Official Kiev says a lot about the “war with Russia”. This is manifested, in particular, decommissioning of the economic relations of the Ukrainian and Russian economies. However, while the government fought against the “aggressor”, they woke the creeping onset of another monster of the East — China.
Chairman of the Ukrainian State innovation financial-credit institution Vladimir Stavnyuk said Thursday that the largest investors in the Ukrainian IT-sector are offshore zone and the European Union. Thus, according to him, Kyiv expects Chinese investment in the Ukrainian IT-sector in 2017.
“I hope that in the near future actively in Ukraine, will invest in China,” said Stavnyuk.
Stavnyuk late with the predictions. After all, China has long been successfully investing millions of dollars in the Ukrainian IT-sector, and not only him.
At the end of 2015, Ukrtelecom has signed an agreement with China Development Bank (CDB) and manufacturer Huawei, which became main partners of Ukrainian operator on the modernization of its old copper telephone networks and the Internet.
As stated in the financial report of “Ukrtelecom” for 2016, the programme covers the period from 2016 to 2019. As a result telephony “Ukrtelecom” translate all conversations in IP telephony and increase the speed of Internet up to 50 Mbps. As stated in the report of the company, the total investment in the program will be approximately 4.9 billion UAH.
Moreover, the Chinese investors are little risk. The supply of expensive equipment of the largest Ukrainian Internet operator carries out China’s Huawei secured the equipment. Its cost, according to the agreement, is $45 million (about UAH 1.2 billion).
Another $50 million (1.35 billion UAH), “Ukrtelecom” has received a loan from CDB. Maturity in 2023, while as at 31 December 2016 the debt on this credit line is already almost $13 million (343 million).
According to the data published in the report “Ukrtelecom” for the year 2016 total amount of pledges has increased by 400 million UAH — to UAH 1.8 bn. The entire property of “Ukrtelecom” is estimated to be worth about 4 billion UAH.
It is obvious that the Ukrainian company is becoming more and more Chinese. The management of “Ukrtelecom” may not ignore the opinion of the actual owner of about half of the assets of the company.
In the very near future the Chinese can formalize their ownership rights, by entering the capital of the company owned by Rinat Akhmetov.
At the end of 2016, the Chinese company CNBM has completed the registration of ownership of the 10 largest solar power plants in Ukraine with total capacity of 267 MW. This was stated by Junji Chen, CEO of Chinese CNBM New Energy Engineering Co., Ltd.
Commenting on the purchase of a Ukrainian company “Neptune solar”, he said that it was the last transaction for registration of ownership 10 solar power plants received for debts, while the rights to all of the other nine stations were decorated earlier.
“Overall, we invested about $1 billion in investment and Finance, including in the form of commodity credits. More than 168 million Euro was converted to capital of 10 solar plants.
Acquisition of control over these assets was completed in exchange for the repayment of irrevocable and besaratinia debt for that amount for commodity transactions for the supply of equipment,” said Chen.
The scheme is identical to that used in the “Ukrtelecom”: supplied hi-tech equipment, and this equipment was vital. After the Ukrainian company could not pay for it, it became the property of the Chinese Corporation.
This scheme allows the Chinese to protect themselves from financial fraud. It is possible because China produces high-tech equipment, unique by its price parameters. To replace it, but only at a much greater price.
Meanwhile, technological China’s intervention in Ukraine can receive quality development.
As the Director of the international Bleyzer Foundation Oleh Ustenko, in the short term, a strengthening of the Chinese yuan relative to the dollar under US pressure. This will make it unprofitable Chinese exports, and China is now looking for a way out of this situation.
One option may be the opening production in Ukraine. This is beneficial for two reasons: first, the average salary in Ukraine is about two times below the average wage in China, and secondly, Ukraine has an FTA with the EU that will allow made in Ukraine Chinese goods are much easier to enter the European market.
“So why would a Chinese businessman to save 10% on import duties, but still on the cheap labor of Ukrainians and not “move” here… He’s going to start very actively to do in the near foreseeable future,” the economist said in comments Golos.ua.
Interest in the development of production in Ukraine at the end of last year it was expressed by the Chairman of the International chamber of Commerce of the silk road (SRCIC — Silk Road Chamber of International Commerce) Lu jiangjun. According to him, China has already made its proposal, and now the ball is on the side of Kiev.
