Chinese behind the wall: in the People's Republic of China block payments of banks from the new sanctions list

Chinese credit organizations have started to refuse to work with banks from the Russian Federation, which fell under the new US sanctions in November. Representatives of Russian business told Izvestia about this. According to them, so far there are the first cases, for example, Bank of China has stopped accepting payments. As before, this is due to the fear of secondary restrictions from Washington. In the last days as President Joe Biden is trying to use the maximum of anti-Russian measures, experts believe, but after the inauguration of Donald Trump, the situation may well change. Businessmen have already paid for the coming supplies, and they have at least one or two months to rearrange payments to China. What methods of conducting transactions still remain - in the material of "Izvestia".

What Russian banks in China refuse to accept payments from which Russian banks

Chinese banks have begun to refuse to work with Russian credit organizations, which fell under the new U.S. sanctions, told "Izvestia" General Director of JSC "First Group" Alexei Poroshin. According to him, most players have already terminated relations with them.

Photo: IZVESTIA/Mitriy Korotayev

The information was confirmed by Alexei Razumovsky, commercial director of Impaya Rus. He said that he already sees the first blockages. For example, Bank of China is already refusing to accept payments from Russian banks, which were included in the new SDN-list of the USA.

According to Izvestia, entrepreneurs also wrote about refusals to accept money from Russian banks that were included in the new sanctions list in a specialized chat room in Telegram for importers. There they shared that, for example, the Chinese Bank of Kunlun (often mentioned in posts about settlements with the Russian Federation) had begun sending out warnings about the cessation of accepting payments from Russian sub-sanctioned credit organizations.

The practice with such notices as those sent by Bank of Kunlun is likely to spread to other players, expects Roman Tikhonov, director of products at fintech company Paygine. "Izvestia" sent inquiries to the Central Bank of Russia and China.

Photo: Izvestia/Mitriy Korotayev

Russian President Vladimir Putin has repeatedly said that undermining the Russian economy due to sanctions has not happened. "It was believed that it would happen within three or four or six months, but everyone can see that it is not happening," the head of state told, for example, during a meeting with the media at SPIEF-2024. Experts believe that additional tightening of sanctions against the backdrop of the US presidential election results and further complication of the situation with payments are the final actions of Joe Biden's administration. Moreover, they suggest that the outgoing government is trying to make the maximum number of decisions without thinking about the consequences, said Alexei Tarapovsky, founder of Anderida Financial Group.

Restrictive examples: what the new US sanctions against Gazprombank mean

Restrictions on a number of other players and top management of the Central Bank will not affect the economy in any way - the market has already adapted to the new reality

He added: at the same time, Chinese partners fear that violating the new restrictions now could be costly - organizations risk falling under secondary sanctions.

Until January, when the inauguration of the new president of the United States, there will be no relaxation, believes Alexei Poroshin from JSC "First Group". However, in his opinion, even with the arrival of Trump, the situation will not improve significantly.

Photo: REUTERS/ALLISON ROBBERT

Alexei Tarapovsky is of a different opinion. According to him, after Trump takes over the White House, the sanctions may be weakened. And the first step may be the simplification of secondary restrictions, because of which China imposes increasingly severe restrictions.

How to send money to China under new sanctions

Problems with settlements between Russian and Chinese businesses began in late December 2023, when the 12th package of anti-Russian sanctions came into force. Against the background of the risk of secondary measures, China, Turkey and the UAE began to limit settlements with Russia.

In January, several credit organizations in China stopped accepting transactions in yuan. Among them are Ping An Bank and Bank of Ningbo. In March, they were joined by ICBC, China Citic Bank, Industrial Bank, and Bank of Taizhou, Izvestia reported earlier.

Photo: RIA Novosti/Ramil Sitdikov

It is not surprising that many Chinese banks began to stop accepting payments from Russian counterparties, which were included in the sanctions list, says Oleg Abelev, head of the analytical department of the investment company "Rikom-Trust". However, if we look at the last list, there are no major players in it, except for Gazprombank and BKS Bank.

Difficulties with payments are directly related to import deliveries from China - if you can't pay for the goods, you won't be able to bring them. As Izvestia wrote earlier, the most tightened control in China now concerns supplies of dual-use goods - machinery, equipment, metals and chemicals.

On a state-by-state schedule: PRC banks tighten checks on payments from UAE, India and Hong Kong

Why the transactional situation has worsened since the US election

However, as a rule, imports are paid for one or two months in advance, noted Alexei Tarapovsky from Anderida Financial Group. That is, the new difficulties with payments will not affect the import of products instantly. And during this time Russian business, which is already accustomed to constantly looking for new ways in changing conditions, will be able to switch to other methods of payment.

Now small regional credit organizations in China continue to cooperate with regional banks in Russia that are not on the sanctions list. This trend will continue, believes Oleg Abelev.

Photo: Izvestia/Mitriy Korotayev

There are other ways to send money to China, for example, through trusted payment agents. They charge a certain commission and help to transfer money to another country using their own methods - through third countries or arrangements with local banks.

Now this is one of the most reliable options, said Alexei Poroshin from JSC First Group. However, it is always necessary to first check on small amounts, how the payment will go, emphasized Ekaterina Kizevich, general director of Atvira, expert practitioner of foreign economic activity.

Another method is direct transactions through a branch of a Russian bank in China, Ekaterina Kizevich added. In her opinion, this is the safest and fastest option. However, both the Chinese counterparty and the Russian buyer must have accounts opened there. The credit organization charges a fixed transfer fee of 4%, and the money reaches the supplier in two or three days, the expert explained.