Barter is back in Russia for the first time since the 1990s, as payment problems caused by sanctions over the war in Ukraine have forced at least one Chinese company to seek steel and aluminium alloys in exchange for engines.

Barter is back in Russia for the first time since the 1990s, as payment problems caused by sanctions over the war in Ukraine have forced at least one Chinese company to seek steel and aluminium alloys in exchange for engines.

Source: Reuters

Details: In the economic and political chaos that followed the collapse of the Soviet Union in 1991, spiralling inflation and chronic cash shortages forced businesses across the country to settle for in-kind payments.

But barter wreaked even more havoc on the economy, as vast chains of contingent transactions were created for everything from electricity and oil to flour, sugar and boots, making price-setting difficult and enabling some people to make a fortune.

It is over three years since Moscow launched its full-scale war against Ukraine, and barter has returned to Russia once again.

At the Kazan Expo business forum on Monday 18 August, Chinese companies pointed to payment difficulties and Moscow’s insistence on localising production as key obstacles to expanding bilateral trade.

Xu Xinjing from Hainan Longpan Oilfield Technology Co. said the company is seeking Russian shipbuilding materials in exchange for supplying electrical equipment.

“In the current conditions of limited payments, this provides new opportunities for enterprises in Russia and Asian countries, the Asian region. For example, we supply marine engines in exchange for special steel materials or aluminium alloys for shipbuilding from Russia,” Xu Xinjing said.

Sources told Reuters that Russia discussed barter deals with China last year. Arrangements such as these are most common in trading metals and agricultural products, as these are relatively easy to value, industry representatives noted.

China is by far Russia’s largest trading partner, as European countries have cut many of their trade ties with Moscow due to the war in Ukraine.

Delays in payments for trade with Russia’s main partners, such as China or Türkiye, where banks are under pressure from Western regulators to closely monitor transactions with Russia, have become a headache for Russian companies and banks.

Background:

Companies from Russia and Pakistan launched barter trade in October 2024.Barter schemes, which do not involve money transfers or bank payments, enable companies to avoid unwanted attention from Western controllers monitoring compliance with sanctions.

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