While Ukraine’s trade with China is significant — nearly $8 billion in bilateral trade in 2017 — and growing, the bilateral relationship has built-in limitations.
Economically, Ukraine is not a neighbor of China and is a much smaller and less important partner than Russia, with whom China shares a 4,291 kilometer-long border and a $100 billion trade relationship this year.
Politically, China has never supported sanctions against Russia or criticized the Kremlin for its war against Ukraine, which includes the military invasion and occupation of the Crimean peninsula and parts of the eastern Donbas. The conflict has also killed more than 10,300 people since its start in 2014. To the contrary, Chinese President Xi JinPing and Russian President Vladimir Putin are deepening their countries’ relationship.
China’s Ambassador to Ukraine Du Wei, in an interview at the Chinese Embassy with the Kyiv Post on Sept. 11, explained his nation’s policies and outlined the highlights of the bilateral relationship in the political, economic and cultural arena.
The married father of one son, on the job in his first ambassadorial post for more than two years, struck a very hopeful tone for the future of Ukraine-China relations.
Why no sanctions
“China respects the sovereignty, independence and territorial integrity of Ukraine,” Du emphasized. “But it has nothing to do with the participation in sanctions against Russia. There are many hot issues in the world but sanctions don’t work. Sanctions do not solve these hot issues.”
Whether it’s stopping Iran and North Korea from gaining nuclear weapons or bringing peace to Ukraine, “the only solution to those issues is consultation and dialogue,” Du said. “I believe that the way and solution to the Ukrainian crisis is for all relevant parties to act on the basis of the Minsk agreements… this is the only way, there is no alternative.”
However, Russia has not lived up to the key components of the Minsk agreements, named after the Belarusian capital where the agreements were reached. The deal calls for Russia to withdraw from Ukraine, stop arming and supporting separatists, returning control of the eastern border to Ukraine and allow international monitors unfettered access.
Moreover, China and Russia are conducting joint military exercises, while Ukraine is pursuing closer ties with the NATO military alliance, especially such nations as the United States and Canada.
Investment potential
Du said he’s seen progress in Ukraine since arriving as ambassador in 2016.
“I strongly feel that the business environment in Ukraine is improving and the market is becoming more open and transparent,” the ambassador said. “Of course the market in the Ukrainian business environment is not perfect. It has its own problems. These problems also have some negative effects on Chinese company operations in Ukraine. But we are confident of this country’s future and potential and we also take note that many international credit agencies have (been here) and operate in Ukraine.”
Nonetheless, Ukraine has not been a big recipient of China’s massive Belt and Road Initiative, which could amount to $1 trillion in investments and loans around the world to improve infrastructure, from rails to roads and ports, of various nations. It’s often been called the modern Silk Road and the aim is not only to improve China’s trade links with the world, but its political influence as well.
In Ukraine, China has helped dredge ports and one of its giant agricultural corporations, COFCO International with $34 billion in annual revenue, has invested in infrastructure, particularly in Mykolaiv Oblast, through the purchase of a grain terminal and involvement in seed processing.
Overall, the ambassador counts 42 registered Chinese businesses in Ukraine — and likely many more unregistered ones — investing $239 million into the country.
In 2012, under the regime of ex-Ukrainian President Viktor Yanukovych, China agreed to loan Ukraine $7 billion, but ended up lending only $1.5 billion — mainly for agricultural projects — after the other plans were canceled.
A moon lantern is displayed on Sept. 8 at the Yu Garden in Shanghai, ahead of the coming mid-autumn festival on Sept. 24. According to the Chinese Embassy to Ukraine, only 38,000 Ukrainians visited China in 2017. (AFP)
Solving problems
China’s size as the most populous nation with the world’s second-largest economy doesn’t make its businesses immune from the problems faced by other nations, such as corruption and illegal raider attacks.
