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Report: China Is Using Hong Kong Entities to Facilitate Iran’s Sanctions Evasion, Arms Procurement, and Financial Support

The Committee for Freedom in Hong Kong Foundation on May 11 released a report titled “Oil, Arms, and Cash: How Hong Kong Fuels the Iranian Regime,” stating that Hong Kong has become a key enabler of Iran’s activities. The report says Hong Kong-linked entities have helped Iran evade sanctions, finance proxy groups, procure weapons components, and expand surveillance systems. It highlights the role of Hong Kong-registered vessels in transporting Iranian oil—much of it sold to China—and the use of Hong Kong’s financial system for laundering proceeds. It also notes that major banks, including HSBC and Standard Chartered, have previously paid substantial fines for violating Iran-related restrictions.

Since 2020, at least 95 Hong Kong entities have been sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) for assisting Iranian oil trade and sanctions evasion. In July 2025, OFAC sanctioned 17 Hong Kong companies linked to an Iranian shadow banking network. In September 2025, another network involving Hong Kong shell companies was designated for laundering over $100 million in cryptocurrency tied to Iranian oil revenues, some of which allegedly funded Hezbollah and other proxy groups. The U.S. Treasury’s Financial Crimes Enforcement Network estimated that $4.8 billion in related transactions flowed through Hong Kong-linked accounts in 2024.

The report states that Hong Kong companies have acted as key transshipment hubs for dual-use electronics, drone engines, missile components, and centrifuge equipment tied to Iran’s weapons programs. U.S. indictments and sanctions filings cited in the report indicate that Hong Kong-based procurement networks supplied entities affiliated with Iran’s Ministry of Defense, including those involved in drones, radar systems, and ballistic missiles. Evidence from conflicts in Ukraine and the Middle East has identified Western-made components, routed through Hong Kong, in Iranian Shahed and Mohajer drones.

The report also highlights the role of Chinese technology firms in supporting Iran’s surveillance capabilities. It states that Huawei Technologies used its Hong Kong subsidiary Skycom Tech to provide telecommunications and surveillance equipment to Iran, which U.S. authorities allege was used to monitor protesters. It adds that other Chinese firms, including ZTE, Hikvision, and Dahua Technology, have supplied surveillance technologies such as cameras, facial recognition systems, and internet monitoring tools used by the Iranian government.

Source: Epoch Times, May 12, 2026
https://www.epochtimes.com/gb/26/5/11/n14762232.htm

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Chinese State Media Confirms Technical Support to Pakistan During 2025 India–Pakistan Conflict

China’s state broadcaster China Central Television (CCTV) has for the first time confirmed that Chinese personnel were deployed to support Pakistan during the 2025 India–Pakistan conflict. In a May 7 military program, engineers from the Aviation Industry Corporation (AVIC) of China said they were sent to the front line to provide technical and logistical assistance to Pakistani forces.

The conflict followed an April 22, 2025 terrorist attack in Pahalgam, Jammu and Kashmir, that killed 26 people. India launched “Operation Sindoor,” striking targets in Pakistan and Pakistan-administered Kashmir, leading to four days of fighting. Reports indicated that a Chinese-made J-10CE fighter jet used by Pakistan shot down at least one Indian Rafale jet, drawing international attention.

CCTV identified AVIC engineers Zhang Heng and Xu Da as among those providing on-site support, describing combat conditions including frequent air raid alerts and extreme heat. Their accounts are seen as the first public acknowledgment of direct Chinese involvement in support roles.

A 2025 report by the U.S.-China Economic and Security Review Commission suggested China may have used the conflict to test weapons performance and possibly provide real-time intelligence. According to the Stockholm International Peace Research Institute, China has sold about $8.2 billion in arms to Pakistan since 2015 and ranked as the world’s fourth-largest arms exporter between 2020 and 2024.

Source: Epoch Times, May 9, 2026
https://www.epochtimes.com/b5/26/5/8/n14759816.htm/amp

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PLA Navy Says Aircraft Carriers Equipped with “Five-Piece” Air Wing

The “carrier five-piece set” refers to a combination of key carrier-based aviation assets: stealth carrier-based fighter jets, multi-role catapult-launched carrier fighters, fixed-wing airborne early warning aircraft, fixed-wing electronic warfare aircraft, and anti-submarine helicopters.

