Russia’s Economy: Some Chinese Banks Don’t Care About US Sanctions

China is a vital trading partner of heavily sanctioned Russia. Trade between China and Russia is set to reach a record $240 billion in 2023, so maintaining the flow of payments is important for both sides.

Despite the difficulties, Russia – a major commodity exporter – is still receiving payments for its exports of raw materials such as oil and grain, another banking source told Reuters. Its payments for China’s key technology exports are still being made.

However, small Russian companies, such as those in the consumer goods trade, are not so lucky. China’s big state-owned banks are cutting deals with Russia “en masse” and billions of yuan worth of transactions are in limbo – hitting small firms hard, unnamed sources close to the government told Reuters.

The Kremlin acknowledged problems with trade payments and said it was working with China to find solutions.

The Reuters story followed recent reports in the Russian media about the hurdles local companies were encountering with Chinese banks.

Since the invasion of Ukraine, Russia and its trading partners have circumvented the sanctions by using smaller banks and other forms of payment or non-US dollar currencies to circumvent the West’s ban on some Russian banks from the widely used SWIFT messaging system.

But banks dealing with Russia ended their business with the country in December when the US approved secondary sanctions targets financial institutions that aided Russia.

Moscow is now rushing to settle alternative payment systemsinclusive cryptoto facilitate trade.

Russia and China even planned to revive the ancient practice of barter trade to avoid Western sanctions. Reuters reported last month.