TMTPOST—The United States has preliminarily discussed sanctions on some Chinese banks but does not yet have a plan to implement such measures, Reuters reported on Tuesday, citing an U.S. official, as Washington seeks ways to curb Beijing's support for Russia.
The official, speaking on condition of anonymity, said there was no plan to roll out sanctions on China’s banks in the near-term, and said officials hope that diplomacy will avert the need for such action, according to Reuters.
U.S. Secretary of State Antony Blinken arrived in China on Wednesday for a three-day visit.
The Wall Street Journal reported on Monday, citing people familiar with the matter, that the U.S. was drafting sanctions against some Chinese banks in the hopes of stopping Beijing's commercial support of Russia's military production.
In recent weeks, U.S. officials have escalated pressure on China, cautioning that Washington is prepared to take action against Chinese financial institutions facilitating trade in goods with both civilian and military applications.
On Friday, Blinken criticized China's support for Russia's defense industry, attributing Beijing as a primary contributor to Moscow's conflict in Ukraine by supplying critical components for weaponry.
Imposing restrictions on banks' access to the U.S. dollar, a currency widely used in global trade, is typically seen as the last resort due to the potential for forcing banks into insolvency.
Such action would pose a significant risk for China, particularly amidst an uncertain economic recovery and mounting debt.
The Wall Street Journal report did not specify which banks might be targeted, a crucial detail affecting the magnitude of impact on China's economy and its support for Russia.
In the past, the U.S. has imposed sanctions on smaller Chinese banks like the Bank of Kunlun for various reasons, including their involvement with Iranian institutions.
However, Washington has been hesitant to sanction major Chinese banks due to the significant global economic ramifications and potential strain on China-U.S. relations.
China’s foreign ministry spokesperson Wang Wenbin said on Tuesday that China was “firmly opposed” to the U.S. making “groundless accusations” about normal trade exchanges with Russia.
“We firmly oppose the US’s hypocritical moves of fanning the flames while deflecting the blame on China,” Wang said at a regular news briefing when questioned on the possible sanctions.
“China’s right to conduct normal trade and economic exchanges with Russia and other countries in the world on the basis of equality and mutual benefit should not be interfered with or disrupted,” said Wang.
China and Russia have engaged in more trade in Chinese currency yuan instead of the dollar in the wake of the Ukraine war, potentially shielding their economies from possible U.S. sanctions. The United States and its Western allies imposed sweeping sanctions on Russia’s financial system after the military conflict between Russia and Ukraine started in February 2022.
According to a Reuters report in March, many banks in China, the United Arab Emirates, and Turkey have heightened their sanctions-compliance protocols, leading to delays or outright rejections of money transfers destined for Moscow. These delays illustrate the significant ripple effects that U.S. restrictions can exert.