China’s Big Banks Halt Russia Transactions Over US Sanctions, Forcing Firms To Resort To ‘Underground’ Channels: Report
China’s major banks are reportedly halting transactions related to Russia, due to concerns over U.S. sanctions. This has led to a surge in the use of alternative channels for payments, including cryptocurrency, by Chinese companies conducting business with Russia.
What Happened: The Agricultural Bank of China Ltd, Bank of China Ltd, and China Construction Bank Corp are among the banks that have significantly reduced their financing of Russia-related transactions. Reuters reported citing sources that this has caused a significant problem for small Chinese exporters.
The leader of a trade association in a southeastern Chinese province, representing Chinese enterprises engaged with Russian affairs, mentioned that transactions between China and Russia will likely shift towards clandestine routes.
He emphasized the inherent risks associated with such methods. According to a Russian banker based in Moscow, resorting to cryptocurrency for payments might become the sole viable choice, considering the impossibility of passing through KYC procedures at Chinese banks, irrespective of their size, following the ban imposed in 2021.