New payment verification requirements hamper Russian imports of Chinese goods
Russian buyers importing Chinese goods are encountering new challenges, as Russian banks now require written guarantees of payment acceptance for transactions with China. According to a report from Russian newspaper Vedomosti, Russian banks that still manage to send money to China are demanding written assurances from importers that the payments will be accepted. This has created complications for buyers of Chinese products in Russia.
Vedomosti's sources indicate that Chinese suppliers must first confirm with their banks whether they will accept the payments before conducting the transaction. The seller then relays this information to the Russian buyer, who is required to provide written confirmation to the Russian bank that the payment will indeed go through. This requirement applies to non-sanctioned goods and yuan payments alike. This new measure results from Chinese banks frequently refusing payments due to the risk of secondary sanctions, with the money return process involving lengthy procedures and losses due to currency conversion.
Not all Chinese suppliers can readily confirm this information from their banks. This verification often has to be done through private channels, and not all financial institutions offer such unofficial services. The payment situation between Russia and China has significantly deteriorated since late last year when U.S. President Joe Biden signed an executive order imposing secondary sanctions on banks engaged in transactions involving restricted goods due to Russia’s aggression against Ukraine.
Currently, 98% of Chinese banks reject payments from Russian companies and individuals. In response, as some media outlets have suggested, Russia and China might resort to barter trade or use cryptocurrencies to circumvent these sanctions.