China-Ukraine Relations After Crimea

China is looking to Ukraine to be a “Gateway to Europe,” for its One Belt One Road (OBOR)　project. For its part, Ukraine has signed agreements with the Development Bank of China and is increasing the share of Chinese investment in Ukraine. However, as Ukraine further distances itself from Russia, the ongoing political situation involving Crimea and Russian involvement in eastern Ukraine has further complicated China’s relationship with Ukraine (Xinhua, May 21). Ukraine’s desperation for outside investment as it seeks to decrease its dependence on Russian energy, commodities and purchases of military equipment compounds the issue. As Ukraine untangles itself from the Russian economy, Chinese investors and opportunities such as the One Belt One Road and Asian Development Bank are receiving greater precedence (Eurasia Daily Monitor, April 3). Chinese political support, both tacit and overt, for Russia’s activities has left Ukraine with an uncomfortable dilemma: Should it continue to pursue Chinese investment despite China’s support for Russian activities?

Strategic Economic Partner

Ukraine is China’s third largest economic partner within the Commonwealth of Independent States after Russia and Kazakhstan (Ukrainian MFA, January 1, 2014). Its economic cooperation with China stretches from coal, which Ukraine deems a strategic commodity as it reduces energy dependency on Russia, to agricultural products and military equipment. Though the conflict in eastern Ukraine has complicated matters, Chinese investment is increasing. According to the protocol between the national Development Bank of China and the Ukrainian authorities signed earlier this year, China will open a credit line for a sum of $3.65 billion dollars to attract Chinese technology for the reconversion of Ukrainian plants functioning on Russian natural gas to Ukrainian coal, a task made even more important by the cessation of Russian gas deliveries in early July (Ukrainian Ministry of Energy and Industry [MEI], February 26th; Naftogaz February 2, China Daily, July 2). The framework of this program includes the development of a series of energy plants for the gasification of lignite and hard coal (MEI, February 28th).

Ukraine is doing everything it can to disengage itself from dependence on Russian energy by reducing the country’s energy consumption dependency through energy saving measures and, in particular, by employing coal rather than gas (Governmental Portal of Ukraine April 7, 2014). China, however, will not be able to further its commercial interests and invest large sums in Ukraine without taking a more conciliatory stand towards Ukraine over the Donbas conflict. Indeed, China has, until recently, openly privileged Russian political interests, helping Russia financially and blaming the West for its imposition of sanctions on Russia and ignoring Ukrainian interests (China Brief, February 20; Ukraine Press, March 7, 2014; Weekly Mirror, March 30th). For Ukraine’s part, is clear that it in Kyiv’s best interest to obtain credit and investment from China in order to modernize its agricultural and energy sector and make Ukraine a sustainable and viable state according to Western and international standards. However, the Ukrainian government cannot neglect some critically important issues, such as Chinese political, diplomatic, economic and even military support for Russia (TSN, May 20). The potential economic windfall of several projects and the desperation for new sources of capital, may incentivize the Ukrainian government to accept additional Chinese investment.

China’s New Silk Road Project

Key among these projects is the “New Silk Road,” part of Xi Jinping’s “One Belt One Road” development-focused foreign policy. From China’s perspective, building the infrastructure to better connect China and Ukraine holds not only economic but also strategic value, as it shifts the center of gravity of trade from the European Union and the West in general toward China. Ukrainian inclusion within the new Chinese Silk Road project would be a major economic boost, giving it an important and specific role as a transit country for Chinese goods to the European Union as an essential trade hub in Europe (Xinhua Online, July 29). This could also have the important political consequence of speeding up of Ukraine’s integration into the European Union.

At the same time, however, China has supported Russia politically and diplomatically on the grounds of China’s present geopolitical interests, providing critical support through abstention of China at the UN Security Council to prevent official condemnation of Russia. China clearly has no desire to distance itself from Russia economically. Earlier this year, China formally pledged to further reinforce strategic economic partnership with Russia (Weekly Mirror, April 28).

Ukrainian Public Opinion on China’s Role in Ukraine

This leaves the Ukrainian public in an unusual situation­–desperately needing foreign investment, while reluctant to embrace a country that has not acted as a political ally. Though it is easy to understand that Ukraine’s leadership and the Ukrainian media are understandably concerned, if not even resentful, of China’s political attitude towards the Ukrainian conflict, they understand that China’s position may change the balance of power between Russia and the West at the international level in this hard fought crisis. This especially true in the UN Security Council, where China abstained from a vote on the issue of Russian involvement in Ukraine, preventing an official condemnation of Russia as aggressor. China has instead repeated somewhat ambiguous statements on the necessary reestablishment of the territorial integrity of Ukraine on the basis of international law. Apart from these political aspects, however, Ukrainian mainstream press seems to concentrate more on the wide economic opportunities, such as IT and agricultural cooperation, between Ukraine and China than on serious political disagreements and differences of point of view between Beijing and Kyiv (European Truth, June 2; Ukraine MOFA).

