China-Russia de-dollarization hits payment snags as banks hesitate
Chinese banks dodge US sanctions risk, complicating $100B+ Russia trade flows
Deep Dive
China and Russia’s shift from the US dollar faces friction as Chinese banks tighten compliance checks to avoid secondary sanctions. Russian Sberbank reports payment routes are now many times more complex, with intermediary banks rejecting transactions without clear reasons. The new reality shows the limits of de-dollarization amid ongoing geopolitical tensions.
Key Points
- Chinese banks are avoiding direct payments to Russia due to US secondary sanctions risk, introduced in late 2023.
- Payment routes now require 3-5x more intermediaries, with rejections happening without clear explanations.
- China-Russia bilateral trade, valued at over $100B annually, is facing delays and higher compliance costs.
Why It Matters
De-dollarization faces real-world hurdles as geopolitical risks force trade into slower, costlier payment routes.