Chinese banks start blocking payments from Russia for electronics

In the end of March, Chinese banks began blocking payments from Russian companies for components and kits for assembling electronics, including servers, data storage systems, laptops and other equipment.

Source: Kommersant, a Russian media outlet, with reference to its market sources

Details: Kommersant’s sources said that the issue is, in particular, about "kits" that include processors, device bodies, screens, etc.

At the same time, transactions are being blocked even for those companies that have agreed on long-term contracts for the supply of components for electronics assembly with Russian customers.

"China is essentially a monopolist in the component base. Almost 100% of the world's electronics assembly components are on their side," a source says.

Problems with making payments through China, as well as Türkiye and Kazakhstan, began in late December 2023, after US President Joe Biden's decree came into force, allowing sanctions against foreign financial institutions for violating restrictive measures against Russia.

Background:

• Three of China's largest banks – Industrial and Commercial Bank of China (ICBC), China Construction Bank and Bank of China – have stopped accepting payments from Russian sanctioned financial institutions.
• Turkish banks refuse to work with Russian banks for fear of secondary sanctions.
• Turkish banks have tightened their policy towards Russian clients – some financial institutions have started closing accounts for companies and have increased requirements for individuals who are going to open a card. The Kremlin confirmed that the problem does exist.
• China's state-owned banks are tightening restrictions on financing Russian clients after the US threatened secondary sanctions against foreign financial firms that help Russia in its aggression against Ukraine.
• Several Chinese banks have stopped accepting payments in yuan from Russia and started returning such transactions to clients. The new restrictions were prompted by fears of secondary sanctions and pressure from the US.

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