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China Helping Russia's War
What Should the West Do?
A report from the Office of the Director of National Intelligence last week confirmed what we all suspected - that China is actively helping Russia conduct its war in Ukraine.
The intelligence community finds that China has become an even more critical partner for Russia since Moscow’s invasion of Ukraine a year and a half ago, helping Moscow conduct its war effort and offering an economic lifeline.
It’s not just about mitigating sanctions, which China has been helping Russia to do by purchasing Russian energy and increasing bilateral trade between the two countries. China is also using shell companies in Hong Kong to supply Russia with chips and other restricted technologies, and contrary to China’s protestations, helping Russia’s war effort.
China has repeatedly denied sending military equipment to Russia, but evidence points to the contrary. China is even allededly considering sending drones and ammunition to Russia to help Putin murder Ukrainian civilians.
US officials are cautious about directly accusing China of helping Russia conduct its war in Ukraine, but fact is, it’s happening.
Chinese companies, including one connected to the government in Beijing, have sent Russian entities 1,000 assault rifles and other equipment that could be used for military purposes, including drone parts and body armor, according to trade and customs data obtained by POLITICO.
The shipments took place between June and December 2022, according to the data provided by ImportGenius, a customs data aggregator.
China North Industries Group Corporation Limited, one of the country’s largest state-owned defense contractors, sent the rifles in June 2022 to a Russian company called Tekhkrim that also does business with the Russian state and military. The CQ-A rifles, modeled off of the M16 but tagged as “civilian hunting rifles” in the data, have been reported to be in use by paramilitary police in China and by armed forces from the Philippines to South Sudan and Paraguay.
China is also sending other gear to Russia, toeing the line between military and civilian use, and although the shipments are not considered “lethal aid,” these items can certainly help Moscow conduct military operations. We’re talking millions of dollars’ worth of gear, such as body armor and helmets. They may not be lethal, but they do help Russia fight its war in Ukraine.
According to customs records obtained by POLITICO, Russian buyers have declared orders for hundreds of thousands of bulletproof vests and helmets made by Shanghai H Win — the items listed in the documents match those in the company’s online catalog.
The ODNI assessment corroborates these media reports. “China’s state-owned companies are shipping a variety of dual-use related products to Russia,” according to the report, and Kyiv says it is increasingly finding Chinese components in weapons used by Russia on the battlefield.
Chinese companies that walk a fine line by supplying Moscow with dual-use equipment include China Poly Technologies, which has been on the Commerce Department’s Bureau of Industry and Security Entity list for 10 years. The company shipped navigation equipment to Russia’s sanctioned military export firm Rosoboronexport for military transport helicopters.
Electronics firm Fujian Nanan Baofeng Electronic company is not included on the Entity List (yet), and has also shipped antennae used to jam communications to Rosoboronexport via an Uzbek state-owned firm.
China Taly Aviation Technologies, a Chinese procurement firm also included on the Entity List since June, has been shipping parts to Russia’s sanctioned missile manufacturer, Almaz Antey for use on mobile radar units.
China loves to follow the letter of the law, but almost certainly not the spirit of it, and the White House and US allies in the West are being very cautious when flagging China’s questionable activities, stressing technicalities when declining to punish Chinese firms involved in bad behavior.
During negotiations over the EU’s 11th tranche of Russia sanctions, the bloc initially planned on sanctioning several Chinese companies for allegedly supplying Russian firms with banned technologies. However, five of those companies were removed from the list, and the EU only sanctioned three entities in Hong Kong that it was careful to highlight were NOT Chinese, but Russian-owned.
The ODNI report mentioned above cautiously treads around directly blaming China for intentionally arming Russia, stating that the intelligence community “lacks sufficient reporting to assess whether Beijing is deliberately inhibiting United States government export control end-use checks.”
US officials in February claimed there was “no evidence” that China has sent lethal support to Russia.
Except for maybe those “hunting rifles,” eh?
Treasury at the one-year mark of Russia’s invasion warned Chinese companies that they would face consequences for helping Russia evade sanctions, asserting that the United States would not hesitate to sanction Chinese companies that support Russia’s invasion of Ukraine. Deputy Treasury Secretary Wally Adeyemo added that US officials would be “going directly to Chinese companies or financial institutions, and making clear to them that we were prepared to put sanctions in place if they were to provide material support to Russia.”
Well, apparently, Chinese companies are doing exactly that, but significant designations still have not happened. The White House needs China’s cooperation on issues like the fentanyl trade, which it has flagged as a significant priority and an emerging threat, and the Wall Street Journal last week reported that China demanded the removal of the Ministry of Public Security’s Institute of Forensic Science from the Entity List in exchange for renewed cooperation on the issue.
The EU is also cautious about riling China. The United States a few months ago shared intelligence with Europe suggesting China is considering arming Russia in its war on Ukraine. The EU came back with claims that it has seen no evidence “so far” that Beijing is planning to help Russia with arms deliveries. China remains the EU’s largest trading partner as of last year, with France remaining a major trading partner behind the EU and the United States, making any kind of decoupling a difficult matter.
Lithuania last year faced China’s economic pressure after it opened a Taiwan Representative Office in Vilnius. An export embargo came first, and when the Baltic country refused to bow to Beijing, China started threatening companies that used Lithuanian components in their products with restrictions on their exports as well.
Not long thereafter, it was reported that automotive parts produced by Continental, a major German company that sources components from Lithuanian firms, were unable to clear customs in China. Continental, along with the German-Baltic Chamber of Commerce, have called on Lithuania to seek a “constructive solution” with Beijing, while the Federation of German Industries has been more sympathetic, supporting a World Trade Organization (WTO) complaint filed by the European Union on behalf of Lithuania.
So yes, China’s economic coercion and its global economic connections make sanctioning Chinese companies difficult, and the West needs to find solutions to stop China from supporting Russia’s war in Ukraine while balancing its own economic interests.
The most significant growth in restrictions against China over the years has been in non-blocking sanctions—the Non-SDN Chinese Military Industrial Complex (CMIC) list and the BIS Entity List. The United States has imposed blocking sanctions (Specially Designated Nationals or SDN designations) on Chinese persons for human rights abuses in Xinjiang and for involvement in the 2019 anti-democracy crackdown in Hong Kong, as well as some others. The Entity List and CMIC restrictions are related to US national security concerns, and removing entities from those lists may be more difficult.
To date, the US government has used a relative amount of restraint, not issuing full blocking sanctions very often on Chinese entities. It has, instead, focused on individual actors engaged in human rights violations, the drug trade, etc., imposed export restrictions, rather than blocking actors and entities from the US dollar, and used the SDN list relatively sparingly.
The United States is also exploring additional financial restrictions. The Senate last week overwhelmingly passed an amendment to the National Defense Authorization Act that would require US companies to notify the government of investments in Chinese technologies such as semiconductors and artificial intelligence. But the amendment does not seek to restrict or prohibit these deals, but rather notify the government so it understands how much US technology is making its way into China’s hands.
A stick and carrot approach can be effective; economic sanctions, after all, are in part meant to change behaviors. Maybe it’s time to increase our use of the SDN list? Our stick doesn’t seem to have been big enough so far.