China Under Pressure: Faces Sanctions Over Backing Moscow Amid Ukraine Conflict

In a tightening of the economic noose around Russia amidst its invasion of Ukraine, the United States is deliberating imposing sanctions on Chinese financial institutions suspected of aiding Moscow. The move aims to sever crucial financial lifelines fueling Russian military production, reported Nikkei Asia.

The US Secretary of State, Antony Blinken, recently confronted Chinese President Xi Jinping, urging Beijing to halt its military support for Moscow. “I made it clear that if China does not address this problem, we will,” Blinken asserted after the meeting.

Washington is weighing measures that could exclude banks involved from accessing the American financial system. This follows President Joe Biden’s authorization to the Treasury Department in December to enforce secondary sanctions on financial institutions in third countries assisting Russia in evading sanctions.

The fear within the Biden administration is that continued supplies from China could sustain Moscow’s military capabilities, impeding Ukraine’s efforts for a counteroffensive.

The Treasury Department has initiated actions, recently sanctioning ten organizations and twelve individuals with ties to Belarus for aiding Russia’s arms industry in procuring components. Among these is Shenzhen 5G High-Tech Innovation, a Chinese company reportedly facilitating the supply chain for Russian munitions via Belarus.

Internal documents obtained by Belarusian opposition group Belpol reveal extensive procurement of precision instrument parts from China by Moscow, despite existing sanctions.

Russia’s military buildup, anticipated to deploy over 1,000 tanks with Chinese-supplied sights, underscores the urgency of the situation.

The potential sanctions on Chinese banks could also target Russia’s energy exports to China, a significant source of funding for its war efforts. Although Russian financial institutions, ousted from the SWIFT global payments system, have sought refuge in Chinese banks, signs of strain are emerging.

Major Chinese commercial banks, including the Industrial and Commercial Bank of China, are reportedly refusing yuan payments from Russia, leading to disruptions in transactions. Russian companies face hurdles in purchasing crucial electronics due to payment difficulties.

Kremlin spokesperson Dmitry Peskov acknowledged these challenges, indicating the growing impact of sanctions. Financial institutions globally, especially those settling transactions in dollars, are wary of falling afoul of US sanctions, prompting caution in dealing with Russia.

In a separate development, Chinese President Xi Jinping pledged to French President Emmanuel Macron to tighten controls on the export of materials with military applications, signaling a possible shift in China’s stance.

With Russian President Vladimir Putin’s scheduled visit to China in May, the geopolitical landscape is poised for further tension as the US intensifies efforts to isolate Moscow and its supporters.