Russia reacts after Bank of China threatens Putin’s economic lifeline

The Russian government has dismissed concerns over a decision by Chinese banks to suspend all transactions with exporters, saying the move jeopardizes Russia’s main economic outlet amid growing isolation by the West. It will be exposed to

Russian Deputy Foreign Minister Andrei Rudenko has said that Russian companies are having problems settling payments with neighboring China, including through a financial messaging system comparable to Russia’s SWIFT financial transaction service. I denied it.

“No, there is no such problem. Some banks in China have refrained from doing business so far.” [a] Fearing sanctions, he took precautions. But we are confident that this issue will be resolved,” Russia’s state-run TASS news agency quoted Rudenko as saying on Friday.

China has not publicly criticized President Vladimir Putin’s decision to invade Ukraine two years ago this month. As many Chinese companies and financial institutions seek to avoid running afoul of Western sanctions, China’s leadership has provided meaningful political support to the Kremlin.

Several large Chinese banks, wary of doing business with Moscow’s defense industry, have restricted Russian partners’ access to their services or cut ties altogether. Chinese payment system UnionPay, once touted as a suitable alternative to Mastercard and Visa, also pulled out to limit its exposure.

However, that did not stop two-way trade between China and Russia from booming last year. Annual sales in 2023 reached $240.1 billion, up 26.3% from the previous year, due to increased purchases of energy and agricultural products, according to Chinese customs data.

Last week, a Russian economic newspaper reported that. Vedomosti Zhejiang Zhouzhou Commercial Bank announced that it has suspended all transactions with customers from Russia and Belarus. Banks in eastern China were considered to have limited impact from Western sanctions and were the main financial institutions used by Russian exporters, the paper said.

The bank’s decision to suspend payments with Russian and Belarusian companies, regardless of currency, could put it at risk of expanded U.S. financial regulation, or secondary sanctions, announced in recent weeks. May be related to new restrictions.

Experts we spoke to newsweek He said the impact is likely to be felt later, after the current Lunar New Year period, which generally involves a decline in the level of economic activity in China.

China’s Foreign Ministry did not immediately respond. newsweekThis is a comment request from .

Rudenko’s comments suggested banks may be being too cautious, but he was confident Russia and China would resolve the issue, TASS said.

He pointed to Russia’s growing trade with China, saying the Kremlin said last year trade was settled almost exclusively in Russian rubles or Chinese yuan. “And this is the first demonstration of the fact that we solve such problems,” Rudenko said.

The diplomat’s comments followed Kremlin spokesman Dmitry Peskov, who told reporters last week that Moscow was “in close dialogue with our friends in China and, of course, will resolve any issues that arise.” Very similar to comments.

Russia is keen to tout its success in “de-dollarizing” its wartime economy. In late January, Russian Central Bank Governor Elvira Nabiullina told RIA Novosti news agency that more than a third of Russia’s imports and exports from China are settled in renminbi.