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A key Chinese bank used by Russian importers for transactions has stopped all transactions with Russian companies, according to Vedomosti newspaper.
Chinese lenders have tightened controls after the US imposed further sanctions over Russia’s invasion of Ukraine.
The Kremlin has acknowledged the problems and said it is working with Beijing to resolve them.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.
China’s banks seem to be getting cold feet when it comes to doing business with Russian companies.
A key Chinese bank – Zhejiang Chouzhou Commercial Bank – that works with Russian importers has suspended all transactions, the Russian business daily reported Knowledge on Wednesday, citing three businessmen affected.
According to Vedomosti, the bank’s customers were informed about this step last week.
Russian companies now fear a “logistical collapse” if the bank does not resume payment processing after the week-long Chinese New Year, an unnamed source told Vedomosti.
According to the newspaper, other Chinese banks are also tightening compliance controls when dealing with Russian companies.
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The Kremlin has acknowledged the problems. Spokesman Dmitry Peskov said authorities were working to resolve them with Beijing.
“We are in close dialogue with our Chinese friends and, of course, we will solve any problems that arise,” Peskov said in a press conference on Wednesday (AFP).
Russia’s problems with Chinese banks came weeks after the U.S. in December secondary sanctions imposed on financial institutions that helped Russia circumvent Trade Restrictions help.
Russian companies that trade internationally are more exposed to Chinese institutions and the Chinese Yuan dependent. That’s the case, there Some Russian banks have withdrawn from the global financial messaging system SWIFT.
Increased sanctions
Since Russia – a major energy exporter – has managed to maintain its trading activity, it seems its economy to still be resilient – despite Western sanctions over the invasion of Ukraine.
However, after the West tightened sanctions against Russia, Chinese companies are now also trying to stay out of the trouble. After the new US restrictions, at least two state-owned Chinese banks ordered a review of their Russian business. That reported Bloomberg on January 16th.
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It is not the first time that China’s banks have tightened compliance with Western sanctions. In June, at least one major Chinese bank – the Bank of China – Restrict transfers from Russia.
Zhejiang Chouzhou Commercial Bank did not immediately respond to a request from Business Insider for comment.
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