China’s banks appear to be having cold feet about dealing with Russian firms.
One key Chinese bank — Zhejiang Chouzhou Commercial Bank — used by Russian importers has halted all transactions, Vedomosti, a Russian business media outlet, reported on Wednesday, citing three businessmen who were affected.
Bank clients were informed of the move last week, according to Vedomosti.
Russian businesses are now worried about a “logistics collapse” should the bank not resume payment settlements after the weeklong Chinese New Year holiday that starts on Friday, an unnamed source told Vedomosti.
Other Chinese banks are also tightening compliance checks when dealing with Russian businesses, per the media outlet.
The Kremlin has acknowledged the issues, with spokesperson Dmitry Peskov saying authorities are “working” on addressing them with Beijing.
“We have a close dialogue with our Chinese friends and, of course, we will solve all the problems that arise,” Peskov said in a press briefing on Wednesday, per AFP.
Russia’s issues with Chinese banks came weeks after the US in December authorized secondary sanctions targeting financial institutions that help Russia skirt sanctions, proving the effectiveness of these controversial trade restrictions.
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.
Since Russia — a major energy exporter — has managed to keep its trade activity humming, its economy still appears resilient despite primary Western sanctions over the invasion of Ukraine.
However, with the West ramping up sanctions against Russia, even Chinese firms are trying to stay out of trouble.
Following the US’ new restrictions in December, at least two state-owned Chinese banks ordered a review of their Russian businesses following the new restrictions, Bloomberg reported on January 16.
It’s not the first time China’s banks have stepped up on Western sanctions compliance.
In June, at least one major Chinese bank — Bank of China — started restricting transfers from Russia.
Zhejiang Chouzhou Commercial Bank did not immediately respond to a request for comment from Business Insider.
