On financial bridges with Celestial Empire
As a Cabinet source told The Day, Ukraine is negotiating with China the investment of $1.3 billion in modernization of the irrigation system
Ukraine is building commercial bridges with China. How this cooperation will be intensified and which sectors it will concern – this was discussed during the official visit to China of the Ukrainian delegation headed by the First Vice Prime Minister of Ukraine Serhii Arbuzov on September 23-27. Future commercial and economic plans can be found in the project “Strategies of Bilateral Cooperation between Ukraine and China” due to be signed in December 2013 during the president’s visit to PRC. The official reports of the participants of the conference are very restrained in terms of detailed commentaries. However, according to The Day’s source, close to the negotiation process, some positive agreements have been achieved.
Professor in international economics at Harvard University (US) Dwight Perkins opines that many countries are interested in cooperation with China. “The main reason why many businesses and countries are interested in China is the huge territory of the country and its extremely rapid economic growth. Besides, PRC is the biggest exporter and importer; it has a large domestic market. This is the main reason. China has strong business relations in many directions,” he remarked in his commentary to one of the Ukrainian television channels. Perkins also added that China invests all over the world, starting with stock and finishing with natural resources. PRC depends on importations and that is why it wants to make them more reliable. According to the professor, as a WTO member China sticks to the trading regulations of this organization. So, Ukraine will not have to amend many regulations to be able to cooperate with PRC.
President of the Center for Economic Development Oleksandr Paskhaver approves Ukraine’s orientation to China. He opines that the history of China proves that this country has not behaved aggressively towards its partners. “I do not see any threats. The more diverse these agreements will be, the more profit Ukraine will get. All the production we have is Ukrainian and it complies with our inner laws and brings profit to our society. If the Chinese do it more efficiently, let them do it. There is nothing bad if along with the Ukrainian companies, working thousands hectares of farmland, there will be Chinese or some other companies doing the same. What is the most important is that they obey the Ukrainian laws. China is not aggressive towards other countries,” the experienced economists emphasized. According to Paskhaver, the Chinese investors will bring high farming technologies and powerful capital to Ukraine. “If the Chinese investors are able to work in extreme, difficult conditions, it is good,” he says. The only thing, Paskhaver added, the government has to watch that none of the economic sectors is monopolized by one country.
The experts opine that commercial relations with China will be mainly focused on several areas.
Agriculture, energy, pharmaceuticals, high technologies, aircraft engineering are the subjects of today’s commercial dialog, as The Day was told by Chairman of the Board of the Association of Ukrainian-Chinese Cooperation, former ambassador of Ukraine to PRC (1999-2001), deputy head of the Ukrainian part of the Ukrainian-Chinese Business Council Ihor Lytvyn.
The Day asked the former Ukrainian ambassador to China about the prospects of cooperation with China in aircraft engineering. We have a long way to go before co-producing a plane, he replied. “Probably, we will sell some sample Ukrainian planes for the needs of PRC’s national economy. We are actively cooperating in aircraft engineering. The Chinese want to deepen this cooperation and they hope that one day they will manage to own or co-own our production facilities in aircraft engineering,” Lytvyn told The Day. However, this possibility is still very remote since the Ukrainian laws prohibit privatization of aircraft engineering.
In the energy sector, Lytvyn continued, the Chinese specialists may help build, reconstruct or modernize all generating and accumulating capacities. According to him, the Dniprovska and Kanivska storage hydroelectric power stations are likely to be in the list of such projects. It concerns, first of all, allowance of loans with LIBOR + 5 or 6 percent interest for the Chinese companies that will implement projects in Ukraine.
The Ukrainian agricultural sector constitutes a special sphere of interest for China.
According to the Minister of Agrarian Policy and Food Mykola Prysiazhniuk, several common projects are being prepared. “Over the past years the Ukrainian-Chinese cooperation in agriculture has achieved a stable development and positive results. The two countries significantly complement each other in agriculture and have huge potential for cooperation,” he emphasized. According to him, during the meeting of the Subcommittee for Agriculture at the Chinese-Ukrainian Intergovernmental Commission phitosanitary protocols on the export of soya beans and barley to the Chinese market were initialed. “We have also agreed about the beginning of permits coordination on wheat and rape export in 2014. In future this list might be extended with groats,” the minister informed. So, it is planned to start exporting wheat and rape next year. In order for Ukraine to be able to export animal products to China, the Ukrainian farms will soon host the Chinese specialists who will execute veterinary control. After the corresponding documents are prepared and agreed by both countries the export of Ukrainian animal products to the Chinese market will start. The minister also remarked that Ukraine is interested in involving Chinese investments that will enable to modernize production facilities of the agrarian sector and develop a logistic infrastructure. “Today China is opening new opportunities for the Ukrainian economy. Now the investment potential of China is the biggest in the world. That is why Ukraine is interested in implementing large common projects in the agrarian sector,” Prysiazhniuk summed up.
According to Lytvyn, China has already opened a credit line for Ukraine of 6 billion dollars 3.5 of which will be used for agriculture and the rest for energy. “If the loan is successfully disbursed, we might be speaking about dozens billion dollars,” he said.
However, these are not all the investments. As the source of The Day, close to the negotiations in Ukrainian-Chinese cooperation explained, during the last visit to PRC it was preliminarily agreed that China will allocate another loan of 3 billion dollars for agricultural projects. The Day addressed the press service of the Ministry of Agrarian Policy and Food asking it to confirm or deny this information. However, the commentary issued by the press service of the ministry did not contain this information.
