Gleb Stolyarov
(Reuters) – Payment problems between Russia and China caused by U.S. sanctions are causing serious problems for Chinese car imports that have been supplying the Russian domestic market for the past two years, the head of Russia’s Automobile Dealers Association told Reuters.
As the threat of secondary U.S. sanctions against Chinese banks facilitating trade with Russia has stifled big lenders, Moscow and Beijing are trying to avoid payment delays with complex measures, including a workaround that uses smaller local Chinese banks.
Alexei Podshekordin, head of the Russian Automobile Dealers Association, said the problem was particularly acute for small and medium-sized importers who were behind on payments.
As a result, Chinese exports could decline and Russian importers could lose business and face additional costs.
“Even if Russian banks are located (in China) and offer ruble account services, they can no longer transact with China,” Podshekordin said. “The transactions will remain within the bank and will not be carried out further.”
“Before, it was just the big Russian and Chinese banks, but gradually they were blocked and added to the sanctions list, and everything shifted to the second and third tier banks.”
Chinese automakers have already captured more than half of Russia’s car market since Western rivals retreated after Moscow invaded Ukraine in February 2022, taking their technology and know-how with them.
According to Chinese customs statistics, China’s automobile exports to Russia in the first five months of the year rose 36% year-on-year to $4.86 billion.
“The problem is so big that even the largest domestic manufacturers who buy spare parts, for example, are already facing it,” Podšekordin said of payments, adding that he hoped a cooperative bank or some kind of electronic rescue solution could be the solution.
He also floated the idea of barter, but said it was unrealistic for officials to agree on prices for cars and spare parts but not basic raw materials.
“It’s possible with commodities like oil, wheat, sugar, gas, but what about cars? It’s very difficult, almost impossible,” he said.
(Reporting by Gleb Stolyarov, Alexander Murrow and Barbara Lewis Editing by
