MOSCOW: Russia and China may begin using barter trading schemes, three trade and payments sources told Reuters, with two expecting deals involving agriculture as soon as this autumn, as Moscow and Beijing try to limit using banking systems monitored by the United States.
Bilateral payment delays were high on the agenda when President Vladimir Putin visited China in May and although workarounds have emerged, such as using small, regional Chinese banks whose activities are harder for Washington to detect, payment issues remain. Barter trading would allow Moscow and Beijing to circumvent payment issues, reduce the visibility Western regulators have over their bilateral transactions, and limit currency risk.
Russia is developing regulations for barter trading and the Russian sources Reuters spoke to are working on the assumption that China is doing the same.
The sources, who requested anonymity due to the non-public nature of the information, are all closely involved in bilateral trade.
A top manager at a large Russian bank said a barter scheme was being prepared, but refused to disclose details. One source who works in payments said a trade with Russia exporting food products was under discussion.
Russia’s industry and trade ministry and China’s commerce ministry did not respond to questions about the commodity barter trade.
China and Russia have a history of barter deals. In 2019, China agreed to trade palm oil worth nearly $150 million from Malaysia for construction services, natural resources products, and civilian and defence equipment.
In 2021, a Chinese company exported auto parts worth $2 million to Iran in exchange for pistachios.
Barter deals between Moscow and Beijing were common before the Soviet Union collapsed and continued into the 1990s, but the deals now under discussion would be the first in around 30 years, the sources said.
“I remember in the early 1990s…there were barter deals between China and Russia back then,” said Kyle Shostak, deputy board chairman at Qifa, a Chinese-Russian company seeking to ease bilateral trade woes with digital settlements.
“Then, due to the development of the banking sector, the whole business, the whole trade between Russia and China completely switched to bank settlements.”
Shostak said Qifa’s platform would be ready to facilitate barter trading when regulations were fully in place.
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