China facilitating Russian evasion of sanctions, US intelligence report claims

The Office of the Director of National Intelligence (ODNI), a leading US government intelligence agency, has claimed that China is aiding Russia in its war on Ukraine by supplying Moscow with technology, military hardware, as well as helping the country evade western sanctions, particularly in the field of crude exports.

In a newly declassified report the ODNI said that China was pursuing a variety of support mechanisms for Russia which had reduced both the impact of western sanctions and export supplies.

China has not just been buying crude oil from Russia, with the latter seeking new export markets after largely being locked out of EU and G7 markets, it had also, the ODNI claimed, opened its financial system for commercial interactions with Moscow, allowing Russian entities to conduct financial transactions without using any of the financial services in operation in the West.

The reports aid that in 2022 total bilateral trade between Beijing and Moscow reached $190bn, up 30% on 29021 and an all-time record. Russia’s exports to China increased by 43% year on year to $114bn.

Chinese purchases of Russian energy rose to $81bn compared to $52bn in 2021. By March 2023 crude imports from Russia reached 1.65m bpd, overtaking India as the largest buyer of Russia’s crude. By May the figure had reached 2m bpd, accounting for about 15% of China’s demand.

The ODNI also claimed that China was offering insurance coverage to tankers that moved the crude to Chinese ports. Citing trading sources and tracking data, the ODNI suggested that as of January this year at least four Chinese supertankers were shipping Russian Urals crude to China. Over the year to date, a total of 18 Chinese supertankers and another 16 Aframax-sized vessels had been used to ship Russian crude. That would be enough to transport 15m tonnes, or about 10% of total Urals exports.

China looks to have significantly opened up its financial system to Russia, based on the increased share of bilateral trade settled in yuan and expansion of use of both country’s domestic payment systems. The share of Russian exports paid for in yuan rose “significantly” from the 0.4% before the invasion of Ukraine.