Russian companies now want to open new accounts with the Chinese bank since its businesses face troubles as Western countries impose sanctions after it invaded Ukraine.
After at least four of the most prominent Russian banks were removed from the SWIFT global financial messaging system, a Chinese bank received hundreds of requests to open new accounts from Russian firms.
On Friday, Reuters quoted a staff member at the Moscow branch of a Chinese state bank who revealed that “Over the past few days, 200-300 companies have approached us, wanting to open new accounts.”
Since Russia invaded Ukraine, Western countries cut off Russia’s economy from the global financial system and called international companies to halt operations in the country.
China, the most significant export and import trading partner with Russia has opposed the sanctions and has expressed its hopes for trade exchanges with Russia to be as usual.
A Chinese businessman with long-term trade with Russia told Reuters that “It’s pretty simple logic. If you cannot use U.S. dollars, or euros, and the U.S. and Europe stop selling you many products, you have no other option but to turn to China. The trend is inevitable.”
Affected by the West’s embargo, FESCO Transportation Group, a major Russian transport, plans to accept Chinese yuan from customers.
However, The Russian currency plummeted to a record low of more than 17 roubles per yuan on Wednesday. It has lost about 40% of its value against the Chinese currency in the past week.
According to Shen Muhui, head of a trade body that promotes links between Russia and China, many small Chinese exporters suffer from a drop in the ruble, so they halt deliveries to prevent potential losses.
Besides the foreign exchange risk, Chinese firms also face sanctions from the U.S. if they cooperate with Russia.
The South China Morning Post reported that on Thursday, Derek Chollet, the Counselor of the U.S. Department of State, said that “China, if it were to seek to evade the sanctions, or somehow dividing the sanctions, they would be vulnerable.”
He added, “Any country that tries to evade these sanctions will also face the consequences of its actions. I don’t want to speculate what that would be.”
Countries that joined in punishing Russia constitute 50% of the global economy, with China accounting for about 15%.