According to Reuters, Alexei Podshchekoldin, chairman of the Russian Automobile Dealers Association, said that Russia has been importing cars from China to supply the domestic market for the past two years, but payment problems between Russia and China triggered by U.S. sanctions have had a serious impact on this, Reuters reported.
Some large banks have been deterred by the US threat of secondary sanctions against Chinese banks that facilitate Russian-Chinese trade. As a result, Russia and China have taken a number of complex measures to avoid payment delays, including workarounds such as using smaller Chinese regional banks.
Alexei Podshchekoldin says the problem is particularly acute for small Russian importers whose funds are returned. The result is that Chinese car exports to Russia are reduced, while Russian importers lose business and may face additional costs.
Even if Russian banks offer and manage ruble accounts in China, they can no longer trade with China,” Podshchekoldin said. Previously, only large Russian and Chinese banks could conduct transactions, but these banks were gradually put on the sanctions list. After that the funds need to be channelled through several banks and all transactions need to be transferred to a second or third hand bank in order to be carried out.”
When talking about the payment problem, Podshchekoldin said, “The problem is so serious that even our biggest domestic producers, who are buying parts, are already experiencing it.” He hopes for a joint bank or some sort of electronic solution.
Podshchekoldin also floated the idea of bartering, but also said that unlike basic raw materials, such as commodities like oil, wheat, sugar and natural gas, it would be difficult for the Russian authorities to agree on prices for cars and parts.
Since the Russian-Ukrainian conflict in February 2022, Western carmakers have been pulling out of the Russian market, providing a great opportunity for Chinese carmakers, who quickly filled the market gap left by their Western competitors. Today, Chinese automakers have captured more than half of Russia’s automotive market. According to China’s customs statistics, from January to May 2023, China’s automotive exports to Russia rose 36 per cent year-on-year to $4.86 billion.