On May 9, Jiang Bin, deputy director of the Information Bureau of China’s Ministry of National Defense and a ministry spokesperson, addressed the issue at a press briefing, confirming reports that the People’s Liberation Army (PLA) Navy has completed its “carrier five-piece set.”

He stated that this configuration represents a critical component in building an integrated carrier strike group combat capability. Jiang added that the development marks an important milestone in the PLA Navy’s efforts to accelerate its transformation and modernization.

Source: Xinhua, May 9, 2026
https://www.news.cn/20260509/f7057b4186ea45e48991080ab976335a/c.html

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Former Chinese Defense Ministers Wei Fenghe and Li Shangfu Sentenced to Death with Reprieve

On May 7, China’s military court issued first-instance verdicts in corruption cases involving former defense ministers Wei Fenghe and Li Shangfu. Both were convicted of accepting bribes, with Li also found guilty of offering bribes. The court sentenced each to death with a two-year reprieve, along with life imprisonment without the possibility of commutation or parole. The ruling represents one of the most severe penalties imposed on senior People’s Liberation Army (PLA) officials in recent years.

A commentary republished by Xinhua News Agency, originally from the PLA Daily, emphasized that the cases involve not only corruption but also political loyalty. The article stated, “The military must not tolerate individuals who are disloyal to the Chinese Communist Party. “Since the 18th Party Congress, under the leadership of the Party Central Committee, the Central Military Commission, and Chairman Xi Jinping, authorities have intensified efforts to investigate high-level corruption and eliminate ‘political risks.’” “The armed forces must align closely with Xi Jinping and uphold the Central Military Commission Chairman responsibility system, … building a strong military first requires being ‘politically strong.’”

The verdict noted that Li Shangfu’s offenses included both accepting and offering bribes. Li previously served as head of the PLA General Armaments Department, whose predecessor was Zhang Youxia, prompting speculation that the bribery charge could be linked to Zhang.

Separately, overseas commentator Yuan Hongbing cited sources claiming that Wei and Li were viewed as politically unreliable because their views are different from Xi Jinping on a potential Taiwan Strait war. According to these claims, they outwardly expressed support for the official position of being willing to wage the war, but privately doubted the likelihood of success. They worked on contingency preparations to control China in case of such a failure, not only reaching out within the PLA system, but also to officials in the Party and government organs. This was why Xi Jinping couldn’t tolerate them and imposed such severe punishment on them.

Sources:
1. Xinhua, May 8, 2026
https://www.news.cn/politics/20260508/705866aafb3841a68c165a4fbeaa4dca/c.html
2. Epoch Times, May 8, 2026
https://www.epochtimes.com/gb/26/5/8/n14759168.htm

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PLA Daily: Japan Moves Beyond ‘Exclusively Defensive’ Policy, Expands Offensive Capabilities

People’s Daily has republished a commentary from the People’s Liberation Army (PLA) Daily asserting that Japan is moving beyond its long-standing “exclusively defensive” security posture and developing more offensive military capabilities:

On April 27, Prime Minister Sanae Takaichi stated at a security policy review meeting that Japan must prepare for “new forms of warfare” and even “prolonged conflict.”

To this end, Japan is accelerating the development and deployment of longer-range strike capabilities. These include systems such as the Type 25 surface-to-ship missile, with an estimated range of around 1,000 kilometers, as well as hypersonic glide vehicles, with plans to extend strike ranges to approximately 2,000 kilometers. Japan is also acquiring U.S.-made Tomahawk cruise missiles and Norway’s Joint Strike Missiles to equip its naval forces.

At the same time, Japan is undertaking a sweeping restructuring of its Self-Defense Forces. This includes what is described as the largest reorganization in the history of the Japan Maritime Self-Defense Force, with the creation of a new “Surface Fleet” composed of three surface combat groups, alongside a patrol and defense group and an amphibious and mine warfare group. Japan is also expanding its space capabilities by upgrading its Space Operations Group to a Space Operations Regiment, with plans to further elevate it into a Space Operations Command. In parallel, it is establishing specialized intelligence units, reflecting a broader effort to modernize and strengthen its overall military structure and operational capacity.

