Despite sanctions, goods produced in Western countries increasingly reach Russia via China and Hong Kong, totaling $9.2 billion from April 2022 to July 2024. Including all goods produced by Western companies anywhere in the world, they accounted for $23.7 billion in this supply flow to Russia in the same period, according to new research by B4Ukraine, the Norwegian Helsinki Committee, and risk consultancy Corisk. European and North American firms provided goods worth $17.9 billion, the rest being produced by East Asian companies.
This attests to the role of Western-owned production abroad in supplying Russia during wartime. We call on the EU and G7 governments to take urgent action to halt these exports, limiting Russia’s ability to sustain its military actions and uphold international law.
Nezir Sinani, Executive Director of the B4Ukraine coalition, said: ‘Western governments must enhance coordination and prosecute companies within their jurisdictions that, knowingly or unknowingly, facilitate sanctions evasion. Additionally, governments must hold other states accountable for their role in facilitating circumvention.’
The total includes both sanctioned and non-sanctioned goods. Among the half of goods ($9.2bn) in the trade flow that were produced inside Western countries, largely sanctioned products included aircraft and parts ($292mn from the US, $15mn from France), computers and parts ($556mn from Taiwan, $142mn from Korea, $126mn from the US), integrated circuits ($447mn from Taiwan, $181mn from the US, $77mn from Korea), telephones ($201mn from Taiwan), electrical parts, controls or switches ($50mn from Germany, $41mn from the US, $9mn from Italy), automotive parts and tyres ($215mn from Japan, $18mn from Korea), and valves ($20mn from Germany, $19mn from Italy).
Berit Lindeman, Secretary General of the Norwegian Helsinki Committee, said: ‘Sanctions work. Sanctions bite. Sanctions save Ukrainian lives. But there are still several measures that states and companies could take to limit circumvention further and make it even more difficult and expensive for Russia to wage its illegal war.’
The trade also involved highly war-critical lathes or machining centers including CNC machines ($89mn from Japan, $58mn from Taiwan), and radar or radio apparatus ($4mn from Germany).
Erlend Bjørtvedt, founder of Corisk, said: ‘EU companies are increasingly involved in exports to Russia via China, which we see in connection with the gradual closure of European trade routes. Asia is the next battleground for curbing European supplies to Russia.’
Key Findings:
- $8.8 billion and $8.6 billion — the total value of Russian imports from China and Hong Kong of goods produced by US and European companies, respectively (April 2022 – July 2024).
- European and Japanese companies are increasingly exporting indirectly to Russia via China and Hong Kong, while US companies have reduced exports through this East-Asian corridor.
- Western manufacturers of electronic components, machinery, tools, cars and trucks, and medical equipment are increasingly channeling goods to Russia through these regions.
- Goods produced by Western companies’ subsidiaries in countries outside the sanction coalition now make up 61% of all Western content in Chinese-Russian exports, surpassing the value of goods produced within Western countries.
Recommendations:
1. Enhance Enforcement Resources: The EU and European governments should increase resources dedicated to tackling the flow of sanctioned goods to Russia via China and Hong Kong. Strengthen enforcement to close gaps in indirect trade and sanctions evasion.
2. Implement Common Provisions: Enforce common provisions on circumvention and daughter companies within the EU. Support joint investigative groups focusing on businesses involved in sanction evasion.
3. Ensure Transparency in Enforcement: The EU should transparently monitor and report enforcement efforts, enabling the public to see how member states investigate and prosecute sanctions violations.
4. Demand Sanctions Compliance in Reconstruction Efforts: The Ukrainian government and the EU should require companies involved in reconstruction projects or tenders under the Ukraine facility to prove they have not violated sanctions.
5. Strengthen Corporate Compliance: Investors, owners, pension funds, and financial institutions should engage at-risk companies to enhance corporate compliance cultures and resources through ownership dialogue and shareholder meetings.
6. Address Circumvention Trade in Key Countries: Governments of Germany, the Netherlands, Belgium, Ireland, Canada, and Japan in particular, should focus on curbing these countries’ increasing circumvention trade via China and Hong Kong, and take swift action against it.
7. Tackle Multinational Companies Registered in Ireland: Ireland’s low corporate taxes attract multinational companies that engage in Chinese-Russian trade. Irish authorities must significantly enhance enforcement and export controls to prevent these companies from facilitating sanctions evasion.