China keeps supplying Shahed components to Russia and Iran despite US sanctions – WSJ

Chinese companies continue to supply engines, microchips and other components for the production of Shahed kamikaze drones to Iran and Russia, openly disregarding US sanctions.

Source: The Wall Street Journal

Details: According to Chinese customs data, companies in China are shipping hundreds of containers of components to factories in Iran and Russia. For example, Xiamen Victory Technology sells Limbach L550 engines, a key component of the Shahed-136 kamikaze drone used by Russia to attack Ukrainian cities.

An image of a Shahed drone appears alongside the slogan "Innovating Aviation Engine Solutions" on the company's website.

For some time, Chinese exporters deliberately mislabelled certain shipments to bypass US and European sanctions, but according to senior US Treasury officials and arms analysts, in many cases they are no longer making such efforts.

Former US Treasury officials said China has long served as a transit hub for American and European-made components that can be redirected to drone production facilities in Iran and Russia. They added that such parts are increasingly being manufactured in China itself, often at smaller factories that are not deterred by Western sanctions

A US Treasury investigation found that nearly all American and European components were routed through authorised distributors to retailers in mainland China or Hong Kong, which then shipped them onward to Iran or Russia.

Payments are typically made through shell companies that can easily be set up in Hong Kong and help conceal the final destination of the goods.

The US Treasury in 2024 imposed sanctions on a network of Hong Kong-based shell companies linked to Hamed Dehghan, a Tehran-based trader whose firm was a key supplier for Iran's drone and missile programmes. A new network of Hong Kong companies was being used as cover for his activities a year later.

"The Chinese turned a blind eye to that flow even as its role has been repeatedly exposed in public reporting and sanctions designations," said Miad Maleki, a former US Treasury official who oversaw sanctions programmes at the Office of Foreign Assets Control (OFAC).

Conflict Armament Research, a UK-based group investigating illicit arms trafficking, said it had observed a "discernible increase" in the use of components from Chinese manufacturers in Shahed drones.

Chinese customs data also indicate that local companies are increasingly willing to openly trade in drone components despite US and European sanctions.

According to current and former officials, the US cannot fully stop this trade, so its aim is to raise the costs for Iran and Russia as much as possible.

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