China's support wanes. Financial strains hit Putin amid sanctions
President of China, Xi Jinping, has steadfastly supported Vladimir Putin through the years. Yet, as German media suggests, economic ties are increasingly strained by Western sanctions, framing China's reliance as a catalyst for Putin's decline.
10:08 AM EDT, April 3, 2024
Russia's reliance on China offers little advantage to Putin. Following US sanctions, Chinese banks have imposed restrictions on Russian clients, dramatically impacting Russia's economy, as the German "Münchner Merkur" reported. This move is expected to have dire consequences for Russia's financial health.
Russia faces Western pressure
Many of Russia's gold and foreign reserves are held in Chinese yuan, a strategy Western powers are keen to undermine.
Despite Russia's pursuit of financial cooperation, China has noticeably pulled back. Russia's Finance Minister, Anton Siluanov, disclosed that an arrangement for loans in yuan hasn't been finalized, highlighting the currency's pivotal role in Putin's quest to break away from the dominance of the American dollar, as interpreted by German analysts.
Complications extend beyond negotiation tables. Bloomberg has uncovered that Russian businesses borrowing yuan are grappling with soaring repayment costs, complicating their operations and ballooning their debts.
The challenges don't stop there. According to German analyses, Turkish banks, wary of US sanctions, sever ties with Russian firms and impose stricter rules on Russian nationals. "Russian oil companies face payment delays of several months or outright transaction denials, as banks in Turkey, China, and even the United Arab Emirates anticipate secondary sanctions" - the report describes.
