RMB Settlement System Expands, Weakening U.S. Sanctions Effectiveness Against Iran
Taylor Wilson
China's renminbi-based cross-border payment architecture is giving sanctioned nations like Iran and Russia a working bypass around the dollar system — Iran still earned up to $43 billion in oil exports in 2024, signaling a structural erosion of America's dollar-anchored sanctions toolkit.
Why does switching to renminbi put transactions beyond Washington's reach?
The dollar accounts for roughly 80% of global trade finance, and that dominance is what lets the U.S. monitor and block cross-border fund flows.
This means → once a deal is priced in renminbi, the money never touches the U.S.-led banking system, and Washington's ability to surveil or intercept it simply disappears.
In plain terms = dollar sanctions work on a "my turf, my rules" logic; move the transaction onto a renminbi track and it is no longer on American turf.
How much has Iran earned through the renminbi channel?
U.S. Energy Information Administration data show Iran's oil-export revenue reached up to $43 billion in 2024 (pre-discount) despite sanctions — most of it paid in renminbi, a fact the U.S. Treasury has confirmed.
Iran uses that renminbi income to buy Chinese auto parts, solar panels, other goods, and potentially dual-use raw materials — all outside U.S. jurisdiction.
This reflects a channel that has moved well past "usable" — it now sustains a full import-export cycle for a sanctioned economy.
How big has CIPS actually grown?
CIPS — China's Cross-Border Interbank Payment System, a renminbi-denominated clearing network launched in 2015 — has averaged roughly ¥790 billion ($115 billion) per day in the three months since late February, up from about ¥680 billion ($100 billion) a day last year.
By comparison, SWIFT processes an estimated $5 trillion-plus daily, still far larger than CIPS.
But the Atlantic Council notes that CIPS's rapid growth trajectory means it is evolving from a regional tool into a more globally relevant cross-border payment system.
How complete is Russia's shift to renminbi?
After the 2022 invasion of Ukraine and tighter U.S. sanctions, Russian trade with China swung heavily into renminbi settlement; Russian officials say over 90% of bilateral trade is now settled in renminbi or rubles.
From the start of the war through mid-2025, CIPS's total daily transaction volume doubled and the number of connected financial institutions more than doubled.
This means → Russia's case proves the renminbi channel is not a stopgap — it is a parallel financial pipeline already running at real trade scale.
Why does Hengli Petrochemical's statement matter?
In April the U.S. sanctioned Chinese refiner Hengli Petrochemical (恒力石化), alleging it bought billions of dollars of Iranian oil; Hengli denied the charge.
But Hengli simultaneously announced it would switch future oil purchases from dollar to renminbi settlement — effectively declaring in public: change the track and the sanctions cannot touch me.
In plain terms = the sanctioned company did not capitulate; it chose to change lanes, turning U.S. sanctions from a punishment tool into a catalyst for de-dollarization.
What does this mean for Washington's negotiating leverage?
The U.S. is negotiating a new nuclear deal with Iran; its traditional bargaining chips are sanctions relief and the unfreezing of roughly $100 billion in frozen assets.
But Iran has already maintained substantial oil revenue under sanctions via the renminbi channel, supplemented by intermediaries and shell companies in Hong Kong and elsewhere, plus Strait of Hormuz transit fees collected in renminbi or cryptocurrency — multiple bypass routes now form a system.
This means → Washington's economic leverage is not as strong as it once was: the assets you promise to unfreeze may be assets the other side no longer urgently needs.
Content is for reference only, not financial advice.