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Beijing, a key Russian ally, has moved to restrict financing for Russian commodities purchases through two of China’s largest state-owned banks, Bloomberg reports, as Russian forces advance to Kyiv only a day after launching a full-scale invasion plan.
According to Bloomberg, the Industrial and Commercial Bank of China (ICBC) has ceased the issuance of dollar-denominated letters of credit for physical Russian commodities purchases, and the Bank of China has also restricted financing on some level, though details are not forthcoming.
Beijing’s move is an apparent attempt to comply with U.S. and European sanctions, but also follows a move on Thursday to assist Moscow by lifting restrictions on wheat imports from Russia, the world’s top producer of wheat.
The Chinese restrictions had been put in place earlier due to fears of a fungal disease.
China’s commodities financing restrictions come despite the lack of any US or European sanctions targeting Russia’s energy industry.
China is Russia’s biggest trading partner and Western sanctions will impact major investments and financial ties. Ukraine, too, is a key trade partner for China.
On Friday morning, in a telephone call between Chinese President Xi Jinping and Russian President Vladimir Putin, Xi allegedly urged Putin to negotiate with Ukraine and to forego “cold war mindsets”.
Russia’s invasion of Ukraine contradicts ally China’s attestations that the sovereignty of all countries should be protected, extending to Ukraine. Territorial sovereignty is a key hallmark of Beijing’s foreign policy, which makes this invasion tricky for the Russian ally to navigate.
On Thursday, Beijing refrained from labeling Russia’s aggression as an “invasion”, instead laying the blame at the feet of the U.S. and its Western allies.
China’s Assistant Foreign Minister Hua Chunying described the situation as “not what we would hope to see” and suggested that Washington was to blame for escalating the situation.
“China has taken a responsible attitude and persuaded all parties not to escalate tensions or incite war…Those who follow the US’ lead in fanning up flames and then shifting the blame onto others are truly irresponsible,” she said.
