Evidence shows China helped Russia hide $80 billion in Treasury securities offshore

With the Joe Biden administration issuing a series of warnings about China’s material support to Russia, Foreign Affairs reported on Tuesday (local time) there are signs that China helped Russia hide billions of dollars in Treasury securities offshore. U.S. President Biden plans to visit Europe on Thursday to discuss countermeasures against China’s support to Russia.

Benn Steil, a senior fellow and director of international economics at Council on Foreign Relations (CFR), and CFR analyst Benjamin Della Rocca argued in the contributing article that Russia may have “secluded up to $80 billion in Treasury securities offshore” in mid-2018 and in late 2021.

They pointed out that Russia’s holdings of Treasury securities plunged from $96 billion to $15 billion in 2018, but in fact, Russia only sold about $43 billion of them. During the same period, however, there were rises in holdings of Treasuries in the Cayman Islands and Belgium’s international custodial bank Euroclear, which are the two most notorious tax havens on earth, by $20 billion and $25 billion, respectively.

In December last year, when Russia was preparing for an invasion into Ukraine, Euroclear’s Treasury bond holdings surged by $47 billion. According to the article, it coincides with the time, when Russia’s central bank reported an increase of $41 billion in its currency and deposits held at “other national central banks.” Based on this, the article raised a possibility that Russia deposited $41 billion with the People’s Bank of China (PBOC) and the Chinese central bank exchanged it for dollars, allowing Russia to hide the money at Euroclear.

“Such an arrangement would explain why the PBOC’s currency and deposits with China-headquartered banks jumped by an unprecedented $13 billion last December,” wrote Steil, pointing out that Russia would be able to withdraw the dollars whenever it pleases.


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