After going nowhere for much of the last five years, Ukraine-China relations are poised for a fresh burst of momentum under President Viktor Yanukovych. Getting China interested in Ukraine’s economy could provide a welcome boost of investment.
The world’s superpower, with more than 1.3 billion people and the world’s fourth largest economy, remains governed by a very conservative Communist Party cadre.
And the rulers reacted very cautiously to Ukraine under the five years of rule by the Orange Revolution tandem of Viktor Yushchenko and Yulia Tymoshenko. There were no official visits at the highest level between the two nations – not even during the 2008 Olympics in Beijing. And major investment projects were put on hold. Some official documents of the Chinese government referred to the Orange Revolution as “a coup d’йtat of Yushchenko and Tymoshenko.”
“China did not take the Orange Revolution enthusiastically and was waiting for a clear political course take hold,” says Ihor Gumenyi, an official handling relations with China within Ukraine’s Foreign Ministry.
If true, the election of Yanukovych and his speedy consolidation of political power were perhaps taken as a welcome sign by the Chinese leadership, who seized the opportunity to personally meet with the Ukrainian president. During the April 11-14 nuclear security summit in Washington D.C, China President Hu Jintao granted Yanukovych a prized one-on-one meeting.
Both leaders emphasized the need to deepen the political dialogue between the two nations, as well as cooperation on investment projects and joint work in the space sector and aircraft building. Ukraine is, of course, looking for investment dollars for its ongoing infrastructure and other preparations ahead of the Euro 2012 European soccer championships that it will co-host with Poland.
“In the past, projects were developed, agreements were signed. However, the Chinese were very cautious about investing. They needed guarantees, but did not see them in Ukraine,” added Gumenyi.
Oleksiy Plotnikov, head of Verkhovna Rada subcommittee for foreign economic development, said three investment projects with Chinese capital involving key sectors of the Ukrainian economy are finally in the works.
“Finally, cooperation in three major infrastructure projects involving Chinese investment are kicking off involving construction of roads, railway and expansion of Kyiv’s metro. We expect them to start in the nearest future,” Plotnikov said.
To advance these and other projects, the Foreign Ministry expects a visit to Ukraine by Chinese Foreign Minister Yang Jiechi in the next month. Moreover, the Chinese president in Washington, D.C., invited Yanukovych to visit China later this year.
Limited interest
But at least one expert thinks that there are severe limits to the relationship between the two nations.
Eugene Chausovsky of the U.S.-based Stratfor intelligence analytical firm, explained why.
“While Beijing has certainly been exerting and increasing its influence in places like Central Asia in its energy projects there, it is unlikely that China could replicate such efforts in a country like Ukraine,” Chausovsky said. “For China, Ukraine has neither the volume of energy resources nor the geographical proximity that makes Central Asia such an enticing and promising prospect for economic deals and energy cooperation. For Ukraine, I would not be so quick to write off its traditional suitors, particularly Russia.
While Moscow has been hesitant to provide Ukraine with direct financial assistance in the form of loans, it has shown a willingness to make deals with Kyiv if the administration is willing to cede control of key assets like energy and industrial infrastructure to Russia.”
Moreover, Stratfor’s Chausovsky said: “Ukraine is much more strategic to Russia’s geopolitical interests, so any Chinese moves other than loans or business deals would be seen as a direct challenge by Moscow and would not be taken lightly. China has been careful to not brush up against Russia in its moves in Central Asia, and it would be even more so in a country like Ukraine.”
The Chinese community in Ukraine includes representatives of Chinese business giants, such as Huawei, a leading telecom solutions provider. (www.huawei.com)
Ukrainian diplomas help
As these ties develop, the Chinese community in Ukraine – which officially numbers about 15,000 people – just finished celebrating Youth Day on May 4. It marks the anniversary of a powerful student uprising in 1919 against imperialism and feudalism.
Who are the Chinese here? Thousands are students, carrying on a tradition that started in Soviet times, when Ukraine offered educational opportunities on an ideological basis. Today, the reasonable cost-quality ratio of Ukrainian education lures young Chinese students who come for linguistics and technical studies, by and large.
“I left China to pursue a better life abroad. I had no idea that China would develop so fast. Now there are more opportunities in China for me,” said Liu Yan, a Ukrainian university graduate with a master’s in computer science, who has recently returned to China.
Unseen expansion
From fur to cars, tea to telecommunications, the Chinese are firmly stepping into every spot of the Ukrainian market, increasing range and quality of goods imported to Ukraine.
“Twenty years ago there were no Chinese telecommunication products in Ukraine,” said Chen Xiao Dong, head of the Ukrainian representative office of ZTE, a Chinese manufacturer of IT technologies which services Ukraine’s leading mobile operators.
While “Made in China” labels are ubiquitous in Ukraine, the Chinese community does not have a high profile.
Even the Chinese Business Association called Hua Shang Hui opens its doors exclusively to Chinese entrepreneurs. Only on certain occasions, like Chinese New Year and National Day, do they organize events to which Ukrainians are invited. Chinese nationals also publish a Chinese language business newspaper.
Aside from the business giants, many Chinese entrepreneurs come to Ukraine with small amounts of start-up capital. They open businesses through contacts with the local Chinese community, known to be one of the most closed and supportive foreign communities, guarding its integrity with great discretion and actively assisting newcomers.
“Many goods are imported without legitimate documents, which is the simplest way to conduct business in Ukraine,” said Ling Yi, a 40-year-old woman from Beijing, who runs a small Chinese grocery store at Lybidska metro station market, known as Kyiv Chinatown.
Different bureaucracies
Chen, head of ZTE in Ukraine, has spent the last decade in Ukraine. He admires Ukrainian hospitability but not its bureaucracy.
“There are literally hundreds of checks by Ukrainian authorities ranging from police to fiscal administrators. Last year the police took away passports from several of our employees and even after pulling certain strings, it took a week to get these passports back,” Chen added.
Ukrainian corruption, a nightmare for many Western investors, is not as big of a threat to the Chinese. Corrupt bureaucracies flourish in both societies, with differences.
“While in China there is strict control over corruption by several state organizations, in Ukraine it is present at all layers of society and forms part of the nation’s mentality,” said Chen.
Chen, however, still cannot get used to Ukrainians’ relaxed approach to work.
“In China, even if people work extra hours, they don’t ask for compensation. I still find it difficult to get used to the prevalence of music in the workplace, in banks and in public transportation. You can hear music everywhere. In China, this would be impossible,” he added.
Nevertheless, the business mentality of Ukrainians and Chinese has common features. Connections are important. Virtually the first question asked in the Chinese business community is “Ni you guan xi ma?” or “Do you have connections?”
“In China, people often say that ‘harmony brings wealth,’ and so we try to avoid conflicts,” Chen said. “Chinese like to work in a calm atmosphere, without which development is impossible.”
That is hardly the case in chaotic Ukraine
Kyiv Post staff writer Nataliya Bugayova can be reached at [email protected]. Maryana Polyakova is a freelance writer living in Kyiv.
Read also ‘China diplomat: Many opportunities in Ukraine’ by Nataliya Bugayova.
