The territory of the People’s Republic of China occupies the third place by area (after Russia and Canada, then the USA follows the PRC). However, it is in the first place in terms of population of more than 1.404 billion, leaving behind India (more than 1.377 billion) and the USA (more than 331 million). There are over 146 people per one square kilometer (in Ukraine, it is slightly over 73).
The GDP per capita of the People’s Republic of China (according to the UN forecast data for 2019) is $19,581 (for comparison: the USA – $64,805, the United Kingdom – $47,479, Japan – $45,956, Russia – $29,504, Ukraine – $9,741, India – $8,348).
Also, the geographical location of the country assumes leadership positions in the East Asian region: the Celestial Empire shares land borders with 15 countries and sea borders with 6 countries.
Chinese migrants and diaspora contribute to the development of the country. Its diaspora is the largest in the world (about 50 million people) and lives in almost all countries. The capital of the Chinese diaspora is estimated at $1,500 billion. Every year, labor migrants send around $80 billion to their homeland. In Ukraine, according to the Chinese embassy, there are about 20 thousand immigrants from the Celestial Empire, although in 2001 there were only 2213. At the end of the twentieth century, 20 thousand Ukrainians lived in China, but they were fully integrated into the social life of the country.
A culturally developed country (literacy of the population is 96.4%) with a huge economic and technological potential, an excellent logistic structure in the region naturally seeks to have equal relations with the same giants (not in terms of territory or population) from the positions of the financial, industrial, technological and trade potential.
Who rules the world market?
Of course, such a large consumer market is a great piece for many countries in the export of their goods and services. Indeed, import of China has crossed the mark of $ 2 trillion since 2013, and have been steadily growing since 2017. To promote trade in 2018, the government reduced customs duties for the importation of a wide range of goods. According to the Department of Foreign Trade of the Ministry of Commerce of the People’s Republic of China, in 2019, Beijing intends to take additional measures to stimulate the import of advanced technologies, agricultural products, consumer goods and services, as well as continue to reduce the overall level of import duties.
However, there is also another side: China is intensifying the exports of its products and services. In 2017, it amounted to over $2.42 trillion (up 10.24% compared to the previous year), while the positive balance of exports amounted to $873 billion. Among the major buyer countries: the USA, then Hong Kong, Japan, Germany, South Korea… However, if we compare the main recipient countries and supplier countries to China, the list is practically the same, but with a “small” exception: among the main exporters to China, the United States moved to the penultimate position, giving way to the first, in addition to the named, also a number of Asian countries. Actually, the policy of the Celestial Empire, which is aimed at the economic restraint of the USA, has contributed to the sharp increase in economic development and, subsequently, the expansion of the global commodity market was aggressive but well-conceived and correct (in the interests of the country. China is going to develop the technology market. It has alerted the main players and leaders in the world market, especially the USA due to the precedent: in 2012, the USA ceded leadership to China in world trade for the first time – $3.82 trillion and $3.87 trillion accordingly. And the trend is still urgent: since 2003, China’s trading volumes have risen sharply – if by the end of 2002, exports amounted to slightly more than $247 billion, and imports – to $210 billion, in 2017, it was more than $2.4 trillion and $2.1 trillion accordingly. Perhaps because of these “trade” reasons, Donald Trump recently announced a “war” to one of China’s largest telecom giants, the manufacturer of electronic devices for wireless networks and consumer devices Huawei Technologies Co. Ltd. (issued an order introducing a state of emergency in the country for the protection of communication networks). The official reason for the investigation is the violation of the US sanctions against Iran.
In addition, according to forecasts, economic expansion of China will continue to expand rapidly, occupying a dominant position in various sectors of the market – services, consumer goods, technologies, transport, etc. In the future, more resistance from other powerful players on the world economic map is expected up to the complete reformatting of political influence on the main regions of the planet.
What is the reason for this dramatic vision?
