Russia and China are expanding the use of a bank netting system that allows bilateral trade payments to be settled without relying on SWIFT or accounts held with Western banks.
The system, known as the China Track, was established by major Russian banks to handle China-related transactions through payment agents, with participating banks centrally reconciling outstanding obligations.
The mechanism allows export proceeds to finance imports without requiring funds to cross borders through conventional banking channels.
For example, if China buys $100 million worth of Russian oil while Russian companies purchase $80 million in Chinese machinery, the two obligations can be offset. Only the remaining residual $20 million needs to be settled.
Russia’s financial watchdog chief, Yury Chikhanchin, outlined the arrangement to President Vladimir Putin in July 2025 explaining that exporters could make their proceeds available to importers with transactions subsequently reconciled domestically.
Reuters reported on the development in April 2025.
The arrangement highlights how Russia and China are adapting their financial infrastructure to sanctions pressure. Rather than creating an entirely new international currency, the two countries are reducing their dependence on Western financial networks by changing how bilateral trade obligations are settled.
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Another interesting statistic has also emerged.
Russia’s gold exports to Hong Kong have surged in 2026 raising questions about whether bullion is also helping settle residual trade balances between Russia and China outside conventional Western banking channels.
Hong Kong imported approximately 100 tonnes of Russian gold during the first seven months of 2026, nearly 3x the volume recorded during the same period in 2025, according to trade data.
Much of the gold subsequently moves to mainland China.
The increase coincides with expanding Russia-China trade and the use of the China Track allowing participating Russian banks to offset bilateral import and export obligations without routing the full value of transactions through SWIFT or Western correspondent banks.
How The Global SWIFT Payment System Works
One possible explanation is that gold is providing an additional settlement mechanism for balances remaining after trade obligations are offset. Under such an arrangement, bullion could serve as a settlement asset while the yuan and ruble remain the primary transactional currencies.
However, there is no publicly available breakdown establishing how much Russian gold entering Hong Kong ultimately reaches mainland China or whether any of it is used for bilateral trade settlement. Neither country has officially announced a gold-backed settlement arrangement.
Russia is also selling gold to support government finances. Central Bank Governor, Elvira Nabiullina, said in September 2026 that the decline in the country’s gold reserves was primarily linked to Finance Ministry operations involving the National Wealth Fund under Russia’s budget rule as the government manages its budget deficit.
The two developments are not necessarily mutually exclusive. Gold exports could serve both fiscal financing needs and, potentially, alternative trade settlement arrangements.
If used alongside banking netting, gold could provide a way to settle outstanding obligations without requiring equivalent cross-border transfers through conventional international banking infrastructure.
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