China news: Xi gives Putin a huge blow as Beijing pulls the plug | World | News

Russia has been hit by a package of heavy economic sanctions by the West in the wake of its invasion of Ukraine. The sanctions targeted various sectors of the economy, most notably the financial sector and major Russian banks. The Central Bank of Russia (CBR) has frozen its assets in the US, UK, Canada and the EU, while the West tries to prevent it from using its $630 billion (£470 billion) in foreign exchange reserves.

Sberbank and Alfabank, two of Russia’s largest banks, have also been targeted and the US has imposed full-blocking sanctions on them in recent weeks.

Many Western financial institutions have fled Russia as a result of economic restrictions against the Kremlin.

Visa and Mastercard (MC) suspended operations in Russia last month, preventing Russians from making payments outside their country using cards issued by the two companies.

The Kremlin had hoped to strike a deal with China’s UnionPay system as an alternative to Visa and MC and to circumvent the ban.

However, UnionPay unexpectedly pulled out of talks with Sberbank and other Russian financial institutions on the West’s economic blacklist yesterday.

It is believed that the Chinese company fears that Western countries will impose secondary sanctions on the company if they cooperate with Moscow.

A banking source told Russian media website RBC.ru: “The project [to issue UnionPay cards] is temporarily on hold.

“They are not officially confirming it is related to sanctions, saying it is on hold until further instructions.”

Founded in March 2002, UnionPay offers bank card services similar to Visa and MC.

In 2015, it surpassed Visa and MC in the total value of customer payments to become the largest card payment processing organization in the world.

According to Retail Banking Research, the company accounted for one percent of Russian bank cards in 2020.

READ MORE: China ‘thought Russia would be successful’ in Ukraine

However, the EU remains Russia’s largest overall trading partner. Total trade between the two was worth nearly twice as much as China’s trade with Russia last year.

It comes as Shell continues its efforts to sell its stake in a major Russian gas project.

The company has said it will cut ties with Russia to comply with the sanctions.

The energy giant is said to be in talks with Chinese state-owned companies Cnooc, CNPC and Sinopec over its 27.5 percent stake in Sakhalin-2 liquefied natural gas company.

Shell warned its decision would affect its profitability, saying the move would cost him up to $5 billion (£3.8 billion).

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