G7 Likely to Warn Chinese Banks Against Trade with Russia

U.S. officials predict that the Group of Seven (G7), comprising seven of the world's wealthiest democracies, will issue a stern warning to smaller Chinese banks in the coming days to refrain from assisting Russia in evading Western sanctions. This was reported by two sources familiar with the matter to Reuters. According to Reuters, leaders gathering in Italy from June 14 to 16 are expected to focus during private sessions on the threats posed by the growing trade between China and Russia, its impact on Moscow's aggression in Ukraine, and the actions that need to be taken in response. An American official and another source indicated that these discussions are likely to result in explicit statements regarding Chinese banks. It is not expected that the U.S. and its G7 partners (the UK, Canada, France, Germany, Italy, and Japan) will take any immediate punitive actions against any Chinese banks during the summit, such as restricting their access to the SWIFT banking communication system or cutting off access to the dollar. The report suggests that the G7 leaders will focus on smaller Chinese banks rather than much larger ones. According to individuals who wished to remain anonymous regarding ongoing diplomatic efforts, discussions about the exact shape and content of the warning to Chinese financial institutions are still ongoing. Senior Biden administration officials state that Washington and its partners are prepared to use sanctions and stricter export controls to reduce Russia's ability to circumvent Western sanctions, including secondary sanctions that can be applied against banks and other financial centers. An informed source said that Washington is preparing to announce significant new sanctions on financial and non-financial matters in the coming days. Following Putin's attack on Ukraine, China and Russia have turned to using the yuan instead of the dollar, which may somewhat shield their economies from potential U.S. sanctions. Ukraine has shot down nine Shahed drones made by the Islamic Republic, and the UN reports that the number of civilian casualties in Ukraine has reached the highest level in the past year.