Russia and China may initiate barter trade this autumn, sources say

Russia and China are expected to start barter trading schemes this autumn, according to three sources involved in trade and payments discussions.

This move aims to bypass challenges related to using Western-monitored banking systems.

The sources, who requested anonymity due to the sensitive nature of the information, indicated that agriculture deals might be among the first to be conducted through barter, Caliber.Az reports, citing foreign media.

The need for such schemes emerged from high-level discussions during President Vladimir Putin's visit to China in May, where payment delays were a significant concern. Although alternative methods like using smaller regional banks in China have been explored, payment issues persist.

Barter trading would help Russia and China avoid these payment problems, minimize Western regulatory oversight, and reduce currency exchange risks. Both countries are reportedly developing regulations to facilitate barter transactions, though specifics remain undisclosed.

Barter trading between the two nations is not new. Historically, China and Russia engaged in barter deals before the Soviet Union's collapse and continued into the 1990s. Recent examples include China’s 2019 trade of palm oil for construction services and a 2021 barter deal involving auto parts and pistachios.

Kyle Shostak, deputy board chairman at Qifa—a company working on digital solutions for bilateral trade—recalled that barter was common in the early 1990s but gave way to bank settlements as the banking sector evolved. Qifa plans to support barter transactions once new regulations are finalized.

In February, Russia’s economy ministry issued guidelines for conducting barter transactions, including advice on cost calculations, customs duties, and contract templates. However, the ministry has not responded to inquiries about these guidelines or specific plans for barter trades with China.

A Russian government source highlighted that despite President Putin's visit, political and practical challenges remain unresolved. Discussions are ongoing about exchanging Russian metals for Chinese machinery, but conventional trade methods face scrutiny due to their transparency and the lack of a direct payment mechanism between the two nations.

Global financial messaging system SWIFT remains a transparent option for non-sanctioned transactions, but both Russia’s SPFS and China’s CIPS platforms are not yet fully integrated. Efforts to establish a BRICS Bridge payments system, proposed by Russia’s Central Bank Governor Elvira Nabiullina, are progressing slowly, with digital currency settlements not expected before 2028.