Economic sanctions against Russia force the Chinese partners of the Russian Federation, including the PRC government agencies, to deviate from close cooperation with the aggressor country, Joinfo.ua reports.
In the article written for Finance Asia, Yuri Soloviev, the First Deputy Chairman of VTB Group, informs, that despite the fact that Beijing has not officially imposed any financial sanctions against Russia, the Chinese banks support the restrictions imposed by the United States and the European Union.
In particular, most of the credit institutions of China deviate from operations with the Russian banks. Besides, they have reduced their participation in the financing of collaborative commerce, by giving this function to the Russian partners.
“The relationship is not without its sticking points. China’s ambiguous position regarding Russian banks in the wake of US and EU sanctions is a key issue holding back progress toward greater bilateral cooperation. Most Chinese banks will currently not execute interbank transactions with their Russian peers. In addition, Chinese banks have significantly curtailed their involvement in interbank foreign trade deals, such as providing trade finance,” Soloviev writes.
So far, it is possible to stimulate funding for the Chinese market in yuans only in a very limited extent.
“From our partners in China we understand that non-Chinese issuers require approval from the State Council, Central Bank and Finance Ministry to be able to undertake fundraising efforts. However, there is no clearly formalized procedure for obtaining these permissions, and only international financial institutions such as the International Finance Corporation and Asian Development Bank have been able to do so,” Soloviev says.
The Russian Ministry of Finance wants to start to work actively and raise funds in yuans too. On June 3, the Deputy Minister Sergei Storchak said that Russia considered the probability of issuing bonds in the currency of the PRC. However, according to him, all these tasks are far from implementation.
“We do not know the organizational issues, how it works, we do not know the agent banks. The whole infrastructure of the market needs to be learned: who enters the market, how they enter it, through what mediators etc. to be able to register emission or enter the market, who can be a potential investor, who is allowed and who is not,” Storchak said.