Three out of China’s Big Four state banks have halted payments from sanctioned Russian financial institutions, Russia’s Izvestia news outlet reported on Wednesday.
The Industrial and Commercial Bank of China, China Construction Bank, and Bank of China have stopped the transactions since the start of 2024, Alexey Poroshin, the general director of investment and consulting firm First Group, told Izvestia.
While the three Chinese banks informed their Russian clients of the move in January, the issues started in December — after the European Union imposed its 12th sanctions package against Russia, Poroshin said. In December, the US also authorized secondary sanctions targeting financial institutions that help Russia skirt sanctions.
Chinese banks are tightening compliance checks with Russian businesses because they fear getting caught up in the West’s increasingly restrictive sanctions regime against Russia over its invasion of Ukraine.
Poroshin told the Izvestia that Chinese banks are now unwilling to do business with sanctioned firms because the trade balance between the US and China is far greater than that of China and Russia.
Industrial and Commercial Bank of China, China Construction Bank, and Bank of China did not immediately respond to a request for comment from Business Insider.
The West has been ramping up sanctions against Russia as its economy appears resilient even two years after its invasion of Ukraine triggered sweeping trade restrictions. This is partly because Russia has diverted its trade eastward, particularly with China and India.
In particular, Russian firms trading internationally have become more dependent on Chinese institutions and the Chinese yuan since some Russian banks withdrew from the SWIFT global financial-messaging system.
So, the West is now trying to find a way to break Russia’s economy by targeting international firms still doing business with the country instead.
The Kremlin has acknowledged issues with Chinese bank transactions, with spokesperson Dmitry Peskov saying earlier this month that authorities are “working” on addressing them with Beijing.
