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Ukraine - China Relations

While China became Ukraine’s top trading partner in 2019, Ukraine is in greater need of political support and military aid from Washington in its ongoing struggles with Russia. The PRC supports Ukraine's efforts to defend its independence, sovereignty and territorial integrity, and said that China is counting on Ukraine 's support for " our principled position on Taiwan and Tibet. Ukraine and the PRC have very good prospects for cooperation, especially in the transit sector, the space industry, aircraft construction, in the field of high technologies, the creation of technology parks, in the humanitarian and educational spheres.

Ukraine is a strategic partner of China and an important country participating in the One Belt, One Road initiative. Ukraine became one of the first countries to support the initiative of President Xi Jinping "One Belt, One Road". Ukraine has a unique geographical location - on the eastern border of the EU, on the way from Asia to Europe, as well as between the Black and Baltic Seas.

Ukraine's relations with China are a long history of political and cultural dialogue, mutually beneficial economic cooperation, respect for the choice of each other's development path. Since the establishment of diplomatic relations in 1992, Ukraine and China have made significant progress in building political dialogue and practical cooperation - from the first interstate contacts and the establishment of bilateral cooperation mechanisms to a strategic partnership. The sphere of interests in cooperation with China has always been extremely wide. Ukrainian-Chinese cooperation has always been based on a solid foundation of mutual respect for sovereignty, territorial integrity and independence, non-interference in internal affairs and recognition of the people's chosen path of development.

Bilateral relations between Ukraine and China are of a strategic partnership, reflecting long-standing traditions of friendship and cooperation between the two countries. China has consistently supported Ukraine's sovereignty and territorial integrity. Ukraine remains steadfastly committed to the "one China" policy. Given the ongoing changes and reforms in Ukraine in recent years, both sides are currently working to launch a new phase in the development of bilateral relations by raising them to a new level.

The last state visits of the heads of state took place in 2011 and 2013, within which basic documents were concluded, which at the present stage define and legally consolidate the foundations of friendship and cooperation between the two countries, achievements and priorities for further mutually beneficial development of Ukrainian-Chinese relations.

During the visit of the President of the People's Republic of China to Ukraine in June 2011, a Joint Declaration on the Establishment and Development of Strategic Partnership Relations between Ukraine and the People's Republic of China was signed. The state visit of the President of Ukraine to China in December 2013 was marked by the signing of the Treaty of Friendship and Cooperation between Ukraine and China, the Joint Declaration of Ukraine and China on further deepening of strategic partnership and the Program of Strategic Partnership between Ukraine and China for 2014-2018.

In January 2015, the President of Ukraine Poroshenko met with the Prime Minister of the State Council of the People's Republic of China Li Keqiang within the framework of the meeting of the World Economic Forum (Davos). In October 2014, the Minister for Foreign Affairs of Ukraine PA Klimkin met with the Minister for Foreign Affairs of the People's Republic of China Wang Yi on the sidelines of the ASEM Summit in Milan.

Ukraine was especially grateful to Chinese companies, NGOs, provincial people's governments and ordinary citizens for providing much-needed and timely assistance to Ukraine. Thousands of test systems, masks, goggles, gloves and other personal protective equipment were sent to Ukrainian hospitals at the beginning of the pandemic in Ukraine in the spring. This saved many Ukrainians.

Ukraine inherited roughly a third of the Soviet Union’s defence industry, and China had long looked to Ukraine in its quest to upgrade its military capabilities. China’s first aircraft carrier, the Liaoning, was a refit of the former Soviet carrier Varyag which it bought from Ukraine through a Hong Kong-based businessman. By 2017, Ukraine had become China’s second-biggest foreign supplier of weapons after Russia.

According to the State Statistics Service of Ukraine, in 2019 the trade turnover between Ukraine and China amounted to $ 12.79 billion and increased by 30.4% compared to last year, while exports of goods from Ukraine to China amounted to $ 3.59 billion (+ 63.3%), imports of Chinese goods to Ukraine amounted to $ 9.20 billion (+ 20.9%). The negative balance for Ukraine during this period amounted to $ 5.61 billion. In 2019, the structure of Ukrainian exports to China was dominated by supplies: ore, slag and ash - 32.8%; cereals - 23.9%; fats and oils - 20.6%; residues and waste from the food industry - 7.6%; boilers, machines - 4.9%. The general structure of imports from China was dominated by supplies of: electric machines - 34.5%; boilers, machines - 16.8%; plastics, polymeric materials - 3.8%; land vehicles, except rail - 3.4%; toys - 3.0%; footwear - 2.9%.

