China In Eurasia

The European Union is looking to sanction more Central Asian companies that it says are aiding Russia's war effort in Ukraine, according to a document seen by RFE/RL.

The draft for the EU's 12th sanctions package looks to add 31 new entities to its ever-growing embargo list -- including two from Kazakhstan and one from Uzbekistan -- that it has been compiling since Russia's full-scale invasion of Ukraine on February 24, 2022.

The proposal also looks to issue a ban on Russian diamonds, which Brussels has not yet enacted but Washington already approved.

The inclusion of firms based in Central Asia points to the growing role the region is playing as an intermediary working around Western sanctions meant to limit Moscow's ability to wage war on Ukraine.

Russian imports of dual-use goods from Central Asian firms have skyrocketed since the start of the war, including electronics and components produced by Western and Chinese companies, such as microchips and drones.

According to a draft memo seen by RFE/RL, the new measures look to limit loopholes around nonlethal but militarily useful equipment that "might contribute to the technological enhancement of Russia's defense and security sector." It adds that there is a need to target "certain other entities in third countries involved in the circumvention of trade restrictions" in order to curb Russia's war effort.

The new Central Asian companies are the Kazakh-based Aspan Arba (Sky Chariot) and Da Group 22 as well as the Tashkent-based Mvizion.

Aspan Arba imported drones and allegedly sent them to the Russian company Skymec, aka Sky Mechanics, which in turn sold them to organizations inside the country linked to Russia's military-industrial complex.

According to an investigation by the Organized Crime and Corruption Reporting Project (OCCRP) in May, the two companies have the same Russian national as an owner.

Kazakh trade data shows the imported drones are made by the Chinese-firm DJI, which makes up more than 90 percent of the global consumer drone market, according to DroneAnalyst.

Despite the company announcing measures to prevent the drones from appearing on Ukrainian battlefields, DJI drones have become a mainstay of the war for both sides. An RFE/RL report from October showed how the Chinese-made drones are being bought by pro-war groups in Russia, with Skymec -- which lists Russia's Interior Ministry, the Federal Protection Service, and the Emergency Situations Ministry as distribution clients on its website -- among them.

Da Group 22 shows up in Russian customs data as the exporter of thousands of microchips to Russia from Kazakhstan in the last year, and the OCCRP investigation linked the company to a Russian family with business dealings in Germany.

Mvizion was sanctioned in early November by the U.S. Commerce Department for sending "electronic components and computer software" to a sanctioned Russian firm linked to the country's war effort.

The set of proposed EU measures would add the three Central Asian-based companies to its June sanctions list that included entities from that region, when it added two Uzbek-based entities to its 11th sanctions package.

Those included two Tashkent-headquartered companies: Alfa Beta Creative and GFK Logistics Asia. Both companies were previously sanctioned by the Commerce Department in April, which said they were designed to "evade export controls" and aid in "acquiring or attempting to acquire U.S.-origin items in support of Russia's military and/or defense industrial base."

Beyond the three Central Asian-based firms, most of the proposed new entities on the draft list are registered in Russia, apart from the Singapore-based Deflog Technologies.

Central Asia's role in circumventing Western sanctions against Russia has been a target of the EU's recent dealings with the region's leaders.

In September, German Chancellor Olaf Scholz raised the issue during a visit to Berlin by Kazakh President Qasym-Zhomart Toqaev. French President Emmanuel Macron also pressed for a greater effort to crackdown on companies based in the region when he visited Kazakhstan and Uzbekistan in early November.

The draft also looks to introduce tougher reporting requirements designed to prevent the sale of Russian oil, which violates sanctions and is then sold with falsified documents.

The proposal does not include any new Chinese companies.

Brussels originally included seven Chinese firms in its 11th sanctions package but removed four before passing it in June. The final version only included the Hong Kong-based Asia Pacific Links, Tordan Industry, and Alpha Trading Investments. There had been speculation that the remaining four firms would be added to the new package, but Sinno Electronics, 3HC Semiconductors, Sigma Technology, and King-Pai Technology are not included on the draft.

EU member states will begin discussions on the new sanctions proposals this week and are looking to agree on the package before Christmas, according to an EU official familiar with the matter.

The entities included on the list seen by RFE/RL are not final and additional companies and persons could be added or removed before a final version is passed.

