He explained that if Chinese banks are found to be involved in dealings that go against the existing sanctions imposed on Russia, the US could then impose these secondary sanctions.
If Chinese banks are found to be “supporting Russian military operations in Ukraine” through their dealings with Moscow, they could face US “ultimatums”.
Hartley added: “Secondary sanctions are in effect an ultimatum – stop doing the business, which is legal in that jurisdiction, or the US will take steps to limit certain financial and business interests with the US economy.
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“Such steps may include the refusal of export/import licences and limiting access to financial services and loans. The threat of not accessing the US markets may therefore carry more weight than terminating the offending relationship.”
Sources say Chinese banks are increasingly scrutinising of Russia-related transactions – and even ceasing business altogether – to avoid backlash from the US.
The potential ramifications of these sanctions on Russia–China trade relations would be profound, particularly since the nations have enjoyed an “increased financial relationship” in recent years.
Hartley said: “Should China cease to trade with Russia it will severely impact Russia’s export market and the country’s income from the Asian market.”