Espreso. Global

Exports of advanced machine tools from China to Russia increased tenfold after full-scale invasion of Ukraine — FT

2 January, 2024 Tuesday
13:10

Chinese suppliers now dominate trade in ‘computer numerical control’ devices vital to Moscow’s military industries

The Financial Times writes that Chinese shipments to Russia of an important class of advanced machine tools have increased tenfold since the full-scale invasion of Ukraine.

According to Russian customs returns, Chinese manufacturers delivered $68 million worth of CNC devices in July—the most recent amount that can be verified—up from just $6.5 million in February 2022. 

Chinese-made CNC tools accounted for 57% of Russian imports by value in July, according to customs records, compared to just 12% in the months before the conflict. They also imply that Moscow kept importing large quantities of CNC tools produced in South Korea and Taiwan.

“In November, the US imposed sweeping sanctions on all significant Russian importers of CNC tools — including some that had moved less than $200,000 of equipment since the invasion in February last year. Chinese companies that continue to trade with the Russian importers now risk action from the US that would imperil their ability to trade in other markets,” the report states.

Beijing claims that it does not supply Moscow with lethal weaponry, but it opposes sanctions. China is also supplying consumer goods, automobiles, machinery, energy, and other things to Russia, which is under sanctions. China's president, Xi Jinping, informed Vladimir Putin in October that the two nations' yearly commerce had reached a "historic high" of around $200 billion.

A Financial Times study of export data reveals that some significant beneficiaries of the Russian upsurge have close ties to China's People's Liberation Army. Wuhan Huazhong Numerical Control, for instance, has boosted exports to Russia. Between 2008 and 2010, HuazhongCNC was subject to US sanctions imposed under a statute that prohibited the supply of weapons technology or equipment to North Korea, Syria, or Iran. 

Read also: Achilles heel of Russia's military might: Western CNCs

Reluctant to use financial penalties to target Chinese enterprises aiding Russia, according to Emily Kilcrease, a former deputy assistant US trade representative, Washington had been worried that doing so would lessen the effectiveness of such measures in the event of a crisis with Beijing.

The Bank of Finland Institute for Emerging Economies' analysis indicates that between 2021 and 2023, the median price of a Chinese commodities basket that Russia might use to assist its war effort increased by 78%. Only 12% more was charged for identical items when they were exported by China to other nations.

It's unclear how Russia has used the CNC tools it acquired from China. Maggard believes Russian defense plants are only “beginning to use Chinese CNC machine tools”.

At the moment, the CNC devices that can be seen on social media or in propaganda videos still belong to European, Taiwanese, Korean, or Japanese suppliers.

Olena Yurchenko, an analyst at investigative and advocacy organization the Economic Security Council of Ukraine, said it would be “almost impossible” to use a Chinese CNC machine in a plant that had based its production processes around a tool from another producer with different specifications, the report states.

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