China exploits Iran war to widen edge over U.S., intelligence says

China has been widening its edge over the United States as the war with Iran pulls Washington deeper into the Middle East, according to a confidential U.S. intelligence assessment produced this week for Joint Chiefs chairman Gen. Dan Caine. The analysis says Beijing is exploiting the conflict across military, economic, diplomatic and other fields, a sign that U.S. focus on Iran is creating openings well beyond the battlefield.

The timing matters. President Donald Trump is expected to raise Iran with Chinese President Xi Jinping during their meeting this week, but analysts say Xi is unlikely to fully cooperate. Beijing has strong incentives to preserve its economic and military ties with Tehran, while keeping alive the flow of dual-use goods that Iran’s military can use. That leaves Washington pressing China for help at the same moment Chinese leaders are benefiting from the distraction.

The economic channel is especially important. U.S. officials say China buys about 90% of Iran’s oil exports, giving Beijing enormous leverage over the revenue stream that funds Tehran’s security apparatus. The Treasury Department has identified Hengli Petrochemical (Dalian) Refinery Co., Ltd. as China’s second-largest teapot refinery and said it became one of Iran’s most valued customers, purchasing billions of dollars’ worth of Iranian oil products. Officials also say some of those shipments move through shadow-fleet tankers, intermediaries and opaque shipping networks that help conceal the crude’s origin.

Washington has responded with a fresh round of pressure. The State Department said on May 1 it was taking decisive action to disrupt Iran’s illicit oil trade, while Treasury in April targeted a China-based refinery and nearly 40 vessels and entities tied to Iranian oil shipments. Treasury also warned financial institutions on April 28 about sanctions risks linked to teapot refineries in Shandong Province. The campaign underscores how deeply Chinese buyers remain embedded in the trade even as U.S. enforcement tightens.

The military burden is just as stark. Defense Department documents say U.S. Central Command launched Operation Epic Fury against Iran on Feb. 28 at 1:15 a.m., and a later Pentagon fact sheet said the operation had involved more than 12,300 targets struck, more than 13,000 combat flights and more than 155 Iranian vessels damaged or destroyed by April 1. That scale shows how much U.S. attention, munitions and planning have been consumed in the conflict, giving China more room to study American constraints and press its own position in the Indo-Pacific and beyond.