Advantages and disadvantages of Chinese philosophy
This is not about the Chinese philosophy itself, which is one of the most ancient cultures in the East and marked the beginning of numerous philosophical trends. It is about the modern economic ideology of the state and the developing of people’s outlook. Since ancient times, China has promoted the idea of returning (and capturing) the territories lost in different periods of the historical past. Such ideas are still supported in society. That is what we read in the Chinese history textbook for the 8th grade: “After the Second Opium War, the Russian Empire, when China was seized by the army of Great Britain and France, occupied Chinese territories with the help of force captured the lands of the north-east and north-west of China with an area of more than 1.5 million square kilometers in an insidious way.”
This story is a thing of the past. Naturally, primitive invading intentions are seen utopian in modern world realities. However, the idea itself remained latent, turning into a trait of a national character, becoming an integral part of national mentality. It has been transformed into an economic expansion under the motto “We are for peace in the world and business.” This motto can be slightly paraphrased “We are for business in a peaceful world.” It’s about Chinese business…
The state adheres to a policy of maximally promoting the entry of local enterprises into world markets. Special attention is paid to high technologies (in particular, artificial intelligence), the industrial and transport sector, software: China’s experts (and not only they) are seeing the future of development on Earth in general. Besides the interest in the cooperation of their own enterprises with advanced technology companies in Europe and America, the government promotes quality education for its citizens abroad mainly in the USA and Europe. Hundreds of thousands of young Chinese are studying in European universities, not only in the technical field but also in humanitarian. Ukraine is one of the countries chosen by students from the PRC.
The state has developed a program that supports farmers who buy agricultural land abroad. Russia, as the geographically most convenient region, ranks first in these plans.
So, in African countries, where local laws are loyal to buying land, China has invested more than $ 10 billion, and in Latin America – more than $25 billion.
Ukraine is among the priority regions in this context. In 2017, during the Chinese-Ukrainian business forum, Liu Jun, economic and trade adviser to the Chinese Embassy in Ukraine said that China has invested more than $7 billion in the development of the agricultural, energy and infrastructure sectors of our country.
However, virtually everywhere, Chinese farmers and entrepreneurs enter another country, they turn it into their raw material appendage.
UKRAINE AND CHINA: Excursus in the new history
For Ukraine, such a large market for potential exports, as well as the possibility of importing competitive goods and services (if compared with imports from Europe, as well as taking into account the sharp decline of imports from the Russian Federation in recent years), is of strategic interest. To understand this, it is worth turning to the closest history of the formation of relationships…
The relations in this vein have actually been adjusted since Ukraine declared independence, which China recognized on December 27, 1991, that is, a few days after the All-Ukrainian referendum. By the way, this happened even earlier than in some recognizable EU countries — France, Italy, Great Britain, Greece, Denmark…
Even before the official visits of the state heads, a number of documents aimed at the normalization of relations were signed (Joint Communiqué on the Establishment of Diplomatic Relations, January 1992; Joint Ukrainian-Chinese Communiqué, October 1992 and June 1995). The first meetings at the intergovernmental level (in the format of the exchange of state visits) took place in 1994-1995 between the then President of Ukraine Leonid Kuchma and the head of the People’s Republic of China Jiang Zemin. Two documents were signed: “Joint Declaration between Ukraine and the People’s Republic of China” (6.09.1994, the so-called ‘Kyiv’ one), and next year “Joint Declaration on the Development and Deepening of Friendship and Cooperation Between Ukraine and the People’s Republic of China” (04.12.1995, the so-called ‘Beijing’ one). The documents are rather declarative with the aim of recognizing each other as subjects of international relations (mutual confirmation of the territorial integrity and legitimacy of governments, the guarantee of peaceful coexistence, close cooperation at the ministerial level). This was the first major step in intensifying relations between countries at all levels. In 2001, the head of the People’s Republic of China, Jiang Zemin, visited Ukraine for the second time, which resulted in the signing of the “Joint Declaration on the Strengthening of Friendship and Comprehensive Cooperation in the 21st Century” (so-called ‘Kyiv’ one). In