China and Russia may start using barter trade schemes – they may sign agreements related to agriculture as early as this fall. In this way, they want to limit the use of US-controlled banking systems and avoid sanctions, Babel reports.
According to Reuters, during Putin’s visit to China in May, one of the main topics was the delay in bilateral payments. Although the countries have found workarounds, for example, by using small regional Chinese banks, which are difficult for Washington to control, problems with payments remained.
This type of trade will avoid bank payments and limit currency risk. It would also reduce the visibility of cooperation between the two countries in the eyes of Western regulators.
Russia is currently developing rules for barter trade. China is likely to do the same.
Both China and Russia have experience with barter trade. For example, in 2019, Beijing agreed to receive palm oil from Malaysia in exchange for construction services, natural resources, and defense equipment. Two years later, China exported auto parts to Iran in exchange for pistachios.
Barter deals between Moscow and Beijing were commonplace before the collapse of the Soviet Union, with some continuing into the early 1990s. However, with the development of the banking sector, all trade switched to bank payments.
