China Leads Authoritarian Nations in Evading US Sanctions, Controls: Report Finds

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Sanctions and export controls or restrictions are important economic tools the United States uses to discourage destabilizing behavior and encourage adherence to international norms, according to the U.S. Treasury Department.

According to the report, the importance of these tools has only risen in this age of “forever wars” and the Chinese regime is actively finding workarounds that have an additional effect of helping it grow its influence with countries that would be otherwise isolated from the international economy.

“China is the decisive enabler of sanctions evasion by the so-called ‘axis of autocracy’ countries,” the report said.

This is aided by the regime’s ability to use Hong Kong, which became a hub of global trade and finance during the years before Beijing effectively ended its “two systems” agreement, now applying the same authoritarian control over the territory.

In doing so, it is creating an alternative to the dollar economy.

These include sanctions on Iranian and Russian oil to cut off financial support for terrorism and war activity, and Beijing’s enabling of sanctioned oil trade benefits the Chinese regime in more ways than the countries from which it buys or facilitates trade, according to the report.

China is the biggest and nearly the only buyer of Iranian oil, making up more than 90 percent of purchases in 2024, according to the report, and making its purchases with yuan. The United Against Nuclear Iran nonprofit estimates China imported 1.6 million barrels a day in July 2025, which would make up 13.5 percent of China’s total oil imports, and 45 percent of the Iranian regime’s budget.

In addition to securing cheap energy, Beijing is able to enhance the resilience of Russia’s war efforts or Iran’s destabilizing actions, drawing the United States’ attention away from the Indo-Pacific, the report says.

China also accounts for 98 percent of North Korea’s total trade, making it a “critical lifeline” to the North Korean regime and nuclear buildup efforts, the report says.

Hong Kong is key to this “shadow banking” system, as it is where many relevant shell companies, forming complex chains used to pass money along to authoritarian regimes, are based.

This allows the sanctioned nations to gain access to dollars, euro, and other international currencies that are then used to fund, in Iran’s case, groups that the United States has designated as terrorist organizations.

In the past eight years, more than 100 Chinese and Hong Kong companies have been added to the U.S. entity list for helping Iran evade sanctions.

Sometimes the methods of illegal trade are riskier, such as making ship-to-ship transfers and turning off transponders, which have resulted in incidents including vessel collisions.

These include memory chips, radio and communications equipment, metal cutting tools, and optical equipment.

The report notes that direct sales can be hard to trace, but agencies such as the U.S. Treasury and the United Nations have identified and sanctioned several China or Hong Kong-based companies that have bought technologies to sell to North Korea and Russia.

Since the start of the Russia–Ukraine war, several nations have sanctioned Russia and imposed export controls on technologies that could have military applications.

Meanwhile, Beijing maintains a “no limits” partnership with Russia. Since 2022, 125 Chinese or Hong Kong companies have been added to the U.S. entity list for providing support to Russia’s military base.

According to the commission, Chinese firms manufactured 49 percent of the restricted items that Russia imported from China. Chinese companies were also responsible for routing 16 percent of the restricted items imported by Russia, originating from Western companies. Another 18 percent of these restricted items imported by Russia were transshipped through China and Hong Kong.

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