Peking business: what problems with Chinese banks arise from Russia because of sanctions?

Under the conditions of the existing sanctions pressure, Russia is increasingly experiencing difficulties when working with Chinese commercial banks. This was stated by Vladimir Danilov, head of the Central Bank’s representative office in the People's Republic of China, on the margins of the annual forum of the Moscow Exchange in China.

As noted in the Central Bank, financial and credit organizations of the Asian Republic exaggerate the influence of the anti-Russian measures in force today. This, in turn, creates a number of problems in the implementation of operations between the two countries.

“Despite the wide correspondent network and the growth of settlement volumes in national currencies, there are a number of problems related to the fact that a number of Chinese commercial banks extensively interpret the restrictive measures applied to Russia,” Danilov quoted Tass as saying.

According to the representative of the Central Bank, the regulator, for its part, does not create any artificial barriers to interaction between Moscow and Beijing. Moreover, the Bank of Russia considers the unreasonable references of Chinese partners to the restrictive actions of other countries with regard to the Russian Federation.

For example, the inclusion of banks in the sanctions list of high-ranking officials does not mean the extension of prohibitive measures to the financial organizations themselves, so it is possible to cooperate with them as legal entities.

Experts interviewed by RT also note that many companies and entrepreneurs from Russia have recently been experiencing difficulties in working with the PRC banking system. First of all, problems arise in organizations with Russian capital in the ownership structure.

“A number of businessmen in frequent conversations stated that often some Chinese banks ultimately ordered them to close their accounts and look for another credit organization. It is characteristic that when servicing in Chinese banks (along with companies), individuals with Russian citizenship will also experience pressure. Last year there were not rare cases when a credit institution not only didn’t open an account, but even refused to reissue a debit card, ”said Maxim Romanchuk, an independent expert on China, in an interview with RT.

The restrictive actions of Chinese banks in relation to Russian companies and businessmen occur against the background of a general geopolitical and economic rapprochement between Russia and the PRC. Romanchuk explains the current state of affairs by the fact that to a certain extent political statements at the highest level contradict the business interests of an Asian country.

According to the expert, even in the conditions of a trade war, cooperation with Washington brings Chinese business the maximum benefit. For comparison, according to the Federal Customs Service and the US Department of Commerce, in 2017, China's trade turnover with the Russian Federation amounted to almost $ 87 billion, and with the US - $ 636 billion. In addition, China also fears the growth of negative consequences from the intensification of the tariff conflict with Washington ..

"Now the situation can be attributed to the fact that China is already under pressure from trade contradictions with the United States, and cooperation with companies one way or another connected with individuals or legal entities that fell under sanctions may give Washington an extra reason to put pressure on the PRC authorities" - explained in a conversation with RT analyst "BCS Broker" Konstantin Karpov.

According to the deputy director of the analytical department of Alpari, Anna Kokoreva, today the main stream of investment in the Chinese economy comes precisely from the United States. At the same time, the Chinese, for the most part, are still considering Russia only as the main supplier of raw materials. Thus, according to the expert, Chinese banks do not want to have problems with the States, therefore they are reinsured and either completely refuse to cooperate with the Russian Federation or create additional obstacles in working with Russian partners.

In addition, according to Karpov, the technical component can also play its role in the difficulties of banking operations in Russia and China. The process is complicated by the need for constant verification of Russian companies and entrepreneurs for the presence in any kind of prohibitive lists.

“Given that the lists are periodically replenished and revised, many banks and credit organizations have set up an automated check of counterparties from the database of the Office for Control over Foreign Assets of the United States for mention in various sanction lists. For this reason, there may be difficulties with all payments through Chinese counterparties, delay and cancel payments. That is, it may well be also a banal technical factor, ”Karpov added.

Bank torg

According to Anna Kokoreva, against the background of deteriorating trade relations between the United States and China, as well as the active work of the Central Bank of the Russian Federation to establish relations with Beijing, the resulting problem between banks should disappear soon. The key driver for this process can be the widely discussed strategy of states to reduce dependence on the dollar.

“The problem will be solved by itself, when China finally realizes that it will not be possible to preserve the imputed trade relations with the United States and there is no point in being cautious. You just have to wait. To put pressure on the banks of the PRC, I think, is not the responsibility of the Central Bank of the Russian Federation. Our regulator and so is actively working to create conditions for improving the interaction of Russian and Chinese companies, and also contributes to the transition to calculations in national currencies, ”explained Kokoreva.

Along with avoiding dollar operations, national companies of the Russian Federation should also choose banks that are more loyal to Russian business in the PRC, Romanchuk believes. This, in turn, would allow to avoid a number of problems with the functioning of organizations and the work of entrepreneurs.

“Direct settlement of the ruble — the yuan is currently the most effective measure that avoids payment problems. Such transactions occur without the participation of Western financial centers, and, therefore, allow to reduce dependence and control from third countries. Thus, this scheme for financial organizations of China minimizes the risks of pressure from the US authorities, ”the expert added.