November 2002, Leonid Kuchma first personally visited China, where the counterpart “Joint Declaration” (so-called ‘Beijing’ one) was signed. In addition, already literally in six months, in April 2003, he makes the second visit. In September 2010, Viktor Yanukovych visited China (signing a number of important documents, in particular, “Joint Statement of Ukraine and the PRC on the comprehensive enhancement of friendship and cooperation relations” and “Main directions for the development of relations between Ukraine and the PRC for 2010-2012”). Next summer, the President of the PRC, Hu Jintao, visited Ukraine, which resulted in the signing of the “Joint Declaration on the Establishment and Development of Strategic Partnership Relations between Ukraine and the People’s Republic of China”. In 2013, in spite of the extremely unstable situation in Ukraine, the President headed to the People’s Republic of China again and signed the “Treaty on Friendship and Cooperation” between the countries and the “Joint Declaration on the Further Deepening of the Relations of the Strategic Partnership” (both documents dated December 5, 2013) as well as “The Program for the development of relations for 2014-2018”. Of course, many experts question the functionality of these documents of 2013, but whatever people may say, it shows serious intentions to develop relations further.
In addition, three other important agreements were signed at different times: on scientific and technical (April 1992), trade and economic cooperation (August 1992), as well as on the promotion and mutual protection of investments (May 1993).
In general, the current legal basis of the Ukrainian-Chinese relations includes about 250 documents, in addition, a number of contracts have been signed between state institutions and enterprises of both countries.
Another important fact is that China has received the largest number of visits by Ukrainian presidents among all the countries of the eastern region. Moreover, even if the EU members are taken into account, the PRC is probably one of the leaders among the countries that are well-liked by the leaders of Ukraine.
All the legislative levers exist, the state also seems to be conducive, the prospects for cooperation are enormous – we only have to work and work! However…
CHINA IS TESTING UKRAINE
Today, cooperation between our countries is a slow-moving process. There is a group of Chinese companies operating in Ukraine, but their actions more closely resemble a testing situation than a full-fledged business. By investing relatively small amounts in the agrarian sector, raw materials, and the IT market, they estimate the prospects and hypothetical degree of economic return. Maybe for China, Ukraine is a very convenient platform for a breakthrough to Europe? At one time, the Executive Director of the Chinese Trade Association, Ruslan Osipenko, wrote in his blog: “Ukraine is also beneficial for them geographically, as a springboard for entering the European markets.”
It is a paradox, but the fact: it’s very difficult to determine the exact amount of China’s investment in Ukraine. Domestic officials claim some figures, while the Chinese investors talk about others. An indicative case since 2017: after returning from Beijing, the Ukrainian delegation was puzzled, as they have been working with the Celestial Empire for a long time, and according to the Chinese Embassy, Chinese investments in Ukraine amount to $7 billion, but they didn’t know where this money was sent… Some experts suggest that Chinese “investments” exist only on paper in numerous agreements and memorandums signed over a period of nearly 30 years of relations. However, this is not quite true: Chinese investors tend to work quietly in Ukraine, so as not to attract too much attention, especially from the many corrupt and dishonest officials.
Even this $7 billion against the hundreds of billions that China invests annually abroad, looks rather scanty.
Contrary to expectations and convictions of domestic politicians, there are no noticeable shifts in the intensification of Ukrainian-Chinese relations. At the end of 2018, an Action Plan on Economic Cooperation was signed, and at the beginning of 2019, First Deputy Prime Minister of Ukraine – Minister of Economic Development and Trade of Ukraine Stepan Kubov met with the Deputy Prime Minister of the State Council of the People’s Republic of China, Liu He, on this and other issues. By the way, no project initiated between the countries has been completed before: the introduction of a free trade strategy between our countries; project “China – Motor Sich” on the release of “Dreams”; modernization of Ukrzaliznytsia locomotives; construction (according to Chinese technologies) of coal gasification plants…
So, contrary to the expectations and assurances of politicians, at the end of the whole China-Ukraine investment activity was realized in that on April 16, 2019, Stepan Kubov signed an agreement, under which Ukraine will receive technical and economic assistance in the amount of $29.7 million… Not a lot. And not an investment.
