Rising exports of microchips, aluminum oxide, other dual-use items undermine Western push to stall Russian war effort
With fireworks and fanfare, China and Russia opened a new bridge for freight traffic that links the two countries. As Russia’s isolation grows following its invasion of Ukraine, China is willing to keep their partnership going but not at any cost.
Chinese exports to Russia of microchips and other electronic components and raw materials, some with military applications, have increased since Moscow’s invasion of Ukraine, complicating efforts by the U.S. and Western allies to isolate the country’s economy and cripple its military.
Chip shipments from China to Russia more than doubled to about $50 million in the first five months of 2022 compared with a year earlier, Chinese customs data show, while exports of other components such as printed circuits had double-digit percentage growth. Export volumes of aluminum oxide, which is used to make the metal aluminum, an important material in weapons production and aerospace, are 400 times higher than last year.
The rise in reported export values may partly be explained by inflation. But the data shows that many Chinese tech sellers have continued to do business with Russia despite U.S. scrutiny.
The Chinese exports, while just a sliver of the country’s overall exports, are a source of concern for U.S. officials. The Commerce Department added five Chinese electronics companies to a trade blacklist last month for allegedly helping Russia’s defense industry, both before the invasion and after it began.
“Our government and our national leadership has been very clear from February 24th on that China should not provide material, economic and military support for Russia in this war,” Nicholas Burns, the U.S. ambassador to China, said last week.
The Commerce Department said in a written response that while it didn’t believe China had sought to systematically evade U.S. export controls on Russia, the department was closely monitoring trade between the countries and “will not hesitate to employ our full legal and regulatory tools against parties that provide support to the Russian military.”
The China-Russia trade in chips and other components with potential military applications involves both small, private outfits and sprawling state-owned enterprises. Incomplete data and complex networks of subsidiaries and middlemen make it hard to trace all the activity.
Chinese officials have said the country isn’t selling weapons to Russia. And overall exports from China to Russia have fallen substantially this year as many Chinese companies fear running afoul of the U.S.
Chip shipments from China to Russia more than doubled in the first five months of 2022, Chinese customs data show.
China’s support, broadly speaking, is critical to Moscow. Oil and gas revenues make up a sizable chunk of Russia’s economy. As European nations such as Germany seek to draw down Russian energy purchases, Russian President Vladimir Putin has stressed the importance of selling far more energy to China and others in Asia in the future.
China is also gaining leverage in its relationship with Russia. While China historically has relied on Russia, and before that the Soviet Union, for many advanced technologies, that is gradually changing as China closes the technology gap and emerges as a defense exporter in its own right.
Chinese leader Xi Jinping has repeatedly reaffirmed Beijing’s support for Russia, saying the two countries share a friendship with “no limits.”
A shared dissatisfaction with the U.S.-led post-World War II international system has gradually driven the countries together during Mr. Xi’s decade in power, despite a long history of strategic mistrust.
A trade fair for semiconductor technology in Shanghai. The China-Russia trade in chips and other components with potential military applications involves both small, private outfits and sprawling state-owned enterprises. Photo: aly song/Reuters
Researchers at C4ADS, a Washington-based nonprofit organization that tracks security threats, have been looking at trade between Russian defense firms and China Poly Group, a conglomerate controlled by China’s central government.
Poly’s subsidiaries include a key Chinese weapons producer and exporter of small arms, missile technology and, more recently, antidrone laser technology.
Between 2014 and January 2022, C4ADS researcher Naomi Garcia identified 281 previously undisclosed shipments of so-called dual-use goods, which have both civilian and military uses, from Poly subsidiaries to Russian defense organizations, she wrote in a report released on Friday.
In one of the most recent shipments, in late January, according to the research, Poly Technologies sent antenna parts to sanctioned Russian defense company Almaz-Antey. Ms. Garcia said she hasn’t discovered Poly shipments to Russian defense firms since the Ukraine invasion began in late February.
Russian customs records reviewed by C4ADS say the antenna parts were specifically to be used in a radar that is part of Russia’s advanced S-400 surface-to-air missile system. Russian media, citing the country’s Defense Ministry, has said the S-400 system has been used in the Ukraine war.
“Poly Technologies is undeniably facilitating the Russian government’s acquisition of missile-system parts,” Ms. Garcia said.
Poly Technologies was sanctioned by the State Department in January for engaging in proliferation of missile technologies. A State Department spokesperson said the sanctions were related to the company’s transferring of ballistic-missile technology to another country, but didn’t name which country.
Poly didn’t reply to a faxed request for comment and an official in its press office hung up when asked about its work with Russia. Almaz-Antey, Russia’s Ministry of Economic Development and Ministry of Industry and Trade, didn’t respond for comment.
Beyond radar components and semiconductors, Chinese exporters also have helped fill a gap in basic materials that Russia is restricted from sourcing elsewhere.
In March, Australia prohibited the export of aluminum oxide and several other related products, citing their use in weapons development. Since then, Chinese exports of aluminum oxide to Russia have surged, hitting 153,000 metric tons in May, according to Chinese customs records, compared with 227 metric tons in the same month the year before.
Unlike state-owned conglomerate Poly, the Chinese companies that were targeted most recently by the Commerce Department are small, private hardware distributors run out of Hong Kong and China’s southern province of Guangdong. While there is relatively little information about the size of business they do with Russia, some of the companies named by the U.S. openly advertised their defense work.
One of the firms, Winninc Electronics Co., previously said on its website that it was a top distributor “for industrial, military, aerospace, and consumer electronics manufacturers worldwide.” That language has since been removed. “Hope we can get through this,” the website now says.
Another of the targeted companies, Sinno Electronics Co., also until recently said on its website that it was a “cooperative partner” of publicly traded U.S. hardware manufacturers including Texas Instruments Inc. and Analog Devices Inc.
Texas Instruments didn’t respond to requests for comment. Analog Devices said it isn’t a partner of Sinno. It added that it had instructed its distributors to cease business with the company after the Commerce Department’s decision to blacklist it.
Sinno didn’t respond to a request for comment. A person who answered the phone at Winninc said the company wasn’t informed about the U.S. decision before it was made public but declined to comment further.
Maria Shagina, an expert on Russia sanctions at the International Institute for Strategic Studies in Berlin, said the latest action against the Chinese companies appeared to be intended to show that U.S. threats were credible, particularly considering how smaller companies may be better able to circumvent export controls than bigger ones.
“While the U.S. and its allies failed at deterrence with Russia, it’s important to prevent China early enough from systematically helping Russia,” she said.