Vladimir Putin meets with Xi Jinping in Moscow in March 2023.
MIKHAIL TERESHCHENKO/Getty Images
Two state-owned Chinese banks are severing ties with Russian clients, Bloomberg reported. They’re assessing whether clients have ties to Russian entities sanctioned by the US. It’s a sign that China’s Xi Jinping may be warier of drawing closer to Russia than he lets on.
Two Chinese state-owned banks are severing ties with Russian clients to comply with sanctions by the West over the Ukraine war, Bloomberg reported.
Unnamed sources told the outlet that the banks ordered the reviews of their business ties with Russia after the US announced in December that it would punish financial companies that enabled organizations or individuals to evade the sanctions.
Bloomberg reported that the banks are auditing clients’ business registrations, authorized beneficiaries, and ultimate controllers to determine whether they have ties with Russia’s defense industry and could be linked with the Ukraine invasion.
Business Insider previously reported that Russia has evaded sanctions through networks of shell companies set up to obtain sanctioned technology, and routes payments through banks with lax regulatory enforcements.
According to Bloomberg, the Chinese banks have previously complied with US sanctions levied on Iran and North Korea.
China’s President Xi Jinping has declared a “no limits” partnership with Russia in the wake of the Ukraine invasion, increasing exports of consumer goods and technological components to blunt the impact of Western sanctions.
However, China remains heavily dependent on Western markets to lift the country out of an economic slowdown, and in recent weeks has softened its stance towards the US.
“The reported Chinese reaction to the US secondary sanctions further indicates that China has reservations concerning the Kremlin’s desired ‘no limits partnership’ between the two states,” noted analysts at US think tank The Institute for the Study of War.
The US and its allies have imposed a range of sanctions on Russia over its unprovoked invasion of Ukraine, but Russia has been able to mitigate by increasing its trade ties with China, the world’s second-biggest economy, and diversifying its oil and gas exports.
According to Bloomberg, Chinese banks have extended credit worth billons of dollars to Russia since the invasion almost two years ago.
The US has imposed other sets of sanctions aimed at closing loopholes and punishing companies that do business with sanctioned Russians.
Kremlin spokesman Dmitry Peskov declined to comment when asked about the report by Reuters.