Russia is increasingly turning to barter trade agreements with China and India to bypass US and EU sanctions that restrict financial transactions and access to the SWIFT system.

These barter deals involve a diverse range of commodities, including flax seeds for household appliances, metals for Chinese machinery, and building materials, enabling Russia to import Western goods despite sanctions.

While the overall volume of barter trade remains small relative to total trade, some deals have allowed Russia to circumvent sanctions and access certain Western products.

Western sanctions imposed since 2022, which include over 25,000 measures, aim to weaken Russia’s economy and diminish support for President Vladimir Putin.

Official data indicates a 14% decrease in Russia’s foreign trade surplus in the first half of 2025, with exports declining and imports slightly rising, signaling economic strain.

Despite these sanctions, Russia’s economy has outperformed expectations over the past two years, with growth exceeding that of G7 countries, according to Russian leadership.

Russia’s economy is now in recession with high inflation, and sanctions like disconnection from SWIFT have increased economic difficulties.

Historically, barter caused chaos in the 1990s post-Soviet economy due to inflation and devaluations, but now it is driven by sanctions and payment challenges.

Experts estimate that barter transactions may contribute to a divergence between official trade statistics and actual trade activities, possibly reaching around $7 billion in the first half of 2025.

In 2024, Russia’s Ministry of Economy issued guidelines promoting barter transactions to evade sanctions, including proposals for barter exchanges and dedicated platforms.

Other sanctions circumventions include using payment agents, cryptocurrencies, and Russian banks in China to facilitate transactions.

At least eight recorded barter agreements involve Russian exports like wheat, grain, and metal alloys exchanged for imported goods such as cars, electronics, and military components.

A notable transaction involved Chinese cars traded for Russian wheat, with payments in rubles and yuan, exemplifying how barter circumvents currency restrictions.

Chinese companies see barter trade as a vital solution amid financial settlement difficulties, emphasizing its role in maintaining trade links.

Barter schemes are helping Russia access critical goods and equipment, while Chinese firms expand their market presence and improve logistics through new routes.