Russia to face fines on trade with China: Report

According to a Hong Kong newspaper, Russian companies are being punished with higher fees by Chinese banks trying to avoid becoming caught up in the US sanctions regime put in place after the Kremlin attacked Ukraine. South China Morning Post (SCMP) reported.

“The 25th floor of Shanghai Tower has been filled with Chinese exporters in recent weeks, as businessmen from all over the country flock to open new accounts at VTB Bank, the only Russian bank operating in China.” South Carolina I wrote this on Friday.

The United States has already placed Russia’s second-largest bank, VTB, and its CEO, Andrei Kostin, on its sanctions list.

Major Chinese banks have refused to allow Chinese companies to do business with Russian companies in an attempt to circumvent U.S. sanctions imposed after fighting began in the Russia-Ukraine war.

China-Russia bilateral trade rose to $240 billion last year, buoyed by Russian crude oil imports and Chinese auto and electronics exports, up $50 billion from 2022 levels.

China has not officially supported Russia’s invasion of Ukraine but has taken steps to support the Kremlin’s defense industry, including allowing the transfer of dual-use equipment. In April, U.S. Secretary of State Antony Blinken appealed to Chinese President Xi Jinping for China’s support for Russia’s war effort during a visit to Beijing.

Last month, the United States warned its allies that Beijing was providing Moscow with satellite imagery that helps with situational awareness of the war in Ukraine.

Newsweek The Chinese Foreign Ministry and the Russian Foreign Ministry were contacted by email seeking comment.

During a visit to Beijing earlier this month, Russian President Putin discussed with his counterpart Xi the use of their own currencies for cross-border payments. China and Russia have begun settling bilateral trade in yuan and rubles instead of U.S. dollars and euros to avoid sanctions. But with many businesses in both countries struggling to make financial payments, there was no clarity on how the two countries will proceed with trade amid tough U.S. sanctions.

Of China’s four biggest banks, China Construction Bank reported a 14 percent fall in assets held by its Russian subsidiary last year, while Agricultural Bank of China reported a 7 percent drop, according to Reuters.

Industrial and Commercial Bank of China is one of China’s four largest banks, which saw its assets from its Russian operations increase by 43 percent.

Meanwhile, Russian companies are using a shadow network of middlemen to trade with China, which could add an extra 3-6 percent to costs, it said. South Carolina.

“Trade between China and Russia will increasingly be routed underground,” the head of a trade association representing Chinese companies with stakes in the Russian market was quoted as saying by Reuters earlier.

Chinese companies exporting to Russia are also lining up at local banks on the Russian border in northeastern China to continue accepting commercial payments, Reuters reported.

“But I think they’ve put some limits on it – ‘no limits’ with limits. And the specific words used by the Chinese official were that there is no upper limit in Russia-China relations. But there is certainly a lower limit. That means there are certain boundaries and certain floors that China will not violate in its relations with Russia,” Yun Sang, China program director at the Stimson Center, a Washington think tank, said in an interview published by the Brookings Institution on May 22.

China’s exports to Russia fell 15.7 percent in March and 13.6 percent in April, according to data from the General Administration of Customs.

Growing dissatisfaction over payments has led some Chinese companies to abandon business with Russian companies.

“In the end, I didn’t receive more than 10 million yuan. [$1.4 million] “We have given up because of delays in payment from the Russian side. The process of collecting payment is very cumbersome,” a manager at a listed company in Guangdong province told Reuters.