TL;DR:

• While officially there is no trade between temporarily occupied territories in Ukraine and China, Beijing is quietly building an informal network of businesses across these Ukrainian territories
• Experts say that rebuilding control over these regions will require dismantling entrenched shadow networks, replacing critical infrastructure dependent on Chinese technology, and restoring transparent financial systems

…

The economies of Russian-occupied territories in eastern and southern Ukraine are increasingly integrating into an alternative economic system shaped by China, supported by shadow financial networks and indirect supply chains, [according to a] report by the Eastern Human Rights Group.

…

At the Karansky quarry near Mariupol, Chinese-backed equipment and technical support have enabled the launch of new production facilities. Similar patterns are seen across the coal sector, where Chinese machinery – including tunneling equipment – is now widely used.

“We identified a range of Chinese business partners. It is unlikely that even private companies would engage in such activities without at least tacit approval from Beijing,” said Vira Yastrebova, head of the Eastern Human Rights Group.

Chinese delegations have also reportedly visited industrial sites in the occupied territories, while negotiations continue with Chinese state-linked firms over metallurgy and energy projects.

In addition, the Chinese yuan is increasingly used as a parallel currency for both transactions and savings. At the same time, cryptocurrency – particularly the stablecoin USDT – has become a key tool for cross-border payments.

…

Informal mechanisms are also widespread, including transfers via Chinese apps like Alipay and WeChat, as well as intermediary-based “friend transactions.” “A parallel financial system is taking shape – one that operates without transparency, regulatory oversight, or reliable legal protections,” the report states.

While these systems allow economic activity to continue, they come at a cost. According to the report,

• up to 80% of Russian transactions are rejected by major Chinese banks;
• around 79 bank branches in occupied territories officially sell cash yuan;
• approximately 6,000 mobile base stations in the occupied south and east operate on Chinese equipment;
• businesses pay between 8% and 15% in additional fees to intermediaries facilitating transactions and deliveries.

Direct trade between China and the occupied territories officially does not exist. However, the report outlines a multilayered logistics model that allows goods to reach the region indirectly.

…

Analysts warn that these transformations are not temporary. The occupied territories are gradually integrating into a China-centered economic ecosystem, raising significant challenges for any future reintegration into Ukraine. “Russia destroys what it can, and what remains is handed over to interested companies – mostly from China. This is no longer only about war, but about what reintegration will look like,” Yastrebova said.

…

Web Archive link