The UK has announced a new package of sanctions, which included 31 Russian defense companies and individuals, as well as companies from Belarus, China, Serbia, Turkey, the UAE, and Uzbekistan.
British sanctions against Chinese companies for anti-Russian sanctions evasion
London aims to impede Putin’s ability to obtain military supplies through third-party supply chains in Belarus, China, Serbia, Turkey, the UAE, and Uzbekistan.
The move will hit Russia where it hurts and starve Putin of the resources he needs for his illegal war on Ukraine, the statement said. And this set emphasizes China’s role in Putin’s war even more.
Three Chinese companies are on this list: Asia Pacific Links Limited, Sinno Electronics Co., Limited, and Xinghua Co. Limited, all of which supply sanctioned items crucial to Russia’s war.
The West imposes sanctions on international supply chains to deprive Russia’s military of critical Western components and technology. Sanctions on international supply chains imposed by the West have resulted in a 98% reduction in Russian direct imports of military technology from sanctioning countries.
The Kremlin, on the other hand, managed to evade sanctions and continue to import components, military equipment, and dual-purpose commodities with the assistance of third-country companies. And Chinese firms play a significant role in this.
Chinese drones’ supplies to Russia
According to the Lansing Institute’s data, the Chinese-based company Shandong Buyun Aviation Technology Co. Ltd. plans to deliver 1,000 drones to Russia.
SGGI Limited, a Hong Kong-based trade business likely linked to Russian intelligence, will oversee the manufacturing and logistics of delivering drones from China to Russia.
According to the report, the disassembled drones will be transferred first to Kazakhstan (via Urumqi, Xinjiang Uyghur Autonomous District) and then shipped to Russia. Thus, the delivery strategy suggests that Kazakhstan’s government does not oppose Moscow in designing schemes to circumvent restrictions that prevent weaponry transfers to Russia.
It is highly probable that the agreements pertain to the ZT-180 drone model, which has a payload capacity of 35–50 kg. The drone appears to be “a close clone” of the Iranian-made Shahed-136, which Russia frequently employs in Ukraine. Russia would most likely deploy the ZT-180 in the same way that it has the Iranian Shahed-131 and -136 kamikaze drones in Ukraine.
The similarity of Iranian and Chinese drone specifications may imply that Moscow supplies Iranian technology to China in order for it to develop identical drones at a lower cost, as Beijing, unlike Tehran, does not have concerns with technical components. Thus, the resumption of talks with China may reflect Moscow’s disappointment with Iran’s production capability.
Since its establishment in 2015, Shandong Buyun Aviation Technology Co., Ltd. (Room 813, Building 1B Yaogu, Gangxing Road/Shandong/Rilot Free Trade Zone, Jinan, China) specializes in manufacturing drones with various modifications.
The Chinese government’s limits on the sale of unmanned aerial vehicles beginning September 1 have delayed their supply to Russia, resulting in a shortage of some components as well as UAVs weighing more than 4 kg.
China’s ban on exporting drones with military applications has halted shipments of non-restricted items, including 30–40 kg agricultural drones that are not widely manufactured in Russia.
Russia has a history of attempting to evade bans through third countries as well as by exploiting existing gaps in the imposed sanctions. It is possible that some Chinese government officials are aware of the final destination for drone supplies.
How Chinese-manufactured goods assist Russia’s war in Ukraine
Open-source trade data suggests that a surge in imports of Chinese-manufactured items with military use played a significant role in Russia’s ability to boost its war capabilities on Ukrainian territory and to keep Russian troops supplied to resist Ukraine’s counteroffensive.
Despite ongoing devastating losses of military equipment and massive ammunition expenditures, Russia was able to keep its troops equipped and supplied in the Ukrainian territories it captured in 2022.
Even as NATO countries send ammunition and weaponry into Ukraine, they are offset by Chinese imports, not of weapons but of commodities critical to Russia’s capacity to maintain its war capabilities, the Atlantic Council wrote.
An unclassified US intelligence report shows trade data that makes it clear that China is providing massive volumes of products and technologies essential to Russia’s war in Ukraine.
However, this openly delivered critical aid for Russia’s military machine is not forbidden or restricted by the international sanctions regimes in place against Russia.
It is unclear to what extent Beijing is securing this flow to Russia rather than merely letting it happen. Clearly, Russia’s war effort greatly benefits from the extensive assistance provided.
A large surge in vehicle imports, notably super heavy trucks, has most certainly allowed Russia’s war industry to continue building military vehicles critical to preserving combat strength for a defense strategy. These Chinese vehicles also allow Russian military logistics to maintain supplies and equipment going to the front lines.
