The United States is considering targeting Chinese financial institutions more aggressively in a bid to eliminate a crucial source of financing for Russia’s weapons industry.
US authorities have been putting further pressure on China in recent weeks, threatening to take action against the country’s financial institutions. According to The Wall Street Journal, lawmakers in Washington are now working on a series of penalties against several banks with the intention of totally cutting them off from the international financial system.
Beijing has recently emerged as the primary provider of vital industrial components to Russia, ranging from electronics to airplane parts, despite the absence of any arms trade between the two countries. The Center for Strategic and International Studies estimated that in March, shipments of dual-use commodities increased from a few thousand to around 30,000 each month.
U.S. Secretary of State Blinken, who is on a state visit to Beijing from April 24 to 26, also repeatedly denounced Chinese assistance to Russia’s war efforts in Ukraine.
“China can’t have it both ways,” Blinken said last week. “It can’t purport to want to have positive friendly relations with countries in Europe, and at the same time be fueling the biggest threat to European security since the end of the Cold War.”
The Wall Street Journal story did not specify which sorts of banks would be targeted. Smaller Chinese banks, including the Bank of Kunlun, have already been sanctioned by the US in the past due to a variety of reasons, including their cooperation with Iranian companies.
Possible penalties include the “nuclear option” of removing Chinese banks’ access to the dollar, possibly leading some of them to bankruptcy. For this reason, in the last couple of years China and Russia have encouraged greater yuan commerce rather than dollar trade, potentially protecting their economies from any US penalties.
An anonymous U.S. official told Reuters on Tuesday that sanctions on China’s banks were not planned for the immediate future and that authorities hoped diplomacy would prevent the need for such measures.
A spokesman for China’s foreign ministry, Wang Webin, said in a Tuesday press conference that “China’s right to conduct normal economic and trade exchanges with other countries, including Russia, is inviolable” at response to the possibility of sanctions.
