China’s top financial regulator has quietly told the country’s largest banks to suspend new loans to five Chinese refiners recently sanctioned by the United States over their ties to Iranian oil, even as Beijing publicly orders companies to ignore those same U.S. measures, Bloomberg reported Tuesday.

The National Financial Regulatory Administration, which oversees banks and insurers, asked lenders to review their exposure and business dealings with the targeted firms, including Hengli Petrochemical (Dalian) Refinery Co., and to refrain from extending new yuan-denominated credit while awaiting further guidance, Bloomberg said, citing individuals familiar with the matter. Banks were also instructed not to call in existing loans.

The verbal directive was issued before the start of China’s long May 1 holiday, according to the report. The instruction stands in stark contrast to a May 2 notice from China’s Ministry of Commerce ordering domestic companies to disregard the U.S. sanctions—the first time Beijing has deployed a blocking mechanism it introduced in 2021 to shield Chinese firms from what it considers unjustified foreign laws.

Chinese banks have not publicly disclosed their exposure to Hengli, but loan data compiled by Bloomberg show that the country’s top four lenders—Industrial & Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China—all extended credit to Hengli as recently as 2018. 

While China has long railed against unilateral U.S. sanctions, it has in past episodes allowed its largest companies to comply quietly to avoid economic blowback, the news agency said. Major state-owned banks have previously fallen in line with U.S. measures against Iran, North Korea, and senior Hong Kong officials in order to preserve access to the U.S. dollar clearing system.

Beijing has, in earlier rounds, sought to insulate its systemically important lenders by routing Iran-related transactions through Bank of Kunlun Co., a subsidiary of China National Petroleum Corp. that is itself currently sanctioned, Bloomberg said.

The latest maneuvering comes just over a week before a long-awaited summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing on May 14–15.

Late last month, the U.S. Treasury Department’s Office of Foreign Assets Control blacklisted Hengli, targeting what Bloomberg described as “a significant and well-connected player” in China’s crude-processing industry. The United States has also warned banks they could face secondary sanctions for supporting Chinese private refiners that buy Iranian crude.