Asia
New Russia-China payment network cuts trade costs
According to a report from the Reuters news agency, based on four sources familiar with payment processes, sanctioned Russian banks and companies are actively using netting systems to carry out export and import payments in trade with China.
These systems have significantly reduced costs for Russian businesses while also accelerating cash flow.
Sources stated that in early 2024, payment agent commissions reached up to 12% of the invoice amount, but currently, the average agent commission has dropped to 2% to 3%.
This decrease became possible after large Russian banks and exporters established closed netting systems to simplify financial logistics with China.
Financial logistics had suffered two heavy blows: the mass exclusion of Russian banks from SWIFT in 2022 and the near halt of direct payments with Russia by major Chinese banks in 2024 under the threat of secondary sanctions.
A source from the payment market said, “At that time, everyone faced the need to structure financial flows through friendly countries to protect these payments from blockages, but people have now learned to work with this, different payment solutions are developing.”
The same source and others said that the cheapest way to make payments with China is currently through mutual offsetting via “netting.”
The same source added, “In addition to payment agent services as sub-suppliers, mutual offsetting, sessions… We even do swap transactions so that money does not cross the border. Many companies, especially large importers, are investing in developing their own foreign structure networks and not depending on third parties.”
Elvira Nabiullina, Governor of the Bank of Russia, stated in a recent speech in parliament that Western sanctions have made cross-border payments difficult for Russian companies, but alternative payment channels are emerging.
Another source from banking circles said, “The most effective tool is goods netting. Essentially, this is a solution that involves property exchange and the use of payment agents who serve the counter-flows of exporters and importers within their own circles and service banks, offsetting these flows.”
The source said that this service was established by large Russian banks within their own circles and that thanks to their participation, this system has not yet seen significant defaults.
They noted that large companies are interested in having a bank as a guarantor for payments and that banks offer tools that protect them from the risk of payment agent default.
Bankers explaining the payment system with China through payment agents said that payments go directly to any Chinese bank without delay, provided the goods are not sanctioned and the counterparty is registered in one of China’s 11 provinces (Anhui, Heilongjiang, Shandong, Zhejiang, Guangdong, Xinjiang, Jilin, Shaanxi, Sichuan, Fujian, and Hebei).
The 11-province scheme, also called the “China path,” is primarily aimed at large companies, and its disadvantage is the requirement for each payment to be confirmed.
Furthermore, according to the source, the supplier does not always accept this scheme, as they generally cannot reclaim export VAT.
Another banker described the advantages of the service: “The scheme allows direct work with 11 Chinese provinces that are fundamental for the production of goods exported to Russia. The cost is calculated according to the Central Bank rate, there is no spread on it.”
The cost of agent services starts from 1% of the invoice amount for imports and 0.5% for export transactions.
Banks stated that they assist with VAT refunds through this scheme by consulting with Chinese counterparties.
A banker said, “According to statistics, we currently have 100% money transfer success, meaning there hasn’t been a single return. Money is delivered within two days. Currently, there is one clearing session per week, on Thursdays.”
They added that they plan to start two clearing sessions from the end of April, on Tuesdays and Thursdays.
Zhang Hanhui, China’s Ambassador to Moscow, confirmed that clearing allows for the regulation of mutual payments between the two countries.
Zhang told reporters, “We can turn international mutual offsetting into domestic offsetting. Then we compare the accounts, and that’s it; the balance.”
The diplomat said, “There is a need for a new channel instead of SWIFT between our banks. This issue is currently being discussed.”
Osman Kabaloyev, Deputy Director of the Financial Policy Department at the Russian Ministry of Finance, stated that the authorities support the creation of alternative payment mechanisms to create a full “payment menu” consisting of different options for businesses and banks.
A source from banking circles said, “Thanks to the wide range of solutions, the prices for alternative payments in the banking system have recently decreased… Every large exporter or importer, competing with banks, tries to get involved in payments using the capabilities of their related companies outside Russia.”
The source added that the average range of delivery tariffs, including currency commissions, for large corporate clients is 2% to 3% of the payment amount, which applies to both fiat and crypto payments, and noted that tariffs for small and medium-sized businesses do not exceed 4%.
The source said that the price conditions on the “China path” are the most favorable, but there are restrictions regarding provinces and goods names, and clearing sessions are infrequent.
Global trade wars have reinforced the assumption among Russian businesses that China will now approach US threats more easily.
Aleksandr Shokhin, President of the Russian Union of Industrialists and Entrepreneurs (RSPP), said, “There is a high probability of active penetration of Chinese imports into the Russian market. It is not excluded that the Chinese will stop being afraid of secondary sanctions.”
