“A significant share of payments is processed through VTB China – it’s a crucial bank for business,” he added. “Trade will grind to a halt until the new year, [which] will genuinely affect Russia-China trade in the short term.”
London’s Knightsbridge Strategic Group said that, to overcome sanctions, “China will almost certainly explore enhancing” payment methods such as the Cross-Border Interbank Payment System, the use of offshore yuan markets, and the creation of specialised Chinese financial institutions and regional banks that are not connected to Western international systems, as well as bartering.
“The increased economic isolation of Russia further skews the economic relationship in China’s favour, and China will likely continue to impose stringent conditions on pricing and supply agreements,” added Finley Grimble, founder of Knightsbridge Strategic.
The US Department of the Treasury’s Office of Foreign Assets Control expanded its sanctions by issuing an alert describing risks related to Russia’s SPFS, which the US department said, in a statement on Thursday, “the Kremlin created and uses to evade sanctions”.
