What are the U.S. sanctions on Chinese banks? How to sanction them? Which banks will be sanctioned?

What are the U.S. sanctions on Chinese banks? How to sanction them? Which banks will be sanctioned?

Baijia Trade Night Voyage 2024-04-25 10:09

Morning Mist / Repost

According to Lianhe Zaobao, U.S. Secretary of State Antony Blinken is about to embark on his second visit to China in office, and at this important moment, the United States has released rumors, claiming that it is drafting sanctions and using the most powerful financial "long-arm jurisdiction" tool against China, in an attempt to exclude some Chinese banks from the global financial system, so as to weaken trade between China and Russia.

This move is obviously a diplomatic bargaining chip prepared by the United States for Blinken's visit to China, with the intention of exerting pressure on China and Russia through financial means.

It is reported that Blinken's visit to China will focus on economic and trade cooperation between China and Russia, especially China's support for Russia's military production.

Although China has not directly sent weapons to Russia since the outbreak of the Russia-Ukraine war, the United States and its allies are unhappy with China's continued provision of key technologies and products, such as chips, cruise missiles and engines, to Russia to support its industrial reconstruction. Blinken is expected to make clear U.S. concerns to the Chinese side and suggest that the U.S. is considering tougher sanctions.

In early April, U.S. Treasury Secretary Janet Yellen sent a clear signal during her visit to China, warning that any bank that facilitates major transactions that deliver military or dual-use products to Russia's defense industrial base could face U.S. sanctions.

The Chinese banks involved in this case, as key intermediaries in commercial exports to Russia, may have a serious impact on their cross-border payment and trade finance business.

In fact, the United States has long acted on financial sanctions.

Back on December 22, 2023, U.S. President Joe Biden signed Executive Order 14114, giving the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) new authority to sanction foreign financial institutions that provide "significant transactions" in "specific industries" in Russia.

"Foreign financial institutions" include, but are not limited to, depository institutions, banks, money services, trusts, insurance, securities, futures and options, foreign exchange dealers, commodity exchanges, clearing firms, investment firms, credit card companies, employee benefit plans, dealers in precious metals, gems or jewelry, and any other foreign entity.

What industrial-critical projects involving foreign financial institutions in Russia may be subject to sanctions?

Pursuant to Article 11 of Executive Order 14114, OFAC issued a separate key Russian program, identifying 29 projects in 8 priority categories that support Russia's military-industrial base that could trigger secondary sanctions against foreign financial institutions:

(1) Machine tools and manufacturing equipment, such as: numerical control machine tools (CNC), rapid prototyping manufacturing machines (AM), semiconductor manufacturing equipment, etc.;

(2) Materials used in the manufacture of semiconductors and related electronic products, such as: photoresist materials, printed circuit board substrates (PCB), oscilloscopes, automatic test equipment, data acquisition systems, etc.;

(3) Electronic test equipment, such as: signal generator, pulse generator, spectrum analyzer, etc.;

(4) Chemical precursors of propellants, propellants and explosives, such as: explosive agents (RDX), high melting point explosives (HMX), etc.;

(5) Lubricants and lubricant additives, such as turbine oil, etc.;

(6) Bearings, such as high-precision ball bearings, roller bearings, etc.;

(7) Advanced optical systems, such as thermal sights, thermal imaging arrays, infrared focal plane arrays, etc.;

(8) Navigation tools, such as: inertial navigation system (INS), inertial measurement unit (IMU), fiber optic gyroscope (FOGS), etc.

What are the secondary sanctions that FFIs may be subject to?

（1）禁止或限制在美国开展代理行或通汇账户，列入OFAC-CATPA名单（OFAC-Correspondent Account or Payable-Through Account Sanctions List）；

（2）冻结资产，列入特别指定国民名单OFAC-SDN（Specially Designated Nationals And Blocked Persons List ）。

In the wake of Russia's invasion of Ukraine, the United States, together with its allies, has imposed a series of economic sanctions and export controls on Russia. The sanctions target Russian financial institutions, including freezing the assets of their institutions in the United States and preventing U.S. entities from conducting most types of transactions with them.

In addition, the United States has also strengthened controls on certain goods and technologies exported to Russia, and even included more third-country products in the scope of export controls to Russia.

However, the local currency settlement rate for trade between China and Russia has exceeded 90%, which means that trade between China and Russia can continue to operate normally even in the face of external financial pressures, such as the United States cutting off access to US dollars for Chinese banks.

The Ministry of Foreign Affairs responded

Foreign Ministry spokesman Wang Wenbin said that while the United States has introduced a large-scale aid bill to Ukraine, it has made groundless accusations against normal economic and trade exchanges between China and Russia, which is extremely hypocritical and irresponsible. China firmly opposes this.

Wang Wenbin said that on the Ukraine issue, China has always adhered to an objective and fair position, actively promoted peace talks, and promoted a political settlement. China has always controlled the export of dual-use items in accordance with laws and regulations. China is not the creator or party to the Ukraine crisis, and has never added fuel to the fire, let alone taken advantage of the opportunity, nor accepted to shift the blame.

Wang Wenbin stressed that it must be pointed out that China's right to carry out normal economic and trade exchanges with other countries, including Russia, on the basis of equality and mutual benefit, brooks no interference or undermination, and China's legitimate rights and interests brook no infringement. The only right choice is to take into account the legitimate security concerns of all parties and establish a balanced, effective and sustainable European security framework through dialogue and negotiation.

Source: 2024-04-25 Baijia Trade Night Flight

https://baijiahao.baidu.com/s?id=1797190046869570039

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