In the middle of the current conflict between Russia and Ukraine, China‘s most important financial service named, Unionpay, has become the recent financial services network to halt agreements with Russian banks, following the closure of payment giants Visa and Mastercard’s services in the country due to the crippling sanctions.
According to media sources, the payment processor is concerned about being sanctioned by the United States and other nations if it works with banned Russian banks. These restrictions might include being restricted from doing business with an American individual or firm and importing or exporting items to or from the United States. The sanctions might cut UnionPay off from the global banking system, which is far more profitable than Russia’s local market.
According to 2020 Nilson Report statistics, Unionpay is the world’s second-largest card brand, with a 32% market share, and is a state-owned company registered under China’s central bank. On Wednesday, the Russian tabloid RBC stated that UnionPay had halted talks with Russian banks about providing new bank cards to its users, who are currently unable to make transactions outside of Russia due to Visa and Mastercard’s pullout. (However, due to Russia’s local Mir payment system, Russians could still use the cards to make internal transactions.)
The G7 leaders have already committed to a moratorium on new investments in critical areas of the Russian economy. So when Russia’s assault on Ukraine forced payment majors Visa and Mastercard to cease operations in the nation, Moscow anticipated that it could rely on the Chinese alternative, UnionPay, to patch the gaps in its domestic banking system. The idea, however, appears to have failed, as UnionPay has opted not to grow its footprint in the country.
According to Bloomberg, two of China’s biggest banks, the Bank of China and the Industrial and Commercial Bank of China, have also stopped extending credit to clients for the purchase of Russian commodities. In addition, Izvestia reports that Huawei Technologies has stopped new orders of network equipment for Russian customers, making it one of the few remaining suppliers of 5G technology in Russia since Nokia and Ericsson left in February.
UnionPay’s reluctance to enter the Russian market is the best evidence of significant Chinese corporations’ becoming hesitant to do business in Russia. However, China has not formally joined Western leaders in slapping sanctions on Russia. China has declined officially to accept Western sanctions against Russia, claiming that they are harmful to the peace effort. According to US media reports, Chinese authorities have also accused the US and Western organizations such as NATO of escalating hostilities between Russia and Ukraine.
Furthermore, China does not want to provide “western nations with any justification for bans or boycotts. China has recently encouraged its enterprises to be “cautious” while doing business with Russia since it looks to be capitulating to Western countries that have slapped harsh sanctions on Russia. (ANI)
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