China In Eurasia Briefing: Russian And Chinese Banks Feel The Bite Of New U.S. Sanctions

Worried about being targeted by U.S. secondary sanctions, China’s big banks have limited their cross-border transactions involving Russia and Russian firms of late, with Chinese companies that trade with Russia instead moving to smaller banks or underground financing channels that are difficult to track and have less exposure to the international financial system. Tom Keatinge, director of the Center for Financial Crime and Security Studies at the Royal United Services Institute, told me that this makes up a “burner bank strategy.” This is where China’s trade with Russia becomes concentrated increasingly into institutions that are unlikely to have a contagion effect on the country’s economy and that also are set up with no need for access to the international banking system and thereby limit the reach of U.S. sanctions.