China and Turkey’s trade with Russia has slumped due to payment problems and Western sanctions.
China’s exports to Russia have fallen by a third. A picture of the commercial center of Beijing. Mark R. Cristino, EPA / AOP
Russia’s largest foreign trading partners have sharply cut their supplies. Taking advantage of Western sanctions against Russia, China and Turkey have clearly restricted trade with Russia this year.
The reason for the decline in trade is the threat of secondary US sanctions, which has weakened the export boom. There are problems with payments in Russia, due to which companies refuse to cooperate with the country.
Payment times for major Chinese banks have been extended by months. Wang– Owner of a company in the electrical industry that introduces itself as a news agency to Reuters. He says banks worry that doing business with Russia could be subject to US sanctions.
A representative of four major Chinese state-owned banks told Reuters the banks had tightened controls on Russia-related payment transactions.
– The main reason is to avoid unnecessary problems, says the representative.
“Can’t do business”
Some banks have abandoned business with Russia altogether, according to other Reuters banking sources.
– It is simply impossible to trade normally through official channels, says the director of an industry association representing Chinese companies.
– Trade between China and Russia often takes place through dark channels. But these methods are very dangerous.
Financial Times According to the report, China’s exports to Russia have fallen by almost a third. According to the FT, exports were $10.7 billion in December, but only $7.6 billion in March.
Exports of electronics and mechanical goods especially from China to Russia have decreased, according to data from Trade Data Monitor. The FT points out that the Chinese New Year holidays may have contributed to the decline.
US pressure on Turkey
Exports from Turkey to Russia have also fallen sharply. Even during the first year of the war in Ukraine, significant amounts of sanctioned goods and dual-use goods passed through Turkey to Russia.
In December, the United States issued a presidential order allowing the introduction of secondary sanctions against banks in other countries. Since then, exports from Turkey to Russia have fallen by a third from the start of the year, according to preliminary data from the Turkish Trade Ministry. Moscow Times news.
– Head of the Turkish Machinery Exporters Association, the same interest cannot be sustained in Russia, given the increasing pressure on the banking system and supply chains. Kutlu Karavelioglu He says At Bloomberg.
“No formal solution”
Exports recovered slightly in March after a decline in January. Researcher at the Center for Russian and Eurasian Research in Berlin Alexandra Prokopenko It suggests that this increase can be explained by the ability of Turkish banks to direct liquidity through intermediaries. However, he pointed out that this is only a temporary solution.
– Russia has not found a proper solution to the problem, Prokopenko tells the FT.
Russia’s total exports fell by a fifth in March, according to Russia’s central bank.
