U.S. considers stringent sanctions on Chinese banks to curb military aid to Russia

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People's Bank of China

23rd April 2024 – (Washington) The United States is reportedly crafting sanctions aimed at severing certain Chinese banks from the global financial system. This strategy intends to halt Beijing’s support for Russia’s military enhancements amidst the ongoing conflict in Ukraine, according to sources familiar with the matter as reported by the Wall Street Journal.

The potential sanctions come at a critical time as U.S. Secretary of State Antony Blinken is set to visit China this week. High on the agenda is addressing Beijing’s role in bolstering Moscow’s military capabilities, particularly through trade practices that enable Russia to refurbish its military arsenal.

During remarks made on Friday, Blinken highlighted concerns regarding China’s involvement in supporting Russia’s defence sector. He pinpointed Beijing as a significant contributor, supplying essential components for Russian weaponry that, in turn, supports Moscow’s military actions in Ukraine.

The U.S. administration has ramped up its rhetoric against China in recent weeks, signalling a readiness to impose punitive measures on Chinese financial institutions that engage in facilitating trade of dual-use goods—items that can have both civilian and military applications.

Amid these tensions, China and Russia have reportedly increased their trade transactions in yuan rather than U.S. dollars, a strategic pivot that could potentially insulate their economies against the escalating threat of U.S. sanctions. This shift underscores a deepening economic alliance between Beijing and Moscow in response to geopolitical pressures.

Neither the People’s Bank of China nor the National Financial Regulatory Administration, China’s principal banking regulator, responded immediately to inquiries regarding the looming sanctions.