China’s largest public financial institutions are reportedly limiting financing to purchase raw materials from Russia under the threat of sanctions from the US and allies over the military operation in Ukraine.
The step, which might only be temporary, was taken by at least two of China’s largest state-controlled banks, ICBC and Bank of China, which are at major risk of secondary sanctions from Washington, Bloomberg news agency reported on Saturday, citing unidentified sources.
ICBC, the world’s biggest bank by assets, and Bank of China, the country’s largest commercial bank for currency trading, could potentially lose access to the dollar, as financing purchases of Russian commodities may be regarded as support for Moscow.
The news comes amid geopolitical turmoil after Russia launched a “special military operation” in the Donbass on Thursday morning, at the request of the region’s recently recognized Donetsk (DPR) and Lugansk (LPR) People’s Republics, vowing to “demilitarize” Ukraine and defend the people against “aggression” by Kiev.
Since the outbreak of conflict, the US, EU, and other allied nations have moved ahead with sanctions on various sectors of the Russian economy, blacklisting officials, and halting air service to and from Russia.
In recent years, China has increased purchases of Russian commodities, with nearly 30% of Russian oil and gas currently consumed by the world’s second biggest economy. The nations agreed to boost cooperation in the financial sector and on the supply of gas during the latest visit of Russian President Vladimir Putin to Beijing for the Winter Olympics.
On Friday, China abstained from a United Nations resolution condemning Russia’s “aggression” against Ukraine, demanding the immediate withdrawal of troops, which was vetoed by Russia.
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