China and Russia are reportedly pivoting to alternative channels such as cryptocurrency to circumvent sanctions. Grigory Sysoyev/POOL/AFP via Getty Images
Chinese exporters are going “underground” as domestic banks withdraw from transaction business with Russia. This was reported by “Reuters„.
Many lenders restricted transactions with Moscow and thus also the payment options for Chinese companies.
Alternative channels include money brokers and possibly cryptocurrencies.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
The USA is increasingly scrutinizing Beijing’s trade relations. This leads to domestic exporters increasingly going underground, like “Reuters“ exclusively reported on Monday.
Chinese companies operating in the Russian market are reportedly looking for alternative ways to facilitate trade with their northern neighbor. The reason for this is that they can no longer rely on large banks to finance such transactions.
Read too
Gold prices are rising enormously: According to billionaire investor David Einhorn, China is playing a special role in this
“Transactions between China and Russia are increasingly being conducted through underground channels,” a head of a Chinese trade body told Reuters. “But these methods carry significant risks.”
For example, an anonymous Chinese manufacturer told the news agency that he may have to contact foreign exchange brokers operating on the border with Russia. These could help process payments.
Chinese exporters are conducting business through alternative channels
The search for alternatives is a direct result of the US becoming increasingly concerned about trade between Beijing and Moscow. China is accused of supplying the Russian military industry. That prompted U.S. lawmakers to impose sanctions on Chinese banks that support the trade.
“I reiterated our serious concerns that the People’s Republic of China is supplying components that fuel Russia’s brutal war of aggression against Ukraine,” said Secretary of State Antony Blinken last week on the People’s Republic of China.
Read too
Deutsche Bank, Commerzbank and ING: European banks paid Russia 800 million euros in taxes in 2023
Faced with possible sanctions, a number of financial institutions, including some of China’s largest state-owned banks, voluntarily restricted their transactions with Russia.
Exporters also withdrew from the Russian market. According to Reuters, it is difficult for them to do business outside official channels.
For those who try, money brokers are an option. Cryptocurrencies could also be a solution, even though they have been banned in China since 2021. But the restriction didn’t stop China’s strained investors from pivoting to cryptocurrencies this year. This could help exporters to bypass the “know-your-customer” channels – i.e. to do business without checking the identity of (new) customers.
Other countries also tightened sanctions
Some smaller banks are still willing to facilitate business transactions between countries. However, those who want to open an account will have to wait for months. This is a problem seen among traders on both sides of the border.
Read too
I’m 25, have a six-figure portfolio and rely on one thing above all: Bitcoin
But lenders in China are not the only ones reassessing their relationship with Russia. Countries such as the United Arab Emirates, Turkey and even Austria also tightened restrictions – all as a result of increasing restrictions Sanctions rhetoric of the USA.
This article was translated from English by Stefanie Michallek. You can find the original here.