US aims to cut off supplies from China to Russia’s military machinery

The US is ramping up pressure on Ukraine’s allies and western businesses to cut off supplies for Russia’s defense industry through China, a crucial route to sustain President Vladimir Putin’s war machine. In a speech to German business leaders in Berlin, US deputy Treasury secretary Wally Adeyemo will urge western companies to halt Russia’s import of critical components from or via China.

Adeyemo will emphasize that Chinese firms must choose between doing business in the US and Europe or equipping Russia’s war machine with dual-use goods, but they cannot do both. The US has threatened secondary sanctions against Chinese companies found to have supplied Russia’s defense industry.

Moscow increased its imports of sensitive, dual-use goods from China-based suppliers by 40% last year, according to the US. While China accounts for almost two-thirds of Russia’s imports of dual-use high-technology goods, the components used in Russian weaponry are mostly of western origin.

The European Central Bank has warned Eurozone lenders with Russian operations to expedite their exits, fearing US secondary sanctions for enabling Moscow’s war effort. Adeyemo also cautioned Austria’s Raiffeisen Bank about potential restrictions on its access to the US financial system.

The US is now focusing on ensuring that US microchip manufacturers are vigilant about how their chips are used and preventing transshipment through third countries like China. Adeyemo highlighted Putin’s appointment of Andrei Belousov as defense minister, indicating the war’s toll on Russia’s economy.

The US aims to compel banks to enhance due diligence to prevent Russia from accessing crucial goods, as the Kremlin seeks to bypass sanctions through smaller financial institutions. Adeyemo stressed the importance of enforcing sanctions and export controls to hinder Russia’s military capabilities.