China’s Ambassador said, “Russia-China relations are only changing for the better, from victory to victory… We will overcome American sanctions sooner or later.”
Asia
Pentagon plans covert spy ring for economic war on China, report says
The US Department of War (Pentagon) is reportedly planning to establish an extensive network of deep-cover agents to wage economic warfare against China and other adversaries of the US.
According to a report by The Washington Post citing six sources familiar with the initiative, the plan has not yet been put into effect. The newspaper reported that the initiative remains at the planning stage. The Pentagon, however, denies that any such initiative exists.
The report said the operatives would pose as entrepreneurs or private sector employees while concealing their ties to the US government. The network’s mission would be to gather economic intelligence and counter China.
The programme is led by Tom Rakusa, who spent 39 years at the CIA. Rakusa serves as a senior adviser to Deputy Secretary of Defence Steve Feinberg.
The proposed spy network is seen as part of a broader policy by the Donald Trump administration to sharpen economic competition with other countries.
The US is already resorting to tariffs, export controls, and investment in strategic sectors, alongside expanding its economic intelligence gathering.
According to The Washington Post, the new initiative demonstrates the Pentagon’s growing influence under the Trump administration. The department is currently seeking a record budget of $1.5 trillion.
Trade war flares up again with Trump’s return to the White House
The trade friction between the US and China flared up again following Donald Trump’s return to the White House. In April 2025, Washington raised tariffs on Chinese goods to as much as 145%, and Beijing retaliated with tariffs of up to 125%.
In May, US Secretary of State Marco Rubio described China as the primary geopolitical challenge facing Washington. Rubio said that to avoid war, the two sides needed to manage their conflict of interests.
In July, Chinese expert Zheng Yongnian did not simply warn that underestimating the US could prove to be a “fatal mistake”; he stated it explicitly.
According to Zheng’s assessment, the US maintains its primacy through the role of the dollar, its military superiority, and its technological advantages.
Even so, the two sides agreed in June to declare a truce and lower tariffs. In autumn 2026, the US and China extended their trade truce until 10 January 2027.
US Treasury Secretary Scott Bessent said the extension would give the parties more time to discuss economic issues.
Trade deals do not eliminate the strategic contradictions between the two countries. Financial Times columnist Rana Foroohar likened the race between the two nations for commercial, technological, and geopolitical influence to the 19th-century “Great Game” between the Russian and British empires.
Foroohar cited China’s standing in shipbuilding and commercial maritime transport, as well as its expanding footprint in overseas ports, among its key advantages.
Asia
Japan plans curbs on short-term home sales to cool urban prices
Japan’s ruling Liberal Democratic Party (LDP) plans to restrict short-term property trading to rein in surging home prices in major urban centres, particularly Tokyo.
Led by Prime Minister Sanae Takaichi, the party aims to make support for working households a core priority ahead of local elections scheduled for April next year.
The LDP’s research commission on housing and land policy met on Wednesday to discuss the issue.
According to a report by the Nikkei Asia newspaper, Commission Chair and LDP lawmaker Midori Matsushima said at the opening of the meeting: “Prices of newly built condominiums across Tokyo’s 23 wards have doubled over the past decade. We must work on measures ensuring that people who wish to live in these homes can actually afford to buy them.”
Homeownership in the capital has become virtually unattainable for broad segments of the population. According to data from the Real Estate Economic Institute, the average sale price of a newly built condominium in Tokyo’s 23 wards rose %18.5 in fiscal 2025 compared with the previous year, reaching 137.84 million yen (around $872,000).
Meanwhile, statistics from the Ministry of Labour show that the average annual income of a full-time worker in the capital remained at 6.78 million yen in fiscal 2025. This widening gap between incomes and residential property prices is directly shaping political priorities.
During its campaign for the House of Representatives election in February, the LDP pledged to curb speculative transactions across metropolitan Tokyo and other regions. Earlier this month, a party project team focused on policies concerning foreign nationals also submitted a recommendation urging the government to introduce immediate tax measures against rising home prices.
Under current legislation, profits realized from properties sold within five years of acquisition are classified as “short-term capital gains”. These returns face a tax rate approaching %40, including income tax and local inhabitant tax.
Although this rate is twice the approximately %20 levied as “long-term capital gains” tax on properties held for more than five years, several party members argue it remains insufficient to deter speculation. Calls to tighten the framework may be considered as part of the annual tax reform package to be drafted in December alongside the LDP’s coalition partner, the Japan Innovation Party.
The ruling bloc wants to present concrete housing pledges to voters heading to the polls in April across numerous urban centres, including 22 of Tokyo’s wards where local assembly terms expire.
