DONETSK REGION — Two Chinese companies signed a contract in Moscow in November 2023 to supply stone-crushing machinery for construction projects in the Russian-occupied Donetsk region. Evgeny Solntsev, then prime minister of the People's Republic of Donetsk, announced the deal on his Telegram channel.

The companies, Zhongxin Heavy Industrial Machinery and Amma Construction Machinery, supplied equipment to the Karansky quarry in the southern Donetsk region. Crushed stone from the quarry has been used for construction projects in Russia-occupied areas of Ukraine.

Moscow annexed the People's Republics of Donetsk and Luhansk along with two other Ukrainian regions in 2022, although none of those regions is fully occupied by Russia's military. The two breakaway territories maintain nominal independence features such as a cabinet and border checkpoints, while Moscow controls governance. Only North Korea and Syria under former President Bashar al-Assad recognized the People's Republic of Donetsk and the People's Republic of Luhansk as independent nations.

At least 17 Chinese companies operate in the Russia-occupied areas of Donetsk and Luhansk, according to the Eastern Human Rights Group. Their activities span mining, construction, telecommunications equipment supply and financial services. Almost 6,000 Chinese-made relay stations for cellphone connections have been installed in the occupied areas, the group said. Huawei equipment is being installed in the occupied areas, and the company continues to operate in Ukraine.

Local businesses use Chinese electronic payment systems through Telegram channels offering currency exchange and transfers, and yuan is sold in 79 banks in the occupied areas, according to the Eastern Human Rights Group. Before 2014, 94 coal mines operated in Donetsk and Luhansk; only five remain open.

Beijing's official position on the Russia-Ukraine war is neutrality, and it refers to the conflict as a "crisis." China has repeatedly said it supports Ukraine's territorial integrity and has not recognized the occupied areas as part of Russia. Chinese factories supply spare parts and accessories for drones assembled by both sides in the war.

Ukraine sanctions Chinese companies operating in occupied areas, urges Western nations to follow suit and bans those firms from doing business in Ukraine. The list of sanctioned Chinese companies includes Alibaba, China National Petroleum Corporation and dozens of drone and missile component manufacturers.

"If a company has its interest, it's ready to risk, including the risk of being sanctioned by Western nations and Ukraine," said Volodymyr Fesenko, head of the Penta think tank. Moscow encourages the occupied regions to develop economic ties with Iran, according to the Eastern Human Rights Group. Tehran buys grain and coal from the occupied areas and integrates the occupied Donbas economy into its logistical chains, the group said.