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Chinese lenders have stepped in to offer billions of dollars to Russian banks as Western institutions withdraw from the country during the first year of Moscow’s invasion of Ukraine.
The moves by four of China’s largest banks are part of Beijing’s efforts to promote the renminbi as an alternative global currency to the dollar.
China’s exposure to the Russian banking sector quadrupled in the 14 months to the end of March this year, according to the latest official data analyzed for the Financial Times by the Kyiv School of Economics.
Lenders have replaced Western banks, which have come under intense pressure from regulators and politicians in their home countries to exit Russia, while international sanctions have made doing business more difficult.
“The loans provided by Chinese banks to Russian banks and credit institutions, most of which are a case of the yuan replacing the dollar and the euro, show that sanctions are working,” said Andrey Onoprienko, deputy director for development at the World Bank. Kyiv School of Economics, which collected the data. Here’s more on Russia’s embrace of the renminbi.
Chinese economy: Slowing growth in China is raising warnings of the spread of infection in Asia, where falling consumer demand and a slowdown in manufacturing have hit the region.
Join Financial Times reporters and expert guests for a joint event to assess the implications of China’s economic slowdown and its struggle with deflation. Send your questions and Register for free here.
Here are the other things I’m monitoring today:
Grain deal: Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin meet in Sochi to discuss resuming grain exports through the Black Sea. Russian forces launched a major drone attack on the Odessa port area in southern Ukraine yesterday, ahead of the talks.
Economic data: Germany announces trade balance figures for July.
Markets closed: The United States celebrates Labor Day.
UK policy: The House of Commons and House of Lords return after the summer recess, allowing an injunction to be deployed for a by-election in Midfordshire, sparked by the long-awaited resignation of former Culture Secretary Nadine Dorris.
Five more stories top
1. Exclusive: The London Stock Exchange Group has drawn up plans for new business in digital markets, Claiming that this will make it the first major exchange to offer large-scale trading of traditional financial assets on the blockchain technology known for powering cryptocurrency. Read the full story.
opinion: Facing a long, cold winter, the LSE’s efforts to gain a foothold in private capital and build bridges with public markets are worth a try, writes Helen Thomas.
2. Global growth is likely to slow next year This is due to continued high interest rates in major economies, with production expanding by 2.1 percent, according to the forecast compilation. This is lower than estimates of 2.4 percent for this year, due in part to base effects from unexpectedly strong consumer demand and labor markets this year. Here are more details about the 2024 cuts.
3. Volodymyr Zelensky said he would replace his defense minister, Oleksiy Reznikov, in a move that represents the biggest change for his government since Russia launched its large-scale invasion last year. Rustam Omerov, who currently supervises the Privatization Agency of Ukraine, will assume this role. This is why the president made this move.
4. British banks are seeking to increase attendance in offices as they require time in the era of working from home. Lloyds Banking Group is launching a glamorous campaign that includes free food for employees who are required to spend at least two days a week in the office, highlighting the efforts of UK employers who see remote working as reducing productivity.
5. Exclusive: EU plans to ban combustion engine vehicles spark price war with Chinese automakers, BMW’s chief executive said, warning of the “imminent danger” facing European manufacturers from rival rivals in China producing electric cars. Here’s more from the FT’s interview with Oliver Zipse.
Battery racing: Chinese manufacturers are taking advantage of government subsidies to build battery factories at a speed far exceeding domestic demand, raising concerns that the country will squeeze out global competition.
Great reading
Dry rivers are becoming an increasingly common sight in England, which experienced its hottest June on record. Restrictions on the use of hose pipes have become an annual phenomenon, and one area ran out of supplies this summer. How can an island known around the world for its humid climate so frequently struggle to keep its water flowing?
We read too. . .
Today’s chart
The after-effects of higher European energy prices mean that the region faces a more difficult inflation problem than the United States. Investors and analysts are increasingly warning of the risk of divergence in economic fortunes across the Atlantic and the responses of policymakers.
Take a break from the news
Cantonese food is one of the top four cuisines in China, and is known in the West as a cheap meal. But restaurants like The Chiefman in Hong Kong are changing perceptions abroad. Owner Danny Yip tells FT Magazine why China’s famous regional cuisine isn’t what you think.
Additional contributions from Benjamin Wilhelm