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

However, China's consul in Moscow, Guo Min, told 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 everything be returned to the Chinese merchants, said a press release on the Chinese Foreign Ministry's website.

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

Guo said she hoped Russian police would keep 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 family appliances, two major Chinese exports to Russia, sometimes face charges of 15 to 30 percent and 20 to 30 percent respectively.

To lower their costs, quite a number of Chinese companies have turned to intermediaries to transport and get 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 enough customs documents.

Russian customs regulation require legal documents about customs clearance but the practice of hiring intermediaries has not been banned by the government.

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

According to sources with the Chinese Academy of International Trade and Economic Cooperation, trade of such kind peaked at US$10 billion in mid 1990s, with China taking up one third of the total.

Chinese goods, including garments and family appliances are popular with Russians.

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

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

(China Daily February 17, 2004)