Russian Pork Exporters to China Consider Barter and Cryptocurrency Settlements

Rosyjscy eksporterzy wieprzowiny do Chin rozważają rozliczenia barterowe i kryptowalutowe

Payment Problems with Chinese Banks

Faced with growing difficulties in collecting payments for delivered goods, Russian exporters are reportedly considering switching to barter trade, although this may have several drawbacks.

Russian agricultural firms are considering bartering with their Chinese partners to circumvent Western sanctions. Sending and receiving payments in yuan has become increasingly difficult for Russian companies in recent months, as Chinese banks and financial institutions are reluctant to do business with Russian clients due to concerns about secondary U.S. sanctions.

According to the Izvestia newspaper, Chinese banks are blocking 98 percent of payments or returning them to senders. In May, the figure was estimated at close to 80 percent, as small agricultural banks in border regions maintained intact relationships with Russian companies. But in recent months, this channel has also become unreliable.

Barter is not the best solution

Russian exporters may want to switch to barter trade in this situation, even though it has many disadvantages, according to local analysts.

It has been described as a throwback to the 1990s, referring to the early years after the fall of the Soviet Union when barter trade was common due to Russia's underdeveloped banking system.

However, now this form of commercial activity is actually a forced decision, as there is massive blocking of payments, and all banks – both Chinese and other friendly countries – are afraid and do not want to take risks.

Fair exchange rates needed

According to Russian investors, barter trade between Russia and China could become an effective mechanism for bypassing sanctions. He assumes that it could help Russia export meat and other agricultural goods. Using this channel requires setting fair exchange rates, which can be a challenge.

Pork in exchange for equipment and cars

Russian companies need to find a way to avoid exporting raw materials and importing high-value-added products, which would harm Russia's manufacturing sector.

Russia could obtain equipment and machinery from China in exchange for agricultural goods such as pork.

Cryptocurrency the next option

Barter trade isn’t the only option Russian pork exporters are considering to maintain trade with China. Russian companies are also considering the use of cryptocurrency. Russia introduced a new law in July that allows international payments to be made via cryptocurrencies. The law could be another option for local ag exporters.