China Chouzhou Commercial Bank, which became the main bank for Russian importers in the midst of sanctions, stopped all agreements with customers from Russia, said Three business sources of the Vedomosti newspaper are financial advisors and business associations.
“That’s why many of our deals have already failed.” – The entrepreneur and owner of the company shared it with the newspaper on condition that his identity remains confidential.
In December 2023, the bank informed its customers that it no longer provides payment services for goods whose import into the Russian Federation is sanctioned. A businessman from Izhevsk, who purchased equipment for machine tools in China, reported this to the publication.
Within a few weeks, Chouzhou Commercial Bank contacted the entrepreneur again and said that they had stopped all payments to Russia. Regardless of the type of goods, payment system or currency. Both SWIFT and transfers via Russian SPFS or Chinese CIPS have been suspended.
Other sources announced that the Chinese have cut off relations with all organizations not only from Russia, but also from Belarus. The bank announced this to its customers last week.
Denis Rudenko, head of customs practice at the Moscow law firm “Ri-Consulting”, said that in early February, Chouzhou Bank began returning payments from Russian banks, stating that “it no longer complies with the internal rules of the receiving bank.” ” He emphasized that this only applies to transit operations.
Chouzhou Bank’s choice to halt settlements also adds to the problems, according to Vedomosti newspaper. With Chinese New Year approaching (February 10), all business in the country will come to a halt during the long weekend from February 10 to 17. This means that goods from Russian importers will likely remain stuck abroad until March.
A businessman from Izhevsk says that the problems are not only with the Chouzhou Commercial Bank. Another Chinese bank closed its company’s foreign currency account, leaving transactions in yuan only. At the same time, the financial institution has seriously complicated the verification of transfers and now requires the Russian side to verify its reliability: the buyer of the goods must not have contact with sanctioned persons and companies; products cannot be used for the Russian defense complex or supplied to Crimea.
The Russian businessman did not say which bank he was talking about, but noted that it was one of the three largest banks in China.
Representative of Opora Russia, Ilona Gorsheneva-Dolunts, said that almost all Russian importers no longer work in dollars. They switched to Yuan, but this did not protect them from tighter controls. Chinese banks are now closely interested in yuan transfers.
What is the reason
Chinese banks began to tighten their work with Russian customers in mid-January. Wrote Bloomberg agency. This follows the new US sanctions order.
US President Joe Biden on December 22 last year authorized secondary sanctions against foreign banks that assist or work with sanctioned Russian companies. US Treasury Secretary Janet Yellen in the name this decision “is a new and powerful tool against the Russian military machine.”
Bloomberg sources reported that against this background, Chinese financial institutions began to intensively control their customers. Banks were ready to cut off relations with any company, regardless of currency and location of transactions, if it served the Russian military-industrial complex or sanctioned companies. The checks were also supposed to affect non-Russian customers doing business in the Russian Federation or transporting critical goods to Russia via third countries.
Vedomosti sources say at least three of the Big Four in China have tightened and expanded their control. These are Bank of China, China Construction Bank and Industrial and Commercial Bank of China.
Foreign trade agreements consultant Iskender Mirgalimov stated that using the SWIFT alternative in settlements is not a panacea. Even when transfers pass through China’s CIPS, SWIFT puts pressure on banks and questions them about financial transactions with Russia. But not all Chinese depend on Russian SPFS. Those who use it also use other systems at the same time, which is “quite difficult, risky and often creates competition between providers,” the expert says.
Sergei Tsyplakov, professor of the Department of International Relations at the Faculty of World Economy and International Politics at the National Research University Higher School, noted that the five largest Chinese banks have branches or subsidiaries abroad, including in the United States and the EU. Economy. “China’s political will is not used to the detriment of its own interests,” he concluded.
However, Vedomosti’s source says that not everything is so disastrous, because payments continue to be made, albeit slower than before.
“If you want to buy products made in China, you can do so, you will pay little by little. There will be difficulties if Chinese banks and the jurisdiction in general are used as a transit jurisdiction to purchase goods in dollars or euros. “This option is not possible,” explained the newspaper’s interlocutor.
A representative of Opora Rossii said that Russian businessmen have now had to respond to audits of Chinese banks several times. This is causing delays, but operations have not stopped completely yet.