(Reuters) -The U.S. is drafting sanctions that threaten to cut some Chinese banks off from the global financial system, which officials hope will stop Beijing’s commercial support of Russia’s military production, the Wall Street Journal reported on Monday, citing people familiar with the matter.
As Secretary of State Antony Blinken visits China this week, the question is whether this potent financial threat can dent the China-Russia trade enabling Moscow to rebuild its military after losses in Ukraine, the report says.
Blinken on Friday criticised Chinese support for Russia’s defence industry, saying Beijing was the primary contributor to Moscow’s war in Ukraine through its provision of critical components for weaponry.
In recent weeks, U.S. officials have intensified pressure on China, warning Washington stands ready to take action against Chinese financial institutions facilitating trade in goods that have both civilian and military applications.
The People’s Bank of China and the National Financial Regulatory Administration, China’s top banking regulator, didn’t immediately reply to Reuters’ requests for comments.
China and Russia have fostered more trade in yuan instead of dollar in the wake of the Ukraine war, an effort that could shield their economies from potential escalating U.S. sanctions.