That coincided with more trade between the two countries as Russia was largely shut out of Western markets as well as the global financial system.

By June, the yuan accounted for 99.6% of the Russian foreign exchange market, according to Bloomberg, which cited data from Russia’s central bank. And Russian commercial banks ramped up corporate loans denominated in yuan.

But this dependence on the yuan is now backfiring as top Russian banks are running out of the Chinese currency, Reuters reported on Thursday.

“We cannot lend in yuan because we have nothing to cover our foreign currency positions with,” German Gref, CEO of top Russian lender Sberbank, said at an economic forum.

That’s because the U.S. expanded its definition of Russia’s military industry earlier this year, thereby widening the potential scope of Chinese firms that could get hit with secondary sanctions for doing business with Moscow.

As a result, Chinese banks have been reluctant to transfer yuan to Russian counterparts while servicing foreign trade payments, leaving transactions in limbo for months. With yuan liquidity drying up from China, Russian companies have tapped the central bank for yuan via currency swaps.

At the start of this month, banks raised a record 35 billion yuan from Russian’s central bank through these swaps, according to Reuters. And banks were expecting more help.

“I think the central bank can do something,” Andrei Kostin, CEO of second-largest bank VTB, said Thursday. “They hopefully understand the need to increase the liquidity offer through swaps.”

But on Friday, Russia’s central bank dashed those hopes, calling on banks to curb corporate loans denominated in yuan.

The Bank of Russia also said in a report that swaps are only meant for short-term stabilization of the domestic currency market and are not a long-term source of funding, according to Bloomberg. But rather than simply filling the roles that dollars and euros did, yuan loans have expanded.

“The increase in yuan lending was partly caused by the replacement of loans in ‘toxic’ currencies, but 41% of the increase was down to new currency loans,” the bank said.

The central bank also released a survey that showed a quarter of Russian exporters had trouble with foreign counterparts, including blocked or returned payments even when dealing in supposedly friendly countries. And about half of exporters said the problems got worse in the second quarter from the prior quarter.

The overall Russian economy has been propped up by the government’s wartime spending as well as oil exports to China and India. But the combination of busy factories and labor shortages due to military mobilizations have stoked more inflation.

Researchers led by Yale’s Jeffrey Sonnenfeld warned the seemingly robust GDP data mask deeper problems in the economy.

“Simply put, Putin’s administration has prioritized military production over all else in the economy, at substantial cost,” they wrote. “While the defense industry expands, Russian consumers are increasingly burdened with debt, potentially setting the stage for a looming crisis. The excessive focus on military spending is crowding out productive investments in other sectors of the economy, stifling long-term growth prospects and innovation.”

By Sebin Choi and Daewoung Kim

SEOUL (Reuters) – More than 30,000 protesters gathered in South Korea’s capital in broiling heat on Saturday, demanding more aggressive action by the government to combat global warming.

With temperatures exceeding 30 degrees Celsius (86 degrees Fahrenheit), protesters young and old marched in the country’s biggest demonstration so far this year, snarling traffic in central Seoul.

They waved large banners reading “Climate justice,” “Protect our lives!” and “NO to climate villain (President) Yoon Suk Yeol’s administration”.

“Truth is, without the air conditioner this summer was not liveable and people could not live like people,” said Yu Si-yun, an environmental activist leading the protest.

“We are facing a problem not unique to a country or an individual. We need systemic change and we are running out of time to act.”

Organised by the 907 Climate Justice March Group Committee, the protest followed a ruling last month by South Korea’s top court that the nation’s climate change law fails to protect basic human rights and lacks targets to shield future generations.

The 200 plaintiffs, including young climate activists and even some infants, told the constitutional court that the government was violating citizens’ human rights by not doing enough on climate change.

South Korea, which aims to be carbon-neutral by 2050, is the biggest coal polluter after Australia among the Group of 20 big economies, with a slow adoption of renewable energy. The government last year lowered its 2030 targets for curbing industrial greenhouse-gas emissions but kept its national goal of cutting emissions by 40% from 2018 levels.

Even South Korea’s kimchi has fallen victim to climate change. Farmers and manufacturers say the quality and quantity of the napa cabbage used in the ubiquitous pickled dish is suffering due to intensifying heat.

“Feel how long this summer is,” said Kim Ki-chang, a 46-year-old novelist who was participating in the protest for a third straight year.

“This would be a much bigger threat and survival issue to younger generations than the older ones, so I think the older generation should do something more actively for the next generation.”

Seoul has had a record 20 consecutive nights defined as “tropical”, with low temperatures remaining above 25 C (77 F).

Protest organising committee member Kim Eun-jung said the demonstrators chose the popular Gangnam financial and shopping area this year, not the Gwanghwamun area they used last year, to have their voices heard by the many big corporations there that the group blames for carbon emissions.