The Moscow office of a Chinese state bank has noticed an increase in inquiries from Russian businesses looking to open new accounts, as the country’s businesses struggle with international sanctions following its invasion of Ukraine.
“We’ve had 200-300 companies approach us in the last few days seeking to open new accounts,” a person who works at a Chinese state bank’s Moscow branch and has firsthand knowledge of its operations told reporters.
Because he is not authorized to speak with the media, he declined to be named or have his bank’s name revealed.
Although it was unclear how widespread Russian demand for new accounts at Chinese banks was, a banking source told reporters that many of the companies seeking new accounts do business with China and that he expected yuan transactions to rise.
Western governments are isolating Russia’s economy from the global financial system, forcing multinational corporations to suspend sales, terminate links, and abandon tens of billions of dollars in investments.
China has consistently expressed its opposition to the sanctions, claiming that they are ineffectual and that normal commercial and trade relations with Russia will be maintained.
Industrial & Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank are just a few of the Chinese state banks that have operations in Moscow.
China Construction Bank did not respond to a request for comment.
Several Russian companies with whom he works are intending to open yuan accounts, according to a Chinese businessman with long-term ties to Russia who did not want to be recognized.
“It’s straightforward logic. You have little choice but to turn to China if you can’t use US dollars or euros, and the US and Europe stop offering you many items. The pattern is unavoidable.
As an increasing number of Western corporations flee Russia, the willingness of emerging market behemoths like China to maintain commercial ties with Moscow reveals a significant schism over Europe’s worst crisis since WWII. This trend has the potential to erode the dollar’s supremacy in global trade.
After certain Russian banks were banned out of the global financial messaging system SWIFT, FESCO Transportation Group a large Russian transport and logistics company, said this week that it will accept Chinese yuan from customers.
“It’s logical for Russian enterprises to accept yuan,” Shen Muhui, the director of a trade organization that promotes Russian-Chinese ties, said.
Small Chinese exporters, on the other hand, are suffering from the rouble’s depreciation, and many have halted delivery to prevent potential losses, he said.
On Wednesday, the Russian currency hit a new low of more than 17 roubles per yuan, having lost nearly 40% of its value versus the Chinese currency in the previous week.
“Companies will convert to yuan-rouble business,” said Konstantin Popov, a Russian entrepreneur in Shanghai. “However, products will become two, three, or four times more expensive for Russians because the exchange rate between the yuan and the rouble is also changing.”
Russian demand for Chinese goods, according to Shen, will continue to expand in the long run. In the face of sanctions, he stated, “the priority is to solve trade settlement concerns.”
