How Will the US and EU’s Banking and Financial Sanctions on Russia Impact China?

Posted by Reading Time: 4 minutes


By Chris Devonshire-Ellis

We have analyzed the extent of the US and EU sanctions imposed on Russia and their impact on Chinese businesses operating in the Russian market.  


SWIFT will be terminated for all currently sanctioned Russian banks, including Sberbank, Alfa-bank, VTB, Otkrytie, and Promsvyazbank. Other non-sanctioned Russian and international banks are not affected. International payments for foreign businesses operating in Russia using sanctioned banks may still make and receive payments however there may be transfer delays. We recommend opening accounts with non-sanctioned banks, ideally the Russian subsidiaries of international banks who use financial agent services to process international payments.

China’s Union Pay cards are in regular use throughout Russia, while numerous Chinese banks provide business account services in Russia.

Financial services

Russia’s state-owned banks have been denied access to the European Union (EU) and the United States (US) capital markets and cannot obtain long-term loans. Correspondent bank accounts of Sberbank within US banks will be closed. International payments by Sberbank that are processed by US banks will be blocked. European Union banks will not provide investment and listing services for Russian state-owned defense companies. It should be noted that these sanctions affect the US and EU capital markets and will not impact regular foreign businesses operating in Russia.

Seizure of property

There has been discussion concerning the seizing of US and EU foreign-owned assets including funds, as well as production lines and other assets. While serious, we do not think that this is likely to occur, and if it should, would be at selected foreign investors with seizures made as a political statement. Should a whole-scale war break out between Russia and the West then the situation will escalate towards seizures.

Energy sanctions

The US and EU companies are prohibited from transferring any oil/refining technology or products to Russia even if sourced externally from the US or EU. This means that US and EU companies in this sector can be completely shut out of the Russian market.

There are mitigating options: transferring the business operations to a ‘sleeping company’ model, or exiting the market and liquidating the Russian entity. Contact us for assistance.

Aviation sanctions

More than 50 percent of Russia’s aviation market is leased from foreign suppliers and this impacts them. US and EU companies are not permitted to transfer any products or technology for use in aviation and space industries and are banned from selling spare parts and maintenance products to Russian airlines. Chinese suppliers may conduct risk analysis to ascertain the impact on reaching out to this market, please contact us at

Restrictions on air travel

Both Russia and the EU have blocked access to each other’s airspace and barred national airlines from flying to each other’s destinations. Kaliningrad, Russia’s Baltic enclave is now cut off by air from Russia as is Serbia, as overflying EU airspace is now banned.

Accessing Russia from Europe may instead be arranged by transiting through Helsinki (Finland), Baku (Azerbaijan), Istanbul (Turkey), or Abu Dhabi, Dubai, and Qatar (UAE). Alternatively, road and rail border checkpoints between Russia and the EU remain open, although delays can be expected. Regular flights between Russia and Asia remain unaffected.

Technology sanctions

US and EU companies are barred from transferring dual-use products to Russia, including semiconductors, telecommunications equipment, encryption, lasers, navigation, aviation, and maritime technologies. This can be mitigated by transferring such business operations to a ‘sleeping company’ model, transferring the business operations to an alternative CIS country (Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, or Ukraine), or liquidating the business. Contact us for assistance.


Russia has issued counter-sanctions that also affect normal foreign business practices in Russia. The central bank has introduced a temporary ban on securities brokers transferring assets overseas, and foreign holders of Russian securities may not exit or sell out their positions.

80 percent of all foreign export credits must now be converted to Russian rubles. Russian companies (not foreign) are prohibited from transferring or receiving money from their bank accounts held overseas, and they may not provide loans to foreign businesses. We recommend refraining from any securities transactions, checking your business foreign currency account and cash-flow needs, and being aware of potential foreign currency deviations and transactional delays.


The sanctions imposed by the US and EU appear to affect purely US and EU registered businesses and do not extend to China (or elsewhere). Nonetheless, China-based investors would be advised to ascertain whether the export technology bans imposed could infringe upon China’s ability to service the Russian market as an alternative. We can provide such risk analysis, please contact us at for advisory on China’s ability to service the Russian market. We are able to provide detailed answers to risk management issues in Chinese.

In terms of Russian businesses operating in China, Chinese banks have been reluctant to offer facilities due to fear of facing US sanctions themselves. However, we are aware of Russian bank accounts being permitted in Shanghai. Contact us here for information.

Related Reading:
China Passes the Anti-Foreign Sanctions Law to Counter US, EU Sanctions
Russia-China Bilateral Trade Up 30.9% in 2021

About Us

China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at

Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.