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

Listen to the Talking China In Eurasia podcast. Apple Podcasts | Spotify | Google | YouTube

As Biden and Xi Meet, What's At Stake?

In a renewed effort to stabilize increasingly shaky relations between the two powers, U.S. President Joe Biden and Chinese leader Xi Jinping will meet today in San Francisco.

But what can be expected from the November 15 meeting on the sidelines of the APEC summit?

Finding Perspective: This marks their first meeting as leaders since Biden and Xi sat down together at the G20 summit in Bali a year ago and it's been a difficult diplomatic road to reach this point, including degraded ties following a suspected Chinese spy balloon that flew over the United States in February.

The focus of the talks is expected to be Taiwan, which remains a source of tensions between Beijing and Washington. The self-governing island, which China regards as its own territory, is set to hold elections in January 2024 and the meeting will also factor into discussions around the upcoming U.S. election that will take place in a year's time, in November 2024.

Politico also reported that Biden will raise tensions in the Middle East with Xi and urge him to use his influence with Iran to prevent Tehran and its proxies from exploiting the Israel-Hamas war to stoke a broader conflict.

With those potential obstacles for relations ahead, White House officials have said they expect tough discussions. Most analysts say that the goal on both sides is to lower the temperature in the relationship and serve up some favorable optics for each leader's domestic audience.

"For both sides, the preferred outcome from the meeting is that there will not be much to write home about," said Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations.

Why It Matters: We already saw some early steps taken ahead of the November 15 meeting, which U.S. officials said could last four hours with simultaneous interpretation.

On November 13 and 14, reports have signaled a series of measures that could be unveiled at the meeting and would work towards raising the floor of the relationship with Washington.

They include: China buying 3 million tons of U.S. soybeans, Beijing ending a long commercial freeze on sales of Boeing's 737-max aircraft, restricting the export of chemicals to the United States that are used as precursors to make fentanyl, and a decision to raise the number of regular flights between both countries.

The United States has also agreed to lift sanctions on China's forensic police institute and both countries have announced some further cooperation to fight climate change, the State Department said.

Few expect that the meeting will stall the deepening rivalry, but a shift in tone may provide a welcome reprieve as Xi faces an increasingly bleak economic outlook and Biden prepares for a difficult election cycle.

Unlike the last time the two leaders met in Bali and Xi adopted a more conciliatory message, Ukraine is unlikely to factor into discussions between Beijing and Washington in San Francisco.

"U.S. calls that China clamp down on the export of high-tech goods to Russia are wishful thinking and the American side should probably not spend too much time on making such demands," Demarais said.

Podcast Corner: Big Questions After 10 Years of Belt and Road

Listen to the latest episode of the China In Eurasia podcast. You can find the show on Spotify, Apple, Google, and YouTube.

Back when it was launched 10 years ago, Beijing dubbed it the "project of the century" and it became known as Chinese leader Xi Jinping's signature foreign policy initiative as he announced plans to revive the ancient Silk Road.

But what do we really know about the Belt and Road Initiative (BRI) -- China's global infrastructure program -- after a decade of investments around the world?

On the latest episode of Talking China In Eurasia, I'm joined by Jacob Mardell, the editorial coordinator for China at the German NGO N-Ost, to unpack where the ambitious project stands today and to take a deeper look at where it's headed.

Be sure to listen and leave a review on your listening platform of choice. I'd also love to hear what you think. Reach out at Standishr@rferl.org

Three More Stories From Eurasia

1. A Baltic Sea Drama Grows

A Chinese ship suspected of damaging an underwater gas pipeline and two telecom cables in the Baltic Sea is returning to China through the Russian Arctic as Finnish investigators continue to search for answers about the vessel's role in the incident, I reported here.

The Details: Estonia and Finland have been investigating the rupture of the Balticconnector gas pipeline and of a telecommunications cable connecting the two countries, both damaged sometime during October 7 and 8. A telecom cable linking Estonia to Sweden was also damaged the same night, along with one of Russia's telecom cables in the Gulf of Finland.

Authorities have pointed to the Hong Kong-flagged NewNew Polar Bear container ship as the prime suspect, with its tracked location in the Baltic Sea coinciding with the time and place of the pipeline damage.

Investigators say it's too early to determine whether the pipeline damage was sabotage or an accident, but the Finnish National Bureau of Investigation (NBI) said the involvement of a state actor "cannot be ruled out."

