Irfan Smajlagic’s men had already lost to Saudi Arabia 21-26 in their first match and defeated Lebanon 31-26 in Group B.
Iran will play Bahrain on Thursday.
Japan, Oman, South Korea and Syria are in Group A.
Group B consists of host Bahrain, Iran, China, Lebanon, Saudi Arabia and the United Arab Emirates.
The top two teams from each group will advance to the semi-final, from which the winners will contest the gold medal match and the losers the bronze medal match, both on January 28.
The event also serves as qualifier for the 2017 Men’s Handball World Championship in France.