Lawmakers in Washington are reportedly working on measures to cut off sanctioned lenders from the global financial system FILE PHOTO A man walks past the People’s Bank of China (PBOC) building in Beijing, China, December 25, 2023. © Getty Images / Jiang Qiming / China News Service / VCG

US lawmakers are drafting sanctions targeting Chinese banks in a bid to disrupt Beijing’s continued cooperation with Russia, the Wall Street Journal (WSJ) reported on Monday, citing people familiar with the matter.

According to the report, the new measures are aimed at cutting off some Chinese financial institutions from the global financial system. The report does not mention which banks could be targeted. The sanctions in question would reportedly serve as “diplomatic leverage” for US Secretary of State Antony Blinken, who is due to visit China this week. According to WSJ sources, he plans to use the sanctions threat as a last resort in case diplomatic dialogue fails to persuade Beijing to curb its alleged military-related exports to Russia.

At a press briefing following a meeting of G7 foreign ministers earlier this week, Blinken called China the key contributor to Russia’s military operation against Kiev through its provision of critical components for weaponry.

“We see China sharing machine tools, semiconductors, other dual use items that have helped Russia rebuild the defense industrial base,” he stated.

Blinken to warn China against helping Russia in Ukraine conflict Blinken to warn China against helping Russia in Ukraine conflict

In December last year, US President Joe Biden issued a decree which enabled sanctions on foreign financial institutions that continue to deal with Russia. It targeted lenders outside US and EU jurisdictions that help Russia source sensitive items, which reportedly include semiconductors, machine tools, chemical precursors, ball bearings, and optical systems.

The decree has already affected Russia’s work with Chinese banks to a certain extent. Izvestia news outlet reported in February that some Chinese banks stopped accepting certain payments from Russia. Later, Aleksey Potapov, the deputy CEO of Russia’s MSP Bank, also stated that some Chinese banks have started to reject transactions from Russian banks. Kremlin spokesman Dmitry Peskov confirmed last month that such problems exist, but insisted they are surmountable and “cannot become an obstacle to the further development of trade and economic relations” between Russia and China.

Beijing has maintained a policy of neutrality on the Ukraine conflict, with Chinese officials repeatedly stating that the country is not selling weapons to either Russia or Ukraine. Earlier this month, Chinese Foreign Ministry spokesman Mao Ning insisted that China “regulates the export of dual-use articles in accordance with laws and regulations,” urging “relevant countries” not to “smear or attack the normal relations between China and Russia.”

For more stories on economy & finance visit RT’s business section