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TematicheCina e Indo-PacificoChina’s “carrot and stick” policy with Ukraine

China’s “carrot and stick” policy with Ukraine

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China’s efforts for geopolitical influence in Ukraine have increased in recent years. It is derived from China’s multifaceted interests in Ukraine which include its strategic geographic location, inheritance of high-end Soviet defence systems and technology. Besides, Beijing views Ukraine as an important logistic transit hub in its Belt and Road Initiative (BRI) to link China with EU markets.

Despite China’s growing influence on economic and defence-related cooperation with Ukraine following Russia’s annexation of Crimea in 2014, the Ukraine-China relations have gone through roller-coaster ride in the recent past, ranging from appeasing statements of political leaders on how they want to be in the good books of their largest trade partner to vexing China by sanctions against Chinese individuals and entities, aided by anti-China protests staged by Ukrainian public. The following developments reflect on the contours of bilateral relations in the recent past:     

Motor-Sich debacle 

It all started when China’s Skyrizon Aircraft Holdings surreptitiously tried to acquire a majority stake in the Ukrainian aviation firm Motor Sich in 2016 through a number of offshore companies. Located in the industrial town Zaporozia, Motor Sich is main manufacturer of engines and components for civil and military aircraft/helicopters. At present, Motor Sich is one of the world’s largest manufacturers of aviation engines as well as industrial gas turbine units. It supplies products to more than 100 countries around the world. In addition, the company repairs and maintains its equipment.

Ukrainian authorities later quashed (2017) the deal and froze 56% of shares on national security grounds. A year later Ukrainian Security Service (SBU) raided the headquarters of Motor Sich, claiming a planned takeover by a Chinese company represented an “enemy plot”. Since then, China, to its dismay, has been successively attempting to get the shares released and has filed lawsuits seeking billions of dollars as damage, with the latest figure standing at US$ 4.5 billion, at multiple locations including the Permanent Court of Arbitration in The Hague. 

The matter escalated to such extent that Ukrainian President Volodymyr Zelensky signed in late January 2021 a decree to impose sanctions for three years on several Chinese companies and its associates for adopting illegal acts to acquire controlling stake/shares of Motor Sich. A partial list of companies incude (i) Xinwei Technology Group Company Ltd.; (ii) Skyrizon Avation Industry Investment Company Ltd.; (iii) Skyrizon Aircraft Holdings Ltd.; (iv) Hong-Kong Skyrizon Holdings Ltd.; and, (v) Chinese individuals Wang Jing, Du Tao and Chen Hoishen. Wang Jing and Du Tao are reported to have links with the Chinese Communist Party and the PLA. Subsequently, a Ukrainian court ordered (March 19, 2021) seizure of the assets and all shares of the company. Interestingly enough, the US had blacklisted (January 14, 2021) ‘Skyrizon’ before Ukraine imposed similar sanctions, on account of the firm’s “predatory investments and technology acquisitions in Ukraine”.

Bickering over Crimean issue

Although China has neither supported nor criticised Russia’s annexation of Crimea, the visit (March 9-11, 2021) to Crimea by a Chinese business delegation to attend a symposium titled ‘China and Crimea: A New Vector of Export Partnership’ created a furore in bilateral relations. During a meeting (March 11, 2021) with the Chinese Ambassador to Ukraine Fan Xianrong, Ukrainian Deputy PM Olha Stefanishyna lodged protest against the Crimean visit of the Chinese business delegation. Calling China’s action as “unfriendly” and “undesired steps”, the Ukrainian Deputy PM noted that the move “grossly violated” the current Ukrainian legislation and underlined that such visits would have “extremely undesirable consequences” for the relevant foreign companies and their representatives. 

Later, the Chinese Foreign Ministry Spokesperson Zhao Lijian urged (March 15, 2021) Ukraine not to politicize the issue. He justified the visit by stating that some “Chinese companies, based on historically-established ties and practical needs, conduct exchanges and cooperation with Crimea on the basis of market principles”. Subsequently, the Chinese Foreign Ministry urged (March 25, 2021) the Ukrainian side to “safeguard the legitimate rights and interests of Chinese enterprises and investors in accordance with law and properly handle the relevant issues”.

Roadblocks in China’s success story in Ukraine

Beijing’s vaccine diplomacy in Ukraine was a lacklustre affair despite supply of medical equipment and medicines. Protestors in the Ukrainian town of Novi Sanzhary staged (Feb. 19, 2020) a protest against quarantine of Chinese nationals evacuated from Wuhan in city hospitals. The protestors blocked roads, hurled stones at buses transporting evacuees from China and engaged in violent clashes with the police. 

Later, a blow to China’s narrative on the origin of Covid-19 virus came from the Ukrainian security establishment when Secretary of Ukrainian National Security and Defence Council (NSDC) Oleksiy Danilov affirmed (March 2020) that Covid-19 had originated from one of the secret F4 laboratories in Wuhan, functioning since 2015. The Chinese Embassy in Ukraine had to refute the allegation by terming Danilov’s statement as “scandalous”.    