“We need to support families with children, who are typically at the stage of purchasing a home,” a senior LDP official said.
Opposition parties are also preparing alternative proposals that target not only prospective homebuyers, but also residents forced into the rental market by high property prices and now affected by escalating rents.
Tax steps take precedence over limits on foreign buyers
Several countries seeking answers to housing affordability pressures have imposed direct restrictions on foreign purchasers. In South Korea, real estate policies played a major part in the declining public approval ratings of President Lee Jae Myung.
In August 2025, authorities in Seoul introduced an approval requirement for foreign nationals buying homes in the capital and adjacent areas, while also mandating that buyers reside in the properties for at least two years.
Canada and Australia have enacted temporary bans on foreign residential purchases, while Singapore levies a %60 additional stamp duty on foreign buyers.
The role of overseas investors in Japan’s property market also drew debate during the February election. However, restrictions aimed directly at foreign nationals are viewed as potentially conflicting with international trade and services agreements.
Consequently, rather than imposing restrictions based on the nationality of buyers, the government is discussing tax measures aimed at speculative real estate deals, such as rapid resales.
Fears that sharp market measures could shake regional banks
Concerns have also surfaced that aggressive steps to force down prices could harm the wider national economy.
A senior LDP tax official cautioned that a steep drop in land prices could weaken local financial institutions, warning: “We must consider the impact on regional banks.”
The real estate sector accounts for roughly %18 of total lending by Japanese banks. This proportion sits well above the %10 level recorded during Japan’s bubble economy of the mid-to-late 1980s.
At certain regional banks, property lending accounts for nearly half of total loan portfolios.
According to March 2025 data from the Financial Services Agency, approximately one-quarter of all loans extended by regional banks to the real estate sector are concentrated directly in Tokyo’s five central wards.
Buoyant asset valuations, supported in part by rising stock indices, have underpinned strong public approval for the Takaichi administration. Observers note that property interventions designed to cool the market could drag down equity prices and weaken the government’s standing.
A senior official on the LDP research commission stressed that decision-makers must act with caution regarding the scope and timing of any measures intended to bring price increases under control.
Asia
South Korea plans $120B spend on eight US nuclear power plants
South Korea will spend $120 billion to construct eight nuclear power plants in the US under an agreement that provides for $350 billion in investments in exchange for lower tariffs.
The South Korean government also announced that Seoul and Washington will begin examining a liquefied natural gas (LNG) project in Alaska comprising a large-scale pipeline to transport natural gas from the north of the state to the south, alongside the construction of an LNG terminal for exports overseas.
Seoul stated that a decision regarding the LNG project will be made following a commercial feasibility study. However, US President Donald Trump said that South Korea would invest $54 billion in the project, pointing to an apparent lack of full coordination between the two sides on the matter.
Trade and Industry Minister Kim Jung-kwan said in a statement: “This announcement opens a new horizon of cooperation where the two countries join forces to develop joint commercial ventures in strategic areas directly linked to economic security and future sectors such as artificial intelligence, nuclear energy, and LNG.”
“We will adhere to the principle of prioritising national interests and investing solely in commercially viable projects,” Kim said.
Speaking at the White House, Trump characterised South Korea’s plans as “one of the largest energy infrastructure investments in American history”.
The announcement followed a meeting between Trump and South Korean President Lee Jae Myung roughly one year ago at the APEC Economic Leaders’ Meeting held in South Korea, where they agreed on the creation of a $350 billion investment fund.
Under that agreement, $150 billion was allocated to the shipbuilding sector and $200 billion to other sectors. In return, the US announced it would reduce tariffs imposed on goods imported from South Korea from 25% to 15%.
Under the nuclear power project, South Korea’s state-controlled utility will build two plants in the US, while Pennsylvania-based Westinghouse Electric will construct six plants.
According to the South Korean government, this will mark the first instance in which a foreign country builds its own nuclear power plants in the US.
South Korean firms are also evaluating the possibility of acquiring a stake in Westinghouse as part of negotiations over sharing profits generated by the project.
South Korea additionally announced that it will build a $22.3 billion natural gas-fired power plant in Texas with a capacity of 6,472 megawatts.
The facility will be designed to supply electricity directly to nearby data centres. The project’s first phase is targeted to begin commercial operations in 2029, with full-capacity operations slated for 2032.
Seoul also disclosed that it had agreed to allow the US to receive 50% of the profits generated by the projects until South Korea recoups all of its investments.
After South Korea fully recovers its total investment amount, 90% of the profits will go to the US.
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