US-China Trade Fight Hits Drones, Impacting Ukraine

The US-China trade war has now spread to drones, a key part of Ukraine’s defense, with Beijing companies cutting unmanned aerial vehicle (UAV) parts sales to the US and Europe and threatening bigger restrictions next year, Bloomberg reported, citing sources familiar with the matter.

Insiders say China’s new rules could require exporters to get special licenses or at least report their plans to the government.

This is the latest chapter in the ongoing US-China trade feud. The Biden administration tightened rules on selling advanced chips to China in December, and in response, Beijing stopped selling some rare earth metals needed for high-tech and military gear.

Now, limits on drone components are hitting American and European companies hard, especially since China makes many of the motors, batteries, and flight systems for drones.

The impact is particularly acute for Ukraine, whose defense strategy heavily depends on drones. Ukrainian manufacturers faced challenges after China imposed a July ban on exporting drones for military purposes.

As a result, alternative supply routes were established, but the newest restrictions threaten to disrupt Kyiv’s domestic drone production operations.

China’s actions seem to serve dual objectives: aiding Russia and retaliating against US trade policies, including restrictions on advanced chips and tariffs on Chinese imports.

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Lorenz Mayer, CEO of Swiss-based Auterion, which develops drone software used in Ukraine, said there are increasing reports of Chinese export limitations and predicted further tightening.

Western intelligence also suggests that China is assisting Russia in developing attack drones. Eoin Treacy, investment analyst, business strategist, and commentator at Fuller Treacy Money, said the restrictions pose a challenge for Ukraine, given its reliance on Chinese components. He added that China’s actions could tie up Western resources in Eastern Europe, indirectly benefiting Beijing’s strategic goals in Asia.

While the extent of China’s support for Russia remains unclear, Treacy added, it is evident that Beijing is maneuvering to strengthen its geopolitical influence while complicating Western efforts in the ongoing war.