Renminbi (RMB)/Yuan Appreciation & Internationalization

tphuang said:

another little one

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Not a big deal since Maldives is so small, but one at a time

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Chinese banks began blocking payments from Russian companies for components for electronics assembly to avoid secondary sanctions

According to media sources, since the end of March 2024, Chinese banks began to block payments from Russian companies for components for electronics assembly as part of attempts to avoid secondary sanctions. At the end of 2023, retailers and distributors began having difficulties paying for finished electronic products from China.

According to industry representatives, Chinese partner banks have indeed begun to block payment for the supply of components and kits for assembling electronics (“kit kits”, which include processors, device cases, screens), including servers, data storage systems (DSS), laptops and other items for PC.

The media source clarified that payment is blocked “even from those organizations that have entered into long-term contracts for the production and supply of components for electronics assembly with Russian clients.” “China, in fact, has a monopolist in the component base. Almost 100% of the global volume of components for electronics assembly is on their side,” the expert added.

The IT holding Fplus confirmed information about problems with payment. “We, like all leading industry players, are under pressure from secondary sanctions and are working to mitigate their consequences as much as possible,” the company clarified.

The founder of JSC Sovereign Mobile Initiative Holding (SMI Holding), Alexander Kalinin, also confirmed to the media problems with paying for services for the supply and production of electronics through Chinese banks. According to Kalinin, since December 2023, Asian financial structures “have not missed payments for goods from Russian legal entities for the supply of finished products” (computers, storage systems, servers, and since the beginning of April, problems have arisen with components and “kit kits.” “Domestic developers who ordered components from China cannot begin the final assembly of their products in the Russian Federation,” explained Kalinin. He believes that the Central Bank of the Russian Federation “should intervene in the situation and agree with the Chinese side on payment.”

In January, the media reported that after the US threatened Chinese banks with sanctions if they detected cooperation with the Russian Federation, they tightened control over operations. Large Chinese banks, including Ping An Bank, Bank of Ningbo, China Guangfa Bank, have stopped accepting payments in yuan from the Russian Federation.

Problems with financial logistics through Chinese banks are observed in payment for almost all goods and services, Chairman of the Russian-Asian Union of Industrialists and Entrepreneurs (RAUIE) Vitaly Mankevich clarified to the media. “In December 2023, the American regulator gathered the heads of Chinese banking organizations and threatened to impose sanctions against them if cooperation with Russian legal entities was revealed. Therefore, the prospects are not bright yet,” Mankiewicz told the media. He added that payment blocks affected “almost all Asian banks.”

The president of the customs and logistics broker KBT, Yulia Shlenskaya, told the media that “the general problem with payments to China began to grow around February and, one might say, reached its climax in April.” She estimates that more than half of importers do not receive payments to Chinese recipients, regardless of whether the product is sanctioned, the sending bank, or which Chinese bank is used by the Chinese supplier. According to Shlenskaya, for this reason, shipments of goods from China have fallen by about three times, and payment schemes have still not been found to ensure payment is received with certainty.

Representatives of Russian electronics manufacturers clarified to the media that they are currently working on alternative payment scenarios, but this problem “delays the production of domestic electronics for about six months, since in the next two to three months there will be no shipments of components and assembly kits to any Russian electronics manufacturer."

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tonyget said:

Don't know about the progress of Yuan internationalization, but Chinese banks don't seem to have much "sovereignty" or "sanction proof" as of now

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tonyget said:

Don't know about the progress of Yuan internationalization, but Chinese banks don't seem to have much "sovereignty" or "sanction proof" as of now

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FairAndUnbiased said:

China Guangfa Bank is a private bank with Citigroup as their #1 shareholder.

Ping An and Ningbo are also private banks.

See if they have the balls to do jack shit to ICBC or China Construction Bank.

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tonyget said:

Why do you Chinese companies use these second tier banks to do business with Russians in the first place？Because they cannot use “large SOE banks”. The “large SOE banks” block these kind of transaction（deals involve “sensitive products”）ever since the very beginning of the war，that's why Chinese companies went to smaller banks. Now smaller banks also starting to deny these kind of transaction.

It just shows you that how vulnerable Chinese banks are to the US. And the CIPS system doesn't seem to have much progress recent years，at least China-Russia trade are still dominated by SWIFT

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Michaelsinodef said:

Do explain why Russian and Chinese trade is basically constantly breaking records then.

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FairAndUnbiased said:

China Guangfa Bank is a private bank with Citigroup as their #1 shareholder.

Ping An and Ningbo are also private banks.

See if they have the balls to do jack shit to ICBC or China Construction Bank.

Click to expand...