Police in Moscow stopped raiding Chinese stalls at a local market Monday following urgent negotiations between Russia and China.

However, China's consul in Moscow, Guo Min, told the China Daily the matter has not been settled yet.

Police began raiding some 300 stalls in southern Moscow's Emila wholesale market last Thursday. They accused Chinese merchants who rented these stalls of lacking proper customs entrance documents for their goods.

The Chinese diplomatic mission on Friday urged an immediate stop to the seizures and asked that everything be returned to the Chinese merchants, said a Chinese Foreign Ministry press release.

Russia should take effective measures to protect the interests of Chinese merchants, the ministry also said in the release.

Guo said she hoped Russian police would maintain the seized goods properly and would not sell or auction them at will.

The merchants, most of them from East China's Zhejiang and Fujian provinces, sell garments, shoes, hats and other daily necessities in the market.

Russia imposes an average customs duty of 15 percent for imported goods. Some textile products and household appliances, two major Chinese exports to Russia, may be subject to charges of 15 to 30 percent and 20 to 30 percent, respectively.

To lower their costs, numerous Chinese companies have turned to intermediaries to transport and obtain customs clearance for packages of bulk commodities in planes and container trucks.

However, while the practice may save the merchants trouble at the border, it also fails to provide them with proper customs documents.

Russian regulations require legal customs clearance documents, but the government has not banned the practice of hiring intermediaries.

Chinese merchants are not the only ones who use this method to move their goods across the border. Exporters in Turkey, Pakistan and some European countries also try to save money this way.

According to sources with the Chinese Academy of International Trade and Economic Co-operation, this type of trade peaked at US$10 billion in the mid-1990s.

"The goods (that China exports to Russia) are midrange and low-end products that meet the need of ordinary Russians," said Liu Huaqin with the Chinese Academy of International Trade and Economic Co-operation. "That is why the practice has been around (in Sino-Russian trade)."

However, Liu said that the two countries have talked about this "gray customs clearance" over the years because "it has a negative impact on the normal trade between China and Russia."

(China Daily February 17, 2004)