Banks in China are afraid of American sanctions. Therefore, payments are suspended.
A home appliance maker in southern China is facing difficulties shipping its products to Russia as China’s major banks suspend payments for such transactions due to concerns about US sanctions, Reuters writes.
According to the company’s founder, the company from Guangdong province is considering the possibility of using currency brokers operating along the Chinese-Russian border to pay for electrical goods. “You simply cannot conduct business properly through official channels,” the businessman said. He explained that large banks are now spending months rather than days to clear payments from Russia. This forces them to use non-traditional payment channels or reduce their business.
Threat of US sanctions for Chinese banks
It is noted that the United States imposed a number of sanctions against Russia and Russian companies after the invasion of Ukraine in 2022. Now the threat is to extend those sanctions to banks in China, posing a growing problem for small Chinese exporters, seven trade and banking sources familiar with the situation told the agency.
As China’s big banks pull back from financing Russia-linked transactions, some Chinese companies are turning to smaller border banks and underground funding channels such as money brokers and even banned cryptocurrency, journalists say. Others have retreated from the Russian market entirely, the sources said.
Going underground
A banker from one of the large state-owned banks told the company’s founder that the financial institution had strengthened control over business related to Russia in order to prevent sanctions risks. Since last month, Chinese banks have stepped up their scrutiny of Russia-related transactions or stopped operations altogether.
“Transactions between China and Russia will increasingly occur through underground channels. But these methods are associated with significant risks,” said the head of a trade organization.
Making payments in cryptocurrency, banned in China since 2021, may be the only option, a Russian banker based in Moscow said.
At the same time, Reuters was unable to determine the volume of transactions that moved from large banks to lesser-known routes.
Warning to China from the US
US Secretary of State (Foreign Minister) Antony Blinken, at a briefing following a meeting with Chinese leader Xi Jinping, said that if Beijing does not take measures to resolve the problem of supporting Moscow’s military efforts, Washington will. Blinken directly threatened China with sanctions as punishment for supporting Russia’s war of aggression against Ukraine.
Earlier, UNIAN wrote that the United States is preparing draft sanctions that threaten to cut off some Chinese banks from the global financial system. Washington hopes that such leverage will stop Beijing’s commercial support for Russian military production.
