Chinese, Russian Banking Sectors Sign Deal to Boost Bilateral Trade

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Last updated at: (Beijing Time) Tuesday, June 18, 2002

Chinese, Russian Banking Sectors Sign Deal to Boost Bilateral Trade

A Chinese bank in Harbin signed an agreement Monday with a Russian bank to resolve a problem with settling accounts that had been hindering Sino-Russian trade. The inter-bank cooperation would not only benefit bilateral trade but also expand the bank's business and increase its number of good customers.

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A Chinese bank in Harbin signed an agreement Monday with a Russian bank to resolve a problem with settling accounts that had been hindering Sino-Russian trade.

At the on-going China Harbin Fair for Trade and Economic Cooperation, the Heilongjiang Branch of the China Everbright Bank and the Khabarovsk Branch of the Russian Bank for Foreign Trade (BFT) agreed to act as the other's correspondent bank in foreign trade settlement.

Experts described the move as a major step in providing a smooth financial path for booming Sino-Russian trade.

Trade between China and Russia hit a new high of 10.6 billion US dollars last year. Owing to the different financial systems, financial services for trading businesses lagged far behind demand, resulting in a "bottleneck" for bilateral trade.

Lin Zuoming, a division head of the Heilongjiang Branch of the State Administration for Foreign Exchange Control, said it was significant that the two countries were moving towards adopting international practices in trade settlement.

"Such a move can also reduce costs and risks," he said.

Evgeny Monin, manager of the International Settlement & Currency Control Department of the Russian BFT Khabarovsk Branch, said that the deal marked the joint efforts by Russian and Chinese banks to improve on former settlement difficulties and provide quality services for businesses in the future.

Significance of Sino-Russian Trade Cooperation

To solve the problem, the committee for the China-Russia Prime Ministers Regular Meeting has set up a sub-committee for inter-bank cooperation and held a series of talks.

Financial institutions in both countries have also boosted cooperation.

The Heilongjiang Branch of the Bank of China has signed an agreement with four Russian banks to set up mutually recognized US dollar accounts and form partnerships among correspondent banks with 21 Russian banks. The bank's trade settlement volume in the first five months of the year exceeded 300 million US dollars, or a year-on-year rise of 51 per cent.

China Everbright Bank now has signed similar agreements with four large Russian banks. With the cooperative ties, cash settlements for trade ventures in the border regions now could be finalized within one working day, said Sun Qingchao, assistant president of the bank.

Svetlana Zhang of the Khabarovsk Commercial Bank said that the Russian economy had turned around and Russian-China trade was seeing rapid growth.

The inter-bank cooperation would not only benefit bilateral trade but also expand the bank's business and increase its number of good customers, she said.

The bank's financial business with China this year had doubled from that of the same period last year, she said.

Zhang Yunliang, chief accountant of the Harbin Linen Textile Co., said he used to bring packets of cash to Russia to buy materials in the past. Now the company could use the same accounts when conducting business either in China or Russia.

Its trade with companies in Russia's Far East rose by 27 per cent this year thanks to the better financial services, Zhang said.

Wang Chao, general manager of the Foreign Trade Company with Harbin High and New-Tech District, also thought the current banking services had resolved former headaches.

Besides using the prompt and safe settlement services, his company had also asked the banks to investigate their business partners' creditworthiness.

Wang Junwen, commercial councilor of the Chinese Embassy to Russia, said that banking cooperation was "still in its initial phase" and "will take time to fully comply with international practice."

The bottleneck, anyhow, had been cleared and improved cooperation would definitely boost bilateral trade in the future, Wang said.

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