty following the renewal of UN sanctions in September.
“With the return of UN Security Council sanctions and the exposure of sanction-evasion methods, will Chinese automakers still be willing to operate in Iran?” the business daily Donya-ye-Eqtesad asked this week.
The share of private automakers in Iran’s car market has tripled over the past eight years, according to a recent parliamentary report, driven largely by Chinese partnerships.
But the reactivation of the UN “snapback” mechanism and renewed Western pressure have cast doubt on their long-term presence. If Chinese firms were to withdraw, the market could face severe disruption.
Chinese automakers increasingly rely on barter trade to skirt US restrictions, according to a Bloomberg report, with vehicles and auto parts shipped to Iran in exchange for copper and zinc.
Factories under strain
Iran’s automotive “pyramid” places domestic models at the base, Chinese-assembled cars in the middle, and high-end imports at the top. Losing the middle tier could trigger sharp price increases across all segments.
The auto-news site Pedal reported last month that several Chinese automakers have instructed their Iranian partners to lay off about 30 percent of production-line staff and to suspend both cash and installment sales.
The industry also fears further price hikes as the rial continues to slide against the dollar.
Parts shortages have deepened the malaise.
Economist Albert Baghzian of Tehran University told the government-run Iran newspaper: “Visit any Chinese car dealership today and the first thing you hear is, ‘We have no parts, we’re sanctioned.’”
To cushion the blow, major assemblers such as Kerman Motor (which produces Chery’s Tiggo line), Iran Khodro (Haima), and Saipa/Pars Khodro (Brilliance) are rebranding Chinese models, working with smaller firms less exposed to sanctions.
Flashy but distrusted
Vehicle imports are restricted and tightly controlled.
Prices of imported cars cannot exceed $35,000, and only a few models—from Changan, DFM, Geely, Haima, Kia, Hyundai and several Chinese SUVs—have entered the market.
Some Korean and Japanese brands like Toyota, Kia and Mazda reach Iran through free-trade zones, but European and American models such as Mercedes-Benz, BMW, Peugeot and Ford remain largely absent.
Middle-class buyers praise the design and technology of Chinese cars compared with domestic models from Iran Khodro and Saipa. Reza, a shop owner in Tehran’s Grand Bazaar, quipped they were like “a fake Rolex: flashy, but unreliable.”
He told Iran International that while Chinese SUVs have improved, many owners report problems after 30,000 to 40,000 kilometers, including rattling cabins and gearbox failures.
“The market still doesn’t trust them,” he added.
In inflation-hit Iran, where cars serve as a store of value, that perception carries weight.
One user on X wrote, “A 2024 Chinese-made Toyota Corolla sells for 2.7 billion tomans and finds no buyers, while a 2015 Japanese-made Corolla with an unknown history is listed for 3 billion! Once you drive both, the quality gap is obvious.”
Abbas Araghchi told reporters in the northeastern city of Mashhad that Iran remained committed to diplomacy but would not compromise on its national rights.
He said five rounds of indirect talks with Washington had taken place before the 12-day conflict in June that saw US and Israeli strikes on Iranian nuclear facilities and that subsequent discussions on the sidelines of the UN General Assembly also failed due to US demands.
“This year, after five rounds of negotiations, the United States joined Israel’s military attack against Iran. Later, in New York, there was also an opportunity for a reasonable, mutually beneficial agreement -- but once again, the talks failed because of America’s excessive demands,” he said.
He added, “As long as the Americans persist in their policy of overreach and continue to make unreasonable demands, we will not return to the negotiating table.”
“Iran has always shown that it believes in peace and diplomacy,” Araghchi emphasized. “Wherever the country’s interests can be secured through dialogue, we will not hesitate to act. But the other side has repeatedly proven it does not adhere to diplomacy.”
The comments came as Araghchi arrived in Mashhad to attend a two-day regional diplomacy conference alongside senior Iranian officials, business leaders, and ambassadors to neighboring and Asian countries.
Earlier in the day, the foreign ministry spokesperson said Iran must rely on both its missile capabilities and diplomacy to safeguard national interests.
Speaking earlier in the day in the same city, Esmail Baghaei said: “We must use all tools to protect the country’s rights -- whether through missiles or diplomacy and negotiation.”
The collapse of the talks followed months of rising tension over Iran’s nuclear and missile programs, compounded by the reimposition of UN sanctions under the 2015 nuclear deal’s snapback mechanism.
In a formal decree on Tuesday, Pezeshkian instructed the judiciary, the ministries of interior, intelligence, justice, foreign affairs, and economy, as well as the Central Bank, to implement the law in accordance with national regulations -- a condition that could limit its impact even as Tehran seeks to ease its isolation from the global financial system.
Under conditions set by parliament and endorsed by the Expediency Council, Iran will act “within the framework of the constitution,” and in cases where any provision of the convention conflicts with national laws, “domestic legislation will take precedence,” council spokesman Mohsen Dehnavi said.
