China banks Russia sanctions: How to Send Money to China from Russia?
After Chinese local banks started refusing payments from Russia, over 98% of Chinese banks no longer accept direct transfers from Russian businesses. This has led to serious challenges in the payment process, potentially affecting goods supply to Russia and causing price hikes.
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Direct Payments Are No Longer an Option
During May and June, local Chinese banks were still cooperating with Russian businesses, and payments were relatively stable. However, since July 20, payments have almost been completely suspended. More than 98% of Chinese banks are no longer accepting direct payments from Russia.
Alternative Payment to China from Russia Methods
With these challenges, Russian companies now have to find alternative ways to send payments to Chinese suppliers. Below are some of the available methods:
1. Payment Through Invoicing (10-13% Fee)
If a Russian company wants to pay in RMB (Chinese Yuan), the payment can be made through invoicing. However, this method comes with an additional charge of 10-13%. This option is typically used when companies wish to settle payments directly in Chinese currency, bypassing bank restrictions.
2. Payments via Alibaba International Accounts
Another solution is through Alibaba’s international platform. Suppliers who have Alibaba international accounts can accept certain types of Russian currency via special channels set up by Alibaba. This payment method was specifically developed by Alibaba to help Russian businesses manage payments amidst current banking restrictions.
3. Third-Country Payment Agents
Many Russian companies have been turning to third-country payment agents to facilitate transactions to China. These agents handle the payments by using intermediary countries such as Hong Kong to process the money. Over the past few weeks, the number of payment requests using third-country agents has increased significantly.
4. Russian Bank Branches in China
Another possible option is to use Russian banks’ branches in China. However, this method involves additional costs, as these branches sell RMB at a 5% surcharge based on the Central Bank’s exchange rate. Additionally, many Chinese companies do not accept payments from these Russian bank branches.
Background
Due to banking issues caused by Western sanctions, Russia and China may resort to barter trade in the autumn. The suspension of payments has impacted bilateral trade, and several smaller Chinese banks, particularly those near the Russian border, are restricting the conversion of rubles into yuan.
Many banks in countries trading with Russia are increasingly delaying or refusing payments, fearing secondary sanctions. To address this, during President Vladimir Putin’s visit to China, both countries explored alternative payment options to circumvent sanctions.
Since June 24, the Russian subsidiary of the Bank of China has suspended all transactions with Russian banks due to U.S. sanctions. This has further complicated payment processing between the two countries.
