Illicit Chip Flows to Russia Slow, But China and Hong Kong Remain Key Hubs

International International News

Posted by pallavi on 2024-07-25 04:55:50 |

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Decreased Trans-Shipments of Restricted Goods

Recent data from the U.S. Commerce Department reveals a significant decline in the shipment of semiconductors and other restricted goods through China and Hong Kong to Russia, a drop attributed to aggressive enforcement and corporate engagement by U.S. authorities.

Hong Kong's Role in Sanctions Evasion

Trans-shipments of advanced components through Hong Kong, which are likely to be used for Russia's war efforts in Ukraine, fell by 28% between January and May. Despite this reduction, Hong Kong remains a critical hub for sanctions evasion, highlighting ongoing concerns about the region's role in global supply chains for restricted goods.

China's Involvement and U.S. Concerns

Shipments through mainland China, excluding Hong Kong, fell by 19% in the same period. The U.S. continues to view China as a major concern, accusing it of supporting Russia's military by exporting essential parts and equipment.

U.S. Efforts to Curb Illicit Trade

The decline in illicit flows is seen as a result of multiple factors, including aggressive U.S. enforcement actions and dialogues with companies involved in the trans-shipment of goods. Despite this progress, U.S. officials remain vigilant, emphasizing the need for ongoing efforts to restrict Russia's access to critical technologies.

Data on Hong Kong-Registered Firms

A separate dataset from C4ADS indicates that over 200 Hong Kong-registered firms shipped nearly $2 billion worth of goods to Russian buyers between August and December 2023. This includes $750 million worth of high-priority items like advanced chips from Nvidia, Vectrawave, Texas Instruments, and Intel.

Lack of Response from Authorities

The Hong Kong government, China's Customs Administration, and Foreign Ministry did not respond to requests for comments. The Russian embassy in Washington also provided no response. Hong Kong's government stated it enforces UN Security Council sanctions but does not implement unilateral sanctions from other countries.

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