Since the all-out invasion of Ukraine, Chinese shipments to Russia of an important class of advanced machine tools have increased tenfold, and the country’s manufacturers are now producing high-precision “computer numerical control” essential to Moscow’s military industry. It has a monopoly on the equipment trade.
The surge in shipments of CNC equipment, which allows highly precise metal milling, is a major concern for Ukraine’s allies, who are trying to clamp down on Russia’s access to the equipment.
Russian customs returns show that Chinese manufacturers shipped $68 million worth of CNC tools in July, the latest verifiable figure and a sign that Moscow is planning a full-scale invasion. That’s up from just $6.5 million in February 2022, when it started.
Michael Laska, an assistant professor at Singapore’s S. Rajaratnam School of International Relations, said CNC exports are an example of how China and Russia are being drawn into a deepening military-industrial partnership.
“China and Russia share the same political interest in challenging and confronting the United States,” Laska said. “In fact, Russia is cut off from importing European machinery and has no choice but to rely on China.”
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Imports of CNC tools from the EU, of which Russia has historically been a major source, have decreased dramatically due to tightened regulations from February 2022 onwards. Analysts said the Russian government is trying to obtain CNC tools from sources that are not closed by international regulations.
According to customs returns, Chinese-made CNC equipment accounted for 57% of Russian imports by value in July, up from just 12% before the war. They suggest that Moscow also continues to import significant amounts of CNC tools made in Taiwan and South Korea.
In November, the United States imposed sweeping sanctions on all major importers of Russian CNC tools, including those who had moved less than $200,000 in equipment since the invasion last February. Chinese companies that continue to do business with Russian importers are now at risk of actions from the United States that could jeopardize their ability to trade in other markets.
Beijing insists it is not shipping lethal weapons to Moscow and denies supporting its neighbor’s war effort, but it also refuses to impose sanctions. Shipments of products such as oil, machinery, consumer goods and automobiles from China are helping to sustain Russia’s economy, which has been hit by sanctions. In October, Chinese President Xi Jinping told Russian President Vladimir Putin that annual trade between the two countries had reached a “historic high” of nearly $200 billion.
Allen Maggard, an analyst at the Washington-based conflict analysis organization C4ADS, said CNC tools “can rapidly manufacture complex parts from metals and other hard materials with consistent precision and accuracy.” Masu. These characteristics make CNC machine tools particularly valuable in defense manufacturing. ”
Additionally, they are often large devices, making them more difficult to smuggle into Russia from the West than smaller components such as microchips.
A Financial Times analysis of export records found that some of the key winners from Russia’s surge had strong ties to China’s People’s Liberation Army.
For example, the Wuhan-China numerical control increased exports to Russia. In 2017, the company was the prime contractor for the “Brain Switch Project” (a plan to replace foreign CNC systems with domestically produced ones in the defense industry) and was awarded to Chinese jet fighter manufacturer Shenyang Aircraft. We have cooperated with the company.
HuazhongCNC itself was subject to U.S. sanctions from 2008 to 2010 under laws that prohibit the transfer of weapons technology and equipment to Syria, Iran, and North Korea. The company did not respond to requests for comment.
Emily Kilcrease, a former deputy assistant to the U.S. Trade Representative, said the U.S. government has been reluctant to impose financial sanctions targeting Chinese companies that support Russia, but that doing so could prevent a crisis with China from occurring. This was done out of concern that the effectiveness of financial sanctions would be reduced.
“This dynamic around overuse is a major concern of the administration,” Kilcrease said. “They know that these sanctions and export controls are by no means perfect. So what they’re really focused on is making sure that what Russia gets is inferior goods. It’s a cost imposition, making it much more difficult and expensive for Russia to obtain this type of machine tool.”
The median price to Russia of a basket of Chinese products that could support Russia’s war effort rose 78% from 2021 to 2023, according to an analysis by the Bank of Finland’s Institute for Emerging Economies. China’s export prices of the same products to other countries rose only 12 percent.
Existing U.S. sanctions and export controls on Chinese government military contractors over other issues have made many Chinese companies vulnerable to potential U.S. sanctions, said Alexander Gabuev, director of the Carnegie Russia and Eurasia Center in Berlin. They say they are ignoring the risks.
Gabuev said many Chinese companies “expect that sooner or later all companies associated with the People’s Liberation Army will be subject to sanctions.” “So they think they can either avoid deepening military ties and try to stay in the market and get sanctioned anyway, or they can just move on.”
It is unclear how Russia deployed the imported Chinese CNC equipment. Maggard said he believed Russian defense facilities were just “starting to use Chinese CNC machine tools.”
Analysts have not yet clearly identified what was used in hours of propaganda footage shot on social media and inside Russia’s high-tech military factory. All of his CNC devices pictured are from suppliers in Europe, Taiwan, Korea, or Japan.
This image is supported by other sources. For example, CFT, the currently licensed Russian CNC equipment importer, imported almost no Chinese-origin products until July, according to customs records. Internal documents leaked from CFT reveal that CFT is a supplier to Russian defense manufacturers, including Aeroscan, which makes the Lancet suicide bomber that caused significant damage to the Ukrainian military. CFT did not respond to requests for comment.
Olena Yurchenko, an analyst at the Ukrainian Economic Security Council, a research and advocacy group, said Chinese CNC machines were used in factories whose production processes were based on tools from another manufacturer with different specifications. He said that would be “nearly impossible.”
Defense manufacturers’ preference for equipment from other countries may also reflect skepticism about the quality of Chinese equipment. Mr. Maggard referred to recent public comments from experts in the Russian field who said that Chinese tools are less accurate and precise and have a shorter operating life than equipment manufactured by German and Japanese companies.