Ukraine's aircraft engine and industrial gas turbine producer Motor Sich occupies a dominant position in both Ukraine and Russia's aviation industries. The venerable company, which began producing aircraft engines in 1915, remains dependent on Russia for 41 percent of its sales. As a result, Motor Sich president Bohuslayev, a Party of Regions parliamentary deputy, is vocally opposed to NATO membership for Ukraine.

The main products of Motor Sich are engines for military and civil aircraft and helicopters. The Zaporizhzhya plant is the only strategic defense enterprise in Ukraine that was privatized in the nineties of the last century. The controlling stake in the company before the sale in 2017 to Chinese investors belonged to Vyacheslav Boguslaev, an ex-deputy of the Verkhovna Rada, the CEO of the enterprise since Soviet times. Russia has been the main buyer of Motor Sich products for many years. After Kiev introduced an embargo on the export of defense products to Russia in 2014 - amid the annexation of Crimea and the war in Donbass - the company's revenue fell sharply, and Boguslaev decided to sell it to the Chinese.

Ukraine, at the behest of the United States, arrested the shares of Chinese investors in Motor Sich, and if Beijing imposed sanctions against Kiev, this could deprive the latter of a significant part of its export earnings. On 29 January 2021, Ukrainian President Volodymyr Zelenskyy approved the NSDC's decision to impose sanctions for three years against the shareholders of Motor Sich - four Chinese companies and one citizen of the country. Zelensky imposed sanctions on Skyrizon, a Chinese aviation firm that has been trying to buy Motor Sich, the crown jewel of the Ukrainian defence sector. The Chinese Foreign Ministry said they hope that Ukraine will ensure the legitimate interests and rights of Chinese companies.

And one of the shareholders of Motor Sich Beijing Skyrizon Aviation Industry Investment Co. considered the sanctions imposed by Kiev against her unreasonable. These attempts are being blocked by law enforcement agencies and the Antimonopoly Committee of Ukraine, in connection with which the Chinese initiated an arbitration dispute against Kiev in December 2020 demanding compensation for losses in the amount of $3.5 billion. Wang Jing bought Motor Sich shares using loans from a state-owned Chinese bank. So if a businessman is unable to repay loans due to sanctions, the assets will automatically become the property of the Chinese state bank. President Volodymyr Zelenskyy assured that during his rule of the state, neither China nor any other country will be able to gain control over Motor Sich.

Motor Sich is an enterprise in Zaporozhye that develops, manufactures, repairs and maintains aircraft gas turbine engines for airplanes and helicopters, as well as industrial gas turbine units. The company's products are used on airplanes and helicopters in 120 countries. Skyrizon reportedly obtained a 41 per cent stake in Motor Sich in early 2017 and later raised that to 80 per cent through several foreign companies, but the shares were frozen later that year, pending a review by Kiev. In August 2020, US Secretary of State Mike Pompeo expressed concern to the Ukrainian president in connection with China's plans to buy the plant. In January 2021 Motor Sich signed a record US$800 million contract with the People’s Liberation Army, a deal that included 400 turbofan AI-322 engines.

On 14 January 2021, the US Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) added Chinese company Skyrizon to the Military End-User (MEU) List. The Chinese government fuels its military development, in part, through aggressive policies that allow it to access and replicate sensitive technologies for its militarization efforts. “Skyrizon—a Chinese state-owned company—and its push to acquire and indigenize foreign military technologies pose a significant threat to U.S. national security and foreign policy interests,” added Ross. “This action serves to warn the export community of Skyrizon’s significant ties to the People’s Liberation Army.”

Economist Vsevolod Stepanyuk, on the air of the channel "First Cossack", was outraged by the behavior of the Kiev authorities, who decided that they might not fulfill the signed agreements. Stepanyuk is sure that it was precisely this behavior that brought Ukraine to its current situation. "The world's largest economy, Ukraine's largest trading partner, China, may well retaliate," he warned. In this case, Kiev will lose a fifth of its exports, as well as cheap imports, the economist added. He noted that Chinese products are two to three times cheaper than Japanese and European ones. “Where will Ukrainian grain and metal be sold? China is the main buyer of this,” Stepanyuk recalled.

He recalled that after the coup and the severance of diplomatic relations with Russia, the trade turnover between the two countries decreased by $ 15 billion and this was a severe blow to the country's economy. "Now we can survive the strongest blow to the economy from the deterioration of relations with China," the expert added. At the same time, Stepanyuk stressed that the United States dictated to Ukraine what trade policy it should pursue, and imposed bans and anti-dumping sanctions.




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Page last modified: 06-05-2021 17:08:13 ZULU