Chinese banks have started blocking payments from Russia for electronics

Chinese banks have begun blocking payments for supplies of components and kits for assembling electronics, including servers, data storage systems, laptops and other equipment.

The business complained about Chinese banks blocking payments from Russia for the supply of components for the assembly of electronics. China accounts for almost 100% of the world’s supplies in this area. “The prospects are not rosy,” experts say.

Chinese banks have begun blocking payments for the supply of components and kits for assembling electronics, including servers, data storage systems (DSS), laptops and other equipment, Kommersant writes, citing a market source.

We are talking, in particular, about “kit sets”, which include processors, device housings, screens and more. According to the interlocutor of the newspaper, Chinese partners have been warning Russian electronics manufacturers since the end of March that payments from legal entities from Russia do not go through Chinese banks. Moreover, transactions are blocked even from those companies that have agreed on long-term contracts for the supply of components for the assembly of electronics with Russian customers.

“China is, in fact, a monopolist in the component base. Almost 100% of the world’s electronics assembly components are on their side,” the newspaper’s source said.

Alternative payment options are being worked out, but current difficulties “delay the production of domestic electronics for about six months, since there will be no shipments of components and assembly kits to any Russian manufacturer in the next two to three months,” the source added.

The existence of the problem was confirmed by the IT holding Fplus; the organization indicated that all leading industry players face difficulties due to the risk of secondary sanctions, and work is underway to smooth out the consequences.

Alexander Kalinin, the founder of Media Holding, also recognized the difficulties. Asian banks, he pointed out, have not missed payment for goods from Russian companies since December for the supply of finished products — servers, computers, data storage systems, and since the beginning of April, difficulties have appeared with kit kits. As a result, Russian developers who ordered Chinese parts cannot begin the final assembly of their products in Russia, A. Kalinin explained.

Financial logistics when making payments through Chinese banks suffers in relation to almost all goods and services, said Vitaly Mankevich, head of the Russian-Asian Union of Industrialists and Entrepreneurs (RASP). According to him, in December, 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 rosy yet,” admitted V. Mankevich and added that the blocking of payments affected “almost all Asian banks.”

Since the beginning of the year, several of China’s largest banks have refused to accept payments from Russia from sub-sanctioned organizations, and several smaller financial organizations have stopped processing even yuan payments from other Russian legal entities.

Problems with making payments through China, as well as Turkey and Kazakhstan began at the end of last December, after the decree of American President Joe Biden came into force. He authorized the imposition of sanctions against foreign financial organizations for violating restrictive measures against Russia.

The Kremlin assured that Russia has sufficient potential to overcome difficulties in trade. “The unprecedented pressure of the United States and the European Union on the People’s Republic of China continues, including in the context of relations with us. This, of course, creates certain problems, but it cannot become an obstacle to the further development of our trade and economic relations,” said presidential spokesman Dmitry Peskov.

The Russian authorities consider the sanctions illegal, ineffective and demand that they be lifted.