Covert Chinese and Iranian Business Networks Take Root in Russian-Occupied Ukrainian Territories
Jakarta, CNBC Indonesia – Chinese and Iranian companies are reported to continue widening their business operations in the Ukrainian territories occupied by Russia, particularly Donetsk and Luhansk, amid ongoing fighting and increasing economic isolation of the region.
The Eastern Human Rights Group (EHRG), a Ukrainian-based watchdog, says at least 17 Chinese companies are now operating in the occupied territories. They are active in mining, construction, telecommunications, and financial services.
One notable cooperation emerged in November 2023, when two Chinese firms, Zhongxin Heavy Industrial Machinery and Amma Construction Machinery, signed a contract to supply stone-crushing machines for construction projects in Donetsk. The agreement was announced by Evgeny Solntsev, who at the time served as the ‘prime minister’ of the Donetsk People’s Republic, a separatist pro-Russian entity.
‘I believe the potential of our cooperation is very large, and we are only beginning to implement it,’ Solntsev wrote on his official Telegram channel, as quoted by Al Jazeera, on Friday (22/5/2026).
The post shows Chinese company representatives standing with separatist officials against a backdrop of flags for China, Russia, and the Donetsk People’s Republic.
Equipment from the Chinese companies is used to support mining operations at Karansky in southern Donetsk. The extracted stone is then used in various construction projects in the Russian-occupied region, including the port city of Mariupol, which was devastated by the war.
According to the report, construction in Mariupol has become one of Russia’s largest projects since the city was besieged in early 2022. Some buildings are even reported to stand on a site of mass graves from civilian casualties of the war.
EHRG researcher Maksym Butchenko said the entry of Chinese companies forms part of Russia’s ‘shadow integration’ of the occupied region. ‘This is a dangerous precedent from the viewpoint of politics and international law because it violates international agreements,’ he said.
Butchenko disclosed that the Donetsk and Luhansk economies are increasingly dependent on China. The use of the yuan is said to be spreading in the region, including via China’s electronic payment system and a currency exchange service operated via Telegram. As many as 79 banks in the occupied territory are also reported to be trading yuan.
While Beijing formally states neutrality in the Russia–Ukraine war and continues to support Ukraine’s ‘territorial integrity,’ Chinese companies are said to continue seeking business opportunities in the occupied region. ‘China does not ban business in the occupied Russian-ruled territory, but turns a blind eye to certain things,’ said Ukrainian political analyst Volodymyr Fesenko.
Kyiv has imposed sanctions on several Chinese firms, including Alibaba (owner of AliExpress) and China National Petroleum Corporation. Yet Ukraine acknowledges that dependence on some Chinese companies remains hard to avoid, particularly in technology and telecommunications sectors.
‘Their prices are much lower than those of their competitors,’ said a telecommunications expert affiliated with the Ukrainian government, referring to Huawei, which remains active in Ukraine. He noted that Huawei engineers have previously resolved system issues in a single night.
In addition to China, Iran is also said to be expanding its economic influence in the Russian-occupied region. EHRG reports Tehran has bought grain and coal from Donbas and begun integrating the area into Iran’s logistics chain. Deputy Prime Minister of the Donetsk People’s Republic Pavel Kovalev even said local producers are ready to supply casein (milk protein) to Iran.
Butchenko assessed that Iran’s involvement is not only driven by Kremlin incentives. ‘The Kremlin not only permits Iranian companies to enter the occupied market but also encourages them,’ he said.