BEIJING, (Reuters) – In recent years, China has been investing more in Ukraine than ever before, particularly since it is currently in a crisis of security with Russia.

China is interested in Ukraine due to its strategic location and a free trade agreement between Ukraine and Europe. The deal also includes Ukraine’s access to agricultural and mineral resources.

China expressed concerns about Ukraine’s “worsening situation” and asked for restraint from all sides to resolve their differences by dialogue.

These are just a few of the major business and economic interests that China has in Ukraine.

TRADE TIES

Since President Viktor Yanukovych’s 2013 state visit to China, trade relations between Ukraine and China have improved significantly.

China surged ahead of Russia to be Ukraine’s largest single trading partner in 2019. The total trade volume was $18.98 Billion last year. This is nearly 80% more than 2013 according to the State Statistics Service of Ukraine.

The data revealed that the Ukrainian trade to China was dominated by commodities like iron ore and corn oil. In contrast, imports from China were primarily machinery and consumer goods and totalled $10.97 trillion in 2021.

China was the top importer in China of Ukrainian barley during the 2020-21 marketing years. Chinese customs data revealed that about 30% of China’s corn exports, which amounted to more than 8,000,000 tonnes, was from Ukraine.

The launch of direct rail freight services between these two countries was also possible due to increased bilateral trade. However, the frequency is still low. The China-Europe Railway Express also stops in Ukraine, which helped alleviate logistic headaches for Chinese companies during the COVID-19 pandemic.

BOLT AND ROAD

The Belt and Road Initiative is a key hub in China’s Belt and Road Initiative. This initiative, which was launched by President Xi Jinping and includes Xi Jinping’s iconic infrastructure and foreign-policy project. Kyiv joined the Initiative in 2017. Both sides reached an agreement with the other to improve cooperation in the areas of financing and construction.

China’s largest companies have operations in Ukraine, including the state food conglomerate COFCO Corp. China Harbor Engineering Co. (CHEC) and China Pacific Construction Group.

According to Chinese data, the direct investment of Chinese companies in Ukraine was $150 million as of end-2019. According to the embassy of Ukraine in China, $75.7 million was invested by Chinese companies in Ukraine in the first quarters 2020.

In 2016, COFCO launched a grain terminal in Nikolaev, a port in the southern Ukraine. It was worth $75 million. CHEC finished a dredging operation at Chornomorsk in 2019

China Pacific Construction Group, in 2017, signed a deal for a Metro Line in Kyiv. Huawei, who has assisted Ukraine in developing its mobile networks in recent years, won in 2019 the bid to place the 4G Network in Kyiv’s subway.

Huawei was appointed in 2020 as a partner to ensure cybersecurity and cyber security in Ukraine.

China Longyuan Power Group Corporation (the country’s biggest wind power producer) built and put in operation a wind farm large enough to cover the entire city of Yuzhne in 2021.

Every investment is not always a success.

Ukraine declared last year it would stop Skyrizon’s takeover bid for a local manufacturer of aircraft engines. It was concerned about forced technology transfers by the U.S.

Power Construction Corp of China signed an agreement to build an 800MW wind power station worth $1 billion together with Donetsk partners. This would make it Europe’s largest onshore wind park.