Reuters cited a senior Biden Administration official saying that the Chinese regime does not appear to help Russia evade Western financial sanctions imposed in response to its invasion of Ukraine.
The official mentioned that helping Russia evade U.S. sanctions would “do profound damage” to China’s image, and give “tacit or explicit accommodation to Russia’s invasion of a sovereign country in the heart of Europe.”
He added, some Chinese banks have stopped issuing letters of credit for purchases of physical commodities from Russia, which was a positive sign.
On Feb. 26, U.S. and European allies agreed to remove a number of Russian banks from The Society for Worldwide Interbank Financial Telecommunication – SWIFT. Russia heavily relied on the SWIFT international financial transaction network to export its oil and gas.
According to Bloomberg, Bank of China Ltd. has also curbed financing for Russian commodities based on its risk assessment.
Chinese banks need access to the U.S. dollar clearing system, so they need to comply with the U.S. sanctions programs to avoid being kicked out of the U.S. Clearing House Interbank Payments System (Chips.)
However, the Observatory of Economic Complexity data showed China is currently the biggest export destination of Russia. Beyond that, the two countries signed oil, wheat, and coal trading projects.
The New York Times reported that six days before the military campaign began, Russia announced a multi-year deal worth more than 20 billion dollars with China to sell 100 million tons of coal. And China agreed to buy Russian wheat hours before Russia began bombing Ukraine, despite concerns about plant diseases.
According to SMCP, Putin confirmed the agreement to supply 10 billion cubic meters (353 billion cubic feet) in a meeting aside from the opening ceremony of the Winter Olympics.
Russian oil purchased from China surpassed those from Saudi Arabia in December.
Russia is a significant energy supplier to China, and the two countries frequently find themselves aligned in geopolitical disputes with the United States. However, Russia’s economic weight pales compared to Western nations, which buy most of China’s exports and maintain control over its access to the dollar-dominated international financial system.