As West follows Xi-Putin meetings, China touts crackdown on military assets to Russia

A DJI Inspire 1 Pro drone is flown during a demonstration at the headquarters of SZ DJI Technology Co. in Shenzhen, China, Wednesday, April 20, 2016.

Qilai Shen | Bloomberg | Getty Images

China's Commerce Ministry on Thursday highlighted the country's efforts to restrict illegal exports of military goods to Russia, aiming to make Beijing a neutral player in the ongoing war in Ukraine.

The remarks were made during the week of the BRICS summit in Kazan, Russia. In a meeting on the sidelines of the summit, Chinese President Xi Jinping told Russian President Vladimir Putin that the “deep” relations between the two countries would not change despite global geopolitical turmoil.

China has walked a diplomatic tightrope throughout the Russia-Ukraine war. Beijing did not condemn Russia for invading Ukraine, but also did not directly supply Moscow with weapons and ammunition.

The Commerce Ministry's statement “clearly signals that Chinese leaders are sensitive to Western criticism” that the country's exports were “keeping Russia's war economy afloat,” said Gabriel Wildau, Teneo's chief executive. He added that this sends another message to Moscow: Beijing's support is not unlimited.

In its strongest denunciation to date, the North Atlantic Treaty Organization in July called on Beijing to “cease all material and political support for Russia's war effort”, including dual-use items. The term refers to goods or technologies that can be used for civilian and military purposes.

China Saturday unveiled export control law for dual-use items, which is expected to come into force on December 1. It came after the United States sanctioned two Chinese companies for allegedly helping Russia build long-range attack drones.

The new regulations would establish a licensing system for the export of dual-use goods, and create a list of restricted goods, with exporters of such goods required to disclose the end users and intended use of the exported goods.

“Since the Ukraine crisis, China has issued several announcements on drone control and has clearly stated that civilian drones should not be used illegally for military purposes,” He Yadong, a spokesperson for the Ministry of Commerce, told a press conference on Thursdayaccording to CNBC's translation from Chinese. He added that law enforcement officials have strengthened review of drone export licenses and intensified inspections of “illegal exports.”

Despite the timing of its release, the text of China's new export control law does not mention specific countries. And Xi did not mention export controls during his trip to Russia, according to official statements.

Claim a neutral position

Beijing has called for negotiations to end the war in Ukraine, while saying it defends multilateralism in contrast to other countries' use of tariffs and sanctions.

After speaking on Thursday about China's efforts to restrict exports of dual-use goods, the Commerce Ministry spokesperson reiterated his opposition to “unilateral sanctions,” which he said had no basis in international law .

“China will firmly protect its legitimate rights and interests against malicious acts of suppression and sanctions against Chinese companies due to their involvement in Russia,” he said.

It remains unclear to what extent the latest export controls on dual-use products will be implemented by China.

Russia “can easily, and likely will be, exempted from China's export controls,” said Sari Arho Havren, a research associate at the Royal United Services Institute who oversees China's foreign policy. “I would step back and see what comes next.”

The new Chinese rules still leave the door open for dual-use products. “These export control measures do not constitute total export bans,” Chinese Ministries of Commerce and Justice said in an explanatory note Sunday, after the rules are published. That's according to a CNBC translation from Chinese.

Officials stressed that the rules will not create obstacles to normal economic and trade cooperation or the global supply chain.

Washington might interpret Beijing's latest policy announcements as a positive sign, but “actions speak more than words,” Teneo's Wildau said.

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