Russia and China have maintained a close working relationship for years, but that relationship appears to be in question after Russian President Vladimir Putin made the decision to invade Ukraine and take on serious economic sanctions.
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.
The implementation of those restrictions, which could be temporary, brings into question Beijing’s support for Moscow as Western alliances deliver harsh sanctions on Russia. According to Bloomberg, the four largest banks in China have complied with prior sanctions from the U.S. against Iran, North Korea and officials in Hong Kong because they need access to the U.S. dollar clearing system.
“Chinese financial institutions take sanctions compliance seriously,” said Ben Kostrzewa, a foreign legal consultant in Hong Kong who once handled U.S.-China disputes and negotiations through the Office of the U.S. Trade Representative. “They don’t want to be sanctioned themselves, they can’t lose access to U.S. dollar transactions, so they are going to have to think about it very seriously — whatever the geopolitical impact might be.”
For the most part, China has remained tight-lipped in condemning Russia’s invasion of Ukraine. The nation has echoed talking points and claims it respects “all countries’ sovereignty and territorial integrity.”
As a key supplier of energy to China, Russia has gone to great lengths to maintain its relationship with its southern neighbor. At times, the two countries have found themselves to be geopolitical allies among disputes with the United States.
In large part, at least for now, China remains a supporter of the Kremlin as recent food and energy deals between the two countries made headlines. Prior to the invasion, Russia struck a deal valued at an estimated $20 billion to supply China with 100 million tons of coal in the “coming years.” Earlier this month, China also agreed to purchase Russian wheat. Together, Ukraine and Russia produce almost a quarter of the world’s wheat.
Robert L. Wilkie, former undersecretary of defense for personnel and readiness during the Trump administration and visiting fellow at the Heritage Foundation, previously told Fox News Digital that he believed Chinese President Xi Jinping would support Putin if sanctions were levied against Russia.
“A lot of the talk about economic sanctions is really a pie in the sky because China is now Russia’s banker,” Wilkie said prior to Russia’s invasion. “Xi Jinping will back Putin if sanctions from the West come.”
The steady relationship between the two nations can be traced back decades to the 1940s and 1950s when Chinese President Mao Zedong worked with Soviet Union Premiers Joseph Stalin and later Nikita Khrushchev.
Showing the closeness of the relationship, Chinese media reported that Xi and Russian President Vladimir Putin held a telephone call Friday in which they discussed the situation in Ukraine.
It didn’t appear as if Xi asked Russia to stop the invasion or even called it one. Rather, according to the readout, it was noted that Xi reiterated China’s support to Russia and Ukraine to resolve the issue through diplomacy. Putin, the readout noted, had explained the historical context of Russia’s ties to Ukraine and also brought up Russia’s special military operation taking place in the east of Ukraine. China also announced the previous day it was lifting all previous sanctions on Russian wheat imports.
Fox News’ Megan Henney, Ben Evansky, and Caitlin McFall contributed to this article.