US targets Hong Kong chip transshipments to Russia

United States officials, lawmakers and non-profit organizations have called for sanctioning Hong Kong firms and banks after NATO on July 11 condemned Beijing’s support of the Russian defense sector.

US Secretary of State Antony Blinken plans to make a complaint, during a meeting in Laos with his Chinese counterpart Wang Yi, over Russian shipments. He said last week that Russia is importing 70% of its machine tools and 90% of its microelectronics from China.

Separately, Republican US Senator Marco Rubio proposed an amendment to the National Defense Authorization Act that will grant power to the president to sanction financial institutions that handle transactions related to problematic Russian shipments.

Over the past few days, two US news media outlets and an activist group have released their analyses estimating the volume of the transshipments of the common high priority list (CHPL) items via Hong Kong to Russia.

On Thursday, the New York Times reported that Russia has obtained about US$4 billion in restricted chips since the country invaded Ukraine in February 2022. It said a cluster of shell companies in Hong Kong helped ship many of these goods to Moscow. It said the figure came from its analysis of Russian customs data since mid- 2021.

The newspaper said the chips were sent to Russia in nearly 800,000 shipments by more than 6,000 companies. New York Times staff visited the office of a Hong Kong company, which was allegedly involved in the transshipments, on the seventh floor at 135 Bonham Strand in Central but failed to meet anyone.

Between August and December 2023, 206 Hong Kong companies, known as consignors, have shipped US$750 million of CHPL items to Russia, the Committee for Freedom in Hong Kong