A report by the Financial Times on July 15 alleges that Ukraine will use European Union funds to purchase drone components from China. According to unnamed sources, Kyiv secured a carve-out within a €6 billion EU loan tranche—the first €1 billion of which has already been disbursed—to buy Chinese-made parts for its unmanned aerial vehicles.
President Volodymyr Zelensky has stated that the objective is to double Ukraine's annual drone production to 20 million units by leveraging the EU's financial and industrial capacity. However, achieving this target appears to depend heavily on Chinese manufacturing. A former Ukrainian deputy defense minister confirmed in summer 2023 that volunteer groups were already procuring Chinese drones for the armed forces.
The New York Times reported earlier this year that by 2024, the vast majority of drones Ukraine sent to the front were assembled domestically—but almost entirely with Chinese components. That share has since fallen to about 38%, but Ukraine still relies on cheaper Chinese parts due to budget constraints and the need for massive numbers. According to a Ukrainian official who spoke on condition of anonymity, both Ukrainian and Russian companies often buy from the same factories in China.
China's Strategic Calculus
Some observers question whether Beijing would accept EU payments to help Ukraine against Russia, given the perception of a Sino-Russian alliance. In reality, the two are strategic partners, not formal allies. Russia has historically armed India and Vietnam as part of its regional balancing strategy, actions that have at times undercut Chinese interests. As noted in our analysis of the Power of Siberia 2 deadlock, the relationship has clear limits.
It is plausible that China sees advantage in a prolonged conflict. A protracted war keeps the United States focused on Europe, preventing a full "pivot to Asia" to contain China. It also weakens Russia, potentially reducing Moscow to a junior partner—one that might offer Beijing bargain prices for energy resources like the Power of Siberia 2 pipeline and curtail arms sales to India. Such a shift would give China a trump card in its border disputes with New Delhi.
During Donald Trump's recent visit to Beijing, President Xi Jinping articulated a vision of "constructive strategic stability" with the United States. This may signal a quid pro quo: China ramps up drone sales to Ukraine using EU funds, and in return, Washington waives tariffs that the late Senator Lindsey Graham's bill would impose on Chinese goods. The Trump administration could justify such a waiver on "national interest" grounds, effectively rewarding Beijing for arming Ukraine at scale.
The intensification of what some analysts call a US-led war of attrition against Russia thus hinges on China's choice. Beijing can either help Ukraine for profit and potential détente with Washington, or refuse out of solidarity with Moscow. The stakes are high: Russia's arms sales to India and Vietnam have preserved regional balances without causing civilian casualties, whereas Chinese drone components used by Ukraine could shift that balance and cost lives.
This development also intersects with broader Indo-Pacific dynamics. As the US races to build up its military capacity in the region—detailed in our piece on the US wartime buildup—China's industrial base remains a critical factor. The EU's willingness to fund Chinese components for Ukraine underscores the complex web of economic and security ties that defy simple bloc-based narratives.
For now, the reported carve-out remains unconfirmed by official EU or Ukrainian statements. But if true, it would mark a significant shift in how Western allies approach the war—and a stark illustration of China's dual role as both a potential partner and a competitor in global security affairs.
