By Hai Yang, Zhao Jialin and Lu Jingli

China and Russia have reached broad consensus on the proper handling of the sudden closure of the Cherkizovsky Market through friendly negotiations, said Chinese Vice Minister of Commerce Gao Hucheng in Moscow Saturday.

Gao, who arrived in Moscow Wednesday, heads a Chinese delegation for talks on the impact of the June 29 closing of the market, where tens of thousands of Chinese vendors had been operating.

Local analysts said the shutdown has marked an inevitable transformation of the nongovernmental trade between China and Russia and necessitated a change in mindset and operation mode among Chinese businessmen in Russia.

Reasons behind the abrupt shutdown

Cherkizovsky is Russia's biggest wholesale market. Police abruptly shut down the nearly 300-hectare market in northeastern Moscow on June 29 after disclosure by the Russian Federal Supervision Service for Consumer Rights Protection and People Welfare of various illegal and irregular operation in the markets

Russian Prosecutor General's Office said the shutdown was due to bad sanitary and fire control conditions, but local media believe many factors have prompted the closure.

A June report tendered by Minister of Industry and Trade Victor Khristenko stated that contraband goods not only cost the government great loss in taxation, but also undermine the development of the country's light industry.

The report suggested promoting legal, standardized chainstores and cracking down on terminal markets notorious for the sales of counterfeited and shoddy products and goods entered the country through "grey customs clearance".

Russian Federal Supervision Service for Consumer Rights Protection and People Welfare, Prosecutor General's Office, Federal Migration Service , Moscow municipal government and other government agencies even proposed shutting down the market for good.

The latest poll conducted by research group Levada Center also showed that among 94 percent of Moscow citizens who know about the closure, 67 percent support the move. Another online poll conducted by newspaper Izvestia also showed that over 80 percent of netizens are in favor of the shutdown.

"Grey customs clearance" hampers Sino-Russian trade

Over the past 20 years, the people-to-people trade between China and Russia has undoubtedly made great contribution to bilateral economic and trade cooperation, said Gao Xiyun, Economic Minister Counselor of Chinese Embassy in Russia.

However, it is also an undeniable fact that problems such as "grey customs clearance" had seriously hampered the health development the bilateral people-to-people trade, he said.

The so-called "grey customs clearance" is a long-standing practice that involves intermediaries handling customs clearance for bulk commodities loaded in planes or containers trucks.

After paying the so-called "customs clearance companies," the consignors of the goods do not have to deal with Russian customs authorities in person. Consequently they receive no official customs declaration documents.

In recent years, the Russian government has strived to rectify its domestic market order. For a time, goods that entered the country through "grey customs clearance" were regarded as contraband, and their owners would face penalties, including fines or even outright confiscation.

Prior to the market closure, on Sep. 11, 2008, the Investigation Committee at the Russian Prosecutor General's Office sealed up a large part of Chinese merchants' container storehouse in the Cherkizovsky market.