Delays and increased costs in Russian payments for Chinese goods have been a major issue in recent months due to stricter banking compliance measures in response to U.S. threats of secondary sanctions, as reported by Reuters. Chinese state banks have halted transactions with Russian companies, leaving payments worth billions of yuan in limbo, primarily affecting smaller businesses and consumer goods companies.
Despite these challenges, cross-border payments in “priority areas” are still functioning smoothly, with larger Russian commodity exporters and Chinese technology exporters largely unaffected. Trade between Russia and China grew by 1.6% to $137 billion in the first half of 2024, with imports from China declining slightly.
To navigate these compliance checks, Russian companies are turning to intermediaries in third countries, resulting in significantly higher transaction processing fees. The U.S. Treasury Department’s expanded secondary sanctions have put pressure on foreign banks doing business with Russia, prompting these changes in payment processing.
As a result, many small companies are facing complete shutdowns due to the increased costs and complexities involved in processing transactions.