According to previously undisclosed data from the U.S. Department of Commerce, the shipment of semiconductors and other restricted goods from China and Hong Kong to Russia this year, assisting in sustaining the Russia-Ukraine conflict, has decreased by one-fifth. However, Hong Kong remains a hot spot for global sanctions evasion.
The Department of Commerce revealed to Reuters that from January to May of this year, items on the “General High Priority List” (CHPL), including microelectronics, transited through Hong Kong decreased by 28%. The U.S. and the European Union believe that these items could be used in the war in Ukraine.
Officials from the Department of Commerce stated that during the same period, the transit of these items through China (excluding Hong Kong) decreased by 19%.
Reuters was the first to report these previously undisclosed numbers.
The U.S. government believes that China and Hong Kong are crucial global transit points for Russia to procure materials (including semiconductors and drone components) for its military.
The official stated, “I think there is at least reason to be optimistic that we have slowed down some of the trade.”
But he added, “China remains our top concern.”
The U.S. and Western allies have accused the Chinese Communist Party of supporting Russia in the war in Ukraine, citing that China has exported the necessary components and equipment to Moscow’s weapon manufacturers.
The U.S. State Department and Treasury have imposed multiple rounds of sanctions on entities globally suspected of conducting commercial transactions with the Russian military, including Hong Kong shell companies transferring semiconductors to Russia.
The official said that the reduction in illegal flows is the result of various factors, including active enforcement by U.S. authorities and engagement with product transit companies.
Officials stated that when products from a company are found on the battlefield in Ukraine, U.S. authorities will engage in discussions with that company.
According to another customs data summary from the U.S.-based think tank, the Center for Advanced Defense Studies (C4ADS), between August and December 2023, over 200 companies registered in Hong Kong shipped nearly $2 billion worth of goods to buyers in Russia.
Customs information provided to Reuters by the Hong Kong Free Committee Fund showed that from August to December 2023, CHPL goods worth $750 million were shipped through Hong Kong to Russia. This included high-end chips from Nvidia and France’s Vectrawave, as well as low-end chips from Texas Instruments and Intel.
These goods included Nvidia’s “Jetson TX2” edge artificial intelligence system, which is one of the components used in drones discovered by the Ukrainian government on the battlefield.
Nvidia stated in response to Reuters’ inquiries that the company ceased sales to Russia in March 2022 and asked customers to comply with all applicable U.S. laws.
Texas Instruments stated that the company “strongly opposes” the use of its chips in Russian military equipment and the illegal transfer of its products to Russia.
Intel said that the company strictly adheres to U.S. export regulations and sanctions measures and has requested suppliers and distributors to comply with the same standards.
Vectrawave did not respond to requests for comments.