Source: People’s Daily, April 30, 2026
http://military.people.com.cn/n1/2026/0430/c1011-40711778.html

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Retired Japanese Military Commander: Janpan’s Early Intervention Could Force China to Rethink Taiwan War Plans

Kiyoshi Ogawa, a former senior commander of the Japan Ground Self-Defense Force and now a think tank researcher, said in a recent talk that Japan could intervene at an early stage of a Taiwan Strait conflict. Such early involvement, he argued, would significantly disrupt China’s assumed timeline and compel it to reassess its military plans for Taiwan.

According to his analysis, China’s approach to a Taiwan scenario can be broadly divided into three phases:

  1. A “peacetime” phase involving psychological operations, military exercises, and a blockade aimed at deterring foreign intervention;
  2. Escalation into active conflict, including missile strikes and cyberattacks;
  3. A full-scale amphibious invasion after achieving air and sea superiority.

In November last year, Japan’s Prime Minister Sanae Takaichi stated in a parliamentary response that escalating tensions around Taiwan could constitute a “survival-threatening situation” for Japan. She noted circumstances a blockade of the Taiwan Strait could meet this threshold, “if Taiwan is subjected to a military attack, including a naval blockade carried out by warships in conjunction with other measures, it could be regarded as the use of force.”

China’s strategy is widely seen as relying on achieving a rapid victory before external forces—particularly the United States and Japan—can intervene. However, Japan’s position suggests that intervention could occur as early as the initial blockade phase, rather than in later stages of the conflict.

Such a shift would fundamentally alter China’s planning assumptions, potentially forcing a reassessment of its operational timeline and force deployment. Sanae Takaichi’ remarks are viewed as strategically significant and have drawn strong reactions from Beijing.

Source: Central News Agency (Taiwan), April 27, 2026
https://www.cna.com.tw/news/aipl/202604270115.aspx

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ESET Uncovers New China-Linked APT “GopherWhisper” Leveraging Legitimate Platforms

Researchers from the Slovak cybersecurity firm ESET have identified a previously unknown China-linked advanced persistent threat (APT) group dubbed GopherWhisper. The group leverages legitimate platforms—including Discord, Slack, Microsoft 365 Outlook, and file-sharing services—to carry out command-and-control (C&C) communications and data exfiltration.

Active since at least November 2023, the group is believed to operate from China based on timestamp analysis of chat logs and email activity. It deploys a suite of custom malware tools—primarily written in Go—using injectors and loaders to install backdoors and facilitate cyber-espionage.

Among the identified tools are several backdoors, including LaxGopher, RatGopher, BoxOfFriends, and SSLORDoor, as well as a data exfiltration tool, an injector, and a malicious DLL. Notably, the malware exhibits no code or tactical overlap with previously known threat actors, leading ESET to classify it as a distinct new APT group.

The campaign was first uncovered in January 2025 within a Mongolian government system, where the LaxGopher backdoor was observed using Slack for C&C operations. Subsequent analysis indicates that, in addition to the Mongolian target, dozens of other organizations may have been affected.

Source: Epoch Times, April 26, 2026
https://www.epochtimes.com/gb/26/4/25/n14749648.htm

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PLA Daily: Japan’s Strategic Calculations Behind Its Frigate Export to Australia

People’s Daily recently republished a commentary from the People’s Liberation Army (PLA) Daily analyzing Japan’s frigate export agreement with Australia.

Japan and Australia have signed a memorandum of understanding to jointly develop new Australian naval vessels based on Japan’s upgraded Mogami-class frigate. As frigates are fully armed combat platforms, the move is widely viewed as enabling Japan’s first post–World War II export of a major warship under the guise of joint development. It signals a shift in Japan–Australia defense ties from limited cooperation toward deeper and more comprehensive military integration.

This growing partnership is driven by multiple factors. While exporting frigates may help Japan offset development costs and bolster its defense industry, the article argues that Tokyo’s objectives extend well beyond economic considerations.

First, Japan seeks to use defense exports as a means to expand military ties beyond its alliance with the United States, deepen its integration into Western security frameworks, and elevate its status as a major military power.

Second, if Australia adopts the platform and establishes supporting maintenance and logistics systems, it could create favorable conditions for Japanese vessels to access resupply and servicing in the region, thereby extending Japan’s operational reach.

For Australia, closer alignment with Japan helps address capability gaps and strengthen its regional influence. The partnership is also supported by the United States, which views both countries as key allies in the Asia-Pacific and has encouraged closer defense cooperation between them.

Source: People’s Daily, April 29, 2026
http://military.people.com.cn/n1/2026/0429/c1011-40710946.html

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