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1. New Information on Shenyang Machine Tool Company’s Illicit Sales to North Korea and Russia

Author:
David Albright and Spencer Faragasso
Publication Date:
01-2025
Content Type:
Special Report
Institution:
Institute for Security and International Studies (ISIS)
Abstract:
Several years ago, the Institute reported about the relatively large, multinational Chinese company Shenyang Machine Tools Company supplying sophisticated computer numerically controlled (CNC) machine tools, equipped with Western controlled software, to North Korea in violation of UN Security Council (UNSC) sanctions and a supplier country’s trade control laws that banned re-export of this software. New information details the disingenuous way in which the Chinese government investigated this case, indicating nonetheless inadvertently that North Korea received these machine tools, while also demonstrating China’s utter disregard for enforcing UNSC sanctions or its own or others’ export control laws. This case serves as another of the many cases highlighting China as a long-time irresponsible trading partner that responsible companies should avoid when sensitive dual-use goods are involved, lest they be complicit in outfitting North Korea’s, Iran’s, or Russia’s military programs. Today, responsible suppliers are inadvertently facilitating Russia’s prosecution of an illegal war against Ukraine. Given Shenyang Machine Tools Company’s recent exports of goods to Russia with Harmonized Shipments (HS) codes found on the Bureau of Industry and Security (BIS) Common High Priority List (CHPL), this company should be considered for sanctions.
Topic:
Sanctions, Trade, Illegal Trade, and Shenyang Machine Tool Company
Political Geography:
Russia, China, Europe, Asia, and North Korea

2. Chinese Export of Restricted High Priority Battlefield Items to Russia

Author:
Spencer Faragasso
Publication Date:
09-2024
Content Type:
Special Report
Institution:
Institute for Security and International Studies (ISIS)
Abstract:
The Institute for Science and International Security has reviewed more than 295,000 commercial import-export trade manifest records from May 2022 through the end of December 2023, detailing exports of restricted Tier One Harmonized System Codes (HS Codes) items on the Bureau of Industry and Security (BIS) Common High Priority List (CHPL) being exported by Chinese companies to Russian importers. The BIS CHLP applies trade restrictions to Russia on the most sensitive and sought-after Western electronics and other commodities that Russia requires to build its war machine. Tier One covers key items that Russia cannot domestically produce and that have limited manufacturers and constitutes four HS Code chapter 84 codes (8542.31, 8542.32, 8542.33, and 8542.39) detailing the most important electronics which Russia needs to build drones, missiles, and other weapon systems. Russia depends on illicit import practices and networks to acquire these goods from overseas, mainly Western goods via China. Without these critical commodities, Russia would be crippled in its ability to produce the advanced missiles, drones, and other combat systems it needs to wage its war of aggression in Ukraine. More than $1.5 billion worth of restricted Tier One commodities were found being exported from China to Russia during the assessed period. The shipments contained electronics designed and produced by Western firms, but shipped by often obscure and little-known Chinese companies to Russian firms. Shipments containing Western brands found in the trade data include Texas Instruments, XILINX, Analog Devices, Intel, NVIDIA, ST Microelectronics, and other major sought-after designers and producers of electronics. Many of these companies’ products have been frequently found in Russian weapons used in Ukraine, especially in drone systems such as the Shahed 136 and the Lancet kamikaze drones, and Kometa anti-jamming equipment. For example, XILINX field programmable gate arrays (FPGA) and microcontrollers, all of which were found in the assessed trade data, are essential components in the Shahed 136, hundreds of which are being launched at Ukraine each month. 1 NVIDIA Jetson AI modules play a key role in how the Lancet—another drone launched by Russia at Ukraine in the thousands—autonomously identifies, tracks, and engages targets. 2 These amounts of drones, as well as other weapon systems like missiles and other drones, demand a huge quantity of Western Tier 1 goods to keep up production rates and meet the Russian military’s operational needs.
Topic:
Weapons, Exports, Trade, and Russia-Ukraine War
Political Geography:
Russia, China, Europe, and Asia