Beijing has expanded its yuan-based trade infrastructure to facilitate commerce with both Iran and Russia, effectively constructing a parallel financial network that routes around Western sanctions. By early 2024, over 90% of bilateral trade between China and Russia was settled in rubles or yuan, a staggering shift from a relationship that was heavily dollar-denominated just a few years earlier.

The numbers behind the network

Total trade between China and Russia hit approximately $245B in 2024. That figure is double what it was in 2020, meaning the commercial relationship didn’t just survive Western sanctions on Moscow. It thrived.

China’s Cross-Border Interbank Payment System, known as CIPS, serves as the backbone. Daily transactions on CIPS have doubled since the start of the Russia-Ukraine war, suggesting the system is absorbing a meaningful share of trade flows that previously ran through dollar channels.

On the Iranian side, China now imports roughly 80-90% of Iran’s total oil exports, and payment increasingly flows in yuan rather than dollars. The transactions are routed through smaller Chinese banks, institutions that have less exposure to the US financial system and therefore less to lose from secondary sanctions.

Iran’s trade with China operates through what amounts to a closed-loop system. Iranian payments for oil get matched against purchases of Chinese goods heading the other direction.

Crypto enters the picture

As of March 2025, some Russian oil firms began using Bitcoin, Ether, and USDT to convert yuan or rupee payments into rubles. The crypto layer acts as a bridge currency, a way to move value between national currencies without touching the traditional banking system at all.

Before anyone gets too excited, this remains a small fraction of total trade volumes. Russia and China aren’t settling billions in Bitcoin.

Washington’s response and the de-dollarization question

Between 2025 and 2026, Washington has targeted Iranian exchange houses that process billions annually in oil-related transactions. The sanctions net has also expanded to include Chinese-linked entities facilitating these flows.

China gets discounted oil from two sanctioned producers. Russia and Iran get access to the world’s largest manufacturing economy. Secondary sanctions create friction, but they haven’t reversed the trend.

CIPS doubling its daily transaction volume means there is now a functional alternative to Western financial infrastructure that handles real volume. Every new participant in that network makes it harder to unwind, and every new round of sanctions gives countries a reason to join it.