China's Economic Impact: Russia's Shift Under Scrutiny Amid Sanctions
Challenges of the Russia-China Partnership Amid Sanctions
China's economy is struggling under the weight of Russia's pivot to China, especially as U.S. sanctions over Vladimir Putin's invasion of Ukraine take their toll. This year, many Chinese banks are rejecting transactions, forcing Moscow to raise fees on yuan (RMB) transfers.
Financial Constraints Imposed on Moscow
Although heavily sanctioned Moscow saw a significant boost in trade with China during the war, with bilateral exchanges soaring 26 percent to $240 billion, this relationship is showing signs of strain. Recent reports indicate that around 98 percent of Chinese banks are now avoiding RMB-denominated settlements.
- Major banks comply with Biden administration guidelines.
- Increased fees are a direct result of liquidity issues.
- Russian banks face higher transfer costs for RMB transactions.
Implications for Russian Companies
Russian companies are now facing new hurdles, as Expobank JSC has dramatically increased its RMB transfer fees from 1.2 percent to 6.5 percent. Additionally, minimum commission has skyrocketed to 7,500 RMB.
- Other banks like Uralsib Bank are following suit with similar increases.
- SDM Bank has also joined in raising its commission for RMB transfers.
As the Russia-Ukraine war continues, it remains to be seen how these financial strains will further affect Moscow's relationship with China's economy.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.