05/14/2024 – 9:30
Frightened by the threat of American sanctions, Chinese banks have shown themselves to be more cautious in recent months in their transactions with Russia, despite the “unlimited” friendship touted by the leaders of Moscow and Beijing.
Just days before Russian President Vladimir Putin’s visit to China on Thursday and Friday (May 16 and 17), diplomatic and commercial relations between the two countries hit a financial hurdle.
In December, United States President Joe Biden signed a decree authorizing secondary sanctions against foreign banks linked to the Russian war machine.
In practice, this means that the US Treasury can exclude them from the global financial system, based on the dollar.
Since then, several Chinese banks have stopped or reduced their transactions with Russian customers, according to eight people from the two countries involved in bilateral trade.
“Currently it is difficult to bring in money from Russia”, says a Chinese businessman dedicated to wholesale trade in the textile sector in front of his store in the center of Beijing.
“The banks don’t say why (…) but it is undoubtedly due to the threat from the United States”, he adds.
Traders interviewed by AFP assure that banks impose additional controls on transactions between the two countries. Sometimes the process takes months, which especially affects the liquidity of small and medium-sized companies.
Another trader told AFP, on condition of anonymity, that he was forced to close his activities in China and return to Russia due to the “impossibility of receiving money from customers”.
Trade between China and Russia has increased since the beginning of the invasion of Ukraine and in 2023 exceeded 240 billion dollars (1.2 trillion reais), according to the Chinese government, which represents an increase of 25% at an annual rate.
If China’s banks reject payments from Russia, the effects on Moscow’s economy could become significant.
China imports gas and oil from the neighboring country, “almost 50% of Russian oil”, according to the Kremlin. In turn, Russia imports electronic components necessary for both civilian and military industries.
Payment difficulties coincided with a drop in Chinese exports to Russia in March and April.
“Although sanctions were imposed on exports of some products from China, they have an impact on the rest of trade,” says Pavel Bazhanov, a lawyer who works for Russian companies in China.
The Russian press addressed the situation and Kremlin spokesman Dmitri Peskov criticized “unprecedented pressure” from the United States.
Beijing does not publicly confirm the problem, but the Ministry of Foreign Affairs told AFP it was against “unilateral and illegal American sanctions”.
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