Home Asean News With An Eye On Sanctions, Chinese Banks Asking Russian Clients Tough Questions

With An Eye On Sanctions, Chinese Banks Asking Russian Clients Tough Questions

China, Bank of China, Russia, Ukraine
Source: REUTERS (File Photo)

Two Russian news sources reported on Friday that Russian companies are increasingly struggling to make payments to China. They mentioned that especially transactions for electronic components are being impacted. According to the news outlet Kommersant, some Chinese banks have started to block payments from Russia since late March, affecting the purchase of essential electronics like server parts, storage devices, and laptops.

The move expanded previous restrictions that mainly targeted finished goods, it said. Experts cited by Kommersant said China was the only supplier for such parts, and that Russian companies assembling electronics could therefore face serious difficulties and production delays.

Another Russian news source, Izvestia, reported that some Chinese banks, including the Bank of China and Great Wall West China Bank, are now asking Russian customers detailed questions about their transactions. They want to know if these transactions involve the Russian military, areas of Ukraine under Russian control, or countries like Cuba, Iran, and Syria.

Izvestia mentioned that these banks began asking for more detailed transaction information earlier this year. This increased scrutiny might cause considerable delays or even result in transactions being denied. Reuters has not been able to confirm these reports independently.

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After Russia’s military action in Ukraine in February 2022, Western countries imposed extensive sanctions on Russia. Following this, Reuters reported in late March that banks in China, the UAE, and Turkey had increased their compliance with these sanctions. This has led to delays and sometimes rejections of financial transfers to Moscow.

The strained financial interactions between Russian companies and Chinese banks signal a shift in China-Russia relations amid global sanctions. While historically allied against Western policies, Chinese banks are now cautiously complying with sanctions to protect China’s global market access. This delicate balance highlights China’s efforts to maintain both economic stability and diplomatic ties with Russia, potentially reshaping their long standing partnership.

But there is nothing this hiccup in their trade relationship is impacting on the broader political narrative. In fact, the political relationship seems rock solid with President Putin expected in Bejing in the next few months.

With Inputs from Reuters