In general, the implementation of joint projects has shown that China is interested not so much in investing in Ukraine, but in lending to joint projects. However, under one condition that Chinese equipment will be used, Chinese technology will be used, Chinese workers and contractors will be involved. Of course, such economic relationships are not always economically not mutually beneficial.
The situation in trade turnover is not better. Though according to the export strategy of Ukraine, the Celestial Empire is second in the list of priority countries for export, the trade turnover between them in 2018 reached only $8 billion. At the same time, Ukraine sold goods to China worth almost $1 billion but imported five times more from China.
In retrospect, the amount of trade turnover is relatively insignificant, there were no significant leaps during the last 10 years and for Ukraine, it always had a negative balance (Fig. 1).
For comparison: the trade turnover between the PRC and the Russian Federation exceeds $ 80 billion, with the EU – more than $ 500 billion, the USA – more than $ 600 billion. However, almost all countries have a negative trade balance, but in China, it is a positive one.
If we analyze the trade between Ukraine and China in a commodity segment, then our country mainly supplies mineral products (about 42%), vegetable products (within 23%), animal fats, vegetable oils, and products of their processing (more than 23%).
China imports cars, mechanical appliances, electrical equipment to Ukraine. This article in the total mass of goods is more than 35%. Textiles and textile products account for an average of 11%, metals and products from non-ferrous metals – 10%, plastics and products from them – about 8%, chemical products – 7%.
In this section of trade, the real picture of economic relations is: for China, Ukraine is still the sales market for its products (high added value), and at the same time – the market for the purchase of raw materials and semi-finished products (low added value).
PROBLEMS, SOLUTIONS, PROSPECTS
The revision of the agreements reached the state level is now urgently needed.
This presupposes, first of all, clearing the relations from the corruption. Cleaning of all structures involved in the establishment of economic cooperation between countries. Alternatively, removing them. Corruption is the main, if not the key, obstacle to effective economic cooperation. This is precise because of the corrupt harassment and abuse that many treaties and memorandums, contrary to their really good intentions, remained only on paper, and a few implemented projects still raise questions. To confirm this, you can quote the words of Ambassador of China to Ukraine Du Wei, that he said two years ago in an interview to the KyivPost: “Chinese investors are interested in the Ukrainian market, but this remains only an intention.” Then the ambassador diplomatically softened the hard truth, encouraging that to improve the relations “it is necessary to solve a number of issues and carry out a lot of work.”
Despite the significant prospects of the Chinese consumer market, Ukrainian entrepreneurs are not actually aware of the possibilities of developing their business in the PRC. Therefore, many of them, not possessing sufficient information, are afraid to enter the Chinese market. However, there are a number of very promising areas.
1. The agricultural industry itself from the processing of products to the manufacture of the finished products is the most promising in enhancing business relations with the Celestial Empire. China is a huge country with a billion people to feed. Ukraine is a country with the most productive lands, a temperate climate and developed traditions of agricultural activity. These two factors already indicate the prospects of developing this area of cooperation.
2. The current economic policy of China is aimed primarily at the development of high technologies and industries based on these technologies. At the same time, there is (and to a certain extent is maintained) a very high level of technological development, concentrated mainly in scientific institutes and laboratories in Ukraine. Previous attempts to somehow realize this potential met the government misunderstood or corruption and frank extortion from the scientific structures interested in financing their projects. The prospects of China’s investment in research and development in artificial intelligence (the PRC approved the strategy of AI development as a priority), as well as high-tech industries on equal terms, is also a very promising trend in the business between the countries.
