Recent, previously undisclosed data from the U.S. Commerce Department reveals that transshipments of restricted goods through China and Hong Kong to support Russia’s war effort in Ukraine fell significantly this year. Between January and May, the movement of Common High Priority Items (CHPL), including advanced microelectronics, through Hong Kong decreased by 28%, while transshipments through mainland China fell by 19%.
Despite these reductions, Hong Kong remains a key hotspot for sanctions evasion. The U.S. Commerce Department official who provided the data noted that while there is cautious optimism about the decline in illicit flows, China remains a major concern. The U.S. has accused China of facilitating Russia’s war efforts by exporting critical parts and equipment.
The official cited aggressive enforcement actions and engagements with companies whose products were being illicitly diverted as factors contributing to the decrease in transshipments. The U.S. government continues to pressure China and Hong Kong to curb these activities, but responses from the Hong Kong government and Chinese authorities have been limited. Hong Kong stated that it does not implement unilateral sanctions imposed by other countries but enforces United Nations sanctions as directed by China’s Foreign Ministry.
A separate customs dataset from C4ADS, a Washington-based security non-profit, highlighted that over 200 Hong Kong-registered companies shipped nearly $2 billion worth of goods to Russian buyers between August and December 2023. This includes $750 million worth of CHPL items, such as advanced chips from Nvidia and other manufacturers. Some of these goods were reportedly sent to sanctioned Russian firms.
Nvidia confirmed to Reuters that it halted sales to Russia in March 2022 and ensures its customers comply with U.S. laws. Texas Instruments and Intel also stated their opposition to the use of their products in Russian military applications and emphasized adherence to export regulations. Vectrawave did not respond to requests for comment.
The CFHK report highlights the role of Hong Kong-based companies in facilitating the transfer of sensitive technologies, raising concerns about the city’s role in undermining international security. High-end chips, including Nvidia’s Jetson TX2 AI systems, which are used in drones, were found among shipments to Russia. Nvidia stated it would take action if it discovered violations of U.S. export controls.
The proliferation of shipping and logistics firms in Hong Kong, coupled with the ease of setting up new companies, has led to an increase in intermediaries involved in restricted trade and monetary flows to countries like Iran and North Korea. Some of these intermediaries have already been sanctioned by U.S. authorities.