The move, which follows years of political wrangling, comes just a day before the Financial Action Task Force (FATF) plenary in Paris on October 22–24, where delegates from over 200 jurisdictions will discuss mutual evaluations and global efforts to combat money laundering and terror financing.
Iran’s Financial Intelligence Unit chief, Hadi Khani, has traveled to Paris to attend FATF plenary for the first time in six years at the group’s official invitation, according to state media.
Khani, who also serves as deputy economy minister and secretary of Iran’s Anti–Money Laundering and Counter-Terrorist Financing Council, is expected to outline Iran’s progress on its action plan, focusing on the recent approval of its accession to the UN Palermo Convention against transnational organized crime.
The Iranian delegation will brief FATF members on legislative and implementation steps and coordinate future meetings to address questions and clarify outstanding issues, IRNA reported.
In May, Iran’s Expediency Council, conditionally approved the country’s accession to the Palermo Convention, one of the two key legislative items tied to the FATF standards, alongside the CFT.
The Expediency Council, overseen by Supreme Leader Ali Khamenei, mediates disputes between parliament and the Guardian Council, a body that vets laws and candidates.
Supporters say joining the UN convention could help Iran align with FATF standards, reconnect with global banking systems, and attract investment, while hardliners warn it risks exposing financial channels used to evade US sanctions and fund regional allies.
Parliament Speaker Mohammad Bagher Ghalibaf sent the bill to Pezeshkian for implementation under Article 123 of the constitution last week after lawmakers rejected a conservative-backed motion to block the move, clearing the way for Iran to finalize its accession.
Iran and North Korea remain the only two countries still outside the FATF framework.
The current state of China–Iran relations is unusually difficult to assess. Both governments continue to affirm their “strategic partnership,” but beyond the rhetoric the reality is less clear.
On paper, the two countries are bound by a 25-year cooperation agreement signed in 2021, covering trade, infrastructure, energy and security.
Yet China has remained notably cautious during Iran’s recent crises. Despite being Tehran’s largest oil customer and a key diplomatic partner, Beijing largely stayed on the sidelines as Israeli strikes hit Iranian territory.
In practice, the partnership operates within strict limits. While Sino-Iranian economic relations have been stagnating, China’s ties with Saudi Arabia and other Gulf monarchies have expanded dramatically.
Expectations meet caution
During the 12-day confrontation with Israel, some Chinese analysts urged a more proactive role—mediation, public condemnation of Israeli strikes or closer military cooperation.
But Beijing did little, triggering accusations in Tehran that it failed to grasp the Islamic Republic’s strategic value in its rivalry with the United States.
China should have done more, many asserted, rarely elaborating on what that more could look like.
Direct military or political backing, however, would have risked confrontation with Washington and jeopardized China’s broader regional network.
Oil as quiet support
Where China’s support has been most tangible is in energy trade. The world's top importer of oil is Iran's main, almost sole, customer.
Despite sanctions, imports of Iranian crude have continued to grow in 2025, with tankers often re-flagged or disguised to evade detection. This provides Tehran with a crucial lifeline.
For Beijing, the motive is less political than practical: discounted Iranian oil fits its strategy of stockpiling reserves and securing cheap energy while global prices remain low.
Dependence by default
With UN sanctions back in force, Iran faces renewed isolation from global finance, trade, and technology. That leaves Tehran even more dependent on a handful of partners—above all, China.
A recent review of Iranian media published by the ChinaMed Project confirms this.Iran’s leaders—or at least parts of the elite—prize strategic autonomy and resent reliance on any single power, yet options are scarce.
Russia, itself sanctioned and weakened, offers little beyond rhetoric. China, by contrast, provides trade, energy purchases, and a degree of diplomatic cover, making it Iran’s indispensable partner whether Tehran likes it or not.
The trajectory of Iran-Saudi relations will be decisive. If détente holds, Tehran may find limited room to maneuver; if it collapses, dependence on Beijing will only deepen.
Looking ahead
The return of UN sanctions on Iran coincides with Donald Trump’s unveiling of a new peace plan.
Beijing’s official line is that it “welcomes all efforts” toward peace based on a two-state solution. Chinese experts, however, are skeptical, arguing that peace will be impossible without recognizing Palestinian statehood—a position long enshrined in Chinese diplomacy.
Many Chinese commentators also see Trump’s plan as a US bid to reassert dominance, protect Israel’s interests, and strengthen Arab-Israeli ties.
Beijing opposes none of these in principle, but grows wary when they appear designed to isolate Tehran further, potentially undermining China’s own mediation between Iran and Saudi Arabia.
Beijing’s challenge is to sustain its balancing act: maintaining economic ties with Tehran, preserving partnerships with Iran’s Arab neighbors, and avoiding direct confrontation with Washington.
For Tehran, choices are narrowing. The more isolated it becomes, the more it must rely on China, even if that means accepting a subordinate position in the relationship.
China’s support for Iran remains significant but measured, rooted more in calculation than ideology. As sanctions bite and isolation deepens, Beijing’s role may grow—but within limits that protect China’s own interests above all.