3. In Ukraine, the machine-building industry, aircraft engineering, dual-purpose and military production are well-developed, and the development of appropriate technologies are at a rather high level. Economic sanctions against Russia, the traditional consumer of this commodity nomenclature from Ukraine, encourage us to look for new markets for finished products, as well as components and technologies. However, Ukraine and China have considerable experience in military-technical cooperation, which has been developing for many years. Its activation, still, in a new format already, can become an effective component of trade and economic relations between the countries.
Read the news in our app!
Google Play: https://play.google.com/store/apps/details?id=ua.com.grodas.ldaily&hl=ru
App Store: https://itunes.apple.com/us/app/ldail/?p=89234y/id1354384907?l=uk&ls=1&mt=8
World debt will reach $ 200 trillion, which is 265% of world product, but the debt crisis is not yet expected. This was reported by Reuters, citing the forecast of analysts of the international rating agency S&P Global. It is claimed that this year the debt-to-world debt ratio has risen by 14% as a result […]
Company representatives, who engaged in the design, construction and equipment for solar power plants, note a significant decline in demand for their services. This is due to instability of the industry and growing debts for “green” electricity. “We are talking about 1260 MW of RES generation that has been launched in the first three quarters […]
China, Australia, Japan and 12 other countries in the Asia-Pacific region have formed the world’s largest free trade area. The agreement was signed during the online summit of the Association of Southeast Asian Nations. We are talking about the creation of a free trade area called the Comprehensive Regional Economic Partnership (CREP). The following countries […]
German automaker Volkswagen will invest about 73 billion euros over the next five years in electrification, hybrid powertrains and digital technology, the company said in a statement following a meeting of the supervisory board. In particular, about 35 billion euros are planned to be spent on electric cars on battery power, about 11 billion – […]
Shares of Netflix fell after the company released a quarterly report on October 20 with only 2.2 million new subscribers. At the same time, over the last week, stock growth has resumed and since the beginning of the year, the share price of Netflix has risen by 59%. The company’s management and analysts cited the […]
According to the BBC, China has launched the world’s first 6G test satellite into space. It should demonstrate how well the experimental technology of the sixth generation network works. The satellite successfully entered orbit along with 12 other spacecraft after launching a rocket from the Taiyuan Cosmodrome in Shanxi Province. It is known that the […]
According to the National Bureau of Statistics of China, the country’s GDP grew by 4.9% year on year in the third quarter. China’s economy is recovering the fastest in the world from the COVID-19 pandemic – GDP decline by closing factories and quarantine in the first quarter of the year already fully compensated, and the […]
The largest Chinese Internet company Alibaba Group Holding Ltd. will acquire from Auchan Retail International shares of the largest Chinese hypermarket operator Sun Art Retail Group for $ 3.6 billion, according to the press release from Alibaba. “Alibaba is investing $ 28 billion ($ 3.6 billion) to acquire … 70.94% of Auchan Retail’s stake in […]
В Україні вже зібрали 11,8 млн. тонн зернових та зернобобових культур із загальної площі 3,5 млн. га, повідомляється на сайті Міністерства аграрної політики. Так, намолочено 8 млн. тонн пшениці (+4,2 млн. тонн за тиждень) з 2,3 млн. га (+1,1 млн. га), 3,5 млн. тонн ячменю (+1 млн. тонн) з 1,73 млн. га (+0,92 млн га) […]Next
Apple employees opposed the corporation’s new rule, which requires them to work from the office at least three days a week from the fall. Verg, citing a letter from employees to the head of the corporation Tim Cook, reported this. The letter refers to the refusal of many employees to return to the office. The […]Next
If re-rigid quarantine is introduced, the Ukrainian economy will lose three times less than during the spring lockdown. This was stated on ICTV by the adviser to the head of the President’s Office Tymofiy Milovanov. According to him, the second lockdown will be easier, because during this time the economy has adapted to the conditions […]Next
