Major Chinese banks are limiting payments for transactions with Russia, fearing U.S. sanctions, Reuters reported on April 29, citing undisclosed trading and banking sources.
The Wall Street Journal reported last week that Washington is drafting sanctions that will threaten to cut off Chinese banks that aid Russia's war effort from the global financial system.
Chinese banks have stepped up scrutiny of Russia-related transactions since March or stopped doing business with Russia at all to avoid U.S. sanctions, the sources told Reuters.
"Transactions between China and Russia will increasingly go through underground channels. But these methods carry significant risks," said the head of a trade body in a southeastern province that represents Chinese businesses with Russian interests.
The threat to extend U.S. sanctions to banks in China is affecting financing even for non-military trade between Beijing and Moscow, which causes problems for small Chinese exporters, seven sources told Reuters.
Some Chinese companies are turning to small banks at the border and underground financing channels such as money brokers, including banned cryptocurrencies, as the country's big banks pull back from financing Russia-related transactions, Reuters wrote. Others entirely left the Russian market, the sources said.
The owner of one of the companies, Wang, told Reuters that now it takes "months rather than days" for major banks to process payments from Russia, forcing businesses to either scale back or switch to unusual payment channels.
Reuters reported earlier in April, citing unnamed U.S. defense officials, that China is aiding Russia's war machine in Ukraine by providing machine tools, weapons technology, and satellite imagery.
China is also thought to be supplying Russia with semiconductors and other dual-use technologies that can be used for military purposes.
U.S. Secretary of State Antony Blinken and other American officials have previously warned China against providing Russia with lethal military aid and urged Beijing to use its influence over Moscow to help end the war.
Over the past months, multiple stories appeared in Russian media about Chinese banks scaling back their operations in and with Russia due to the pressure of Western sanctions.
Kateryna Hodunova
