China gets about 11 percent of its energy needs from Iran, putting Beijing at odds over a Western push to sanction Iran for its controversial nuclear program.
U.S. President Barack Obama during a nuclear summit in Washington this week acknowledged that Beijing is "concerned" about the economic impact of sanctions.
"Iran is an oil-producing state," he added. "I think a lot of countries around the world have trade relationships with Iran and we're mindful of that."
Western sources to London's Independent newspaper, however, said talks were under way to find ways to ease China's oil concerns in exchange for support for sanctions at the U.N. Security Council.
Beijing, however, appears to be balking on the sanctions measure, saying diplomacy was the favored course of action with Iran.
British Foreign Secretary David Miliband, however, downplayed the significance of the Chinese balk.
"I don't believe that China wants to find itself isolated in the international community when it comes to Iran," he said.