China continues supplying drone components to Russia and Iran despite sanctions – WSJ

Chinese companies are exporting dual-use drone components – including engines, batteries, fibre-optic cables and microchips – to Iran and Russia in disregard of US sanctions.

Source: The Wall Street Journal

Details: Washington has long sought to curb the flow of dual-use goods – items with both civilian and military applications – to its adversaries, including Russia and Iran.

Meanwhile, the Chinese firm Victory Technology posted an image of a Shahed drone on a product page of its website, alongside the slogan "Innovative solutions for aviation engines".

The small and relatively unknown company also expressed support for Iran after the outbreak of war in the Middle East in late February. At that time, it offered to sell the Iranians German-made engines used in the production of attack drones.

The United States has banned the sale of these engines, known as Limbach L550, to Iran and Russia.

According to Chinese customs data, companies are shipping hundreds of containers filled with engines and other dual-use goods from the country to these destinations.

For some time, Chinese exporters deliberately mislabelled certain shipments to circumvent US and European sanctions, but are now largely doing so more openly.

Many of these components are increasingly being manufactured directly in China, often at small factories that are not deterred by Western sanctions.

Payments are typically processed through shell companies that can be easily registered in Hong Kong, helping to obscure the final destination of the components.

In 2024, the US Treasury imposed sanctions on a network of Hong Kong-based shell companies linked to Hamed Dehghan, a Tehran-based businessman whose company was a key supplier for Iranian drones and missiles.

Within a year, an entirely new network of Hong Kong firms emerged to serve as a cover for his activities, prompting a new wave of sanctions.

China's Ministry of Foreign Affairs says it consistently adheres to export controls on dual-use goods in line with its domestic legislation and international obligations.

As for non-sanctioned dual-use goods, in April 2025 China began supplying Russia with significantly larger volumes of fibre-optic cables after Ukraine disabled Russia's main fibre-optic producer in Saransk.

Exports of lithium-ion batteries to Russia also surged as the country ramped up production of battery-powered drones and have remained high since, according to official data.

Similar spikes in exports of batteries and fibre-optic cables to Iran were observed in July and August 2025, immediately following the 12-day war between Iran and Israel.

Background: Chinese state-owned company COSCO Shipping is planning to acquire an 80% stake in the logistics firm Zippel in Hamburg, Germany, but the Federal Office for the Protection of the Constitution has opposed the deal, citing concerns over growing Chinese influence in European logistics.

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