China builds new economic empire in occupied Ukraine — NV analysis

An unusual delegation arrived at the Bilorichenska mine in occupied Luhansk Oblast in December 2025. Representatives of a Chinese mining equipment manufacturer went underground, inspected the active ninth longwall, and studied the mining conditions in detail. The purpose of the visit was to coordinate technical requirements for equipment for the new twelfth longwall.

Local occupation authorities proudly reported all of this, although they did not name the Chinese factory. However, they assured that the mine modernization project is valued at over 1.1 billion rubles ($13.2 million) and is supported by Russian state institutions — the VEB foreign economic bank and Promsvyazbank.

Chinese visitors to occupied parts of Ukraine are not an isolated phenomenon. Analysts from the Ukrainian Eastern Human Rights Group, together with the Institute for Strategic and Security Studies, confirmed this after monitoring the economy of the Russian-captured lands from 2022 to 2025, studying open data, and conducting an anonymous survey of local entrepreneurs.

Analysts identified at least 17 Chinese companies operating in the occupied territories of Ukraine and documented over 10 visits and other contacts with local "authorities" by delegations from China — ranging from businessmen to members of the Chinese People's Political Consultative Conference.

The Chinese presence spans seven key sectors in the region: mining, metallurgy, construction, telecommunications, energy, agriculture, and education. According to researchers, over 80% of imports to occupied Luhansk Oblast consist of Chinese goods, and the yuan has become the second base currency there — it is sold in 79 banking locations.

Overall, about 90% of Russian-Chinese settlements are now made in yuan and rubles, and the volume of bilateral trade between Russia and China reached a record $220 billion in 2024.

Vira Yastrebova, director of the Eastern Human Rights Group and co-author of the study, explained that this involves forming a new architecture of external support for the occupation regime.

"China operates in a format of 'de facto integration without de jure recognition.' Beijing formally does not recognize the annexation of Ukrainian territories, but Chinese companies are entering them en masse through Russian intermediary firms," Yastrebova said.

The penetration of Chinese technologies into critical infrastructure is particularly dangerous.

"Mobile communications in the occupied South are built on Huawei server equipment. Donbas mines operate on Chinese conveyors and heading machines," the human rights activist added.

"This creates a technological dependence that will be very difficult to dismantle even after de-occupation."

Gradual economic expansion

The Chinese presence is most systematically evident in the mining industry of occupied Donetsk Oblast. Chinese company SANY Heavy Industry delivered heading machines for four local coal mines belonging to the Impex-Don structure in August 2024: the Lutuhin and Progress mines in Torez, Zorya in Snizhne, and Komsomolets Donbasu in Kirovske. Following this, the management of Impex-Don announced its intention to purchase Chinese equipment for all its mines.

Two other Chinese representatives — Amma Construction Machinery and Zhongxin Heavy Industrial Machinery — now provide crushing and screening equipment for Donetsk quarries. A new Chinese-made crushing and screening plant was launched at the Karanskyi quarry in the Telmanove district in eastern Donetsk Oblast in June 2024. A Russian intermediary company carried out the installation.

Chinese technologies are entering other industries as well. The Donetsk refrigeration equipment plant Donfrost replaced two Hungarian production lines from the early 1990s with a new Chinese one in 2024. According to the deputy director, 82% of the components are manufactured locally, but compressors and electronic components are purchased from China.

A large group of businessmen from the "DPR," "LPR," [so called Donetsk and Luhansk People Republics - ed.] and occupied areas of Zaporizhzhya and Kherson oblasts, led by Russia's Promsvyazbank, visited an international import exhibition in Shanghai and ZPMC factory — the world's largest manufacturer of port equipment — in November last year. A month earlier, at the Russian Eastern Economic Forum in Vladivostok, a DPR delegation signed an agreement with China's Beijing Andora Technology for the supply of energy equipment with the prospect of localizing production.

