Russia and China may start using barter trade schemes this autumn. Reuters reports this with reference to sources involved in trade and payment transactions, Komersant ukrainskyi
.
Two of the sources said that the first deals may involve agricultural products.
Problems with bilateral payments were a key issue during Russian President Vladimir Putin’s visit to China in May. Although workarounds have emerged, such as the use of small regional Chinese banks that are harder for Washington to detect, the problem with payments remains unresolved. In addition, Chinese banks are leaving the Moscow Stock Exchange in droves due to sanctions.
“Barter deals will allow Moscow and Beijing to avoid problems with payments, reduce the visibility of their bilateral transactions to Western regulators and minimise currency risks,” the source said,
– one of the sources said.
According to a top manager of a major Russian bank, a barter scheme is already being prepared, although details remain classified. Another source connected with payment transactions said that negotiations are underway on deals where Russia will export food products.
Barter is a form of trade in which goods or services are exchanged directly, without the use of money. It allows parties to avoid currency risks and payment problems, especially in times of economic sanctions or instability. Barter transactions are often used when it is not possible or desirable to make financial settlements.
Barter trade between Russia and China has a long history, and the new agreements may be the first of their kind in 30 years. Kyle Shostak, deputy chairman of the board of directors of the Sino-Russian company Qifa, notes:
“In the 1990s, there were many barter deals between China and Russia. However, the development of the banking sector changed the situation, and all trade switched to bank payments.”
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The Russian Ministry of Economy has already published a document that provides Russian companies with guidance on barter operations, including step-by-step instructions on how to calculate costs and customs duties, the necessary accounting requirements, and contract templates for various types of barter transactions.
Barter trade could be a way out of the huge payment problems faced by both sanctioned and civilian goods, a Russian government source said.
However, despite expectations, Putin’s visit to China did not bring the desired progress.
“There are political issues that need to be resolved, but despite our leader’s visit to China, they remained unresolved,” the source said,
– the source said.
Deals are also being considered where Russian metals would be exchanged for machinery from China, a Russian industry source said.
The lack of transparency in traditional trade methods is a deterrent to bilateral trade between China and Russia, as is the lack of a direct payment mechanism. The SWIFT system is still used by banks that are not subject to sanctions, but it is “completely transparent for our friends, including the Americans,” said one payment intermediary.
“They are watching this open book closely. Therefore, the less SWIFT is used for interbank transactions between Russian and Chinese banks, the calmer it is,” he said,
– he added.
Despite the fact that the payment platforms of Russia and China are not yet connected, the development of a new payment bridge within the BRICS is ongoing, although it is expected to become operational no earlier than 2028.