China Retains Position As Ukraine’s Top Trade & Potential Investment Partner

March 17, 2023 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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