By James Pomfret and Michael Martina
HONG KONG/WASHINGTON (Reuters) – Semiconductors and other limited goods shipped through China and Hong Kong to fuel Russia’s war effort have fallen by a fifth this year, previously undisclosed U.S. Commerce Department data show. but Hong Kong remains a global hotspot for sanctions evasion.
Transshipment through Hong Kong of Common High Priority Items (CHPL) – advanced components including microelectronics likely to be used by the US and European Union for Russia’s war in Ukraine – fell 28% between January and May, one said. US Department of Commerce official told Reuters.
During the same period, transhipment of these goods through mainland China, excluding Hong Kong, fell by 19%, the official said.
Reuters is releasing the previously secret figures for the first time.
Asked about the transshipment of dual-use goods through China to Russia, the Commerce Department referred Reuters to previous statements outlining its efforts to “limit Russia’s access to the technologies and other items it needs to wage its brutal war against Ukraine.”
Both Hong Kong and China are seen by the US government as important global hubs for Russia to obtain materials for its military, including semiconductors and drone parts.
“I think there is some reason to at least be optimistic that we have been able to slow down some of this trade,” the official said, but added: “China is still our biggest concern.”
The United States and its allies have accused China of supporting Russia’s war in Ukraine, in part by exporting parts and equipment needed by Moscow’s weapons manufacturers.
The U.S. State Department and U.S. Treasury Department have imposed several rounds of sanctions on entities around the world with alleged commercial ties to the Russian military, including shell companies in Hong Kong that had diverted semiconductors.
The official, who spoke on condition of anonymity, said the decline in illicit flows was the result of several factors, including aggressive enforcement by US authorities, as well as involvement with companies whose products are transshipped.
“We are talking to every company whose items appear on the battlefield,” the official said, without naming names.
The official declined to share the full dataset with Reuters, citing the need to protect the department’s access to the information. “What I can say is that we are confident in the source associated with the imports into Russia.”
The Hong Kong government did not respond to questions from Reuters about the transfer of goods to Russia, but said it is “not implementing the unilateral sanctions imposed by other countries, nor do we have the legal authority to take action.”
However, it added that it was “vigorously enforcing” sanctions imposed by the United Nations Security Council in accordance with instructions from China’s Foreign Ministry, including those related to North Korea.
Chinese customs and the foreign ministry did not respond to Reuters’ requests for comment.
There was no response to Reuters questions from the Russian embassy in Washington.
A separate customs dataset from C4ADS, a Washington-based global security nonprofit, found that more than 200 Hong Kong-registered companies shipped nearly $2 billion worth of goods to Russian buyers between August and December 2023.
The data, outlined in a new report from the Committee for Freedom in Hong Kong Foundation (CFHK) and reviewed by Reuters, showed $750 million worth of CHPL items – ranging from high-end chips from Nvidia (NASDAQ:) and France’s Vectrawave, to cheaper chips from Texas Instruments (NASDAQ:) and Intel (NASDAQ:) – shipped via Hong Kong between August and December 2023.
Some of these restricted goods were shipped to sanctioned Russian companies, CFHK said.
Nvidia said in a response to questions from Reuters that it stopped sales to Russia in March 2022 and requires its customers to comply with all applicable US laws.
Texas Instruments told Reuters it “strongly opposes” the use of its chips in Russian military equipment and the illegal diversion of its products to Russia.
Intel said it operates in strict compliance with U.S. export regulations and sanctions and holds suppliers and distributors accountable to the same standards.
Vectrawave did not respond to a request for comment.
“Our investigation has uncovered numerous cases in which Hong Kong-based companies have facilitated the transfer of sensitive technologies and raw materials, undermining international security and stability,” said Samuel Bickett, lawyer and author of the CFHK report.
HIGH-QUALITY CHIPS
C4ADS’s 2023 customs records showed that two of the Nvidia shipments, worth $1.58 million and $1.21 million, were sent to a Moscow-based company called “Lotos” by a sender called Malachor Electronics with a secretarial address in a luxury office building in Hong Kong. Kong’s central business district.
Malachor director Colin Stevenson, who has an address in Britain, could not be reached for comment.
Between August and December last year, a total of $17.6 million worth of Nvidia goods were shipped to Russia by Hong Kong shippers after being traded in countries including China, Taiwan, Turkey, Thailand, Serbia and the United Arab Emirates, according to reports. is evident from audited customs data. by Reuters.
The shipments include “Jetson TX2” Edge AI systems, which are among the components used in drones that the Ukrainian government has discovered on the battlefield.
“Pre-owned Jetsons are available through many pre-owned channels. While we cannot track products after they have been sold, we will take appropriate action if we determine that a customer is in violation of U.S. export controls,” said John Rizzo, a spokesman for Nvidia. .
Rizzo did not provide details about the shipments to Lotos.
Other high-value shipments included two shipments worth $1 million each of Vectrawave semiconductors labeled as microprocessors. Vectrawave is a maker of specialized semiconductors for high-tech communications and defense systems, including radar.
The ease of setting up and registering new companies in Hong Kong has led to a proliferation of shipping and logistics companies and other intermediaries that have also facilitated limited trade and financial flows with Iran and North Korea, according to the CFHK report and a survey of Hong Kong. Kong company registrations by Reuters. Some of these have been sanctioned by US authorities.
Reuters found shuttered offices during visits to industrial buildings in Hong Kong, close to the city’s Kwai Chung container port, for shippers listed in customs and corporate documents. One company, Align (NASDAQ:) Trading, the sender of the Vectrawave chips, had an address that consisted of a moldy room full of hundreds of registration letters from Hong Kong companies.
Li Yanqing, a Chinese director of Align, had an address in Jiujiang in southern China and could not be reached.
