Chinese banks lend billions of dollars to Russia amid western sanctions

China’s largest banks are increasingly providing substantial financial support to Russia as sanctions continue to push Western banks out of the country, as reported by the Financial Times.

Since Moscow’s invasion of Ukraine in February 2022, Western regulators have cracked down on Russia by imposing sanctions and urging banking institutions to pull back on operations in the country. Chinese lenders are now filling the gap, the newspaper said.

The four biggest banks in China have quadrupled their exposure to Russia’s banking sector since the war in Ukraine began, according to data analyzed for the FT by the Kyiv School of Economics.

At the beginning of 2022, Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., and Agricultural Bank of China Ltd. collectively held an exposure of $2.2 billion.

According to Russian central bank data cited in the report, this exposure surged to nearly $10 billion over the 14-month period ending in March this year. When approached for comment, the mentioned Chinese banks declined to respond, as reported by the Financial Times.

Andrii Onopriienko, the deputy development director at the Kyiv School of Economics, who compiled the data, remarked that “The loans provided by Chinese banks to Russian banks and credit institutions, primarily involving the yuan as a substitute for dollars and euros, indicate that the sanctions are having their intended impact.”