China restricts supply of drone parts to US and Europe - Bloomberg
Photo: Western countries are trying to reach suppliers outside of China (Getty Images)
China is restricting the export of drone components to the United States and Europe. Starting next year, Beijing may tighten these measures even further, Bloomberg reports.
The agency writes that China's escalating conflict with the United States over trade now extends to drones, which have become an important part of Ukraine's defense.
According to several people briefed on the developments, Chinese manufacturers have recently begun restricting sales to the United States and Europe of key components used to build unmanned aerial vehicles.
In turn, officials in the West consider these measures to be a “prelude” to broader restrictions that Beijing will introduce in 2025. China is expected to expand export controls on parts.
Background
The trade conflict escalated this month when Washington imposed new restrictions on the sale of high-bandwidth memory chips and additional semiconductor equipment to China. In response, Beijing banned the sale of dual-use goods and several materials with high-tech and military applications to the US military.
The measures, taken a little over a month before Donald Trump returned to the presidency with a tough agenda on China, have led to a sharp rise in prices and disruption of trade flows as manufacturers look for alternative supply options.
For the first time, Beijing's response claims that the trade restrictions apply to Chinese goods or goods with Chinese parts sold by suppliers in the country and abroad. This, in turn, is an attempt to replicate the extraterritorial coverage of US and European sanctions.
In addition, the restrictions on the supply of drone components have affected both American and non-European companies. According to the people cited by Bloomberg, Chinese manufacturers of motors, batteries, and flight controllers have limited or stopped deliveries altogether.
West trying to go beyond China
According to the agency, Western countries are seeking to manufacture and assemble drones outside of China to secure their supply chains. In particular, Taiwan has established communication with European countries around drone technology.
China remains the center of production of cheap equipment for the devices. According to a report by the Center for Strategic and International Studies, China controls almost 80% of the commercial drone market.
At the same time, Chinese export restrictions may provoke a wave of competition from suppliers from Korea, Japan, or other countries. One source believes that Beijing's leadership is fully aware of this reality.
What Ukraine has to do with it
According to Bloomberg, many UAV manufacturers in Ukraine rely on Chinese parts to produce the cheap and effective weapons that helped determine the course of the war with Russia. However, China in July announced a ban on the export of drones for military use. Beijing says it does not supply weapons to any party to the conflict.
Read more about how Donald Trump wants to increase duties on imports from Mexico, Canada, and China, and how global markets are reacting to this in RBC-Ukraine's article.
