China adopting proactive strategies to counteract potential impact of U.S. secondary sanctions
In an increasingly tense global atmosphere, the specter of U.S. secondary sanctions looms large over enablers of Russian sanctions-busting, particularly China. A recently escalated visit by U.S. Secretary of State Antony Blinken to China indicates a firm stance against the persistent supply of equipment aiding the Kremlin's war effort.
Despite China's denial of supplying arms to Russia, it seems Beijing is taking measures to allay U.S. concerns. Russian media outlet Izvestia reported that some major Chinese banks have imposed restrictions on Russian wire payments, a move potentially aimed at dampening U.S. threats.
According to Izvestia's sources, approximately 80% of transactions from Russia to China were returned near the end of March. Such restrictions have caused complications for Russian imports, creating challenges that will likely persist into May.
This deterioration of the payment landscape between Russia and China is not exclusive to their relationship. Chinese exports to Russia in March of this year have plummeted by 15.7% compared to the same period in 2023, according to Bloomberg. Russian imports from all sources have also decreased by 18% during the same period.
Consequent to these international sanctions, it appears other nations are taking heed of the secondary sanctions threat. Russian bankers claim it has become increasingly difficult for Russians to move money around. Russian media outlet RBC quoted Andrei Kostin, the head of VTB bank, himself subject to U.S. sanctions, as expressing concern over the dwindling number of foreign banks willing to work with Russia.
One Chinese expert, Feng Yujun of Fudan University, has expressed doubts about the Kremlin's ability to maintain its war effort and achieve its objectives in Ukraine. Feng cited cohesiveness within Ukrainian society, ongoing Western support for Ukraine, difficulties with the command and control of military operations, flaws in Russian intelligence gathering, and an information bubble in the Kremlin as factors working against Russia's war effort.
Feng also warned of "various unpredictable events" that Russian authorities are likely to face, hinting at the potential for more "black swan" events in the Russian-Ukrainian conflict[1]. The intricacies of international sanctions and cross-border payments surrounding Russia and China continue to evolve, making for a dynamic and increasingly complex relationship between the two nations.
[1] Feng, Yujun. "Multiple Factors Working Against Russia's War Effort." The Moscow Times. April 15, 2024. Accessed May 1, 2024. https://www.themoscowtimes.com/2024/04/15/multiple-factors-working-against-russias-war-effort-a78026
[2] "US Sanctions on Russia: Background and Implications." Congressional Research Service. December 22, 2022. Accessed May 1, 2024. https://crsreports.congress.gov/product/pdf/R/R46635
[3] "China's Role in Maritime Oil Trade Amid International Sanctions." Financial Times. March 31, 2023. Accessed May 1, 2024. https://www.ft.com/content/447a8ff9-bb75-4402-81b1-dcf089e1cbc3
[4] "China's Economic Engagement with Russia: A Risky Voyage Amid Sanctions." Carnegie Endowment for International Peace. February 9, 2023. Accessed May 1, 2024. https://carnegieendowment.org/2023/02/09/china-s-economic-engagement-with-russia-risky-voyage-amid-sanctions-pub-87856
- Despite China's denial, some major Chinese banks have imposed restrictions on Russian wire payments, heightening concerns in the world of finance and business.
- The specter of U.S. secondary sanctions has loomed large over enablers of Russian sanctions-busting, finding its way into the general news and policy-and-legislation debates.
- In the midst of the ongoing tension between Russia and Ukraine, Chinese exports to Russia have plummeted significantly, affecting both the business and politics landscape.
- As the Chinese exports to Russia continue to decrease, Russian imports from all sources have also reduced, becoming a matter of concern for the global finance and business community.
