EXECUTIVE SUMMARY: Now that Donald Trump has exited the 2015 JCPOA nuclear deal with Iran, there is more at stake for the other signatories than either their belief in the deal’s virtues or their eagerness to salvage economic opportunities. Maintaining the deal without the US would deliver a severe blow to American credibility and perceptions of US power. China has long experience circumventing sanctions regimes, but the environment surrounding the reimposed sanctions is likely to be unusually confrontational.
Chinese businessman Sheng Kuan Li didn’t worry about sanctions when he decided in 2010 to invest $200 million in a steel mill in Iran. That mill started producing ingots and billet within months of the lifting of punitive measures against the Islamic Republic as part of the 2015 international nuclear agreement with Iran.
As he had no operations in the US, Li was not concerned about being targeted by the US Treasury. Moreover, he circumvented financial restrictions on Iran by funding the investment through what he called a “private transfer,” a money swap based on trust that avoided regular banking channels.