Economic Allies Falter: Russia's Tightening Bond with China Shows Cracks
China's president, Xi Jinping, has remained loyal to Vladimir Putin for years. However, Western sanctions are evidently putting economic relations to the test—according to German media, "dependence on China signifies Putin's downfall."
3 April 2024 10:57
Russia's dependence on China brings no benefits to Putin. After the U.S. imposed sanctions, Chinese banks introduced restrictions on serving Russian clients, which - as the German "Münchner Merkur" points out - will have disastrous effects on the Russian economy.
Russia under pressure from the West
A significant portion of Russia's gold and currency reserves is in the Chinese yuan, while the West aims to limit Moscow's access to this currency.
"Russia wanted to continue cooperation in the financial sector, but China is withdrawing from talks. According to Russia's Finance Minister Anton Siluanov, an agreement on taking out loans in Chinese currency has not been reached yet," the Germans write, emphasizing that the Chinese yuan plays a significant role "in Putin's path to independence from the American dollar."
Recently, Bloomberg reported that Russian companies taking loans in the Chinese yuan are facing increased loan repayment costs. These entrepreneurs are under pressure, and their debt is rising.
That's not all. Germany also reports that Turkish banks, fearing U.S. sanctions, have started closing Russian companies' accounts and tightened requirements for Russians. "Russian oil companies are also struggling with several months' delays in payments, and even refusal of transactions, because some banks from Turkey, China, and even the United Arab Emirates fear secondary sanctions," the report states.