“It is our embassy’s obligation and responsibility to protect our companies,” Du said. “During my two years here in Ukraine many Chinese companies also come to the embassy and report to me to report and complain about some problems that they face and experience, and I listen very carefully to their report and scrutinize what kind of problem it is. If it is a problem of our own company I will instruct them to solve it themselves, to check it for themselves. If the problem is on the Ukrainian side, I will consult and talk to my Ukrainian counterparts to ask them to solve the problem. And in most cases I get positive feedback. Actually, I feel that the Ukrainian side gives very great importance to Chinese concern and they are willing to absorb Chinese investment.”
Counsels patience
While it’s easy to be preoccupied with Ukraine’s problems, Du said that “we should be more tolerant in understanding the Ukrainian situation because Europe got to the current stage after more than several hundred years, but Ukraine is only 27 years old. It’s not a long time. Ukraine is making progress. It is improving even though the pace is not as fast as many people expect, but it has indeed improved.”
Trade & theft
China is facing criticism, particularly from the United States for running huge trade surpluses with other nations and also for theft of intellectual property as well as forced censorship and forced technology transfers on investment partners.
Du acknowledged some of the problems, but denied others.
“The Chinese government doesn’t pursue this trade surplus,” Du said. “The current so-called trade surplus appeared naturally in the market and not (as a result of) the pursuit of the government. But we try to pursue a more balanced trade with other countries.”
Such trade disputes, accompanied by threats of higher tariffs, threaten to harm the global economy, he said.
“This is a big problem right now,” the ambassador said. “China is the biggest supporter of the fair trade system right now,” noting that the United States is currently talking about building walls to close its borders while China is investing heavily in the world through its Belt And Road Initiative.
“We try to be more open and transparent,” Du said. “We firmly support fair trade.”
Some beneficiaries of China’s investment, however, are thinking of cancelling the projects because of high interest rate or high return on investment required by China. Among those nations worried about falling into a “debt trap” to China are Pakistan and Malaysia, two of the world’s biggest recipients of China’s infrastructure investment and loans. Sri Lanka, additionally, effectively turned over one of its refurbished ports to China on a 99-year lease after it was unable to make the debt payments.
Tourism & other matters
Chinese tourists are the most numerous and spend the most in the world. The World Tourism Organization counted nearly 117 million Chinese making trips abroad in 2015. Yet few come to Ukraine.
Last year, Du attributed the small numbers to bad infrastructure, security concerns because of the war and the lack of information about Ukraine in China.
“These three obstacles still exist but I think there is much progress and improvement in this field,” Du said. “Several of my friends visited Ukraine last weekend. They are based in North America. When they came to Ukraine, they said that they never thought that Ukraine was such a good place. It is very beautiful.”
He thinks that, after many Chinese tourists get bored with seeing such famous tourist destinations such as Rome and Paris, they’ll give Ukraine a try.
“They will try to explore more fresh and more exciting places, and I think Ukraine is a very ideal place for these people,” Du said. “In recent years more and more Chinese people come to visit Ukraine.”
The numbers show a steady progression from 13,000 Chinese visitors to Ukraine in 2015, 20,000 in 2016 and 30,000 in 2017. He expects more than 30,000 in 2018, still small but with a positive trend.
In the other direction, 38,000 Ukrainians visited China in 2017, up from 34,000 in 2016.
“I do believe that these numbers will grow and even double — both the Chinese tourists coming to Ukraine and the Ukrainians coming to China,” Du said.
Chinese living in Ukraine
But demographics pose another limitation to the relationship. Du said that only 12,000 Chinese people live in Ukraine, including 5,000 students. And there’s not a large number of Ukrainians living in China. So the opportunities for interaction are limited.
Aside from his work, Du said that — with his wife and son living in China — he spends free time on sports. He likes fishing and socializing. “I have many Ukrainian friends. I have a cute dog. Life here is colorful and interesting.”
He dodged one final question about where to find the best Chinese food in Kyiv.
His answer: Go to China for the best Chinese food.