The deal on the absorption by the US company Liberty Media group of companies Formula 1 is currently closed. Liberty Media has confirmed the completion of the absorption of the prestigious auto-racing Formula 1, and said that a new CEO position will head Chase Kerry. He succeeds his predecessor, Bernie Ecclestone. It became known from […]Next
On Wednesday, Boeing announced the financial results of the 2nd quarter, which ended on June 30. Boeing Management noted that the company makes “tough, but necessary steps to adapt for a new realities of market.” Aviation giant is experiencing perhaps the most difficult times in its history, faced with a double crisis. On the one […]Next
Mondelis Ukraine company (Kraft Foods Inc.) has invested $ 9 million in the purchase of new technical equipment for Trostiyanetska chocolate factory and started export of its products in 12 EU countries. The company also plans to increase the quantitative measure of the supply on the European market and in the countries of the Arabian […]Next
In March, the American aerospace corporation Boeing delivered to customers 29 aircraft comparing to 20 in March last year. The company has maintained positive dynamics for the second month in a row, Reuters reported the day before. In the first quarter, Boeing delivered 77 aircraft against 50 a year earlier. Also in late March, the […]Next
Leaders of Ukrainian chemical holding Ostchem Holding AG appealed on December, 8 to the South City Court of Odessa region demanding to recover from the Odessa Portside Plant a debt owed to the company by force. On it informs Interfax Ukraine with reference to official sources. To confirm the legitimacy of this request, representatives of […]Next
Allseeds group companies challenged in court the decision of the Vizirskyi village council (Odessa region) on the allocation of land for the berths of the “Energo Products Co., Ltd.” company (Odessa) in the Yuzhny sea port. The Comintern District Court of Odessa region (included in Allseeds Group) decided to suspend the decision on the suit […]Next
Before the fall of the economy in the second quarter of 11.4% led to strict quarantine restrictions and declining demand, as well as reduced investment. This is stated in the report of the National Bank. “The main factor in the deepening decline in GDP was expected to be a reduction in domestic demand. It is […]Next
For the first time, the National Bank fined a collection company for violating the requirements of ethical conduct in settling overdue debts. This was reported by the NBU. “The National Bank, as a body that regulates and supervises the activities of non-banking financial institutions, has revealed a violation of the requirements of the legislation on […]Next
Facebook has begun merging Messenger and Instagram chats into a single correspondence system. The Verge writes about it. Reportedly, till August 14, many users of both iOS and Android devices in the Instagram mobile application began to receive notifications about the possibility of correspondence with friends who use Facebook. After the update, the usual Direct […]Next
The Antimonopoly Committee drew the line under the proceedings between the Ukrainian “daughter” of the German firm Rehau and its namesake – the Kyiv production company Rehau. Both work in the window market under the Rehau brand. By the decision of the AMCU the Rehau production company is obliged within a month to abandon from […]Next
The increase of the minimum wage in Ukraine from UAH 5,000 to UAH 6,500 in 2021 may increase the state budget deficit to more than 6% of gross domestic product. This is stated in the economic review of the World Bank. In addition, the increase in the minimum wage will increase the overall need to […]Next
Shares of Alibaba, up 35.7% since the beginning of the year but down almost 8% this week, rose 5.3% during trading on Friday after China’s largest public company announced second-quarter results financial year 2021, which ended in September. Alibaba’s quarterly report was preceded by news of the termination of the IPO of financial technology company […]Next
Johnson & Johnson plans to complete the third phase of trials of its single-dose vaccine against COVID-19 in mid-January 2021. Paul Stoffels, vice chairman of the executive committee, senior scientific expert at Johnson & Johnson said they plan to deliver to market 1 billion doses. “We are in the middle of the third phase of […]Next