China demands prepayment for exports to Russia amidst US sanctions

As a result of the latest American sanctions, Chinese exporters have ceased delivering products to Russia without prepayment, reported the daily "Izwiestija" on Friday, citing the president of the Association of Road Transport and Forwarding. The sanctions have concerned Chinese manufacturers and banks.

Prepayments are primarily required for the export of so-called dual-use products, including electronics, machinery, and factory equipment, logistic companies and industry organisations informed the newspaper. The sanctions imposed on Russia due to the war in Ukraine, stated the portal, have compelled Chinese banks to conduct thorough payment checks. Consequently, goods have been lying in warehouses for extended periods, causing delivery costs to rise by an average of 15 per cent.

There have been instances where banks returned money for already shipped products if they did not receive documents in time assuring that the dispatch of goods to Russia would not be a reason for sanctions, said a president of one of the companies to "Izwiestija."

Due to fears of secondary sanctions, Chinese financial organisations sometimes return payments regardless of whether the cargo reached Russia or not. A peculiar situation has arisen: the cargo arrives in Russia from China, and the amounts paid for it are returned, she added.

Trade between Russia and China has become complicated after the EU introduced the 12th package of sanctions and following the decree by US President Joe Biden, which imposed restrictions mainly on third-country banks, highlighted the Moscow Times portal. On 23 August, the US Treasury Department added 400 legal and physical entities to the sanctions list, as well as seven tankers. The press service of the department clarified that their products and services are used to support Russia’s war efforts and circumvent previously imposed sanctions.

A few days later, banks in the United Arab Emirates began massively blocking payments for Russian companies for electronic components and consumer electronics from China, reported the portal, dealing a blow to one of the last channels of Chinese gadgets and equipment supply to the Russian Federation.