China’s Heihe Rural Commercial Bank has stopped accepting payments from Russia after falling under European Union sanctions, Russian pro-government media outlet Vedomosti reported on Sept. 1.
Heihe, a small rural lender, was one of the last Chinese banks willing to process transactions for Russian non-sanctioned credit organizations after larger Chinese banks cut off such services.
Many Russian small and medium-sized businesses had shifted to Heihe following earlier restrictions.
The EU sanctioned Heihe on July 18 for providing cryptoasset services that allegedly helped Russia bypass sanctions. The measures took effect on Aug. 9, barring EU entities from engaging with the bank. Payments reportedly continued for several weeks, but were blocked last week.
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While China claims neutrality in Russia’s war against Ukraine, it has supplied Moscow with dual-use technology and continues to purchase Russian oil, indirectly bolstering Russia’s war effort.
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The reporting comes as Russian President Vladimir Putin met Chinese President Xi Jinping in China on Sept. 1 during the Shanghai Cooperation Organization summit, highlighting Moscow’s dependence on Beijing amid Western pressure.
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Why were they able to stay under the radar for 3 years?
They weren’t under the radar. The EU sanctioned Heihe Rural Commercial Bank only on July 18 this year.
The war started in 2022, and so this means that they were trading with Russia for 3 years straight with no consequences until July 18, 2025, unless I am missing something. Like, why didn’t they get sanctioned in 2022 but only after 3 years?
As far as I can tell, because the EU is slow, and sanctioning the Russians and military suppliers of the Russians came first.
because the EU is slow
That, and also because sanctioning China is not a politically trivial question.
Yup. The EU cares very little about imports from Russia (except for gas but that was kinda solved). But if we piss of China the EU is very much fucked. Just the reality of politics sadly.
Good question, but I don’t know either.
Probably a mix of diplomatic escalation, practicability, effort vs effect.
You don’t generally for for full blockade right away, just for the biggest targets – enough to hurt, but still signalling some level of willingness to compromise. I know, compromise feels bad with people like this, but diplomacy doesn’t work all-or-nothing. To get them to negotiate, you need to signal that they stand to gain something from negotiation. Conversely, you need to leave some room to increase pressure.
If the point of the sanctions is to coerce a peaceful end to hostilities, there needs to be at least a performative olive branch to extend. Smaller banks have less impact, so you don’t achieve much by hitting them with sanctions, nor does ignoring them diminish the effect too much.
Until, of course, they become big enough to make a difference – that’s where we’re at now.
Because this was their last refuge to date. Until 2025, the amount of transactions were minimal.
As sanctions hit the big players, Russian companies had to switch progressively to smaller, less known Chinese banks.
This was the last one to date.
It’s also a sign that sanctions do work.
