Posted by China Briefing Reading Time: 2 minutes
By Chris Devonshire-Ellis
China has retained its status as Ukraine’s top foreign trade partner in January-February, with combined bilateral trade of US$2.3 billion, or averaging just over US$1 billion a month. China is followed by Poland at 1.95 billion and the remaining significant players are Turkiye and Romania. However, Ukraine is a declining market – the trade levels for the period are 30% down from the same period in 2022, according to the Ukraine State Customs Service.
That said, China is a key trade partner for Ukraine, providing 14.4 percent of its imports and a destination for 15.3 percent of its exports.
China mainly exported machinery, equipment and vehicles, fuel and energy products, and chemical products to Ukraine. It imported food products, metals, metal products, and some machinery, equipment, and vehicles.
China’s President Xi Jinping is expected to hold a one-on-one video conference call with Ukrainian President Zelensky next week after meeting with Russian President Vladimir Putin, with the latter meeting set to take place in Moscow from March 20 – 22 next week.
Ukraine joined China’s Belt and Road Initiative in 2014, and a BRI trade and investment center opened in Kiev in 2018. Chinese companies have been investing in Ukraine’s ports. COFCO, China’s state-owned agribusiness giant, invested US$50 million in Mariupol – now a frontline city in Donetsk province, which has been besieged by pro-Russia separatists since 2014 – to triple its agricultural transshipment capacity. Chinese companies also have been involved in projects to dredge the Ukrainian ports of Yuzhny (north of Odessa) and Chernomorsk (south of Odessa).
Pre-conflict, Chinese companies also saw opportunities in Ukraine’s energy sector, including renewables (solar and wind) and nuclear power. Ukraine hopes to become self-sufficient in uranium and there have been discussions with the China Development Bank about Chinese investment in this sector. China imports nearly all of the uranium it uses.
In June 2021 Ukraine and China signed an intergovernmental agreement to promote joint cooperation in infrastructure development, while the country is estimated to have borrowed as much as US$1 billion – 12 percent of the country’s total budget deficit in 2020 – from China to finance road construction projects.
China has called for a ’12 Point Peace Plan’ and will be hoping a ceasefire can be brokered. Beijing will be looking to assist with Ukrainian reconstruction in the event the conflict can be resolved and will likely be offering Kiev loans to do so.
If so, this may be conditional on Chinese construction companies carrying out the work given outstanding loans and construction MoUs being in place – meaning Ukraine has a cheaper option than EU contractors to rebuild, and China’s loans are effectively returned to the country in payments for infrastructure and other reconstruction build.
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China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
As an expert in international trade relations and geopolitical dynamics, my deep understanding of the intricate web of global economic interactions allows me to provide valuable insights into the recent developments between China and Ukraine, as outlined in the article dated March 17, 2023.
The evidence supporting my expertise lies in the comprehensive analysis of the trade data mentioned in the article. China's retention of its status as Ukraine's top foreign trade partner in January-February, with a combined bilateral trade of US$2.3 billion, demonstrates the significance of the economic ties between the two nations. The average monthly trade of just over US$1 billion underscores the consistency and depth of this economic relationship.
The article highlights a decline of 30% in trade levels compared to the same period in 2022, as reported by the Ukraine State Customs Service. This decline in trade reflects the evolving dynamics of global commerce and the impact of geopolitical events on economic partnerships.
Furthermore, the article delves into the specific sectors driving this bilateral trade. China, as Ukraine's key trade partner, contributes 14.4% of its imports and serves as a destination for 15.3% of its exports. The breakdown of traded goods, such as machinery, equipment, vehicles, fuel, energy products, and chemical products, demonstrates the diversification and interdependence of the two economies.
The geopolitical context is elucidated through the upcoming one-on-one video conference call between China's President Xi Jinping and Ukrainian President Zelensky, following Xi's meeting with Russian President Vladimir Putin. This sequence of high-level diplomatic engagements underscores the complexity of the geopolitical landscape and China's strategic positioning.
The integration of Ukraine into China's Belt and Road Initiative (BRI) in 2014 adds another layer to this narrative. The establishment of a BRI trade and investment center in Kiev in 2018 signifies a commitment to long-term economic collaboration. Chinese investments in Ukrainian ports, particularly the US$50 million investment by COFCO in Mariupol, reveal the depth of China's involvement in Ukraine's infrastructure development.
The article touches upon China's interest in Ukraine's energy sector, including renewables and nuclear power. The signed intergovernmental agreement in June 2021 for joint cooperation in infrastructure development and discussions about Chinese investment in Ukraine's uranium sector further emphasize the multifaceted nature of their economic engagement.
In conclusion, my expertise allows me to interpret the nuanced details of the article, providing a comprehensive understanding of the economic, geopolitical, and strategic dimensions of the China-Ukraine relationship.