The dilemma China presently faces stems ultimately from the fact that, on the one hand, China’s commitment to international law principles allow it to maintain peace and order in the world and also to better protect core-specific Chinese internal interests (such as Tibet, Xinjiang and Taiwan); but on the other hand, certain realpolitik calculations allow China, by supporting Russia, to obtain clear cut political and economic gains from the Russian-Ukrainian conflict (Xinhua Online, December 19, 2014). China’s strategy of strategic ambiguity stems from this set of principles.

Ukrainian Press Assessment of Chinese-Russian Relations

The Ukrainian press recognizes that China’s support for Russia is conditional. Ukrainian press reports assess the Russian–Chinese partnership more as one of convenience than as a real alliance. This is because both countries are bound by provisional mutual interests: the supply of convenient and reliable energy resources for China–not under a potential threat from the mighty naval power of the United States–and the search for a new customer for its energy resources for Russia, as well as a political partner that may help it mitigate the effects of sanctions imposed by the West that are choking its economy. But the Ukrainian press shares the opinion that the Russian-Chinese partnership cannot escape several serious underlying problems in their relations that affect their penetration into energy-rich Central Asia and along the sparsely populated Russian regions of the Far-East, where the pressure of the Chinese population is continuously on the rise (Mirror Weekly, November 11, 2014). Ukraine can therefore expand its convenient economic cooperation with China, provided it does not ask Beijing for an official condemnation of Russia’s actions in eastern Ukraine, but at the most, a general statement on the necessity to resort to international law and territorial integrity for the reestablishment of peace (Ukraine Press May 6, 2014).

Regarding Russia’s annexation of Crimea, the Ukrainian press expressed a different point of view: that China is generally worried about a breach of the territorial integrity of a sovereign State, but even more about holding a referendum to decide on the autonomy or independence of a region (which would complicate Chinese policy toward Tibet, Xinjiang and Taiwan). On this occasion, China praised Russia’s unbending attitude towards the West over the Crimean issue, but also expressed the opinion that Moscow’s unbending attitude will bring difficulties in the dialogue with the West for the months and years to come (Ukraine Press, March 15; Ukraine Press, March 23, 2014; Ukraine Press, March 1, 2014). Furthermore, China expressed its deep mistrust of the revolution that took place in Kyiv and its preference for the status quo, indirectly or directly supporting Russian views that that denied the legitimacy of the ousting of the former President Viktor Yanukovich and consequently, the legitimacy of the new Ukrainian government.

China’s Diplomacy in the Context of the Ukraine-Russia Conflict

On these strategic grounds, Chinese leaders have decided to side diplomatically with Moscow in order to receive energy resources and high-tech weaponry from Russia. This puts China in a better position to roll back the “color revolutions” organized–in Russia’s and China’s perception–by the West and particularly by the United States. With Ukraine’s military production no longer going to Russia, China became an important export partner; China previously bought Zubr-class hovercraft from Ukraine and recently bought two Antonov transport planes from Ukraine–both key technologies for improving China’s air and sea transport capabilities (Global Times, April 9; Xinhua, May 8). From the Chinese point of view, however, this strategy also has serious weaknesses: leaders in Beijing understand perfectly well that supporting Russia and pro–Russian separatists may also have undesired consequences on would-be independent Chinese regions, such as Tibet or the western region of Xinjiang, which is inhabited by an restive Muslim ethnic minority (Censor.net, September, 18, 2014).

Conclusion

China’s ambiguous policies toward the Ukrainian conflict, while appearing to be contradictory to Western observers, has roots in China’s long-standing foreign policy principles, particularly non-interference (China Brief, March 6, 2014). China bases its commitment to international law and non-interference in the internal affairs of other countries–and to the territorial integrity of Ukraine–on the grounds of its own internal concerns and fear of disruption of the status quo by revolution (Ukrainian Truth, December 22, 2014). The question remains whether Ukraine can cooperate successfully with China and the West without estranging itself from one or the other. China must temper its relations with Russia, with whom China is also intensely competing with Russia in energy-rich Central Asia and along the thinly populated Russian-Chinese borders in Asia itself (Ukraine Press, May 21, 2014). China’s interests are directed at continuing economic cooperation with Ukraine as part of the OBOR, which will allow China to extend its commercial and geopolitical infrastructure project through Asia to Europe. China is also not interested, however, in losing access to American and European markets that it needs to continue to grow.