Chinese companies have begun to refuse direct supplies to Russia - media

Trade between Russia and China continues to be hampered by sanctions, with Chinese companies refusing to supply goods directly to Russia, reports The Moscow Times, according to UNN.

Details

In mid-July, Chinese suppliers began demanding that goods be exported to Russia through third countries, said Alexey Poroshin, CEO of First Group JSC.

First of all, this concerns goods that have been included in the stop-lists of codes for foreign economic activity, such as electronics, confirmed Ilona Gorsheneva-Dolunts, a representative of the Russian Support in China. However, according to her, there are also cases with goods that are not on this list.

Initially, suppliers made some concessions, but now the situation is getting more complicated - some buyers are being forced to face the fact, said Alexey Razumovsky, commercial director of Impay Rus.

Suppliers who are unable to accept payments from Russian companies through Chinese banks ask to ship goods through third countries, says Ekaterina Kizevich, CEO of the importing company Atvira. For such suppliers, the only way to get money is through other countries, so they need to have documents that the goods have been shipped there, the expert explained.

According to her, Chinese companies are beginning to fear the "Russian footprint," but there are also those who want to work with Russian businesses and continue to ship goods as before. The routes for the delivery of goods through third countries have not yet been "tested" and it will take time to develop them so that there are no difficulties with transportation, Kizevich added.

Businesses are looking for alternative ways, but this leads to additional costs - in fact, agents' commissions are added, says Rozumovsky. According to him, this will lead to an increase in the final cost of goods and, as a result, to a reduction in the volume of imported products.

In general, the main schemes for the delivery of goods through third countries were developed in 2022, said Pavel Kuznetsov, deputy director of the Institute of China and Modern Asia of the Russian Academy of Sciences. He drew attention to a threefold increase in imports from Kyrgyzstan, as well as a 1.5-fold increase in supplies from Kazakhstan. It is also reported that the countries of Southeast Asia, Turkey and the Persian Gulf states are involved in this process. In addition, according to Kuznetsov, pseudo-transit shipments are often used, when the cargo does not actually reach a third country.

Addendum

Earlier, Russia's trade with China was hampered by the refusal of Chinese banks to accept payments from Russian companies. This happened after the introduction of the EU's 12th package of sanctions against Russia and US President Joe Biden's decree, which allowed the US Treasury to impose restrictions on third-country banks for cooperation and assistance to the Russian military-industrial complex and sanctioned companies.

At the same time, according to the General Administration of Customs of the People's Republic of China, in January-June this year, trade between China and Russia increased by 1.6% compared to the same period in 2023 and amounted to $136.67 billion.