Chinese and Iranian firms profit in Russian-occupied Ukraine
Mansur Mirovalev
Dozens of Chinese companies are operating in Russian-controlled Donetsk and Luhansk, while Iran has gained economic footholds through coal and agricultural trade, according to a Ukrainian monitoring group. Firms from both countries are integrating into the occupied economy, often under the radar of international sanctions.
Kyiv, Ukraine – In November 2023, representatives of two Chinese companies signed contracts to supply stone crushers for construction projects in Donetsk, a Russia-backed separatist region. The deal was announced by Evgeny Solntsev, then "prime minister" of the self-proclaimed "Donetsk People's Republic" (DPR), an entity established in 2014.
According to Solntsev's Telegram channel, the contract was signed in Moscow with the flags of China, Russia, and the DPR present. The two companies, Zhongxin Heavy Industrial Machinery and Amma Construction Machinery, supplied equipment to the Karansky quarry in southern Donetsk. Crushed stone from there is used for construction in Russian-occupied areas of Ukraine, including the Azov Sea port of Mariupol, where buildings have been erected atop mass graves of civilians killed during the siege in early 2022.
Neither company responded to Al Jazeera's requests for comment. Amma Construction Machinery has no clear public identity; its phone number is registered in Irkutsk, Russia, and it links to the website of Bark, a company specializing in equipment exports.
The Eastern Human Rights Group (EHRG), a Ukraine-based watchdog, reports that at least 17 Chinese companies are active in the occupied territories. Nearly 6,000 Chinese-made cell phone relay stations have been installed. These firms are involved in mining, construction, telecommunications equipment, and financial services. They operate quietly, often revealed only through statements by separatist or Russian-appointed officials.
Maksym Butchenko of EHRG said: "As Russia consolidates control over occupied areas, Chinese companies are conducting a different kind of replacement - in the economy." Most businesses in Donetsk and Luhansk are inactive. Of the 94 coal mines operating before 2014, only five remain open, and the rest "have completely shifted to working with China and Russia."
The economy of the occupied regions has become "renminbi-dollarized," with local businesses using Chinese electronic payment systems via Telegram and renminbi sold at 79 banks. Butchenko calls this "shadow integration" and warns it sets "a dangerous precedent from the perspective of international law."
Beijing, which officially maintains neutrality in the Russia-Ukraine conflict, has not recognized the occupied territories as part of Russia and has repeatedly stated its support for Ukraine's "territorial integrity." However, Chinese companies have nearly "captured the entire market" in the region, according to Butchenko. Kyiv-based analyst Volodymyr Fesenko observed: "China does not ban [business in the occupied territories], but turns a blind eye to certain things. If a company sees profit, it is willing to risk Western and Ukrainian sanctions."
Kyiv has sanctioned these firms, urging the West to follow suit and banning them from doing business in Ukraine. The sanctions list includes Alibaba, China National Petroleum Corporation, and dozens of drone and missile component manufacturers. However, sanctioning major corporations is sometimes impractical because of the high cost of replacing their services and expertise. Huawei, whose equipment is installed in the occupied territories, continues operating in Ukraine due to its low prices and rapid support.
A business owner in Donetsk said: "All new equipment here is Chinese, from machine tools to ventilation fans. China will stay here for the long term."
The Iran factor
Beyond China, Iran is also making economic inroads in these areas, encouraged by Moscow. According to an April report by EHRG, Tehran buys coal and grain from Donetsk and Luhansk and is "integrating the occupied Donbas into its supply chains." The coal mining company Donskiye Ugli, which operates "nationalized" mines in Donetsk and Luhansk, has exported coal to Iran, according to separatist official Andrey Chertkov. The company is linked to exiled Ukrainian billionaire Viktor Medvedchuk, whose daughter was baptized by Russian President Vladimir Putin.
In August, Pavel Kovalev, deputy prime minister of the "Luhansk People's Republic," said local food producers are ready to supply casein (milk protein) to Iran. Butchenko commented: "The Iran factor shows that with Russian permission and insistence, Iranian companies have appeared in the occupied territories. The Kremlin is not just allowing but encouraging them."
