On Wednesday, Russian newspaper RBC reported that UnionPay, the Chinese state–led financial services network, had suspended negotiations with Russian banks on issuing new bank cards for their customers, now unable to make purchases outside Russia as a result of Visa’s and Mastercard’s withdrawal.
The payment processor is reportedly worried about being the target of sanctions from the U.S. and other countries if it works with sanctioned Russian banks. These sanctions might include being barred from doing business with an American individual or company, or importing goods to or exporting goods from the U.S. Effectively, the sanctions could sever UnionPay from the global financial system—which is a lot more lucrative than Russia’s domestic scene.
China’s three major state-owned oil companies have reportedly been warned by Beijing to avoid making new investments in Russia, and last month, state-owned oil producer Sinopec suspended talks on a major joint venture in Russia with Sibur, the country’s largest petrochemical company.
Both the Bank of China and the Industrial and Commercial Bank of China, two of China’s largest lending banks, have also stopped offering clients finance options for purchases of Russian commodities, reports Bloomberg.
And Huawei Technologies—one of the few remaining suppliers of 5G technology in Russia after Nokia and Ericsson pulled out of the country in February—has suspended new orders of network equipment for Russian customers, notes Russian outlet Izvestia.
Officially, China has refused to join Western sanctions on Russia, deeming them counterproductive to the peace process. Chinese officials have also blamed the U.S. and Western organizations like NATO for escalating tensions between Russia and Ukraine.
However, in practice, China may be trying to balance continued economic links with Russia while preserving its relationship with the West. China doesn’t want to give “Western countries any excuses for sanctions, bans, or boycotts,” Bruce Pang, head of macro and strategy research at China Renaissance Securities, told Fortune last month.
