Ukraine will be allowed to spend funds from an EU defence loan on Chinese drone components, exposing Europe's reliance on Beijing for critical parts. Kyiv obtained a carve-out for part of a €6bn tranche to purchase drone components from China, according to two people familiar with the decision.

The funds mark the first allocation from a wider Ukraine support loan, under which €60bn is earmarked for defence procurement. The decision underscores gaps in the EU's domestic defence production, despite a push to strengthen Europe's industrial base by tying aid to procurement on the continent. It also highlights China's role supplying both sides in the conflict.

Ukraine has built one of Europe's most innovative defence industries, but its consumption of drones — now accounting for about 80 per cent of Russian battlefield casualties — outstrips its capacity and that of allies to produce certain components. Under EU loan rules, defence products must largely come from the single market, Ukraine, or approved partners.

However, a carve-out permits purchases elsewhere if similar products cannot be sourced quickly enough or in sufficient quantities. Ukraine secured an exemption for the first €5.9bn defence tranche dedicated to drone procurement, allowing Kyiv to buy certain Chinese components not sufficiently available in Europe.