This report examines the evolving role of the People’s Republic of China in enabling Russia’s war economy in occupied Ukrainian territories. Chinese state-owned enterprises and private corporations have expanded their activities across Crimea, Donetsk, and Luhansk by supplying heavy machinery and participating in strategic infrastructure projects that reinforce Russia’s military and economic presence in these regions. Such activities enable the Kremlin to sustain and increase production, circumvent international sanctions, and project legitimacy in the occupied territories. Simultaneously, the same companies – often through European subsidiaries - operate within EU markets, including public procurement. This dual-track model exploits regulatory blind spots in investment screening and sanctions enforcement.

The findings underscore the urgent need for coordinated action by the EU and its transatlantic partners, including expanded secondary sanctions, stricter transparency requirements, and new designation mechanisms targeting corporate networks engaged in adversarial geopolitical activities.