Delays in bilateral payments were a key topic of President Vladimir Putin's visit to China in May, Reuters reports. Solutions were put forward at the time, such as using small, regional Chinese banks, whose operations are harder for Washington to detect, but the payment problem remains. Now, for the first time in 30 years, barter trade, or the exchange of goods for goods, may be returning.
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Why barter grain?
First, such a way of trading, bartering, would allow Moscow and Beijing to bypass payment problems. Second, it would reduce the visibility of Western regulators in their bilateral transactions. Third, it would reduce currency risk.
Russia is developing regulations for barter trade, and Russian sources interviewed by Reuters assume China is doing the same. All the sources, who asked not to be identified because the information was confidential, are closely involved in bilateral trade. A senior manager at a major Russian bank said a barter program was being prepared but declined to provide details. One source involved in payments said trade with Russia in food exports was being discussed. Russia’s Ministry of Industry and Trade and China’s Ministry of Commerce did not respond to questions about barter trade in goods, Reuters reported.
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Barter exchange
The countries have a history of barter trade. Reuters recalls that in 2019, for example, China agreed to exchange almost $150 million worth of palm oil from Malaysia for construction services, natural resource products, and civilian and defense equipment. China also exported $2 million worth of car parts to Iran in 2021 in exchange for pistachios.
The exchange itself between Moscow and Beijing was carried out in the 90s of the previous century. Later, this trade moved to bank settlements.
