Russian companies are increasingly facing difficulties in conducting financial transactions with China, leading to delays in payments worth billions of yuan and rising transaction costs. According to Reuters, the situation has worsened as Chinese banks tighten their compliance measures in response to the threat of secondary sanctions from the West.
These changes have slowed cross-border payments between Russia and China, negatively impacting trade volumes. A source close to the Russian government noted that Chinese state banks are “massively” closing operations with Russia, causing significant payment delays.
China, Russia’s largest trading partner, supplies critical goods such as industrial equipment and consumer products, while also serving as a key market for Russian exports like oil, gas, and agricultural products.
Payment issues became particularly evident after a June statement from the U.S. Treasury Department, which warned Chinese banks of potential secondary sanctions due to their ties with Russia. As a result, Chinese banks have adopted a much stricter stance on transactions with Russia, leading to a sharp decline in trade volumes between the two nations.
Some Russian companies have been forced to seek alternative payment methods, including using gold or intermediary chains in third countries, which has significantly increased transaction processing costs. Sources report that in some cases, these costs have risen to 6% of the transaction amount.
The Kremlin acknowledges the challenges but emphasizes the importance of continued economic cooperation with China. Kremlin spokesperson Dmitry Peskov stated that both countries are committed to resolving current issues constructively.
Despite the difficulties, bilateral trade between Russia and China continues to grow. In the first half of 2024, trade volume between the two countries increased by 1.6%, reaching $137 billion. However, according to official data, Russian imports from China have dropped by more than 1% due to payment challenges.
This situation is concerning, as smaller Chinese banks that are not subject to Western sanctions often struggle with outdated IT systems and lack the necessary personnel.
Russian experts stress that until the payment issues are resolved at the state level, a dynamic flow of investment from China is unlikely.
