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The China-led Asian Infrastructure and Investment Bank is pausing deals involving Russia and Belarus because of the war in Ukraine, it said Thursday.

An announcement from the bank suggested the move was motivated by the new sanctions passed against Moscow and Minsk in the wake of Russia’s invasion of its neighbour.

“AIIB is a multilateral organization created by an international treaty, and adherence to international law lies at the very core of our institution,” the bank said. Citing “the evolving economic and financial situation,” it had “decided that all activities relating to Russia and Belarus are on hold and under review.”

Launched in 2014 as a rival of sorts to the World Bank, the AIIB is headquartered in Beijing, and China is its biggest shareholder by far, with voting power equivalent to the next five largest members.

The move shows how sanctions are forcing Beijing’s hand to a certain extent even as it attempts to walk the line of supporting its ally Moscow while claiming neutrality over Russia’s war with Ukraine.

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While there have been efforts to recast Beijing as a potential peacemaker this week, Chinese officials have consistently blamed NATO and Washington for the situation in Ukraine, refusing to call Moscow’s actions an invasion and abstaining from two votes criticizing Russia at the United Nations.

Chinese President Xi Jinping met with Russian leader Vladimir Putin on Feb. 4, ahead of the Beijing Olympics, after which the two countries released a joint statement in which China backed Russia’s calls for an end to NATO expansion and called on the West to “respect the sovereignty, security and interests of other countries.”

Since the invasion of Ukraine, there has been considerable speculation over whether Mr. Xi was briefed by Mr. Putin about his plans, and to what extent. According to a report Wednesday by The New York Times, citing unnamed U.S. administration sources, “senior Chinese officials had some level of direct knowledge about Russia’s war plans or intentions before the invasion started” and requested that action not be taken until after the Olympics.

At a press conference Thursday, Chinese Foreign Ministry spokesman Wang Wenbin denounced such claims as “despicable” and “fake news” reports and accused Western officials of attempting to divert blame for the war.

The Beijing Olympics ended on Feb. 20. The next day, Russian President Vladimir Putin officially recognized two breakaway pro-Moscow regions in eastern Ukraine, and on Feb. 24 launched a full-scale invasion of the country.

In a call with Mr. Putin last Friday, as Russian forces bombed cities across Ukraine, Mr. Xi said China supported Moscow’s efforts to “resolve the Ukraine crisis via dialogue.” Meanwhile, Chinese Foreign Ministry officials refused to term the action an invasion and anti-war voices were censored within China.

Since then – facing a growing backlash in Europe, where Beijing has been trying to improve ties – China has attempted to position itself as a neutral party, promoting peace talks to end the war. In a call with his Ukrainian counterpart on Tuesday, Chinese Foreign Minister Wang Yi said Beijing “always advocated respect for the sovereignty and territorial integrity of all countries.”

“On the current crisis, China calls on Ukraine and Russia to find a solution through negotiations, and supports all constructive international efforts that are conducive to a political settlement,” Mr. Wang said.

According to the Chinese readout, Ukrainian Foreign Minister Dmytro Kuleba told Mr. Wang “he looked forward to China’s mediation efforts for the ceasefire.”

While Chinese analysts have held up Beijing as a potentially ideal peacemaker, given its strong ties to both Moscow and Kyiv, this attempt to walk the line between not criticizing Russia while claiming neutrality has been greeted with widespread skepticism in the West.

“China is not in a credible position,” said Jude Blanchette, a Washington-based analyst at the Center for Strategic and International Studies. “Functionally speaking, China is not a neutral party, its support for Moscow is implicit on the verge of explicit. It is not seen as a good faith serious broker.”

Mr. Blanchette said the reporting this week about the potential warning Beijing received will make it even more difficult for China to change this narrative, and could increase pressure from Europe and the U.S. to take a stronger position against Russia, one that it isn’t clear Mr. Xi is willing to take.

He said Mr. Xi had “made arguably one of the biggest foreign policy blunders in his two terms in office by aligning himself with Putin on the eve of the Ukrainian invasion,” and that it could dramatically backfire in terms of China relations with the West.

“Beijing is now trying to slowly back out of the room or paint itself as a peacemaker,” Mr. Blanchette said, but “there are a lot people in European and Western capitals who are going to do their damnedest” to make sure China shares the blame with Russia for the crisis in Ukraine.

The AIIB is not the only China-linked body that has been forced to take action this week as a result of the backlash against Moscow. Also on Thursday, it was announced that athletes from Russia and Belarus would be barred from competing in the Beijing Winter Paralympics after other countries threatened to withdraw.

In a statement, International Paralympic Committee president Andrew Parsons said “we are very firm believers that sport and politics should not mix.”

“However, by no fault of its own, the war has now come to these Games and behind the scenes many governments are having an influence on our cherished event,” he added.

Last week, the International Olympic Committee – which was widely criticized for its decision to grant the Games to China despite Beijing’s numerous human-rights abuses – condemned Russia’s invasion of Ukraine, saying it was in breach of the Olympic Truce, which runs until the closing of the Paralympic Games.

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