Barter: a new way for trade between Russia and China

The foreign trade of Russia and China under the pressure of sanctions may switch to barter schemes in the autumn of 2024. This decision is due to the need to avoid settlements through a banking system that is transparent to American regulators. 

Threats of secondary sanctions from the United States have led to increased control by Chinese banks that block transactions and accounts of suspicious Russian counterparties. Some Chinese banks refused to cooperate with Russia at all, which provoked the growth of intermediary schemes. Blocking US sanctions imposed on the only Russian branch in China have further exacerbated payment problems. 

Although Russian banks that have not been sanctioned retain access to SWIFT, the use of this system threatens to be closely monitored by the American authorities. Chinese banks use the local CIPS payment system, while Russian banks use the SWIFT equivalent, SPFS. However, it is not possible to completely avoid SWIFT yet. 

As an alternative, the BRICS Bridge project is considered — a supranational settlement platform providing compatibility with national RTGS systems and digital currency systems of central banks. 

Barter can be a way out of the impasse. China has already developed rules for conducting barter transactions, but so far no transactions have been conducted with Russia. The first deal is expected to take place this year.

The Ministry of Economic Development of the Russian Federation has already issued instructions on conducting foreign trade barter transactions. Barter transactions can be closed or open, as well as carried out in the form of tolling.