When it comes to doing business with the Chinese, it pays to take things slowly and steadily. Ukraine has learned the slow part quite well, but needs to improve on the steady part.
Chinese businesspeople think decades ahead, use cultural events as a backdrop for negotiations and avoid complaining when something goes wrong, said Ruslan Osypenko, CEO of the Chinese Commerce Association, which represents 36 Chinese and Ukrainian companies.
Among its members are information technology giant Lenova, mobile phone giant Huawei and food processer Cofco. Even better for Ukraine, China is not afraid to work in countries at war and wracked by political turbulence.
His organization, in fact, was founded in 2015, amid Ukraine’s deep economic recession and troubling setbacks in Russia’s war.
“If China chooses some country as its strategic partner it’s not going to change it,” Osypenko said. “And China has decided that Ukraine is important.”
While that may be so, China’s economic relationship and political ties with Russia run far deeper. Moreover, while China professes support for Ukraine’s sovereignty and territorial integrity, it doesn’t support or participate in economic sanctions against Russia.
Even Osypenko acknowledged Ukraine’s relationship with China is not what it could be.
Chinese companies are ready to invest billions of dollars in Ukraine’s economy, he said, but haven’t found the right projects or conditions yet.
Lost opportunities
In 2012, the state-owned State Food and Grain Corporation of Ukraine reached an agreement on a $3 billion loan from the Export-Import Bank of China to supply grain to the Chinese market.
But after President Viktor Yanukovych fled power in 2014, the deal stalled. Ukraine allocated spending on only half of this loan, Osypenko said, while the second part is being negotiated.
China has good reasons to be wary.
In 2013, Ukraine also tried to attract, via the now disbanded national investment agency, almost $400 million from the Export-Import Bank of China to construct a high-speed railway connection between the capital Kyiv and Boryspil International Airport.
But the project ground to a halt. Prosecutors last autumn reported that some $3 million in state funds for the project had been stolen.
Vladyslav Kaskiv, the former head of the national investment agency, was detained in Panama in 2016. Ukrainian prosecutors have filed several embezzlement cases involving millions of dollars against him, but Kaskiv has yet to be extradited to Ukraine.
Osypenko said such incidents make it hard to build trust with China. “This is a very small project for China, but it’s very indicative,” said Osypenko. “It’s hard to imagine constructing a high-speed railway that would connect the whole of Ukraine if we failed to construct a small part of it to Boryspil.”
Bypassing Ukraine
In late January, the first-ever direct freight train between China and the United Kingdom arrived in London under the “One Belt, One Road” project launched by Chinese leader Xi Jinping, which aims to set up six new transport corridors connecting China with Europe.
These routes include Russia and Belarus, but bypass Ukraine. Osypenko said that once up and running, the corridors will carry a whopping 51 percent of world trade. He believes Ukraine still has opportunity to join and benefit from it.
Since Kyiv has signed a free trade zone deal with the European Union and joined the Chinese initiative in 2015, Ukraine may become it an important linking point between China and Europe. “This will allow Ukraine to have new industries, develop logistics and increase tax incomes,” Osypenko said.
But Ukraine has to stop making mistakes in dealing with China, as it did back in 2008 when then President Viktor Yushchenko did not to attend the Summer Olympic games in Beijing.
Ukraine-Chinese relations were put on hold again in 2014–2016, when the change in Ukraine’s government and the war shifted Ukraine’s orientation to the Western direction.
In 2013, Ukraine’s trade with China was worth $10.6 billion, while by 2016 it had shrunk to $6.7 billion.
But China, the second largest economy in the world, is again seen as a key partner in Ukraine, Osypenko said.
The Institute of World Policy, a Kyiv think tank, has also noticed the difference. “China has become a kind of trend of Ukraine’s foreign policy, and has come back into the focus of Ukraine’s authorities,” reads the April report.
Common features
Ukraine’s Soviet legacy is a plus, not a minus, to China.
In the mid‑20th century, Ukrainian engineers helped to develop metallurgy and heavy industry in China, Osypenko said.
Regardless of their ideological differences, the two countries have never had any conflicts and, despite geographic difference, the two nations have some common features.
“We’re both agrarian nations, we care a lot about our families, we have many common values,” Osypenko said.
“Ukraine and China complement each other.”
Osypenko, who used to work at the Minister of Foreign Affairs and Economy Ministry before heading the Chinese Commerce Association, said his role is an outgrowth of his longtime interest in Chinese philosophy, which he believes has played a big role in the economic success of the world’s most populous nation.
Du Wei, the Chinese ambassador to Ukraine, at a press conference in Kyiv on April 24, outlined part of that philosophy.
“We usually take just one step, (even) when we can see five, or 10 steps forward. This approach helps ensure the stability of the economy, (and) the continuity and predictability of policies,” the ambassador said.
So even at a slow pace, Osypenko said, they achieve tremendous results.
Chinese Ambassador to Ukraine Du Wei. (Aleksandr Kondratenko)
