Chinese banks have begun blocking payments from Russian companies for electronic component purchases since late March, the Russian state-controlled media outlet Kommersant reported on April 12.
Some Russian businesses connected the complications to Western sanctions. The pressure of trade restrictions imposed on Moscow over its invasion of Ukraine has been recently putting a heavy strain on Russia's international business and financial ties, namely with China.
The first issues with purchases for electronics started back in December 2023, mainly related to finished products, Kommersant said, citing business sources.
Since last month, Russian companies reportedly started receiving letters that their payments are not going through even when buying components for servers, storage systems, and laptops.
Subscribe to the Newsletter Ukraine Business Roundup
Kommersant's business source said that payments were blocked "even for those organizations that have entered into long-term contracts for the production and supply of components for electronics assembly with Russian clients."
"China, in fact, has a monopoly in components. Almost 100% of the world's electronic component supply is there," the source said.
Electronic parts are a critical item in Russia's defense industry production. U.S. Treasury Secretary Janet Yellen recently warned Beijing of "significant consequences" if Chinese companies provide support for Russia's war against Ukraine.
Russian media reported on March 21 that several Chinese banks had stopped accepting payments from Russia in Chinese yuan, fearing ramifications of U.S. sanctions.
In February, China's Chouzhou Commercial Bank ended operations in Russia and Belarus, while three other major Chinese banks stopped accepting any payments from sanctioned Russian institutions.
Read also: US confirms warning allies about China’s support for Russia’s war in recent months