Beijing, May 18, 2024 (Financeflashnews ) – Even military aid comes at a price. Chinese banks are tightening controls on trade with Russia to avoid the fallout from US sanctions related to the war in Ukraine. This is slowing down the once “borderless friendship” between the two countries.
Trade between China and Russia has grown to record levels in recent years. However, Beijing has come under fire for supporting Russia’s war economy, which invaded Ukraine in 2022.
Russian President Vladimir Putin’s visit to Beijing this week was intended to strengthen ties after the West imposed sanctions on Moscow for the invasion of Ukraine.
However, a December order by US President Joe Biden allows for secondary sanctions on foreign banks that help finance Russia’s war machine. The US Treasury can thus cut these banks off from the global SWIFT financial system.
In response to this order, several Chinese banks have either stopped or slowed transactions with Russian clients. Independent sources from both countries have confirmed this information.
Getting money out of Russia is now difficult
“It’s hard to get money out of Russia right now,” says one Chinese clothing wholesaler who wished to remain anonymous. “The banks don’t give a reason, but it’s probably because of the threat of US sanctions.”
Chinese banks are implementing additional controls on cross-border payments to avoid any risk of sanctions. These controls are lengthy and have led to increased costs, causing a “cash flow crisis” for smaller import-export firms.
Although trade between China and Russia has grown record-breaking since the invasion of Ukraine, reaching $240 billion (221.56 billion euros) in 2023 according to Beijing customs data, reports appeared in Russian media in early 2024 that Russian companies were having trouble settling payments with Chinese banks.
The Kremlin acknowledged the problem in February, with spokesman Dmitry Peskov later criticizing the event as “unprecedented” US pressure on China.
Beijing has not publicly acknowledged the payment delays, but the Foreign Ministry told AFP that it is against “unilateral and illegal US sanctions.”
