Micah McCartney
Russia's pivot to China has faced multiple setbacks this year as Chinese banks, wary of U.S. sanctions imposed over Vladimir Putin's invasion of Ukraine, are rejecting transactions, forcing Moscow to raise fees on yuan (RMB) transfers.
Heavily sanctioned Moscow has benefited from the world's second-largest economy since the Ukraine war began, with bilateral trade rocketing up by 26 percent to a $240 billion high last year, and Russia becoming China's top source of oil.
Last month, Russian media reported that some 98 percent of Chinese banks now reject RMB-denominated settlements. First major, and now also more local, Chinese banks have stepped up compliance with the Biden administration to shield themselves from the secondary sanctions. This limited ability to use RMB has caused a liquidity squeeze, which seems to have driven the recent fee hikes by Russian banks.
Russian companies doing business with China began facing additional hurdles this month, this time from domestic lenders.
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