The top Chinese banking regulator announced on Wednesday that China won’t recognize the sanctions imposed on Russia by U.S. President Joe Biden and other Western countries.
Despite sweeping trade and financial sanctions imposed in the wake of the Russian invasion of Ukraine by the U.S., European Union, Britain, and Japan, “China won’t join such sanctions” and “will continue to maintain normal economic, trade and financial exchanges with” Russia, declared Guo Shuqing, head of the China Banking and Insurance Regulatory Commission.
Shuqing, who is also the Communist Party secretary of the Chinese central bank, said that “Beijing neither supports, nor will be taking part in the imposition of, financial sanctions imposed by the West and its allies against Russia,” The South China Morning Post reported.
China’s Commerce Minister, Wang Wentao, went a step further, declaring the U.S. and Western sanctions on Russia ‘illegal.” China “firmly opposes any illegal unilateral sanctions,” he said.
The news agency Reuters reported the Chinese rejection of Russia sanctions:
China will not join in sanctions on Russia that have been led by the West, the country’s banking regulator said on Wednesday, adding that he believed the impact of the measures on China would be limited.
China, which has refused to condemn Russia’s invasion of Ukraine, has repeatedly criticised what it calls illegal and unilateral sanctions.
“As far as financial sanctions are concerned, we do not approve of these, especially the unilaterally launched sanctions because they do not work well and have no legal grounds,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told a news conference. (…)
China and Russia have grown increasingly close in recent years, including as trading partners. Total trade between the two jumped 35.9% last year to a record $146.9 billion, according to Chinese customs data, with Russia serving as a major source of oil, gas, coal and agriculture commodities, running a trade surplus with China.
China’s rejection could weaken the Russian sanctions announced by President Joe Biden amid great fanfare. The cornerstone of Biden’s sanction framework is excluding leading Russian banks from the Swift payment system. The move is designed to cripple Russia’s ability to export oil and gas and make it difficult for the Putin regime to import critical technologies for its industrial sector.
If China does not recognize Western sanctions, Chinese banks could help Russia bypass the Swift ban. China has also created the Cross-Border Interbank Payment System (CIPS), a global payment system to rival Swift.
Cut off from the Western banking system, Russia is likely to fall further into China’s influence. “Sanctions on Moscow are likely to accelerate connection and transactions between Chinese and Russian payment systems,” The South China Morning Post projected. “Russia could turn China for trade, entirely bypassing the dollar-based transaction network,” the Japanese business daily Nikkei precited.
The emerging China-Russia axis was a long time in making. Three months before President Vladimir Putin ordered a full-scale invasion of Ukraine, he forged a de facto military alliance with China. In late November, Chinese and Russian defense chiefs signed a “road map” for closer military cooperation by 2026. The combined annual military budget of China and Russia, estimated to be over $800 billion, exceeds the United States.
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