China, Russia could bypass barriers to buoy business as Western sanctions bite, researchers say
- Finance deals made through smaller Chinese banks would help ‘resolve the threat of secondary sanctions’, according to institute findings at Renmin University
- And there are potential gains to be made in some non-finance partnerships, including near the North Korean border
China and Russia should explore using their own platforms – and could tap obscure banks – to settle payments while strengthening ties in the Russian far east, if the neighbours want to get around Western economic sanctions over Moscow’s war in Ukraine, a Chinese research organisation says.
Smaller Chinese banks could be “promoted” for trade with Russia, while setting up new financial institutions could help “circumvent Western sanctions”, according to a May 11 report by the Chongyang Institute for Financial Studies at the Beijing-based Renmin University.
Sanctions from the West had suspended 80 per cent of payment settlements between Russia and China as of March this year, “severely impacting normal trade and commercial relations”, the institute said.
“To solve the current investment dilemma between China and Russia, the top priority is to build new payment-and-settlement channels as soon as possible, and resolve the threat of secondary sanctions on financial institutions,” it advised.
Moscow’s invasion of Ukraine in February 2022 sparked financial restrictions on Russia by the West. American and European Union leaders have also decried China’s sustained Russian trade that has been accused of possibly helping Moscow get around their sanctions.
Russia has increasingly looked to China for economic support amid the sanctions. And China, for its part, needs Russian crude oil and coal for manufacturing and energy security.