China is using a shadowy network of shell companies to funnel arms into Russia, helping to fuel President Vladimir Putin’s war machine in Ukraine, an expert has claimed. Stefan Bejan, an investigator at Watchdog Moldova, said China is playing a crucial role in supplying Russia with weapons through covert financial channels.

He said: “These arms shipments could prolong the war indefinitely, undermining Western efforts to bring about a peaceful resolution. The supply of weapons is channelled through intermediary firms in China, which use shell companies to conceal their true purpose. Such companies facilitate the shipment of drones and other military equipment to Russia – effectively bypassing international sanctions.

Mr Bejan explained how the operation works, with the starting point being the PSB, or Promsvyazbank, the Ministry of Defence’s main supporting bank in Russia.

From there, funds in rubles are transferred via the A7 payment platform, partially owned by Ilan Shor, a businessman with extensive links to Russian sanctions evasion schemes.

The cash is moved into accounts at the Capital Bank of Central Asia, where they are converted into foreign currencies such as yuan or dollars. The money then flows through shell companies before being used to purchase weapons from Chinese firms.

While China, led by President Xi Jinping, denies any official role in arming Russia, Mr Bejan suggested Beijing was well aware of what is happening.

He said: “China is using plausible deniability here. These weapons are not officially sold to Russia but are routed through intermediary companies to avoid direct links.”

The flow of arms is an indication of the vaunted “limitless friendship” between Russia and China, a term used by both nations to describe their increasingly close ties.

Beijing continues to provide Russia with vital support, including technology, economic assistance, and, as recent reports show, arms shipments.

Mr Bejan pointed out that China is careful to ensure that the arms trade appears to be part of uncontrolled, private-sector activity rather than state-backed aid to Russia’s war effort.

He said: “It would be politically damaging for China to be seen as openly aiding Russia in this conflict, especially as it faces increasing economic pressure from the West. But this trade allows them to support Russia while maintaining the appearance of neutrality.”

The use of shell companies and third-party intermediaries makes it difficult for Western nations to target these transactions directly, but Mr Bejan believes this trade will soon face greater scrutiny.

He said: “These financial networks could face increasing pressure from global regulators, and we may see more sanctions targeting these intermediaries, particularly the banks and shell companies in Central Asia.”

Russia’s reliance on these covert financial networks is a key factor in prolonging its war against Ukraine, Mr Bejan suggested.

He said: “These operations allow Russia to circumvent sanctions and continue its military aggression, which undermines efforts for peace. The West must take stronger action to dismantle these illicit financial flows to weaken Russia’s war machine.”

Russia’s military machine has been under increasing pressure from Western sanctions, but covert operations are keeping its war economy afloat. Mr Bejan warned that as long as these financial pipelines remain open, the war in Ukraine could drag on indefinitely.

The expert also highlighted the strategic role of Ilan Shor, the businessman who owns A7 and is heavily involved in the sanctions evasion scheme, and who is currently in Moscow, and subject to US, EU and UK sanctions.

Shor’s connections with both Russian and Moldovan political elites make him a key figure in these operations.

Mr Bejan said: “Shor is one of the key players in this network. He has a vested interest in keeping the operation running and stands to make significant profits from it.”

The operations also have broader geopolitical implications. Mr Bejan pointed out that Moldova, which shares a border with Ukraine, could be affected by these financial dealings, especially as elections approach in the country.

Funds being funnelled through these networks could be used to support pro-Russian political campaigns in Moldova, further destabilising the region, he argued.

Mr Bejan said: “These arms shipments are part of a much larger web of financial and political ties between Russia and China. As the war in Ukraine continues, the West must take stronger action to disrupt these operations and prevent further escalation.”

His comments reflect growing concerns over China’s role in supporting Russia, despite its stated neutral stance on the war in Ukraine

With both countries continuing to deepen their relationship, the international community will need to closely monitor how this alliance evolves, particularly as it relates to the ongoing conflict in Ukraine.