How China exports sanctioned goods to Russia through Central Asia

Export of sanctioned goods to Russia

Goods exported to Russia from China through Central Asia don’t have to be weapons to aid Russia’s military efforts in Ukraine.

After Russia’s invasion of Ukraine, the US, the EU, and many other countries imposed a wide range of sanctions on Russia. This forced Moscow to use alternative routes through countries like Turkey and Central Asian neighbors to organize the delivery of sanctioned goods.

Many countries did not join the sanctions against Russia directly but still prefer to avoid the risk of secondary sanctions. China, in particular, maintains strong ties with Russia and aims to reduce the risk of secondary sanctions as much as possible. Central Asian countries, sharing borders with China and Russia, have been especially useful in providing indirect assistance to China in its trade with Russia.

The goods exported to Russia from China via Central Asia don’t necessarily have to be weapons to support Russia’s military efforts in Ukraine. Without the import flows of industrial goods through Central Asia, Moscow might have to make tougher compromises, choosing “guns over butter.” Thus, re-export schemes undermine sanctions, allowing Russia to flexibly maintain production lines for military goods.

China is one of the main trading partners of the Central Asian countries, and the import from China to Central Asia has almost doubled over the last five years. However, in 2022, after the Russian invasion of Ukraine, imports from China surged. During the same period, exports from Central Asia to Russia also significantly increased.

From 2018 to 2019, the import from China to Central Asia increased by 17 percent. It decreased in 2020 due to the pandemic but returned to pre-pandemic levels in 2021. Then, in 2022, imports from China increased by 44 percent, with Kyrgyzstan’s share in this import growing particularly fast. According to Temur Umarov, a fellow at the Carnegie Russia Eurasia Center, 2023 became a record year for trade between Central Asian countries and China.

The growing export of China to Central Asia is notable as its global export has not shown such strong growth, while the economic growth rates in Central Asia are comparable to previous years.

In 2022, the volume of exports from Central Asia to Russia increased by nearly one-third. Kyrgyzstan’s share in the total regional export to Russia increased almost two and a half times, Uzbekistan’s more than half, and Kazakhstan’s exports to Russia rose modestly by a quarter. However, Tajikistan’s exports to Russia remained almost nil.

This study hypothesizes that the increase in trade with Russia and China is interconnected and due to the re-export of Chinese goods to Russia, particularly to help China avoid Western sanctions against Russia.

To further explore this connection, we analyzed Central Asia’s foreign trade using the Trade Map online resource, comparing main categories of goods in imports from China and exports to Russia, noting significant growth from 2021 to 2022. Turkmenistan was excluded from this study due to the lack of available data.

For Uzbekistan, two new categories appeared in the list of main imports from China and exports to Russia in 2022: “nuclear reactors, boilers, machinery” and “electrical machines and equipment.” Exports of “nuclear reactors, boilers, machines” from Uzbekistan to Russia increased by 264 percent, and electrical machines and equipment by 150 percent.

Meanwhile, imports of “nuclear reactors, boilers, machines” from China to Uzbekistan rose by more than one-third (134 percent), and electrical machines and equipment nearly by a quarter (124 percent).

However, the absolute import figures of these goods from China significantly exceed their export to Russia.

For Kyrgyzstan, four new categories appeared in the lists of imports from China and exports to Russia: “nuclear reactors, boilers and machines,” “knitted fabrics,” “footwear,” and “various articles of base metal.” Specifically, the export of “nuclear reactors, boilers, and machines” increased by 41,105 percent. However, cotton export provided almost a quarter of last year’s increase in shipments to Russia, rising by 7,564 percent.

The growth in “various articles of base metal” in 2021-2022 was particularly notable: exports to Russia increased by 1,245 times.

An interesting point is that “knitted fabrics” became the second fastest-growing new export category to Russia, increasing by 411 times, while “nuclear reactors, boilers, and machines” grew 23 times, and “footwear” seven times.

The significant increase in fabric exports could be due to a surge in orders from Russian companies, says Saparbek Asanov, head of the Light Industry Enterprises Association of Kyrgyzstan “Legprom”. These goods are not directly under sanctions, but re-export trade to Russia includes not just sanctioned goods but also those affected by global brands leaving the Russian market.

There’s a likelihood that demand for military apparel influenced the supply chains of clothing to Russia. Financial sanctions forced many Russian firms, which previously outsourced production needs, to turn to the Kyrgyz market. Kyrgyz clothing manufacturers are not only fulfilling orders for external brands but are also exporting clothes and designs of local brands, indicating a significant shift in the industry dynamics.

For Kazakhstan, categories like “nuclear reactors, boilers, and machinery” and “electrical machines and equipment” were listed as major goods of import from China in 2022, and also of export to Russia. These categories increased fivefold compared to the pre-war year, suggesting that they cover goods subject to sanctions that could be used by the Russian military-industrial complex.

Tajikistan, in 2022, did not have overlapping groups of goods in trade with both countries, likely due to its limited role in China’s attempts to bypass sanctions in its trade with Russia.

The trade turnover of Kazakhstan, Kyrgyzstan, and Uzbekistan with both China and Russia significantly increased in 2022 compared to 2021. A comparison of imports from China and exports to Russia over time shows that several categories of goods are responsible for this growth.

The category “nuclear reactors, boilers, and machinery” appears in the lists of all three countries, taking leading positions in imports from China and exports to Russia. For instance, this category grew by 553.34 percent in Kazakhstan, 2,342.56 percent in Kyrgyzstan, and 264.18 percent in Uzbekistan from 2021 to 2022.

Between 2018 and 2019, the same category only grew by 8.62 percent and 24.24 percent in Kazakhstan and Uzbekistan respectively, while it decreased by 75.44 percent in Kyrgyzstan.

These shifts convincingly suggest a connection between the growth in 2021-2022 and Russia’s invasion of Ukraine followed by the introduction of Western sanctions.

According to Temur Umarov, in the coming years, it will become increasingly difficult for Central Asian states to help Russians circumvent sanctions. However, much will depend on the reaction of the EU and the USA. Umarov emphasized that Western countries are not ignoring this trend, and a slight decline in trade between Russia and Central Asia was already observed in 2023.

However, this decrease is relative, and according to Umarov, re-export schemes may become more focused on products that are specifically not under sanctions but are unavailable in Russia due to global brands avoiding the Russian market.

This article was published as part of the Spheres of Influence Uncovered project, implemented by n-ost.