Russia and China may switch to barter in trade in the fall due to Western sanctions - Reuters
Kyiv • UNN
Russia and China plan to use barter trade in the fall due to payment problems. This will allow them to circumvent Western sanctions and reduce the visibility of transactions for regulators.
Due to Western sanctions that prevent payments in foreign currency, Russia and China may switch to barter in their mutual trade this fall. Reuters reports and UNN , citing its own sources.
Details
Sources suggest that Russia and China will start using barter trade schemes in the fall. First of all, it is about agreements related to agriculture.
In this way , Moscow and Beijing are trying to limit the use of US-controlled banking systems.
Reuters emphasizes that payment delays were high on the agenda during Russian President Vladimir Putin's visit to China. But even though workarounds have emerged, such as the use of small regional Chinese banks that are harder for Washington to detect, problems with payments remain.
Barter trade is expected to allow Moscow and Beijing to circumvent payment problems, reduce the visibility of Western regulators in their bilateral transactions, and limit currency risk.
Reuters' sources say Russia is already developing rules for barter trade. They also suggest that China is likely to do the same.
In particular, a top manager of a large Russian bank reported that a barter scheme was being prepared, but refused to disclose details. Also, one of the sources working in the payments sector said that food trade with Russia is being discussed.
Addendum
Reuters reminds us that barter deals between Moscow and Beijing were common before the collapse of the Soviet Union and continued into the 1990s. But the deals currently being discussed would be the first in about 30 years.
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Barter trade schemes were abandoned long ago, mainly due to the high development of the banking sector.
The journalists also point out that this winter, the Russian Ministry of Economy published a document that provides Russian companies with advice on barter operations and points out the pitfalls to avoid.
The document describes barter trade as a good way to avoid international payments and cash.
A source in the Russian government emphasizes that barter trade offers a way out of the huge problems with payment for both sanctioned and civilian goods. Also, one of the interlocutors in a Russian industrial firm admitted that the companies are discussing exports of metals from Russia in exchange for machinery from China.
Recall
Ukrainian Foreign Minister Dmytro Kuleba said that China has leverage over Russia. However, some countries fear that excessive pressure on Russia could lead to it falling into Chinese hands, although, according to the minister, this has already happened.
