As the West watches Xi-Putin meetings, China touts crackdown on military goods to Russia

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

Qilai Shen | Bloomberg | Getty Images

China’s Ministry of Commerce on Thursday emphasized the country’s efforts to restrict illegal exports of military goods to Russia as it seeks to cast Beijing as a neutral player amid 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 had told Russian President Vladimir Putin the two countries’ “profound” relationship will not change despite the turbulence in global geopolitics.

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

The commerce ministry’s statement “clearly signals that Chinese leaders are sensitive to Western criticism” that exports from the country were “keeping Russia’s war economy afloat,” said Gabriel Wildau, managing director at Teneo. He added that it sent another message to Moscow that Beijing’s support is not unlimited.

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

China on Saturday unveiled an export control law for dual-use items, set to take effect Dec. 1. It came after the U.S. sanctioned two Chinese companies for allegedly helping Russia build long-range attack drones.

The new regulations would put in place a licensing system for the export of dual-use items, as well as create a list of restricted goods, with exporters of such goods having to disclose the ultimate users and intended use of the exported goods.

“Since the Ukraine crisis, China has issued several drone control announcements and has clearly said civilian drones must not be illegally used for military purposes,” He Yadong, a spokesperson of the commerce ministry, said at a press conference on Thursday, according to CNBC’s translation of the Chinese. He added that law enforcement officials have strengthened review of export licenses for drones, and ramped up 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 the export controls during his trip to Russia, according to official statements.

Beijing has called for negotiations to end the war in Ukraine, while claiming to uphold multilateralism in contrast to other countries’ use of tariffs and sanctions.

After speaking Thursday about China’s efforts to restrict dual-use exports, the commerce ministry spokesperson reiterated opposition to “unilateral sanctions,” which he claimed had no basis in international law.

“China will firmly safeguard its legitimate rights and interests against malicious acts of suppressing and sanctioning Chinese companies on the grounds of involvement in Russia,” he said.

It remains unclear how broadly China’s latest export controls for dual-use products will be implemented.

Russia “can easily, and likely will be exempted from China’s export controls,” said Sari Arho Havren, an associate fellow at Royal United Services Institute covering China’s foreign policy. “I would take a step back and see what will follow.”

China’s new rules still keeps the door open on dual-use products. “These export control measures are not complete export bans,” China’s commerce and justice ministries said in an explanatory note on Sunday, following the rules’ release. That’s according to a CNBC translation of the Chinese.

The officials pointed out that the rules will not create hurdles for normal economic and trade cooperation and global supply chain.

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