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- Double whammy: China has again made it difficult to sell machinery and chemicals to Russia
Double whammy: China has again made it difficult to sell machinery and chemicals to Russia
It has become even more difficult for businesses to buy chemicals and machinery in China, Izvestia has found out. On December 1, updated export control rules for dual-use goods will come into force in China, but the first problems have already started, entrepreneurs say. For the delivery of IT equipment, new routes have to be built, and this may lead to higher prices. What options are still available to businesses and why China has taken such a step now - in the material of "Izvestia".
Why China has complicated the sale of goods in Russia
In China again complicated the sale of dual-use goods abroad. There tightened the rules of export control for such products, expanding its list. Ekaterina Kizevich, general director of Atvira, expert practitioner of foreign economic activity, told Izvestia that from December 1 it will also affect chemistry, metals, equipment and other categories.
The company has already faced difficulties in purchasing argon gas for welding (it was included in the list) before December 1, said Ekaterina Kizevich. According to her, now the supplies that have been agreed and paid for are being shipped, and further work will stop for the time being.
The updated list of products also includes IT-equipment and components, said Alexei Razumovsky, commercial director of Impaya Rus (the company works in this area). According to him, it is already difficult to bring, for example, servers to Russia. And under the new rules, as of December 1, it will become even more difficult. New logistics chains will have to be built, which will probably lead to higher prices for the final goods, Razumovsky said.
The export control rules for the sale of dual-use goods abroad were tightened in China in the summer. They came into force on July 1 of this year. Then the list included, for example, certain technologies, software, engines for aviation and astronautics, everything necessary for the production of gas turbines, some equipment and software for the foundry and metallurgical industry. To sell these products abroad, the Ministry of Commerce has begun to require permission from the Ministry of Commerce or a special license.
China's export control extends not only to Russia, but also to other countries, explained Pavel Kuznetsov, vice president of the National Coordination Center for International Business Cooperation (NCC) and deputy director of IKSA RAS. According to him, the list of dual-use goods includes items, technologies and services that can have both civilian and military applications.
He specified: they also include goods and even data that can be used in the development or production of weapons of mass destruction and means of their delivery. But now the exporter, in addition to a special license, must provide information about the final recipient of the goods.
The situation from December 1 may worsen significantly, admits Alexei Poroshin, General Director of JSC "First Group". In his opinion, the main problem will be payments.
- It will become many times more difficult to deliver money for these products. This is due to pressure from the U.S. authorities. As long as the Democrats are still in power, our relations will escalate in the next couple of months. They are trying to make it as difficult as possible to make payments. China has already started to additionally tighten the acceptance of transactions from Russia," said Alexei Poroshin.
"Izvestia" asked the largest Russian banks, as well as the Central Bank of Russia and the PRC about whether they note such tightening and how the situation will change from December 1 due to new export control rules in China.
What will change for Russia in imports from China from December 1
Under the new rules, Chinese companies that export dual-use products to Russia will be charged a 25% tax, said Ekaterina Kizevich of Atvira. There is no information about this in official releases from the Chinese side.
Contractors from China will have to either put the tax into the price of products or ship them through third countries, and from there - to Russia, the expert said. However, Russian importers should take into account that other countries have their own taxes, for example, Kyrgyzstan imposes 12% VAT. In addition, there are additional links in the supply chain, and the cost of logistics increases.
It will still be possible to bring IT equipment, but it will be necessary to use the services of several agents and deliver it through third countries, confirmed Alexei Razumovsky from "Impaya Rus". At the same time, import substitution will develop more and more in such conditions, because it is better to invest in your own production than to overpay for delivery, the expert believes.
The new rules may look like a confirmation of the fact that the U.S. was able to influence China, and now exports to Russia of products important to us will become much more difficult, if not stopped, said Pavel Kuznetsov from the NCC. However, according to him, this is not quite true. By this act, China has only confirmed to the states that it prevents the misuse of sensitive technologies and materials for non-peaceful purposes.
At the same time, any foreign company that wants to buy dual-use products will have to submit a special report. It must detail the purpose of the product, future sales trends and a security risk assessment. At the same time, a large amount of documentation is required to confirm that such products will not be used for military purposes, the expert explained. He emphasized: in fact, the rules adopted under US pressure allow Beijing to manage shipments to this country as well.
Will businesses be able to send payments to China?
At the same time, Russian and Chinese companies have long been working out mechanisms of interaction that allow them to continue trade, Pavel Kuznetsov reminded. According to him, the most difficult points, as before, will be payments and customs: there is quite strict reporting and fixing of transactions.
Problems with settlements began as early as the end of December 2023. This is due to the entry into force of the 12th package of anti-Russian sanctions. Against the background of the risk of secondary measures, China, Turkey and the UAE began to limit settlements with Russia.
Since January, several credit organizations in China have stopped accepting transactions in yuan. Among them are Ping An Bank and Bank of Ningbo. In March, ICBC, China Citic Bank, Industrial Bank and Bank of Taizhou were added to them, Izvestia reported earlier. In summer, cases appeared when Chinese suppliers asked to export goods to Russia via third countries. This is mainly related to the categories on the stop list, including electronics.
However, foreign partners are interested in maintaining trade turnover with Russia, Alexei Tarapovsky, founder of Anderida Financial Group, is sure. That is why payment through branches in other countries is now being actively developed. The new rules will lead to the fact that goods will go through "parallel import".
Now money can also be delivered, for example, with the help of cryptocurrencies, said Alexei Poroshin. And our state is going to test this tool. By the end of the year, it is planned to launch an experimental legal regime for cross-border payments with digital currencies.
