Many Chinese state-owned banks limit financing for the purchase of raw materials from Russia. They are doing so out of fear of Western sanctions after the invasion of Ukraine, Bloomberg reports based on informed sources. According to the news agency, it is at least related to ICBC and the Bank of China.
China and Russia have significantly strengthened their relations since Moscow’s annexation of Crimea in 2014, when tough sanctions were also imposed on Russia. For example, China bought more Russian raw materials to stimulate the growth of the economy. For example, the country accounts for about 30 percent of Russian oil and gas sales.
These banks fear that allowing the funding may be interpreted as support for Moscow’s invasion of Ukraine. Doing so could risk sanctions against the United States and its allies. According to the sources, this is a temporary decision for the time being. ICBC is the largest bank in the world in terms of assets, while the Bank of China is the country’s largest commercial bank for trading currencies.
The invasion of Ukraine by order of Russian President Vladimir Putin triggered a wave of international sanctions against Moscow, mostly from Western countries. Washington, among other things, imposed sanctions on the energy giant Gazprom and other major Russian companies, which will no longer be able to raise money in Western financial markets.
On the other hand, China does not want to spoil its relations with Russia. Putin recently strengthened ties with China during his visit to the Beijing Winter Olympics. In particular, the two countries agreed to intensify their cooperation in the financial sector and gas supply.
Beijing has neither condemned nor unconditionally supported the invasion of Ukraine. On Friday, China abstained from voting on a UN resolution condemning Russian “aggression” against Ukraine and calling for the immediate withdrawal of troops. Russia vetoed this decision.
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