Trade between Russia and China is getting ever more difficult, with some payments between partners taking up to half a year, the Kommersant business daily reported on Monday.
About 80% of bank transfers made in the Chinese yuan are also getting bounced back with no explanation, after being stalled for weeks while banks decide if they can go ahead, per Kommersant, citing unnamed sources.
Such returns can result in exchange rate or commission losses for Russian businesses, per the media outlet.
Kommersant’s report highlights intensifying pressure on external parties dealing with Russian companies that have managed to keep their international business activities going despite sweeping sanctions.
Earlier this month, several unnamed major Russian commodity exporters told Bloomberg that trade with China has become increasingly difficult, as even direct payments made in the Chinese yuan were getting frozen or delayed.
The troubles started in December when the US authorized secondary sanctions targeting financial institutions that help Russia skirt sanctions.
This prompted global banks from China to the UAE, Turkey, and Austria to reduce transactions with Russia to avoid getting in the crosshairs.
The payment issues were exacerbated last month when the US Treasury rolled out a new package of expansive US sanctions against Russia, forcing the Moscow Exchange — Russia’s key bourse — to halt dollar and euro trade.
To get around tightening restrictions, some Russians who want to buy goods via Chinese companies now have to go through intermediaries — at extra cost, according to Kommersant.
The US and its allies are punishing those who deal with Russia
The development comes 29 months after Russia’s full-scale invasion of Ukraine.
To force Russia to halt its war, West blocked some Russian banks from the widely used SWIFT messaging system for payments early in the conflict. However, Russia and its trade partners have been able to skirt sanctions by using smaller banks and other payment modes or non-US dollar currencies.
The continued business activity between the two countries sent trade between Russia and China to a record $240 billion last year. In June, China’s yuan-denominated exports to Russia grew 4.76% in June from a year ago.
Beijing has not condemned Moscow’s full-scale invasion of Ukraine nor sanctioned Russia. The two countries are not formal allies but have a long and complicated relationship that has been getting closer in recent years.
Even so, the US and its allies have been intensifying restrictions.
Earlier this month, a top Russian banker said the sanctions-evading methods should be made a “state secret” because they keep getting shut down so fast.
“Whatever steps we take, we can see that the reaction is very quick,” said Andrei Kostin, the CEO of VTB Bank, Russia’s second-largest lender.
Russia has said it’s working with a group of countries to build a platform that doesn’t need the dollar.
Some Russian businesses have also used cryptocurrencies with settlements done via Hong Kong, but through central Asian intermediaries, Bloomberg reported last week.
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