The influx of silicon chips from China has provided critical components for Russia to resume weapon production, allowing Russian artillery, missiles, and drones to continue striking Ukrainian military forces and civilian targets.
All of these elements, when combined, have enabled Russia to mount a powerful and multilayered defensive against Ukraine’s counteroffensive. Take these away, and it’s doubtful that Russia could have maintained its defense in depth on captured Ukrainian land, the report says.
Surge Chinese exports to Russia and Kyrgyzstan
Total Chinese ball-bearing exports to Russia have increased in 2022 by 345% y-to-y compared to the same period in 2021. Chinese exports to Kyrgyzstan have increased by 2492%. These products are likely being re-exported from Kyrgyzstan to Russia, possibly to evade future penalties, which explains this behavior.
According to the New York Times, Russian annual tank manufacturing has more than doubled from pre-war levels and now stands at 200 tanks. Chinese ball-bearing exports are most certainly supporting the spike in Russian tank production.
Drones developed in China are making their way to Russia. According to an investigation conducted by Radio Free Europe/Radio Liberty, Chinese commercial drone producer DJI’s goods are being marketed to companies associated with Russia’s military-industrial complex.
China has also provided crucial high-tech components with military applications, such as avionics and fighter-jet engine parts, as documented by the US intelligence community in publicly available reporting.
Electronic components from China
Controlling trade flows of civilian microelectronics with military uses is challenging, and Russia takes advantage of these dual-use goods in particular.
The Ukrainian forces discovered a significant amount of China-produced electronics in Russian weapons taken on the battlefield.
Reuters revealed cases of Chinese parts found in Russian tanks and Orlan aerial drones, which previously employed French and Swiss products.
Aside from Chinese-made electronics, China also exports Western-made military components to Russia. According to research conducted by the Kyiv School of Economics Institute, Western-made components account for the majority of dual-use technology imported from China, and China is the leading intermediary for Russian imports of semiconductors manufactured elsewhere.
US sanctions against Chinese manufacturers
This issue prompted US lawmakers to take action. A bipartisan group of 11 US House lawmakers on November 30 sought the Biden administration to investigate and possibly sanction Chinese drone maker Autel Robotics, mentioning national security concerns, Reuters reported.
The letter said Autel Robotics is openly affiliated with China’s People’s Liberation Army “and poses a direct threat to U.S. national security as local law enforcement and state and local governments are purchasing and operating Autel drones, potentially exposing sensitive data across the country.”
The letter asked the Commerce, Defense, and Treasury departments to investigate Autel Robotics, whose parent company is Autel Intelligent Technology (688208.SS).
The lawmakers questioned whether Autel should face similar restrictions, noting fears that Autel technology was used in Xinjiang, and claiming that the business “further appears to be potentially supporting Russia’s ongoing invasion of Ukraine.”
EU calls on China to deal with companies involved in the supply of dual-use goods to Russia
The EU is also worried by the Chinese support of Moscow’s war efforts. During the EU-China summit on December 7, European Council President Charles Michel called on Chinese leader Xi Jinping to deal with companies involved in the supply of dual-use goods to Russia, which continues its war against Ukraine.
The European Union states that more than a dozen Chinese companies are helping Russia bypass the sanctions imposed by the West on Moscow due to Putin’s war in Ukraine.
These companies help Russia bypass the sanctions imposed by the West on Moscow due to Putin’s war in Ukraine by exporting dual-use goods for the defense industry.
Supplies to Russia from China counterbalance Western military aid to Ukraine
Experts can debate how much China aids Russia’s war and what the West’s policy reaction should be. However, the US, NATO, and their allies must be absolutely certain that dual-use items produced in China and transferred to Russia are counterbalancing the Western shipment of weapons and equipment to Ukraine.
China may not be directly giving weapons to Russia at this time, but Xi’s government must be aware that Chinese enterprises are supplying goods and equipment that help Russia maintain its war and occupation of Ukrainian territory.
Western nations must tighten export controls and limitations to minimize loopholes in their sanctions frameworks and prevent future transfers of products to Russia that could fuel the Kremlin’s war machine. Western nations must tighten export controls and limitations in order to minimize loopholes in their sanctions frameworks.
Given the scale of the Chinese economy and the tensions between Beijing and Washington, combating Chinese dual-use exports to Russia is a more challenging matter. As long as Russia gets supplies from Chinese companies, it will be a major impediment to Ukraine’s ability to repel Russian air strikes and liberate Russian-occupied areas.
As a result, there is an urgent need to halt all military supplies and dual-use products transferred to Russia via China and other third countries. Russia may restore its military forces with the help of sanctions evasion, and Putin’s war can spread beyond Ukraine’s borders into Europe.