There China does not want Chinese financial institutions to participate in the flight of capital from Russia and has introduced detailed restrictions on the export of products denominated in the currency currency yuan from the country led by Vladimir Putin in the direction of the European Union, USA and Switzerland. The extension has also been extended to Russian operators holding yuan-denominated assets.
“Russian state broadcaster RBC and Frank Media, a Russian news channel specializing in finance and business, reported on announcements from Russian banks about the restrictions. Yuan transfers can now only be made from Banks of the Bank of China Group‘ remarks Meduza. In confirmation, “Dmitry Lesnov, CEO of Russian bank Finam, told RBC that Bank of China has suspended remittances in yuan, as well as US dollars, euros and Hong Kong dollars,” outside the Russian Federation, as of June 13 the added newspaper, one of the few independent information systems on Russian territory.
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The move serves to consolidate Russia’s foreign exchange reserves and thus the appreciation of the ruble through the diversification of alternative currency sources. But it’s also a move China is promoting pro domo sua to solidify its penetration into the rest of the world. The yuan fights for it gain an increasing share in international exchanges to the detriment of the dollar, but at the same time suffers from structural problems related to fluctuations in Beijing’s economy.
Moscow has seen a massive asset freeze by Western institutions, and after a long period of recovery, Moscow is seeing a gradual depreciation of the ruble. For China, this poses a threat to economic security given the country’s high share of investment, but also presents an opportunity to make the yuan increasingly “geopolitical.” Such a move essentially creates the yuan Guarantor of the ruble and the business continuity of Russian banks. Hence the function of a vital lung of the Moscow system. In which operators from Moscow are increasingly active.
In this regard, Portal reported that the China Construction Bank has tripled its assets in Russia since February 24, 2022, the day of the invasion of Ukraine, and the Agricultural Bank of China has increased by 1.5 times: they are the Leader of a race that increasingly sees the yuan as a parallel currency in Russia. More and more Russian financial investments are using the payment system Cips (Cross-border Interbank Payment System), the Chinese alternative to Western Swift, and in Mongolia the “buffer” between the two large countries has been emerging for some time Ruble-Yuan Exchange Laboratory. Russia has also, as Nikkei pointed out, paid dividends to Chinese investors for gas production projects on the Moscow-controlled island of Sakhalin in the Pacific Yuan.
In short, Chinese aid to Russia to curb capital flight is just the latest step in a long line of processes that have enabled the yuan to make the ruble its de facto satellite. And increased the strategic projection of the Beijing uniform. From this point of view, the long, jagged, and often incoherent Chinese race to build an alternative currency system to the dollar, if the fact solidifies, could achieve another goal. In addition, the projection of the Yuan Nei energy markets, which players like Saudi Arabia bet on, comes as a key advantage. But will Moscow accept a secondary currency role that already exists in practice? Difficult to tell. But in the great economic war game between the West and Moscow, Russia must make a virtue of necessity. And expose yourself to the need to gradually transform into the junior partner of the People’s Republic. Without anything but selfless favors.
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