China rejected the demand made by US Treasury Secretary Timothy Geithner to curb Iran's oil revenues, saying Washington's sanctions on Tehran are overstepping.

Geithner met Chinese Premier Wen Jiabao on Wednesday, the Chinese official strongly rejected Geithner's demand.

Geithner is touring Asia to muster support for US sanctions on oil revenues flowing to Tehran, which western governments say wants to develop the means to make nuclear weapons. Iran says its nuclear program is for civilian uses, not weapons proliferation.

The US-led West has never presented any corroborative evidence to substantiate its allegations against Tehran.

A US official confirmed to Reuters that Geithner had raised Iran in his meetings in Beijing.

US President Barack Obama authorized a law on New Year's Eve imposing fresh sanctions on financial institutions that deal with Iran's central bank, its main clearing house for oil payments.

Beijing is crucial to Washington's pressure on Iran: China is Iran's biggest oil customer, and has long argued that sanctions will not defuse the nuclear dispute.

China made it clear that, whatever the commercial or political calculations driving ups and downs in its crude orders from Iran, it rejects in principle unilateral US sanctions.

"Iran is also an extremely big oil supplier to China, and we hope that China's oil imports won't be affected, because this is needed for our development," Chinese Vice Foreign Minister Zhai Jun told a news conference in answer to a question about whether Beijing could curtail crude from Iran under US pressure.

"We oppose applying pressure and sanctions, because these approaches won't solve the problems. They never have," Zhai told the briefing about Wen's six-day visit to Saudi Arabia, the United Arab Emirates and Qatar.

"We hope that these unilateral sanctions will not affect China's interests."

As a permanent member of the council, China wields a veto and has cautioned that the United States and European Union should not impose sanctions beyond the UN resolutions.

The United States may face a tough sell with China, Japan or India, the top three buyers of Iranian crude by country.

Geithner headed to Tokyo after Beijing.

China's Foreign Ministry spokesman Liu Weimin repeated the country's longstanding defense of oil and trade ties with Iran.

"China is a major developing country, and it has reasonable demand for energy," Liu said at a regular news briefing.

"It is unreasonable for a country to impose its domestic laws as overriding international law and to demand that other countries enforce it. So China believes that normal energy cooperation and reasonable demand are unrelated to the Iran nuclear issue and should not be affected," Liu said.

China is Iran's largest oil customer and takes around a fifth of its crude exports.

In remarks to Geithner made in the presence of reporters, China's Premier Wen indicated his government wants stable ties with Washington, despite friction over Iran and other issues.

"Somehow, I always believe that when it comes to China and the United States, dialogue works better than confrontation and cooperation works better than containment," said Wen.