China Still Funneling Drone Parts Into Iran and Russia And It’s Not Even Hiding It Anymore

Despite repeated US sanctions targeting the supply chain, Chinese firms keep shipping engines, microchips, and critical drone components to Iran and Russia and are growing increasingly bold about it.

China’s Open Secret: Drone Parts Keep Flowing

Chinese companies are shipping hundreds of containers packed with engines, microchips, and other key drone parts straight to factories in Iran and Russia. This is happening in broad daylight, openly defying US sanctions. The Wall Street Journal, citing Chinese customs data, revealed this brazen trade one that is quietly powering some of the world’s most dangerous drone programs.

At the center of it all is a company called Xiamen Victory Technology. The firm sells Limbach L550 engines a core component of the deadly Shahed-136 kamikaze drone to both Iran and Russia. Russia uses that very drone to strike cities across Ukraine. Xiamen Victory even shows off an image of a Shahed drone on its own website, right alongside its slogan: “Innovating Aviation Engine Solutions.”

From Hiding to Not Bothering

For a while, Chinese exporters tried to be sneaky about it. They mislabeled shipments to dodge US and European sanctions. But that pretense it seems is largely gone now. Senior US Treasury officials and arms analysts say Chinese firms have largely stopped making any effort to disguise these transactions.

Former Treasury officials explained that China has been a transit hub for a long time. American and European-made components flow through Chinese distributors, then get rerouted to drone factories in Iran and Russia. What’s new and more alarming is that many of these parts are now being made inside China itself. Smaller Chinese factories, analysts note, simply don’t feel threatened by Western sanctions.

Shell Companies and Shadow Networks

A US Treasury investigation laid out the mechanics clearly. Nearly all Western-origin components arrive at authorised distributors, then land with retailers in mainland China or Hong Kong. From there, they move onward to Iran or Russia. Payments go through shell companies easy to set up in Hong Kong that hide where the goods ultimately end up.

In 2024, the US Treasury sanctioned a network of Hong Kong-based shell companies tied to Hamed Dehghan a Tehran-based trader who supplied Iran’s drone and missile programs. But within a year, a fresh network of Hong Kong companies had already taken their place, picking up exactly where the old one left off.

“They Turned a Blind Eye”

“The Chinese turned a blind eye to that flow even as its role has been repeatedly exposed in public reporting and sanctions designations,” said Miad Maleki, a former US Treasury official who oversaw sanctions at the Office of Foreign Assets Control (OFAC).

His words are blunt and the data backs them up. Conflict Armament Research, a UK-based group that tracks illicit arms, said it saw a clear and measurable increase in components from Chinese manufacturers turning up inside recovered Shahed drones.

Washington Can’t Fully Stop It

Chinese customs data now show local companies are openly willing to trade drone components even while sanctions are in force. Current and former US officials admitted plainly: Washington cannot fully stop this trade. The realistic goal, they say, is to raise the cost make it more painful for Iran and Russia to keep the supply chain running.

But that is getting harder. China accounts for around 80% of the world’s drone components. It supplies critical electronics, batteries, navigation systems, and engines the essential guts of both Russia’s and Iran’s drone fleets. What started as a sanctions workaround has quietly grown into a self-reinforcing production network, deeply woven into the global arms supply chain.