China's Influence on Russia's Defense Industry: Where to Hit with Sanctions

Xi Jinping's recent visit to Moscow in May was not a diplomatic gesture, but a military and economic statement. China is no longer pretending to be neutral. It is a direct beneficiary of the war, and its support for the Russian defense industry has become structural.

Xi Jinping's meeting with Putin in Moscow in early May, dedicated to the so-called Victory Day as they call it in Russian, 2025, was the culmination of a bilateral escalation against the United States and Europe.

The joint statement of May 8 sent key signals that Moscow and Beijing will coordinate foreign policy for the sake of strategic balance, deepen defense-industrial cooperation, and create a common economic platform to counter unipolarity. Translated from diplomatic language: China recognises itself as a partner of the Russian Federation in a long-term confrontation with the West.

This alliance is not a union of equals. Putin is already in the role of a junior vassal, but this is what makes him dangerous. Xi dictates the rules, Russia complies, and in exchange, it receives access to critical technologies, without which the Russian war would have been over in 2023. Now this assistance is becoming systemic.

Defense Ties Go Deep: Over 30 New Agreements

The agreements signed on May 7-9 cover more than 30 areas, from drones to optoelectronics, from mechanical engineering to communications. A separate intergovernmental working group to coordinate the defense industry has been established.. The real message is: Beijing is openly siding with the Kremlin.

Technology Exchange: What China Gives Russia – Directly and Through Proxies

The modern Russian army without Chinese components is old iron. More than 60% of the chips found in Russian missiles come from China. And not only directly. Through proxy companies in Hong Kong, Singapore, Kazakhstan, Kyrgyzstan, Turkey, and even Africa.

After the May meeting, separate agreements were signed on technology transfer in the production of FPV drones, optical sights, gyroscopes for UAVs, laser rangefinders, and electronic warfare. New legal entities have been created to circumvent the sanctions – they will be engaged in procurement, logistics and joint production in Russia.

A separate area is machine tools and industrial platforms for metal processing. Most companies in Russia that produce shells, missiles, and artillery systems are technically tied to Chinese machines. Without them, repairs and scaling are impossible.

Another critical sector is navigation and telemetry systems. Chinese chips, matrices, and software are integrated into Russian weapons not only as components, but as the basis. Without them, no Geranium, Lancet, Orlan drones, or modernized S-400 or X-101 can be built.

Investments: How Beijing is Financing Russia's Military Capabilities

Financing is another point of influence. After Xi's visit, the parties signed an investment package. Some of it is formally “civilian” but in fact dual-purpose. Chinese funds enter logistics hubs, industrial parks, assembly plants, and transportation hubs. 

A special emphasis is placed on Siberia, the Far East, and Transbaikalia, regions where Beijing wants to have a controlled industrial base.

Separate agreements have been concluded between Chinese banks (in particular, those from Shenzhen and Chengdu) and Russian manufacturers of equipment for UAVs, air defense and electronic warfare. These are second-tier banks that have no assets in the US or EU and therefore are not afraid of secondary sanctions. Payments are made through yuan, crypto-wallets, and exchange systems like UnionPay.

Beijing is acting cautiously but consistently. Its goal is not only to help Putin, but also to make Russian defense dependent on Chinese parts, engineers, and software. Beijing is not forming an ally, but a contractor. This is a long-term model of colonizing the military industry.

Why China is Doing This – and What It is Not Afraid Of Consequences 

Beijing knows exactly what is happening. China’s motivation is simple: the strategic weakness of the United States, the division of the EU, and the transformation of Russia into a dependent country with nuclear weapons. The war in Ukraine is not a tragedy for China, but an opportunity. Ignoring public statements about “peace,” Xi is deeply embedded in the war – through technology, money, diplomacy, and narratives.

Beijing understands: It will be difficult for the West to impose full-scale sanctions on China. The markets are too big, the dependence too deep. And that is why China is trying to act on the edge: to help enough to keep Russia afloat, but not so much as to provoke an escalation with the EU or the US.

The diplomatic formula “we are not involved in the war” is a cover for deep industrial integration. And while the West turns a blind eye, Xi is betting that in a few years Russia will be so dependent that it will not be able to leave China's orbit even theoretically.

Why It Is Dangerous: Risks for Ukraine, the EU and the Global Order

The Chinese rear for the Russian army means additional years of war. It means new missiles, new drones, new electronic warfare equipment, and less chance of the Kremlin's resource depletion. This is a new arms race with cheap technology and rapid production. If North Korea provides missiles, China provides intelligence.

For Ukraine, this means that military pressure will not diminish even if the West stops Russian logistics. China is a backup breath. For Europe, it means the threat of Chinese industrial expansion into critical sectors. For the world, it means the end of sanctions as a tool. If Beijing helps Russia survive, it will send a signal to Iran, North Korea, and Türkiye: authoritarianism is more effective than law.

How the West Should Respond: Targets for Strike that Work

The West should not call for it, but hit it. The first is sanctions against second-tier Chinese banks that service Russian transactions. The list of such banks has long been at the disposal of the G7. The secondis sanctions on manufacturers of electronics, optics, and composites that supply Russia directly or through third countries. Without these components, Russian weapons cannot take off.

The third is sanctions on the insurance of Chinese logistics operators who transport dual-use goods. Without insurance, the traffic stops. The fourth is a blacklist of Chinese proxy companies, including those in Kazakhstan, the UAE, and Türkiye. The fifth is secondary sanctions against countries that cover up logistics.

The sixth is a tough signal from Beijing: either you will leave the shadow game or you will receive sanctions on key sectors – 5G, batteries, energy, IT. This is not an ultimatum, it is a choice: to be a global player or a supplier to dictatorships.

The Chinese trace in Russian weapons is not a detail. It is the main variable in the war of the future. If it is not blocked, the sanctions will become symbolic, the war will be eternal, and international law will be a joke. Beijing is no longer an observer. It is an accomplice. And it must be made to feel it.

Bohdan Popov, Head of Digital at the United Ukraine Think Tank, communications specialist and public figure