China is providing crucial support for Russia’s war effort in Ukraine by helping the Kremlin evade Western sanctions and is likely supplying Moscow with key technology, according to a new U.S intelligence report.

China has dramatically expanded its purchase of Russian oil, gas and other energy exports since Moscow invaded Ukraine in February last year and used its financial system to allow Russia “to conduct transactions unfettered of Western interdiction,” said the assessment released Thursday by the Office of the Director of National Intelligence (ODNI).

China is an increasingly critical economic partner for Russia and is “pursuing a variety of economic support mechanisms for Russia that mitigate both the impact of Western sanctions and export controls,” according to the ODNI report, which was mandated by Congress. 

Dec. 5, 202206:15

Beijing “has also become an increasingly important buttress for Russia and its war effort, probably supplying Moscow with key technology in dual use equipment used in Ukraine,” the report said.

Chinese state-owned defense companies have shipped navigation equipment, parts for fighter jets and other dual-use technology to Russian defense firms, the report said. As of March, China had shipped more than $12 million in drones and drone parts to Russia, the report said, citing a third-party data provider and analysis of official Russian customs data.

“Russia’s war against Ukraine has been enabled in no small part by China’s willingness to support them, in direct and indirect ways. I hope this report makes clear to Beijing that the United States, and the world, will know if they take further actions to enable Putin’s brutal invasion,” said Rep. Jim Himes of Connecticut, the ranking Democrat on the House Intelligence Committee. 

The Biden administration has warned China against sending weapons to Russia for its war in Ukraine.

The Chinese embassy in Washington defended Beijing’s approach to Russia and to the war in Ukraine, saying its trade relations were “above board” and that it does not sell weapons to Moscow.

 “On the Ukraine issue, China upholds an objective and just position, actively promotes talks for peace and has played a constructive part in facilitating a political settlement of the crisis,” Chinese embassy spokesperson Liu Pengyu said in an email. “China does not sell weapons to parties involved in the Ukraine crisis and prudently handles the export of dual-use items in accordance with laws and regulations. China-Russia economic and trade cooperation is completely above-board. It does not target any third party and shall be free from disruption or coercion by any third party,” he said.

July 27, 202307:17

In the aftermath of Russia’s invasion and the imposition of numerous sanctions by the U.S. and the European Union, China has become Russia’s most important trade partner, though it has not fully replaced pre-war trade volumes with Western states, the report said, citing economic data. Russia exported twice as much liquefied petroleum gas to China in 2022, compared to 2021, and China’s crude oil imports from Russia hit 1.65 million barrels per day in March, making Beijing the largest buyer of Russian crude, a position once occupied by India, according to the report. 

Beijing also is providing super tankers and insurance coverage to enable Russia to ship its crude oil to Chinese ports, as international sanctions restricted Russia’s use of Western cargo services and insurance, the report said. This year, 18 Chinese super-tankers and 16 other large vessels could be used to ship 15 million metric tons of Russian crude or about 15% of total Urals exports, according to the report, citing an unnamed executive with a Chinese firm involved in the shipments.

Chinese firms are willing to provide insurance for Russian energy shipments, though the coverage is much smaller than that usually offered by Western insurance companies, the report said.

Despite U.S. export restrictions aimed at blocking Moscow’s access to American-made chips and other technology, Russia has been able to buy U.S-made semiconductors in transactions with small and medium-sized firms based in China, the report said, citing customs data and other open-source information. It remains difficult to precisely track Russia’s evasion and circumvention of export controls, especially transactions involving products from foreign firms that incorporate U.S.-made technology, the report said.

To get around financial sanctions, China and Russia have increased the share of bilateral trade settled in the Chinese currency, the yuan, with financial institutions in both countries expanding their use of domestic payment systems, according to the report. The share of Russian exports paid for in yuan rose to 14% by September 2022, up from less than half a percent before the start of the war, it said, citing Russia’s central bank.

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