According to an unclassified US intelligence report issued on Thursday, China is assisting Russia in evading Western sanctions, and likely providing it with military and dual-use equipment for use in Ukraine.
The Permanent Select Committee on Intelligence of the US House of Representatives published the Office of the Director of National Intelligence (ODNI) assessment.
Military Equipment Sent to Russia
The US Intelligence report evaluates whether and how the People’s Republic of China (PRC), including the PRC Government, the Chinese Communist Party, any PRC state-owned firm, and any other PRC organisation, has supported Russia in its conflict in Ukraine.
According to the report, PRC state-owned defence enterprises allegedly exported dual-use products having commercial and military purposes to Russia in January. The report mentioned that Russian customs records suggest that PRC state-owned enterprises are transferring navigation equipment, jammer technologies, and jet fighter parts to Russian state-owned defence companies.
"China helping Russia in Ukraine war"
— WION (@WIONews) July 28, 2023
US intelligence report has claimed that Beijing is sending navigation equipment and fighter jet parts to Russia.@ShivanChanana joined by @susanmtehrani for details
Watch more: https://t.co/AXC5qRuO3J pic.twitter.com/gIjYgVAXnY
According to Russian customs data published in the investigation, the PRC sent more than $12 million worth of drones and drone parts to the country in March.
The report added that in August last year, the PRC’s state-owned defence company China Poly Technologies, added to the US Entity List in 2013, shipped navigation equipment to Russia’s state-owned military export firm JSC Rosoboronexport for M-17 military transport helicopters.
In October 2022, the report said China Taly Aviation Technologies Corp., a procurement unit of the PRC’s Air Force Equipment Department, sent parts to Russia’s sanctioned state-owned missile manufacturer Alma Antey for use on mobile radar devices.
According to the report, in April this year, Russian President Vladimir Putin and PRC Defence Minister Li Shangfu met in Moscow to discuss the two countries’ military cooperation, which they termed a “boundless” partnership. During that meeting, Putin declared that the Russian and PRC militaries regularly exchanged information, cooperating in military-technical fields and performing joint exercises in the Far East and Europe involving land, naval, and air forces.
China Helping Russia Evade Western Sanctions
According to the report, the PRC has become an even more important economic partner for Russia following its invasion of Ukraine in February 2022. The PRC has boosted its imports of Russian energy exports, including rerouted European oil and gas supplies.
In 2022, Russian imports from the PRC increased by 13% to $76 billion, while exports to the PRC increased by 43% to $114 billion. Total trade between the PRC and Russia reached a record high of $190 billion, a 30% increase from 2021.
The report said the PRC has profited from discounted prices on Russian crude oil, with the cost of Russian imports averaging $73.53 per barrel in February, a 13.7% decrease from $85.23 per barrel in the same month the previous year.
The PRC also supplies supertankers and insurance coverage to transport Russian Urals crude to PRC ports. Moscow seeks export vessels following a G-7 oil price restriction prohibiting using Western cargo services and insurance.
The report further mentions that 18 PRC supertankers and 16 Aframax-sized vessels might be used this year for shipping Russian crude — enough to transport 15 million tonnes or around 10% of total Urals exports — as stated by an executive with the PRC firm involved in the shipments.
China imported a record amount of Russian crude oil (2.13 million barrels per day) in the first half of 2023
— GZERO Media (@gzeromedia) July 22, 2023
The growing Russia-China trade relationship could make China an influential mediator in the Ukraine war#HardNumbershttps://t.co/opX7N2hdqr
Bilateral Trade in Yuan
The PRC and Russia have increased the share of their trade settled in yuan, and both nations’ financial institutions are expanding their usage of domestic payment systems. According to the Central Bank of Russia, the percentage of Russian exports paid in yuan rose to 14% by September 2022, up from 0.4% at the start of the war.
After Russian banks were barred from using the SWIFT system, Moscow and Beijing turned to domestic payment systems — the PRC’s Cross-Border Interbank Payment System (CIPS) and Russia’s System for Transfer of Financial Messages (SPFS) — to clear and settle local currency transactions.
The report indicates that over 20 Russian financial institutions were linked to CIPS as of mid-July 2022. Since Russia’s invasion, the average daily Russian transaction volume through CIPS has surged by over 50% to 21,000 daily transactions as of January.
Last year, Russian firms issued yuan-denominated bonds worth more than $7 billion. As of March, the yuan-ruble pair was the most traded currency on the Moscow Exchange (MOEX) in daily volume.
China has consistently denied supplying military supplies to Russia since Moscow’s ‘special military operation’ in Ukraine in Feb 2022. Earlier this year, Chinese foreign ministry spokesman Wang Wenbin said China “will never accept the US pointing fingers at Sino-Russian relations or even coercing us.”
Wang remarked, “It is the United States and not China that is endlessly shipping weapons to the battlefield.” He added, “We urge the United States to earnestly reflect on its own actions and do more to alleviate the situation, promote peace and dialogue, and stop shifting blame and spreading false information.”