"Russia and China are discussing barter trade to bypass US sanctions and banking system restrictions."

Barter trade relations between Russia and China today are inevitable, according to agricultural expert Alexander Korbut. He acknowledges that this form of interaction is not the best solution for the market, and reminds of the times of the 90s, however, they are becoming a necessity due to payment blocks and the fear of banks, including Chinese and other friendly to the country, risking.

According to Reuters, Russia and China are discussing the possibility of using barter in trade to limit the use of banking systems controlled by the United States. Deals for the sale of goods between the two countries could be concluded as early as this fall. This approach will help avoid international banking systems and risks associated with currency. According to Reuters, Russia is developing a regulatory framework for barter trade.

Earlier this year, the Ministry of Economic Development provided businesses with instructions on foreign trade barter deals, as reported by Forbes. In 2023, businesses more often chose this form of transactions due to increased costs associated with withdrawing money from accounts in friendly countries' banks and difficulties in cross-border settlements in general.

Korbut believes that Russia can trade products with China on a barter basis that it previously exported there: fish, vegetable oils, flour, soybeans from the Far East. He also mentions the possibility of exporting peas, although this season the global market situation for this product is not the most favorable for Russia. In turn, China can offer Russia certain agro-export products, such as juices and garlic, most of which are already offered on the shelves of Russian stores from China.

However, Korbut warns of the need not to rely strictly on the exchange of agricultural products. He suggests that China offer any liquid product that will be of interest to the Russian market in exchange for goods produced in the agricultural sector. Korbut emphasizes the importance of not destroying Russian processing by supplying to China the same fish that they will continue to supply back in the form of finished products. He believes that it would be better to receive from China transportable goods, such as cars or equipment.

Finam company shares Korbuts's opinion and believes that barter trade between Russia and China is an effective mechanism to bypass sanctions and restrictions associated with the use of international banking systems controlled by the United States. They note that in the current geopolitical situation, the prospects of barter trade look quite real but require careful coordination between the two countries.

According to the expert, possible exchange of agricultural products may include Russian grain, meat, and dairy products, as well as Chinese fruits, vegetables, and technological products. Finam notes that Russia possesses vast resources in the agricultural sector and is an attractive partner for China, which needs quality agricultural products, while China can offer a wide range of products in demand on the Russian market.

The main difficulty in implementing barter trade, according to Finam, is establishing fair exchange rates and the quality of goods, as well as logistics. They also note the possibility of price changes for products during transportation and storage, which can affect the terms of exchange. Therefore, it is important for contracts to be flexible and take into account market changes and possible external factors, such as customs duties and logistic chains.

The Grain Exporters Union also points out that sanction risks for agricultural product exporters may increase due to the inclusion of off-profile goods in the commodity flow. They note that trade in agricultural products currently has "legal immunity" thanks to licenses and exceptions from sanction restrictions. Problems with payments from Chinese partners for Russian agricultural products are due to the overcompliance of Chinese banks, which depict risks and effectively nullify the efforts of the parties to ensure food security. The Union supports any payment mechanisms that will help facilitate food trade but notes that traditional banking transfers have not been prohibited for use by Russian and Chinese parties.