In the beginning of this year, China and Ukraine celebrated the 25th anniversary of mutual diplomatic recognition. For the Ukrainian expert community, this significant date was the perfect occasion to assess the current status of bilateral relations, identifying their strengths and weaknesses, and to outline main directions of development of Chinese-Ukrainian relations in the near future.
Political dialogue
17 January in Davos, Switzerland on the sidelines of the world economic forum was a very important event for relations between Beijing and Kiev: President XI Jinping held talks with President of Ukraine Petro Poroshenko. Before the two leaders met only once, and without preliminary agreements. They faced each other on the sidelines of the nuclear security Summit held in Washington in April 2016, and briefly talked. The current talks were prepared in advance, whereby the President of China and President of Ukraine were able to discuss a wide range of issues ranging from trade and economic cooperation and ending with the situation in the Donbass.
Planned character of the meetings and the agreements reached to carry out mutual exchange of visits gave grounds to speak about the revival of the Chinese-Ukrainian political dialogue at the highest level, the pace of which slowed down after the change of power in Ukraine in 2014, in contrast to Poroshenko, his predecessor Viktor Yanukovych visited China twice.
According to Ukrainian experts, one of the main causes a temporary weakening of political contacts between the two countries was the Ukraine’s lack of a comprehensive strategy for the development of relations with China. Meanwhile, all the necessary preconditions for enhancing inter-state cooperation between Beijing and Kiev are available. “First, in bilateral relations there are no any scandals, which clearly demonstrates the high level of mutual trust. In addition, the Chinese side understands the current challenges facing Ukraine”, — said political analyst Igor Shevyrev.
Trade and economic cooperation
By the end of 2016, the trade turnover between China and Ukraine made up 6.51 billion U.S. dollars, an increase of 5.3% compared to 2015. The basis of Chinese exports were engineering products, and the main imports were iron ore and agricultural products, particularly cereals, fats and oils.
It should be noted that in recent years the volume of supplies of Ukrainian agricultural products in China is growing tremendous pace: from 2011 to 2015, it increased 12 times, from $103 million to $1.24 billion While Ukraine is starting to move away from the export of only one raw materials to finished food products — cheeses, yoghurts, confectionery products, i.e. products with a higher added value. However, despite all these positive trends, the Ukrainian farmers, according to estimates of Kyiv, while use of their potential in the Chinese market only 7.5%.
Among other promising areas of increasing Ukrainian exports to China, experts have called the chemical industry, rail transport, aerospace, shipbuilding and aircraft construction.
Wanting to translate all these capabilities from a hypothetical plane in the real, the Ukrainian government has called one of the main priorities of its work in 2017, the expansion and strengthening of trade relations with China, including the increase in exports to that country by $2 billion.
To achieve the goals set this year in China will be sent a trade mission, composed of Ukrainian officials and representatives of the business community. In addition, through participation in the implementation of large-scale Chinese project to build a new silk road, Kyiv plans to launch a regular container train on the TRANS-Caspian international transport route /TITR/. This train will be able to deliver goods from Ukraine to China for 12-14 days, which primarily benefit producers of perishable goods — dairy and organic products, fruit, berries, etc.
Investment
According to the Ministry of economic development and trade of Ukraine, the total volume of joint investment projects, which are currently being implemented China and Ukraine exceeds $7 billion Cooperation is carried out mainly in such areas as energy, agriculture and infrastructure, and has a tendency to increase.
In particular, one of the biggest state corporations, China — CNBM International Corporation — intends to allocate up to $2 billion on the modernization of the energy enterprises of Ukraine. And the other two Chinese companies — China National Complete Engineering Corporation /CCEC/ and Golden Concord Holdings Limited /GCL/ — plan in the next two years to invest $1 billion in the construction of solar power plants in the exclusion zone of the Chernobyl NPP.
Many analysts also say that in the near future one of the most promising directions of the activity of Chinese investors in Ukraine may be opening in this country of new plants. “Ukraine has signed the agreement on free trade zone /FTZ/ with the European Union, so China is very interesting to place production in Ukraine in order to subsequently sell their merchandise in bulk and solvent European market”, — says the head of the Committee of economists of Ukraine Andriy Novak. However, in addition to the FTA with the EU, an important advantage of Ukraine is also highly skilled and inexpensive labor force: due to a substantial devaluation of the national currency, the minimum wage in this country now is about $120.
Meanwhile, for a significant increase in investment inflows from China to Ukraine it is necessary to improve the domestic business climate through reforms aimed at maintaining macroeconomic stability, fighting corruption and ensuring the independence of the judiciary. Only under such conditions foreign capital will feel in Ukraine are protected.
Cooperation in the sphere of tourism, culture and education
In addition to strengthening Chinese-Ukrainian trade-economic and investment cooperation, 2016 was also marked by the development of tourism: according to preliminary data, last year Ukraine was visited by about 25 thousand Chinese tourists, which is two times more than the year before.
The main reason for such significant increase in tourist arrivals was the stabilization of the situation in Ukraine, including in its Eastern regions. However, there was another factor. “Last year, our country has made tangible steps towards liberalization of the visa regime for Chinese citizens”, — said Vice-President of tourism and resorts of the Ukrainian national Committee of International chamber of Commerce Elena Shapovalova. In particular, since June 20, 2016 in Kiev airport “Borispol”, and since October 1 — and even at the airport “Odessa” (Odessa, southern Ukraine) has simplified the procedure of entry to the Ukrainian territory for Chinese businessmen and tourists. It involves the issue of visas for up to 15 days on arrival at one of the two air ports.
2016 was also very full of Chinese-Ukrainian cultural projects, the most important of which was the discovery in the South of Beijing, the Museum-gallery of outstanding Ukrainian poet and artist Taras Shevchenko. This Museum will be used as a platform for the permanent exhibition and temporary exhibitions that introduce the work of contemporary Chinese and Ukrainian artists, sculptors and photographers.
To increase the number of such joint projects in the autumn of last year, China was visited by the Ukrainian delegation headed by Minister of culture of Ukraine Eugene Nischuk. During the talks, Yevhen Nyshchuk with his Chinese counterpart Luo Sugano discussed a wide range of issues, including: the establishment in China of Ukrainian cultural centers, the way of mutual advancement of applied folk crafts, concerts with the participation of artists from both countries, etc.
Last year, China also devoted considerable attention to providing Ukraine with logistical support in the field of education. In particular, he presented the Ukrainian schools 23,5 thousand new computers and equipped with three language laboratories in Kyiv gymnasium of Oriental languages № 1, where Chinese language studies for about 600 children. In addition, the international chamber of Commerce “silk road” has allocated $200 thousand for education projects for students with special needs.
According to analysts, all this suggests that China is interested in continuous development of Ukraine, as well as further strengthening bilateral cooperation on a mutually beneficial basis. Official Kiev, in turn, should take a more active stance in the promotion of interstate cooperation, to find new points of contact.
