Are Banking Sanctions Damaging the Sino-Russian Alliance?

Key Points from FilterLabs’ Analysis:

• US sanctions against Russia are now affecting Chinese firms.
• These sanctions are extremely unpopular in Chinese media. They provoke indignation from the Chinese government and Chinese social media users.
• At the same time, Chinese online discourse indicates that people recognize and fear the sanctions’ long-term economic consequences. 

Western sanctions are making it harder for Russia to do business with China. 

That’s according to a recent Reuters report, which found that “tens of billions of yuan [were] in limbo” after Chinese banks started tightening compliance rules, probably in order to avoid “secondary sanctions for dealing with Russia.”

Losing Beijing as a trading partner would obviously be a huge blow to Putin’s wartime economy. With Talisman, our data platform, FilterLabs has been tracking this story in China. We wanted to know what people in China were saying about the sanctions. Was doing business with Russia worth the rising cost? 

As we looked at the discourse artifacts that Talisman unearthed, we found several stages of the narrative.

On June 12th, the US Department of the Treasury announced new sanctions on “foreign financial institutions for aiding Russia’s military-industrial base.” We looked at many of the artifacts from the following days and found many expressions of outrage, on videos and social media platforms like Weibo. Many users were reposting, and agreeing with, China’s deputy permanent representative to the United Nations. On June 14th he blasted the US policy, calling the sanctions “unilateral coercive measures [that] are a flagrant violation of the UN Charter and international law … and a concentrated embodiment of hegemonism and power politics.” His video appearance and his specific phrasing appeared frequently in Chinese online discourse, across a variety of social and news sharing platforms.  

Then, there was a noticeable shift in focus when the sanctions started to bite, in late August. There was ongoing indignation toward the US, but the discussion moved largely from outrage about the sanctions themselves to their possible effects on the Chinese economy—a subject that is already a source of much anxiety. 

Chinese media sites picked up a Wall Street Journal article about Chinese banks appearing on the “entity list” of companies doing business with Russia. Individual social media users repeated the news that billions of yuan were now frozen in transit. Again there was anger and outrage, with a spokesman for the Chinese Department of Commerce accusing the US of “long-arm jurisdiction” that hampered international trade. Some posts offered approving descriptions of how China’s industries and leadership are responding. But much of the discourse focused on the possible negative impacts, or directly weighed the value of China’s relationship with Russia compared to its ability to trade with the US. For example, one forum user noted that 1,300 firms could potentially be affected. A headline announced that the sanctions “make Chinese and Russian small companies cry bitterly.” An article by Kremlin official Dmitry Medvedev was received negatively, attracting many critical comments. And one post on the social media platform Weibo cut right to the chase: “Only those brainless and fanatical Russian fans would demand that these banks conduct financial transactions with Russia at all costs. In reality, truly rational bankers would of course choose to stand on the side that is not subject to US sanctions. After all, if the sanctions lead to a significant reduction in the bank's operating income, it would be a serious economic loss!” 

It’s clear that the US sanctions are unpopular in Chinese online discourse. They provoke outrage and defiant criticism of the United States. At the same time, it’s also clear that many media commentators and individual social media users in China are concerned about the effects the sanctions could ultimately have on China’s economy. 

In the short term, then, the sanctions will probably further sour relations between Beijing and Washington. But in the long term, they may force uncomfortable questions about the cost of doing business with Moscow.