Despite Western sanctions, the Russian arms industry is producing at full speed. Its manufacturing of weapons crucial to the war effort in Ukraine has increased dramatically since the start of the fighting. It is believed, for example, to have more than doubled monthly long-range missile capacity earlier this year. The growth has been possible thanks to new international suppliers, who supply parts, electronic components and tools.
It is not easy to unravel the supply chain; Products are often marketed through a complex network of shell companies. However, a study of trade data by the Center for Strategic and International Studies (CSIS), a think tank in Washington, D.C., indicates that many of the imports go to a specific country (see charts 1 and 2 ).
Chinese companies have supplied Russia with semiconductors crucial for the manufacture of various weapons systems. They have also supplied navigation equipment, spare parts for reactors and more generic products such as ball bearings, used in artillery pieces and other equipment.
Transaction records indicate that Russian imports of precision manufacturing equipment used for critical material (known as computer numerical control, or CNC) tools also largely come from China (see Chart 3). Between March and July of last year, more than 10,000 monthly transactions were recorded from China to Russia related to these tools. Each record could have contained multiple goods, so the actual number of machines supplied is likely much higher.
The graphs show that Russian imports of such goods began to grow after President Vladimir Putin announced a partial mobilization in September 2022. However, the big increase in supplies from China occurred in March 2023, when top leader Xi Jinping visited Putin in Moscow. China claims to maintain a neutral position in the war and does not supply weapons, but the export of these minor products confirms its great contribution to the Kremlin's war machine. Antony Blinken, US Secretary of State, has already criticized the country for being the “main contributor” to Russia's “defense industrial base.”
Trade with China is not the only problem for Western countries trying to limit the Russian defense industry. Despite exhaustive export controls, Russia continued to receive many Western-made components in 2023. Goods from France, Germany and Japan, for example, arrived in Russia through third countries, such as Turkey and the United Arab Emirates, which have not signed up to Western sanctions. A study by the Royal United Services Institute (RUSI) published in December revealed that Compel JSC, a major Russian microelectronics distributor, had imported huge volumes of Western microelectronic components not only through Hong Kong, but also from Germany.
Enforcing stricter standards is not easy. On the one hand, Russia increasingly uses low-end equipment; in part, because it has exhausted stocks of more advanced systems. This means that Russian arms manufacturers are also looking for technology used for civilian uses whose circulation is more difficult to restrict in international supply chains.
Another complication is that Ukraine itself depends in part on Chinese manufacturers for some pieces of machinery (although those shipments are much lower than those China sends to Russia). Whoever designs and implements Western sanctions needs to consider whether imposing new restrictions on some Chinese companies could also hamper Ukraine's military purchases.
For the moment, the Russian production boom looks set to continue. Its defense spending is expected to reach $115 billion in 2024, a 68% increase from 2023. Still, even with help from China and other countries, Russia will not be able to maintain the momentum indefinitely. The explosive material needed to make artillery rockets and other munitions is in short supply. In some areas, Soviet-era reserves that the Russians have been reconditioning will run out in the next two years. Meanwhile, Western countries can devote efforts to filling the loopholes of the current sanctions and increasing their own production capacity to help Ukraine.
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Translation: Juan Gabriel López Guix
