Cryptocurrencies save trade between Russia and China (barter too)!

Faced with increasing restrictions from the West, Russia and China are now exploring alternative ways to maintain trade. As Chinese banks, once open to yuan transactions, begin to close their doors to Russian payments for fear of retaliation, new methods are emerging.

Russian-Chinese trade under pressure from financial sanctions

Since international sanctions tightened their grip on Russia, trade between Moscow and Beijing has faced unprecedented obstacles. The yuan payments system, once a vital channel for bilateral trade, is now largely paralyzed. Indeed, 98% of China’s regional banks have stopped processing payments from Russia, fearing the consequences of secondary sanctions. The abrupt change is undermining trade relations between the two nations, forcing Russian companies to explore costly and complex methods to circumvent the restrictions.

Using Russian bank branches in China is one of the solutions, but transaction fees can easily reach 5%, making trading still very expensive. This situation is prompting some economic players to turn to more radical alternatives such as bartering.unfortunately this practice is not suitable for all types of goods traded.

Cryptocurrencies: A Future Solution for Sino-Russian Trade

In the face of this daunting challenge, another path is gradually emerging: the adoption of cryptocurrencies as an alternative to circumvent sanctions restrictions and maintain trade. Since June, Russian metal producers have begun using stablecoins to settle their transactions with Chinese suppliers. This adoption of cryptocurrencies allows them to circumvent banking restrictions and secure trades outside the dollar-dominated financial system. This approach, while innovative, is not without its challenges. Russia’s recently tightened crypto regulation could both support and hinder this trend, depending on how authorities choose to implement it.

This growing use of crypto in international trade is not only a response to sanctions, but also a sign of the times. If this trend continues, it could well herald a profound reconfiguration of global economic flows, with implications that go far beyond Sino-Russian trade. The future of international trade could be played out, in part, in the ability of these nations to integrate these new technologies while managing the associated risks.