US to impose sanctions on Chinese banks for assisting Russia in Ukraine war

Washington, DC [US], May 11 : The US is considering imposing sanctions on Chinese financial institutions, which are involved in supporting Russia amid its invasion of Ukraine, in a bid to suppress lifelines for Russian military production, reported Nikkei Asia.
US State Secretary Antony Blinken, during a meeting with Chinese President Xi Jinping last month, urged Beijing to end military support for Moscow.
"I made it clear that if China does not address this problem, we will," Blinken said afterward.
Washington is considering measures that would lock banks out of the American financial system.
Earlier in December, US President Joe Biden gave the Treasury Department authority to impose secondary sanctions against financial institutions in third countries that assisted Moscow in evading sanctions, as reported by Nikkei Asia.
The Biden administration feared that allowing the flow of supplies from China to continue would keep attrition at bay for Moscow's forces and put Ukraine's goal of a counterattack next spring out of reach.
Now, the Treasury Department has already begun taking action.
Last month, it announced sanctions against ten organisations and 12 individuals linked to Belarus that are accused of helping Russia's arms industry procure components.
These included Shenzhen 5G High-Tech Innovation, a China-based company founded by a person linked to the Belarusian government, Nikkei Asia reported.
As reported earlier in February, Shenzhen 5G had procured precision instrument parts from Japan and elsewhere at the request of Russia and Belarus and supplied them to the Russian munitions industry via Belarus.
According to internal documents obtained by Belpol, a Belarusian opposition organisation, since spring 2023, Moscow has acquired sights for 3,000 tanks from China through Belarus, despite American and European sanctions.
Additionally, Russia's military is expected to field over 1,000 tanks equipped with these sights in a large-scale operation as soon as late May, Nikkei Asia reported.
Moreover, the potential Chinese bank sanctions would also likely be intended to stem Russian energy exports to China, which have provided vital funding for its war effort.
However, Russian financial institutions that were shut out of the SWIFT global payments system in 2022 have opened accounts at Chinese banks to continue doing business.
Notably, the pressure is starting to have an effect as the Industrial and Commercial Bank of China and other major Chinese commercial banks are refusing to accept yuan payments from Russia, according to Russian media, with more transactions being blocked since late March.
Russian companies are also reportedly having trouble making payments for electronics such as computers and storage systems.
Kremlin spokesman Dmitry Peskov acknowledged these issues last month, as reported by Nikkei Asia.
Furthermore, financial institutions in third-party countries like China, where most trade transactions with countries other than Russia are settled in dollars, are in the position of wanting to avoid US sanctions at all costs due to potentially severe impacts on their business.
Earlier on Monday, Xi promised French President Emmanuel Macron to strictly control the export of materials that can be used for military purposes, according to a statement from the French government.
It is pertinent to mention that Russian President Vladimir Putin announced on April 25 that he would visit China sometime in May.