According to a new report, Chinese state-owned banks will begin restricting financing for Russian commodity purchases.
Fox Business reports that this suggests “there are limits to Beijing’s support for Moscow as the Kremlin confronts severe economic sanctions over its attack of Ukraine.”
The report adds:
Offshore units of Industrial & Commercial Bank of China have stopped issuing U.S. dollar-denominated letters of credit for purchases of physical Russian commodities ready for export, while the Bank of China has also limited funding, according to Bloomberg News, citing people familiar with the matter.
Yuan-denominated letters of credit are still available for some clients, pending approval from senior executives.
The move comes after Russia launched a wide-scale invasion into Ukraine, shattering three decades of peace in Europe and eliciting a slew of condemnations and financial penalties from the U.S., European Union and other nations.
It was a surprising twist and points to potential cracks showing in the relationship between Moscow and Beijing. The two countries are frequently geopolitical allies who have united in the past against the U.S.; they have formed increasingly close bonds over recent years, with Russia a key supplier of energy to China.