Amid growing sanctions, Russia turns to China for an alternative to SWIFT payment system

Russian Deputy Prime Minister Alexander Novak said during an address at the Russian-Chinese Energy Business Forum that the two nations are in the middle of formulating a payment system that will help avoid dependence on SWIFT. Novak revealed during the speech that the process to switch to another system has already begun, with payments under contracts for gas supplies from Russia to China being made in the national currencies of the two countries. 

Furthermore, payments relating to coal, oil, and petroleum products are also being made in yuan and rubles. "In gas contracts we are already switching to settlements in national currencies - in rubles and in yuan - on an equal basis. Supplies of oil and oil products, coal are also being switched to payment in national currencies," he said, Interfax reported.

According to TASS, the Deputy PM emphasized that the system would help push the currencies to a world reserve status. "Such work makes it possible to prevent risks and promote the transition of the ruble and yuan into the status of world reserve currencies. In this regard, the Central Bank of Russia and the Bank of China are working on the possibility of opening accounts for Russian companies in China, Chinese companies in Russia, and creating a payment system without using SWIFT," he said. 

China, Russia consolidate ties in the energy sector 

Novak also revealed that the two nations are looking forward to collaboratively manufacturing equipment in the energy sector as China continues to be at the pinnacle of consumerism in terms of Russian energy. "Today, China is one of the key manufacturers of equipment in the oil and gas sector. There is already close cooperation on supply of oil and gas equipment for projects in Russia. China is becoming the largest consumer of Russian energy," he said, adding that Russia plans "to jointly work on the development and production of equipment that can be used" in both nations. 

The payment network shared between China and Russia comes as the latter faces isolation and back-to-back sanctions in the wake of its war in Ukraine. Talking about Western sanctions, Novak said that they are “ill-considered” and can come as a major blow to the energy industry at large.