Chinese Banks Halt Russian Payments: Sanctions Squeeze Global Trade
Staff Editor Russian Trade Faces New Hurdles as Chinese Banks Tighten Restrictions
Russia is encountering increased difficulties in global business operations as new sanctions take effect, with some Chinese banks now returning payments for goods already delivered to Russia due to concerns over US sanctions. This development comes in the wake of recent US restrictions imposed on 400 entities supporting Russia’s war in Ukraine.
Chinese exporters have responded by implementing stricter compliance measures and requiring pre-payment for goods destined for Russia. Ekaterina Kizevich, CEO of Atvira, reported that Chinese banks are refusing to process trade transactions with Russia and returning payments for shipped goods, even after they have reached Russian shores.
The US Treasury and State Department’s announcement of new restrictions against 400 individuals and entities, including companies in China and Hong Kong, has prompted a strong reaction from China, expressing firm opposition to these measures.
The situation has led to significant trade snarls and increased logistics costs. Chinese banks, wary of potential US secondary sanctions, are causing issues with trade transactions. As a result, imported goods are spending more time at ports and warehouses, driving up costs. Chinese exporters have adapted by shipping goods to new Russian customers only after payment confirmation, a practice that increases risks and affects cash flow for buyers.
Russian businesses are facing substantial challenges as some Chinese banks refuse to process payments even for non-sanctioned goods. The scrutiny extends to payments from Russia through third countries. The Kremlin has acknowledged these difficulties, with spokesperson Dmitry Peskov stating that Moscow and Beijing are working to resolve the payment issues affecting trade.
In response to these challenges, Russia and its trade partners have been utilizing smaller banks and non-US-dollar currencies to circumvent sanctions. The country is also rushing to establish alternative payment systems, including cryptocurrency, to facilitate trade. Additionally, Russia and China are considering reviving barter trade as a means to bypass Western sanctions.
As the situation continues to evolve, the impact on Russian-Chinese trade relations and the broader global economic landscape remains to be seen.
