Iran U-23 football team failed to bring an end to a 44-year Olympic qualification drought.
Omid Noorafkan scored the solitary goal of the match from the penalty spot in the 87th minute after Mehdi Ghaedi was brought down by China defender in the penalty area.
South Korea qualified for the next round with nine points.
Uzbekistan and Iran earned four points but the titleholders advanced to the quarters on goal difference.
China stayed at the bottom without a point.
The top three teams will qualify for the 2020 Tokyo Olympics in July, although should Japan emerge as one of them, the fourth-placed side will advance.
Iran have not been in the Olympics since the 1976 games in Munich.
MNA/4826718