Commentary
The larger Chinese banks, in response to stern U.S. warnings, have this year been exiting transactions involving Russia.
Are America’s sanctions efforts finally working?
No. Beijing is merely shifting transactions to smaller banks and non-banking channels. China, to help Russia’s war effort in Ukraine, is employing a decades-old stratagem: the shell game.
At best, America’s sanctions are crimping the fast-growing China-Russia trade, not ending it.
Related Stories
There is no mystery why China’s big banks have run from Russia: These behemoths—the four largest banks in the world ranked by assets are Chinese—know the United States can effectively impose a death sentence. The Secretary of the Treasury, for instance, can designate, pursuant to Section 311 of the USA PATRIOT Act, Chinese banks to be of “primary money laundering concern.” Designated banks can no longer clear dollar transactions through New York, where every dollar transaction clears.
As big Chinese banks began to withdraw from Russian business, other Chinese banks moved in. “Some Chinese companies are turning to small banks at the border,” Reuters reported in late April.
The move to smaller banks had to have been orchestrated in Beijing. The Chinese central government and the Communist Party tightly control the banking system, and the banks cannot do anything—especially something as sensitive as helping Russia in the middle of a major war—without approval from the top of the Chinese political system.
China’s regime is playing Americans for fools. It is time for Washington to sanction all Chinese banks, all other Chinese financial institutions, and all Chinese corporates, treating them as one single organization. It is time for American officials to stop playing what has become sanctions whack-a-mole.
The Chinese Communist Party, which should also be sanctioned, runs a unitary state and demands absolute obedience from all parties in society. Banks and other enterprises operate in separate corporate shells and may have separate owners, but they are not separate.
In short, Chinese society is not organized the same way as America’s.
Washington, by patiently going after one sanctions-busting entity after another, gives China plenty of time to adjust and make American sanctions ineffective. Sanctions will work, applying Demarais’s logic, if they are immediately applied against all Chinese entities to produce maximum shock.
There is no point in imposing sanctions that never have a chance of stopping offending behavior.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Can you please rewrite this sentence?
Source link
