3.5 billion dollars visit

Yesterday the Ukrainian and Chinese leaders, Viktor Yanukovych and Hu Jintao, signed a joint declaration on the establishment and development of strategic partnership between Ukraine and the PRC in Kyiv, as previously arranged. A number of intergovernmental instruments were also signed in the presence of the president of Ukraine and the head of the People’s Republic of China.

At a joint press conference the president of Ukraine stressed that the key result of the Chinese leader’s official visit is the establishment of strategic partnership relations between the two countries: “It is no exaggeration to say that this signifies a historic breakthrough in the relations between Ukraine and China.”

The joint declaration announces the commencement of strategic partnership between Ukraine and the PRC and determines the underlying principles, including mutual support of national sovereignty and territorial integrity; respect for each other’s course of development; reciprocal non-use of force or a threat to use force, economic or other pressure; an intensified political dialog on the highest and other levels.

President Yanukovych is convinced that the signing of a number of important bilateral documents, including intergovernmental and interministerial agreements, and business contracts, is proof of the determination of both countries to establish and maintain positive cooperation, and that these agreements and contracts will help step up practical concerted action. In particular, he pointed to the documents pertaining to cooperation in the energy and trade spheres, and Ukraine’s extended diplomatic presence in China.

The head of Ukrainian state noted that tentative estimates indicate some 3.5 billion dollars worth of agreements, projects, and contracts made during the Chinese leader’s visit: “Even now we can state with gratification that serious steps have been taken and practical results achieved along certain lines of this cooperation, specifically in terms of infrastructural construction, energy, innovative development, and high technologies.”

In the course of broader-format Ukraine-China talks, Viktor Yanu­kovych emphasized that China is Ukraine’s major partner in the Asia-Pacific region, that the efforts of both sides have shown positive results, and that Ukraine and China intend to increase bilateral trade to 10 billion dollars a year: “This year commodity turnover has been increasing by 80 percent. This is proof that there is a great deal of economic collaboration potential still to be used.”

Yanukovych declared that he and the leader of the PRC have reached complete understanding and accord in regard to all items on the agenda: “As a result of our talks, we have agreed to fill Ukraine-China strategic partnership relations with concrete content,” primarily by stepping up efforts to launch and carry out joint large-scale investment projects in the energy, industrial, and agrarian spheres, setting up a joint innovative industrial park and the Yevhen Paton Ukrainian-Chinese Institute of Welding.

Yanukovych said there are good cooperation prospects in the sphere of aircraft and engine construction, particularly in terms of cooperation between the Antonov State Enterprise and aircraft construction facilities in China. Other important aspects include cooperation in the space, research and technological spheres. There is also growing bilateral dynamism in the agrarian sector.

The president of Ukraine reminded that these projects are being implemented using loans from Chinese banks, received under Ukrainian state guarantee: “I would like to suggest that the Chinese side introduce other, more effective kinds of cooperation, specifically direct investments, leases, and concessions.” He sees very good prospects for the establishment of joint production businesses on Ukrainian territory with subsequent re-exports to third countries. He believes that Ukraine would benefit from a combined effort by government-run and private banks interested in cooperation with China: “We could offer Chinese banks several effective patterns of Chinese capital’s influx into Ukraine, particularly by opening bank offices in our country.”

Yanukovych proposed cooperation in a trilateral format: “We know that Russia and China are planning a pipeline to transport Russian gas to China, so Ukraine could supply tubes, compressor equipment and take part in this project, if need be.” He went on to say that Ukraine is prepared to become China’s reliable partner in terms of pipeline transportation and equipment supplies. Kyiv could further take part in Sino-Russian nuclear power projects.

Hu Jintao thanked Viktor Yanukovych on behalf of the Chinese delegation for the cordial welcome accorded them in Ukraine: “There are historically friendly ties between our peoples. Over almost 20 years of diplomatic contacts between Ukraine and China, our relations have shown stable progress.”

COMMENTARY

Ildar GAZIZULLIN, senior economist, International Center of Long-Term Studies:

“Today’s China is one of the world’s largest economies. Besides, many experts believe it has quite good prospects for further development. The Chinese have a very open economy, and they cooperate with all countries of the world, including Ukraine. China was once even among our top ten trade partners. The situation slightly changed in 2008 after the Beijing Olympics, when China’s share in Ukrainian exports considerably dropped. This was caused by a reduced demand for metal on the part of our Chinese partners. As for any concrete Ukrainian-Chinese investment experience, it is very difficult to clearly cha­racterize it. It would be more correct to say there has been almost none until now, for we haven’t heard so far about any breakthroughs or failures. There have been some contracts, but they were local and low-profile initiatives.

“Naturally, China is interested in this country’s agro-industrial complex. This interest is all the more obvious – the population is growing, as is the demand for foodstuffs. What is important for us is the fact that food prices have shot up in China. The cause of this was not only a demographic boom but also an improved socioeconomic situation. More and more people can afford to spend more on food. Therefore, China is interested in having open access to a farm produce market, such as the one in Ukraine, and we are interested in a sales market that fits in with our current index of purchasing power.

“As for cooperation in the energy sector, it is quite evident that China is interested in increasing the import of power-generation raw materials. At the same time, it is difficult to assert that Ukraine is capable of exporting this kind of raw materials. In all pro­bability, it will be the question of na-tural gas and oil extraction technologies which China possesses today. Yet I would not say they are as up-to-date as those of the world’s top five oil and gas companies, such as Shell, Chevron, etc. But it is obvious that the Chinese technologies are better than ours because almost nothing has been done [in Ukraine] in this field over the past 20 years. So energy-sector cooperation with China would surely be positive experience for us.

“Looking into the future, we can say confidently that the Ukrainian-Chinese cooperation has very good prospects. I am still absolutely convinced that the trade turnover between China and Ukraine would be on the rise even if we did not announce a 10 billion dollars worth growth.”