How Chinese, Iranian companies profit in Russia-occupied Ukrainian regions | News
Chinese Companies Sign Machinery Deal Amid War-Torn Ukraine
Kyiv, Ukraine – In November 2023, two Chinese companies formalized an agreement to supply stone-crushing machinery for construction projects. The deal, signed in Moscow, was announced by Evgeny Solntsev, the self-proclaimed “prime minister” of the “People’s Republic of Donetsk,” a territory in southeastern Ukraine controlled by Russian-backed separatists since 2014.
In a post on his Telegram channel, Solntsev expressed confidence in the potential of the partnership, stating, “I’m confident that the potential of our cooperation is huge, and we’re only beginning to implement it.” The announcement included images of Chinese representatives alongside separatist officials, displaying the flags of China, Russia, and the self-declared republic.
The companies involved, Zhongxin Heavy Industrial Machinery and Amma Construction Machinery, have supplied equipment to the Karansky quarry in Donetsk. The resulting crushed stone has been utilized in construction projects in areas occupied by Russia.
One prominent construction site is the port of Mariupol, where reports indicate that numerous buildings have been erected over mass graves, where thousands of civilians lost their lives during the city’s siege in early 2022.
Zhongxin Heavy Industrial Machinery did not respond to inquiries from Al Jazeera. Information about Amma Construction Machinery is scarce—its website lists a phone number in Irkutsk, Russia, and a link to a company specializing in equipment exports. It also did not reply to requests for comment.
Recognition of the “People’s Republic of Donetsk” and the adjacent “People’s Republic of Luhansk” as independent entities has been limited to North Korea and Syria under former President Bashar al-Assad. In 2022, Moscow annexed these regions along with two others, despite their incomplete military occupation.
Although Donetsk and Luhansk maintain superficial elements of independence, such as a cabinet and border checkpoints, they are heavily controlled by Russian authorities. In these areas, pro-Ukrainian activists and businesspersons have reportedly faced torture and extrajudicial killings by separatist forces.
According to the Eastern Human Rights Group (EHRG), at least 17 Chinese companies operate in the occupied territories, providing services ranging from mining and construction to telecommunications and financial services. The presence of these firms is often communicated through statements from separatist officials.
As Russia consolidates its influence in these areas, the EHRG’s Maksym Butchenko noted that Chinese companies facilitate a form of economic integration that parallels Moscow’s political control. However, many enterprises in these regions are non-operational; of the 94 coal mines that functioned in Donetsk and Luhansk before 2014, only five are currently active.
The regional economy has shifted towards dependence on the Chinese yuan, with businesses increasingly utilizing Chinese electronic payment systems. “This is a troubling precedent in terms of international politics and law because it violates international agreements,” Butchenko stated.
In response to the ongoing Russia-Ukraine conflict, China’s official position has been one of neutrality. Despite this, unofficially, Chinese companies are asserting considerable influence in the occupied territories. Analysts suggest that while the Chinese government does not explicitly endorse business operations there, it largely turns a blind eye to activities that risk sanctions.
Kyiv has imposed sanctions on several Chinese companies, including Alibaba and the China National Petroleum Corporation, urging Western nations to follow suit. However, replacing the services provided by these firms can be prohibitively expensive.
Chinese companies continue to thrive in the occupied regions, with one business owner stating, “All new equipment here is Chinese.” Furthermore, reports indicate that Moscow is encouraging economic ties with Iran, as Tehran seeks to integrate the economy of occupied Donbas into its logistics chains. Coal from the region is reportedly being shipped to Iran, complicating the geopolitical landscape further.
The EHRG warns that the Kremlin’s tacit support for Iranian business interests in these territories illustrates a broader strategy of economic integration and highlights the growing complexity of international relations amidst ongoing conflict.
