Chinese state-owned banks are tightening restrictions on funding to Russian clients, fearing secondary sanctions from the United States, Bloomberg reported on Tuesday.
At least two banks have ordered reviews of their Russian operations in recent weeks and plan to cut ties with customers on U.S. sanctions lists. The bank has also stopped providing financial services to Russia’s military sector and is screening companies with non-Russian customers that do business in Russia or send critical supplies to Russia through third countries, the sources said. He plans to do so.
The move comes after the U.S. Treasury Department announced last month that it would impose secondary sanctions on foreign financial companies and banks that support Russia’s war effort in Ukraine and process Russian transactions for the purchase of military equipment. It was received and carried out.
Kremlin spokesman Dmitry Peskov said the issue was extremely sensitive for the companies involved, but not for the Russian government.
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“This is a very sensitive area and it is unlikely that anyone will want to talk about it. We should not expect that,” Peskov said, according to Reuters. “We continue to develop our relationship with China. China is a very important strategic partner of ours.”
Peskov added that Russia reported higher-than-expected bilateral trade volumes with China, and trade relations between the two countries remained strong.
“We are confident that we have surpassed $200 billion and continue to grow,” Peskov said.
At the same time as Western banks withdrew in the wake of Russia’s invasion of Ukraine on February 24, 2022, Chinese financiers would have entered Russia’s banking sector, leaving the country’s economy much weaker than it is now. Filled the hole. China is currently the largest importer of fossil fuels from Russia, with coal shipments more than doubling since 2020.
Their escape could be painful for both Russia and the Kremlin. In particular, China’s alleged fear of Western sanctions means that even its leaders, who have remained close to Moscow since the outbreak of the Ukraine war, are wary of the expected economic costs of supporting Ukraine. This is because it would suggest that Kremlin.
However, this move may also reflect China’s ambivalence towards Russia since the invasion of Ukraine. Despite providing diplomatic support to Russian President Vladimir Putin and pledging to expand trade between the two countries, Beijing has avoided full support for the Ukraine war and has offered Moscow major military aid. is not provided either.
Previous Western sanctions have stripped Russia’s central bank of access to about half of its foreign exchange reserves, leaving Russia with only gold and the yuan, leaving Russia weaker and more dependent on China. Russian banks have also turned to China’s UnionPay after Visa and Mastercard suspended operations in the country following the invasion.
Chris Wiefer, CEO of Macro Advisory, a strategy consultancy focused on Russia and Eurasia, previously said: newsweek Russia should be wary of its increasing dependence on China, he said.
“China is avidly buying energy and materials and selling Chinese products to the Russian market, all of which is good for the Chinese government, but very little investment is coming into Russia and Western companies are leaving. “There is certainly not enough to make up for the investment lost from investors,” he said.
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