Chinese banks have started refusing to work with Russian financial institutions that are under U.S. sanctions, creating major challenges for trade and payments.
Alexey Poroshin, CEO of JSC First Group, said that most Chinese banks have already ended their relationships with these Russian banks.
Alexey Razumovsky, commercial director of "Impaya Rus," confirmed that banks like Bank of China are blocking payments from Russian organizations on the sanctions list. Bank of Kunlun, often used by Russian importers for payments to China, has also warned clients that it will stop accepting such payments.
This comes after the U.S. Treasury added over 50 Russian banks, including Gazprombank, Dom.RF, and Centrocredit, to its SDN sanctions list on November 21.
With traditional payment methods shutting down, Chinese payment agents are offering alternatives.
These include "cargo schemes," where agents use undocumented or questionable methods to pay Chinese suppliers and deliver goods to Russia. While these schemes bypass legal restrictions, they carry high risks and lack transparency, according to The Moscow Times.
Problems with payments between Russia and China began in 2022 after sanctions were imposed due to the war in Ukraine. By December 2023, Chinese banks had started restricting settlements with Russia, and the restrictions have tightened further in 2024.
Now, large Chinese banks are blocking yuan transfers from Russia and freezing accounts of Russian companies linked to sanctioned organizations. Chinese banks are also carefully checking payments from Turkey, India, the UAE, and Hong Kong for any links to Russia.
Poroshin said that the situation is unlikely to improve before the January inauguration of U.S. President-elect Donald Trump, and even after, significant changes may not happen. The stricter sanctions and payment barriers are putting pressure on Russia-China financial and trade relations, leaving Russian companies to rely on riskier payment methods.
