Chinese banks caused problems – Kommersant FM

Russian business is facing problems again, this time from Chinese banks. According to Izvestia, several large credit institutions have stopped accepting payments from Russia in yuan. Among them were the popular Ping An Bank and Bank of Ningbo, which are among the top 15 by capitalization in China. Kommersant FM contacted entrepreneurs who trade with China and found out what problems they are experiencing now. Their stories are in the material of Ivan Yakunin.

The problems began around January, entrepreneurs say. Beijing has tightened control over transfers in yuan – delays, checks and even chargebacks have become more frequent.

Previously, this was more of an isolated incident, but on February 23, Washington published a new sanctions package, in which companies from the PRC appeared for the first time – they were punished for helping Moscow circumvent trade restrictions. On the same day, Chinese commercial entities were blacklisted by the European Union. The general director of the Algimed company, Dmitry Slavashevich, who imports medical equipment, talks about the consequences:

“Often, even our supplier’s bank is ready to accept payment from Russia in yuan or other currencies, but correspondent banks monitor this, and they are now beginning to request more detailed information: what kind of equipment, what type of product, HS code, whether this code falls under under sanctions restrictions or not?

Fortunately, we work with goods that are not subject to restrictions, so for now it is enough to provide a description, and payments will go through. But all this takes additional time, up to 10 working days.”

Reports that Chinese banks will be less tolerant of transfers from Russia appear regularly. In January, Bloomberg wrote that at least two Chinese state-owned banks are going to check transactions with Russian companies. If there is a sanctioned business among the senders, contracts with it will be terminated and transfers will not be carried out in any currencies. At least that’s what was expected. In February, the most important Chinese bank for importers, Chouzhou Commercial, basically stopped accepting payments from Russia, regardless of the client’s status. While there are loopholes, Dmitry Voronchikhin, founder of the sports equipment supply company Hasttings, shares his experience:

“Banks began to request additional documents. One of them asked us for a charter translated into English. Last week there was a situation where the payment was returned. First, they requested a bunch of documents in order to confirm and establish the ownership of the money.

We provided everything, but the bank decided to return the money back. Within four days the funds arrived in dollars. Our manufacturer offered to pay in yuan, sent another invoice, and we solved this problem.”

One way or another, the space for maneuver is shrinking. The United States officially warns Chinese businesses about secondary sanctions for cooperation with Russia. Beijing calls it intimidation and coercion, but banks are indeed responding to the threat. At a minimum, local branches of international banks have stopped servicing payments from Russia. We have to look for counterparties far beyond the top ten, says Anna Fomicheva, co-founder of the digital system for business “Digital Foreign Economic Activity”:

“Yuan is not trading well, so we opened current accounts at Guangdong Rural Commercial Bank and work in rubles. We send funds from our Russian and even sanctioned banks to this financial organization in China. A huge number of clients contact me every day who complain that Bank of China does not transit money.

Also, Chinese banks either return the funds or hold them. The situation is stalemate. Payments are now considered more carefully. We carry both parallel imports and equipment. Now we have to work very carefully with the purpose of the payment, because if these are some kind of spare parts, there will be difficulties.”

In general, there have been no serious consequences for banks so far. In December 2023, President Joe Biden signed an executive order that is aimed strictly at banks from third countries. If they are suspected of working for the Russian defense sector, both property and accounts will be blocked. While that gun is still hanging on the wall.

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Vladimir Rasulov