In the latest development, Estonian Foreign Minister Margus Tsahkna told Politico Europe on November 13 that Helsinki and Tallinn had both submitted a legal notice to China for cooperation as part of their investigation.

The minister added that the length of the investigation will depend "on China -- how cooperative China is."

Beijing had previously promised "full cooperation" with Estonia and Finland, but it remains unclear what has been done so far.

2. The China Angle On The Balkan Route For Migrants

As tens of thousands of migrants traverse the so-called Balkan Route looking to claim asylum inside the European Union, my colleague Marija Augustinovic from RFE/RL's Balkan Service tells the story of one Chinese migrant's journey to Germany.

What You Need To Know: Ming -- a pseudonym to protect his identity -- is a 26-year-old native of Shijiazhuang in northeastern China's Hebei Province and is currently awaiting a verdict on his asylum application in Germany.

He told Marija about his difficult journey from China to Germany, which included illegally entering Croatia from Bosnia-Herzegovina and being detained, and as he also alleges, robbed by Croatian police.

Ming is one of thousands of Chinese nationals that are currently looking to leave the country -- legally and illegally. While Europe is still a less common destination, the number of Chinese looking to claim asylum across the southern U.S. border has skyrocketed in 2023, as have legal avenues for leaving China.

3. Taiwan And The Baltics

Taiwanese Foreign Minister Joseph Wu recently completed a tour of the three Baltic countries -- Estonia, Latvia, and Lithuania -- where his visit made waves, including a small diplomatic dustup with Beijing over the warm reception for the Taiwanese official.

What It Means: The focal point of Wu's trip became his stop in Tallinn, which was overshadowed by Estonia's plans to open a "Taipei Representative Office."

Taiwan is only officially recognized as a country by a handful of governments and therefore is not allowed to operate an embassy, with the representative offices serving a similar function for Taiwanese officials posted abroad.

The November 8 episode that sparked a swift rebuke from China erupted over initial reports that Estonia planned to open a "Taiwanese Representative Office," a semantic difference that carries major political weight. Beijing considers the use of "Taiwanese" over "Taipei" as a slippery slope toward recognition and has looked to punish countries inching closer to the island nation.

One major example is Lithuania opening a "Taiwanese Representative Office" in 2021, when China responded by targeting Vilnius with an effective trade embargo, prompting the EU to enact its newly developed anti-coercion instrument, which is a trade tool used by the bloc to tackle governments using economic means to pressure its members.

China also downgraded its diplomatic ties with Lithuania amid the row.

Tallinn elected to not follow this route, a decision that many commentators view as influenced by Vilnius's own experience and the tough reaction from Beijing.

In a related development, Lithuanian Foreign Minister Gabrielius Landsbergis said on November 10 that officials from the Baltic country were in discussions with their Chinese counterparts over how to normalize relations.

Across The Supercontinent

New Scanners At The Border: My colleague Sonja Gocanin from RFE/RL's Balkan Service reports on a new Chinese donation of mobile scanners for the Serbian border amid a surge in migrants in the country.

A Beijing-Brussels Summit: The first EU-China summit in four years has been tentatively scheduled for December 7-8. Those dates are not yet finalized, but the summit will be hosted by China.

Opportunity Strikes: According to a new report from the German Marshall Fund's Alliance for Securing Democracy, the Israel-Hamas war has been a boon for online messaging pushed by state-affiliated actors from China, Iran, and Russia.

Visa-Free: A new agreement between China and Kazakhstan on 30-day visa-free travel for their citizens came into force on November 10, RFE/RL's Kazakh Service reported.

One Thing To Watch

Former British Prime Minister David Cameron made a shock return to the U.K. government as foreign secretary on November 13 and brought some complicated baggage on dealing with China.

As prime minister, Cameron famously welcomed Xi to London and shared a pint at a pub. That visit was hailed on both sides as the start of a "golden era" of relations that the British treasury hoped would turn China into Britain's second-biggest trading partner within a decade.

That never materialized, but expect it to stay in the spotlight as Cameron takes up his new role. Adding to his past China dealings, as recently as October he was also working to drum up foreign investment in the controversial Colombo Port City project, a Sri Lankan venture that is being built by a Chinese firm and is part of China's Belt and Road Initiative.

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

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