New US sanctions affect Russia-China trade in the short term, but strengthen Beijing’s influence in future negotiations, analysts say
The US Treasury Department’s latest sanctions to further restrict Russia’s use of the international financial system will likely hamper Russian trade with China in the near term, according to analysts. They also point out that in the long term, these measures will give Beijing greater negotiating power over the terms of the Power of Siberia 2 pipeline.
Aleksei Chigadaev, former visiting professor at the Higher School of Economics in Moscow, highlighted that “the most critical thing” in this escalation are the sanctions against financial message transfer systems, in particular Russia’s Peredachi Finansovykh Soobshcheniy System (SPFS), a alternative to the Swift international banking system, in addition to the Chinese branch of the Russian bank VTB.
“A significant portion of payments are processed by VTB China – it is a crucial bank for business,” he said.
“Trade will be virtually halted until the New Year, which will significantly affect Russia-China trade in the short term.”
London-based Knightsbridge Strategic Group said that to overcome sanctions, “China will almost certainly seek to improve” payment methods such as the Cross-Border Interbank Payment System, the use of offshore yuan markets, the creation of financial institutions specialized Chinese banks and regional banks disconnected from Western international systems, in addition to the use of direct exchanges (bartering).
“Russia’s increasing economic isolation tilts the economic relationship further in favor of China, which is likely to continue imposing stringent conditions on pricing and supply agreements,” added Finley Grimble, founder of Knightsbridge Strategic.
The U.S. Treasury Department’s Office of Foreign Assets Control expanded its sanctions by issuing a warning about risks related to Russia’s SPFS, which the department described in a statement Thursday as a system that “the Kremlin created and uses to escape sanctions.”
With information from the South China Morning Post*
Source: https://www.ocafezinho.com/2024/11/25/como-o-isolamento-da-russia-fortalece-poder-de-negociacao-da-china/
