China Keeps Supplying Drone Components to Iran, Russia Despite Sanctions

Chinese-made engines hidden in shipments labeled as industrial refrigeration units helped keep Russia’s state-owned drone maker, IEMZ Kupol, supplied even under Western sanctions. Internal Kupol records showed a 2025 contract to produce more than 6,000 Garpiya drones, up from 2,000 the year before, a sharp increase that points to a wartime industrial base still drawing on foreign inputs.

The same pattern has run through Iran’s drone and missile supply chains. On Feb. 26, 2025, the U.S. Treasury sanctioned six Hong Kong and China-based entities for procuring drone components for Pishtazan Kavosh Gostar Boshra, or PKGB, and its subsidiary Narin Sepehr Mobin Isatis. Treasury said Iran was using front companies and third-country suppliers to rebuild its unmanned aerial vehicle procurement network. On April 1, Treasury sanctioned another network of six entities and two individuals in Iran, the United Arab Emirates and China tied to components for Iran’s UAV program. On May 14, the State Department targeted entities and individuals mainly based in China and Hong Kong for support to Iran’s ballistic missile program, and on July 31 it sanctioned five entities and one individual in Iran, China, Taiwan and Hong Kong SAR over procurement for Iran’s UAV program.

The sanctions campaign has not stopped the flow of sanctioned technology into Russia either. By 2026, Russia was importing more than 90% of its sanctioned technology through China, up from about 80% a year earlier. That dependence gives Beijing an outsized role in sustaining Moscow’s war economy while shielding crucial components behind layers of intermediaries.

The Russia-Iran drone relationship has also deepened. In May 2025, C4ADS said Sahara Thunder and Russia’s Alabuga JSC were working on a multi-billion-dollar project to produce an Iranian-designed drone in Russia. Leaked records reviewed in that work indicated at least $104 million in gold bars was used as payment. The project centered on the Geran-2, the Russian-produced variant based on Iran’s Shahed-136, and thousands have been used against targets in Ukraine.

Taken together, the evidence shows a sanctions regime that keeps forcing adaptation but not interruption. Chinese intermediaries, Hong Kong entities, front companies and payment routes tied to gold have all helped keep drone production alive in Iran and Russia. That leaves Washington with a harder question than another round of designations: how much coercive power does the United States really have when the supply chain simply reroutes through China?