Unreal data shows what China means to the Russian army

 

Official foreign trade data for August show that Russia imports drones, helmets, vests and radios from China. At the same time, from the less transparent Chinese statistical data, it is evident that large quantities of goods for supposedly civilian use - various vehicles, construction equipment and synthetic materials - go to Russia, providing direct and indirect support to the Russian army.

'There is no doubt that Beijing is aware of trade flows with Russia. They are big enough that they could not continue without the consent of the Chinese government,'' said Mark Cancian, a senior adviser at the Center for Strategic and International Studies, a Washington think tank.

All this is taking place despite Beijing's claims that trade with Moscow represents 'normal economic cooperation' and is not aimed at harming 'third parties'.

Last week, Chinese Foreign Minister Wang Yi confirmed continued economic cooperation with Russia ahead of a planned meeting between Russian President Vladimir Putin and Chinese President Xi Jinping in October.

China's reaction followed the release of a US intelligence report in July, which said the country had 'become an increasingly important supporter of Russia in its war effort, supplying Moscow with key technology and dual-use equipment used in Ukraine'.

 

Half of Russian imports come from China

That this is true was also confirmed by the Ukrainians, as they have been increasingly finding Chinese components in Russian weapons on the battlefield since April 2023 - the same month that Putin and Li Shangfu, the Chinese Minister of Defense at the time, emphasized the two countries' "unrestricted partnership".

Total bilateral trade between Russia and China reached a record level of $190 billion in 2022, an increase of 30 percent compared to 2021. This year is sure to surpass that figure as already in July the total exchange was $134 billion.

China now accounts for about half of Russian imports, and before the invasion of Ukraine that share was about 20 percent, according to data from the Finnish Institute for Emerging Economies. This includes trade in so-called dual-use goods and technologies – goods with both civilian and military applications, such as drones and microchips.

 

In 2022, China sold more than $500 million worth of semiconductors to Russia, up $300 million from the year before.

CNBC's analysis of official Russian data provides insight into trade with China. Drones manufactured by Chinese multinational SZ DJI Technology were registered in Russia in unspecified quantities on several occasions between September 2022 and January 2023. Despite DJI announcing on its corporate website in April 2023 that it had 'voluntarily suspended all sales and operations in Russia and Ukraine effective April 26, 2022 and contractually prohibited any sales for military purposes'.

One of the Russian importers of drones, the Moscow company Nebesnaya Mechanika, which was DJI's distributor in Russia before the war, filed an import application in September 2022, which is evident from official documents.

Another importer, Moscow-based Vodukh, also registered an unspecified number of lithium-ion and lithium-polymer batteries, as well as an unknown number of battery stations directly from DJI in July 2023 and November 2022, respectively. Such batteries can be used to power small electronic devices, up to electric vehicles.

A third importer, Rostov-on-Don-based Positron, imported more than 54,000 helmets — either construction or military, according to unclear wording of the filing — from Chinese suppliers Liaoning B&R Technology and Beijing KRnatural International Trade in late 2022.

 

Goods with direct military application

Helmets and vests were also procured in batches of 100,000 each in November 2022 from Shanghai-based Deekon (Shanghai) Industry, a manufacturer of military products and police equipment, through Moscow-based Legittelecom.

Legittelecom, which, according to its website, provides consulting services on licenses for the 'import, export and sale of radio electronics and high-frequency devices', also imported an unknown number of portable radios or walkie-talkies from Hong Kong wireless communications company Retekess in March 2023.

"What we are seeing is that Chinese companies are selling to Russia what they may not be able to sell in China or in the West at a higher price," said Antonia Hmaidi, an analyst at Berlin's Mercator Institute for China Studies, who has been studying China's dual-use exports to Russia since the start of the war. .

 

"Behind the imports are not big Russian companies, but small, recently established ones," she explained, stressing that the implications of Western sanctions aimed at such companies would be minimal. "Such companies don't have much inherent value, which is why it's easy to open another one," he adds.

 

One of those companies, Silva, registered in the remote East Siberian region of Buryatia in September 2022, applied to import 100,000 helmets from Shanghai H-Win New Material in March 2023. In August, however, it submitted a request for an unspecified number of radio telemetry systems, which can be used to track drones.

In addition to goods with overt military applications, Russia has also increased imports of Chinese goods with potential direct and indirect war implications, analysts said.

For example, China's shipments of aramid fibers - heat-resistant synthetic fibers whose applications range from bicycle tires to bulletproof vests - have increased by more than 350 percent in 2022 compared to 2021. In January and February 2023 alone, imports were close to 50 percent of the total amount for the whole of 2022.

Construction equipment has also played an understated but significant role in China's contribution to Russia's military effort, helping to bolster defenses against a Ukrainian counteroffensive, said Joseph Webster, a senior fellow at the Atlantic Council.

 

What consequences will China bear?

"Excavators and bulldozers are one of the most significant and yet most underrated aspects of China's involvement in the war in Ukraine," Webster said.

'There was a huge increase in the import of construction equipment at a time when Russian military forces were digging in. This is certainly not a coincidence,' he pointed out.

Russian imports of Chinese bulldozers were almost twice as high, and imports of excavators were three times higher, in the first seven months of 2023 than in the same period of the previous year, according to official data.

Imports of Chinese heavy trucks increased as much as 11 times between January and May 2023 compared to the same period in 2021, with some seen on the battlefield.

It remains unclear to what extent the Chinese authorities are aware of this or are involved in trade with Russia. That it trades in dual-use items leaves enough room for China to evade Western sanctions. However, analysts note that there is no indication that Beijing is taking measures to control trade with Russia.

 

'Chinese companies working with the Russians will not be punished until they explicitly violate Western sanctions and provoke additional tensions with the West. As long as they are quiet, there is little risk of incurring the wrath of the Chinese Communist Party,'' Webster said.

However, a continued alliance with Moscow could have significant long-term consequences for the Chinese economy. The US and several Western allies have already restricted trade in certain sensitive technologies with China.

 

The West faces a difficult decision: whether to target individual Chinese companies, knowing it would have little impact, or to take action against Beijing with potentially wider consequences and the risk of retaliation.

"If China openly supported Russia, it would have enormous consequences for its entire economic, political and security relationship with the alliance of democracies led by Washington and Brussels," Webster is sure.