The last time China failed to win an Asian Games medal was in 1970 and they have competed in nine consecutive finals since 1978, winning seven of them.
Gold medal favorite Iran advanced to the semifinals with this victory.
“China is a very good team. I'm telling you, I just played against them,” Iran's captain Samad Nikkhah Bahrami told after a powerful display which saw him lead his team with 14 points, seven assists and three rebounds.
“They have a lot of good big guys who can shoot the ball very well,”
Some 9,500 athletes from 45 countries are competing at the Games, the world's second-biggest multi-sport event after the summer Olympics, with 439 gold medals in 36 sports up for grabs.
Iran has participated in the games with 276 athletes in 22 sports.