A general distrust of China within a section of Ukrainian society over China’s dubious intentions and expansionist mindset is also a major concern for the Chinese policy makers as anti-China sentiments are prevalent on Ukrainian territory. The latest example of rising distrust towards China is the protest (December 3, 2021) by a group of around 50 individuals belonging to various patriotic organisations outside the Chinese Embassy in Kyiv against China’s economic expansion efforts in Ukraine as well as against China’s oppressive policy against Taiwan. The protestors also demanded opening of Taiwanese Representative Office in Ukraine.   

It may be recalled that involvement of Ukrainian nationals in the Hong Kong protests and support from Ukrainian NGOs to the Taiwanese cause had become a headache for the Chinese government. The pressure was so much that the Chinese Embassy in Kyiv had tried to stall an exhibition (January 11-17, 2020) organised by the Kyiv-based Free Hong Kong Centre (FHKC), which also organised protests in the past outside the Chinese Embassy in Kyiv to express solidarity with jailed Hong Kong activists.

China’s machinations

Meanwhile, China has adopted the policy of “carrot and stick” with Ukraine by showering the latter with the promises worth billions of dollars of investment in infrastructure projects on one side and threatening to withhold the same on the other. 

China seems to have won over the Ukrainian political elite who do not shy away in responding positively towards China’s outreach to Ukraine. A number of Ukrainian politicians attended (July 6, 2021) a forum organised by the Chinese Communist Party in Beijing. In another development, the Chinese Embassy in Kyiv organised (July 2, 2021) an event to launch Ukrainian Version of Chinese President Xi Jinping’s book “Public Administration in China – (Volume I)” in Kyiv, which was attended by a number of Ukrainian officials and politicians. 

As indicated earlier, China has overwhelmed cash-strapped Ukraine with promising investment opportunities as the two sides signed (June 30, 2021) an Inter-governmental Agreement in the field of infrastructure development. As per the agreement, Ukraine will build its infrastructure with the help of preferential Chinese loans and the governments of both countries will do everything possible to support companies that join Ukrainian-Chinese infrastructure projects. The proposed agreement will pave the way for Chinese investment projects worth US$ 1.1 billion in priority areas such as railways, airports, seaports, communications, municipal engineering construction etc. 

China has also upped the soft power initiatives with an emphasis on cooperation in the education sector, in order to woo the young generation. The two sides approved (June 23, 2021) an Education Action Plan for 2021-23 for cooperation between Ukrainian cities of Kyiv and Chernihiv with Chinese counterparts Beijing and Dalian. Besides, an alliance of Ukrainian and Chinese Universities including 49 Ukrainian and 92 Chinese higher educational institutions has been created for closer cooperation in the field of education. China also plans to open new Confucius Institutes in Ukraine to further cement its ties with the Ukrainian youth.

China’s Covid diplomacy to court Ukrainian political elite through supply of Chinese vaccines and other medical provisions, despite huge resistance from within the Ukrainian populace, has earned dividends. The same was reflected during Ukrainian President Volodymyr Zelensky’s telephonic conversation (July 13, 2021) with his Chinese counterpart Xi Jinping, wherein he expressed gratitude to Jinping for timely supply of Covid-19 vaccine to Ukraine. Zelensky also expressed hope that Ukraine can become a bridge to Europe for Chinese business. 

Ukraine had initially concluded (2020) a deal with China on supply of 1.9 million doses of Covid-19 vaccines manufactured by the Chinese Sinovac Biotech, despite reservations expressed by various quarters over the questionable quality of the Chinese vaccines. The two sides signed (2021) another contract on supply of 5.325 million doses of Sinovac Covid-19 vaccines.

The second part of China’s “carrot and stick” policy is measures through which China has tried to arm-twist Ukraine, to toe the Chinese line.  The testimony of China’s “pressure tactic” and “blackmailing” against Ukraine came to light when Ukraine withdrew (June 24, 2021) from a statement on the human rights situation in Xinjiang at the UN Human Rights Council in Geneva, which it had signed earlier (June 22, 2021) alongwith 43 other countries. Though the Ukrainian Foreign Ministry did not clarify on the backtracking, it transpired that Ukraine had done so at China’s behest, which had threatened to stop the supply of Covid-19 vaccines, already ordered by Ukraine. 

There are other instances where China’s double standards with Ukraine are exposed, wherein despite assurances of a strategic partnership, China continues to take steps that directly or indirectly threaten Ukraine’s interests. Some of the examples are as follows:

  1. Holding of the exhibition “Crimea-China: let’s get acquainted” by Russia in China in December 2021.
  2. China’s condemnation (November 24, 2021) of US sanctions against Nord Stream 2 pipeline project despite Ukraine’s opposition to the Nord Stream 2 project. 
  3. The rhetoric of the Chinese state media towards small countries, whose stand contradicts Beijing’s position is quite revealing. In particular, after the recent opening of Taiwan’s Representative Office in Lithuania, the Chinese state-run English-language media Global Times published (Nov-Dec. 2021) articles warning that Lithuania would pay a price for its actions that challenge China’s sovereignty etc.

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