The telecommunications infrastructure of the occupied regions also relies entirely on Chinese equipment. The local operator Miranda-Media operates about 6,000 Huawei base stations in the occupied parts of four oblasts and purchases server equipment from the same Chinese manufacturer for its core network, according to researchers.

Yastrebova considers all this to be evidence of the systemic nature of the technological reorientation.

"Western and Ukrainian companies have left the region, creating an absolute monopoly for Chinese manufacturers. Chinese equipment is systematically integrated into critical infrastructure — from mines to factories," she explained.

"Sanction risks are offset by super-profits due to the lack of competitors."

Not surprisingly, the financial system of the occupied areas of Ukraine is also reorienting toward the yuan. The average daily volume of transactions in the Chinese currency there is an estimated 12.3 million yuan. Promsvyazbank offers yuan deposits with an interest rate of up to 3.5% annually.

At the same time, about 80% of payments through major Chinese banks are rejected due to sanction risks. This has forced local businesses to switch to shadow schemes — cryptocurrency settlements and payments through China's Alipay and WeChat. The intermediaries' commission for bypassing sanctions is 8-15% of the goods' value.

Goods from China enter the occupied region through complex logistics chains. A typical route: manufacturing clusters in southern China — the Manzhouli-Zabaikalsk border crossing — Rostov-on-Don — the occupied territories. Some cargo passes through Kazakhstan, where it is re-registered as local to conceal its origin.

A cultural presence is also forming. A Chinese language study center operates in Luhansk, teaching calligraphy and holding tea ceremonies.

Yuliia Zavhorodnia, an expert at the Institute for Strategic and Security Studies, points to the long-term consequences of these processes.

"Educational and cultural mechanisms form an environment of long-term ties that functions parallel to economic contacts and creates a basis for expanding influence," she explained.

The occupation authorities are also building relations with Iran. For instance, an animal feed manufacturer from the Russian-captured south of Zaporizhzhya Oblast received the right to export to Iran in February 2025 — the certification took a year and included documentary and laboratory control. The so-called Trading House Donske Vuhillia (Don Coal), which leases 10 mines in Luhansk Oblast, announced its intention to supply coal to the country of the ayatollahs [Iran-ed.]. Recently, in December 2025, Zarei Ali, director of the Iranian company RI-Group, announced his intention to invest in the "new Russian regions."

A silent strategy

Official Beijing does not react in any way to the activities of Chinese companies in the occupied territories of Ukraine. Its Foreign Ministry does not comment on visits by Chinese businessmen there, does not confirm agreements, and does not respond to statements by occupation administrations about "Chinese support." Beijing positions all these contacts as "private initiatives."

Beijing's silence is part of a strategy — it allows China to avoid commitments and maintain room to maneuver.

"Any accusations can be met with: 'These are private individuals, the government is not involved, we respect Ukraine's sovereignty.' At the same time, in Chinese authoritarian system, large-scale activities abroad, especially in sensitive zones, are impossible without at least the state's informal sanction," the head of the Eastern Human Rights Group says.

According to her colleague Zavhorodnia, an alternative geopolitical belt is forming around China, in which the occupied territories of Ukraine are integrated into the space of states resisting Western sanctions.

"It is not just about trade, but about a gradual change in economic orientation, standards, logistics, and financial channels. A partial Asianization of the region's economic model is effectively taking place," the researcher explained.

For Ukraine, this means that even in case of de-occupation, these regions will require complete economic reintegration — replacing Chinese technologies, goods, and financial ties.

"Ten years of 'fighting the West' have ended with the survival of Donetsk, Luhansk, and Mariupol now critically depending on Chinese technologies and the yuan exchange rate," Zavhorodnia summarized.

"The longer this technological consolidation in an alternative contour continues, the higher the cost of restoring economic sovereignty will be."

The study's authors recommend that Ukraine create a specialized unit to monitor the economic activity of third countries in the occupied territories, step up diplomatic dialogue with Beijing, and coordinate secondary sanctions with international partners.