A recent report by Russian publication Kommersant has revealed that AliExpress parent company Alibaba Group Holding Ltd. (NYSE: BABA) has stopped accepting payments made in Rubles and halted deliveries to Russia. The report alleges that the Chinese multinational has “tightened conditions for Russian businesses” by making sweeping changes to the payment and delivery rules its online marketplace follows.
Kommersant pointed to a local economic expert who associated Alibaba’s recent anti-Russia policies with heightened fears of current economic sanctions against Russia affecting perceived allies. Most western countries issued sanctions against Russia after it invaded Ukraine in 2022, and countries such as the United States have taken significant steps to ensure Russia doesn’t have enough income to fill up its war coffers.
As a result of these sanctions, financial transactions between China, one of Russia’s major allies, and the Kremlin have become more complicated since early 2024. Russia has managed to keep its economy chugging along despite facing a myriad of sanctions over the past two years, but it may finally begin to feel the effect. Russia was slapped with sanctions that targeted the financial institutions that are funding the ongoing Ukraine war in late 2023, and unfortunately for the Kremlin, China is complying with these sanctions.
Reports indicate that the east Asian nation’s four largest banks have already stopped taking payments from Russian financial institutions named in the sanctions. Chouzhou Commercial Bank in China notified its Russian and Belarusian clients at the start of 2024 that it would terminate its business with them due to the challenges involved in making payments. In March, several publications reported that Chinese banks had also ceased taking payments in Chinese Yuan from Russia, dealing a major blow to financial institutions in the country that had switched to China’s currency to circumvent the sanctions.
Alibaba’s move to stop accepting Russian payments in both rubles and Chinese yuan came several months after the National Corruption Prevention Agency in Ukraine listed it as an international sponsor of war by paying taxes and thus offering Russia financial support. Furthermore, the agency alleged that Alibaba supported Russia by enabling the sale of copper ores extracted from Ukrainian territories occupied by the Russian army through its e-commerce platforms.
After failing to cause any notable damage to the Russian war economy through more than two years of sanctions, the West may have finally hit its mark with December 2023 sanctions. China has been one of the Kremlin’s largest allies since the war began and was responsible for funneling a lot of money and resources into Russia via a myriad of Chinese companies. With companies such as Alibaba now pulling out of the Russian market, Russia’s war chest could finally start to shrink.
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