In the face of stringent Western sanctions, Russia’s importation of sensitive, dual-use goods from China surged by more than 40% to over $5.2 billion in 2023. These Chinese components are integral to Russia’s defense industrial base, fueling the production of long-range armaments, unmanned aerial systems (UAS), and electronic warfare (EW) systems, as indicated in Figure 1. These systems empower Russian forces to launch effective and often indiscriminate attacks on Ukrainian civilian and military targets, while simultaneously bolstering defensive capabilities for Russia’s invasion.
Chinese companies supplying advanced electronic components, such as microchips, semiconductors, and integrated circuits, have significantly enhanced the performance, reliability, and scalability of Russia’s critical military systems. With this technological support, Russia has increased the production of EW systems by a factor of 15. This surge has enabled the saturation of the frontlines with truck-mounted EW systems, which reporting indicates has been positioned approximately every 6 to 9 miles. These systems, particularly through extensive GPS jamming, disrupt Ukraine’s use of Western precision munitions and compromise the effectiveness of Ukraine’s UAS operations. Weapons such as HIMARS, JDAMS, and the M982 Excalibur guided artillery shell have seen their efficacy significantly reduced, with the Excalibur’s effectiveness rate plummeting to below 10%.
Moreover, Russia has scaled production beyond EW systems, reportedly deploying over 4,000 Iranian-designed Shahed-136 attack drones. These drones, featuring Chinese-made voltage converters and possibly engines, are now being produced domestically in the Alabuga Special Economic Zone, located over 500 miles east of Moscow in Tatarstan. The production facility has ambitious plans, aiming to manufacture 6,000 Shahed drones annually.
Critical Components and Sanctions Against Chinese Entities
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has implemented stringent export controls to restrict Russia’s access to critical technologies essential for its military operations against Ukraine. Recognizing the strategic significance of certain items, BIS, in collaboration with the European Union, Japan, and the United Kingdom, developed the Common High Priority List (CHPL) identified by six-digit Harmonized System (HS) Codes. These items are crucial for Russia’s weaponry programs and pose a heightened risk of illegal diversion to Russia. The CHPL categorizes these items into four tiers based on their importance and global sourcing susceptibility. Tiers 1 and 2, shown in Figure 2, cover the most critical technologies, such as integrated circuits and RF transceiver modules, found in Russian EW systems, missiles, and UASs used against Ukraine.
Russia and China often employ evasive and deceptive tactics, including using third-party intermediaries or transshipment points, to disguise the involvement of parties on sanctions and export control lists. Of the 607 OFAC sanctioned Chinese entities and individuals, 138 are associated with sanctions programs directly impacting the war in Ukraine. These programs include Executive Orders (EO) RUSSIA EO-14024, UKRAINE EO-13661, UKRAINE EO-13662, and CHINA CMIC-EO13959. Analysis of over 87,000 declared exports by these 138 sanctioned entities reveals that over 65% correspond to the Tier 1 CHPL critical technology HS code 8542.39, with an additional 8.3% corresponding to another Tier 1 item, 8542.33, as shown in Figure 3.
From 1 January 2023 to 1 June 2024, the top 15 Chinese entities exporting Tier 1 CHPL integrated circuits to Russia were responsible for 77,455 shipments. Notably, 13 of these top 15 exporters have registered addresses in Hong Kong or a subsidiary with connections to Hong Kong. Hong Kong’s legacy as a commercial hub under both British and Chinese rule facilitates the rapid and inexpensive creation of shell companies. These companies, often operating from shared or remote office spaces, are crucial in funneling technology to Russia, presenting significant compliance and disruption challenges. Hong Kong’s regulatory framework allows any individual to establish a company, making it an attractive location for entities seeking to evade sanctions.
Sanctions: Important, but Limited in Effect
Despite the implementation of targeted sanctions, China continues to supply Russia with critical components through complex and opaque supply chains. The indirect shipment of these components via intermediaries makes enforcing sanctions challenging. Sanctions typically target specific named entities, allowing Chinese companies not explicitly listed by OFAC or other allied sanctioning agencies to exploit gaps in the sanctions and export control lists. Common evasion tactics, as shown in Figure 4, include creating shell companies, altering shipping documentation, and smuggling, which are employed by both Chinese and Russian firms to circumvent restrictions.
China’s vast technological and industrial base enables the production and export of a wide range of critical components, making it difficult to monitor and control every potential shipment. Additionally, legal and regulatory loopholes within Chinese laws and international trade agreements permit continued shipments despite sanctions due to their dual use for civilian applications. Addressing these issues requires coordinated international efforts, enhanced monitoring and enforcement mechanisms, and closing Chinese legal loopholes that enable evasion.
For example, Hong Kong-based Finder Technology Limited was sanctioned by OFAC on 1 May 2024 for exporting electronic integrated circuits with UAS applications, such as field-programmable gate arrays, on behalf of the OFAC-sanctioned Russia-based Joint Stock Company Kompel. JSC Kompel is a Moscow-based distributor of electronic components, including Tier 1 CHPL items. Of the 8,579 identified shipments received by JSC Kompel, over 84% can be attributed to Finder Technology. While shipments in 2024 have disappeared from declared trade records, Finder Technology has a sister company named LLC Beliv. Both JSC Kompel and LLC Beliv are owned by a parent organization named the RBA Group, controlled by an individual named Rudyak Boris Aronovich, as shown in Figure 5. LLC Beliv, identified by the Department of Commerce on the BIS list, is not OFAC sanctioned and was also a major recipient of integrated circuits exported by Finder Technology, with 1,983 declared shipments.
The ability of Russian and Chinese entities to utilize subsidiaries or non-sanctioned sister companies to evade sanctions highlights an inherent limitation of a publicly available, name-based sanction system. Once publicly named in sanctions, these entities adapt their circumvention schemes to keep the supply chain intact.
Beyond Sanctions: The Path Forward
To enhance the effectiveness of sanctions and export controls, it is crucial to bolster intelligence sharing—both classified and open source—among the U.S. and its allied nations. Strengthening these collaborative efforts is essential to disrupting the Chinese supply chain of critical components to Russia. Since the onset of the war in Ukraine, bilateral trade between Russia and China has surged by 64%. Recent allegations from the United Kingdom suggest that this relationship has evolved beyond dual-use components, with evidence indicating that China may now be providing lethal aid to Russia.
Diplomatic efforts must emphasize the stark choice facing China: either participate in the global economy or support the Russian defense industrial base, which produces weapons used in an unprovoked war against the people of Ukraine. Clear and unwavering diplomatic pressure can help ensure China understands the profound consequences of its actions, ultimately contributing to a more stable and just international order.
By combining robust sanctions, enhanced intelligence sharing, and decisive diplomatic measures, the global community can more effectively counteract the supply chain that fuels Russia’s aggression. This multi-faceted approach is vital to upholding international law and protecting the sovereignty and rights of the Ukrainian people.