“We see that the investment climate in Ukraine is improving, to improve relations between Ukraine and China. We hope that we will have the opportunity to participate in the industrial parks to attract investments from China through the Chinese chamber of Commerce. We provided our comments and our plan of cooperation on industrial parks to the Ukrainian side. The Ukrainian side is in the process of their study. Waiting for an answer,” he said.
The lü Jianzhong stressed that China has a very large interest in the development and creation of industrial parks in Ukraine.
Not less of IT-sector Chinese people are interested in Ukrainian traditional energy.
At the end of 2012, Naftogaz agreed to attract from the State development Bank of China (China Development Bank Corporation) loan of $3.6 billion for 19 years to implement the program of substitution of consumption of natural gas to Ukrainian coal. This line of credit Ukrainian company has not used so far, but did not rule out getting the money from their plans.
In 2015, the “Naftogaz” submitted to the Ministry of economic development of four of the investment proposal under this line of credit. In particular, the project of modernization of individual heating systems in private homes of low-income consumers, two projects for construction of thermal power plants in Kyiv and Lviv region, as well as the purchase of drilling and ancillary equipment to increase the gas production of the company “Ukrgasdobycha”.
In June 2016, the Ukrainian holding appealed to Chinese partners with a request to extend the period of availability of credit. At the end of August 2016, the China development Bank extended the availability period of this loan for the sample of funds “Naftogaz” to 25 December 2017.
Most likely, the scheme is the same as with solar power plants and “Ukrtelecom”. “Naftogaz” gets the trade credit, where collateral is expensive equipment. In the case of non-payment on the loan, the Chinese side gets control of the assets of the company.
Under President Viktor Yanukovych has been issued a credit of $3.6 billion According to the signed agreement, Ukraine undertook to supply grain to China. For the fulfillment of Ukrainian commitments meet the state enterprise “State food and grain Corporation of Ukraine” (SFGCU).
Within six months from July 2014 to January 2015, the Ukrainian state Corporation was supposed to supply the Chinese side more than 3.3 million tons of grain, including 1.1 million tonnes of maize, 1 mln tonnes of wheat, about 0.8 million tons of barley. About half of this amount needed to ship before the end of October 2014 and the rest during November of the same year.
On the Chinese side, by the beginning of November, the Ukraine has managed to fulfill only 1 of the 19 contracts signed, putting only 65 thousand tonnes of maize instead of the required more than half a million tons. Where did the first tranche of the Chinese loan of $1.5 billion — is unclear.
While the international courts were dismantling the first part of the loan, the second was blocked. In this second installment is not monetary, and the commodity — the Chinese plant protection products, equipment, grain Elevator equipment. It all had to go to the construction of plants for the production of biodiesel and processing of corn.
According to recent reports, China and Ukraine reached a compromise on the grain loan. Agreed procurement plan for 2017 and forward programme of sowing of winter grain. Kiev has also committed itself by 2020 to acquire the funds received 3 thousand grain cars to create its logistics Park.
The Chinese investors intend to buy SFGCU in the process announced by the Cabinet of Ministers of privatization. They hope to get their hands on linear and port elevators, mills, feed mills and cereal plants.
The land issue
In 2013, it became known that China is going to invest in 3 million hectares of agricultural land of Ukraine. At the same time, Ukrainian media reported about the agreements between the state company of China Xinjiang Production and Construction Corps and Ukrainian company KSG Agro. The alleged contract was for the lease of 100 hectares of land.
In December 2016 between the Ukrainian agrarian Confederation (UAC) and the Chinese trade Association signed a Memorandum of cooperation, which gives Chinese businesses access to the latest information on Ukrainian agriculture.
If Ukraine will be introduced the agricultural land market, the Chinese will be able to capitalize on these data for the purchase of Ukrainian black soil.
The real war
Kyiv authorities actively resist Russian influence on the Ukrainian economy, for this destroyed high-tech industries dependent mainly on Russian clients — missile, helicopter, naval architecture.
There has been talk about European integration, but in reality the Ukrainian business doing everything possible not to allow Western investors to the lucrative Ukrainian assets. This strongly inhibited the privatization of such companies as the Odesa port plant.
And at this time Georgia-Pacific comes to China. Its loans and investments have exceeded all of the IMF loans with $3 billion from Russia. While risks are minimal as the loans are given the goods under pledge of the goods.
In addition, their plans include the construction of high-tech enterprises in Ukraine in order to enter the European market. High level of localization is not necessary — just screwdriver Assembly.
The land market, when he entered, too, will face the introduction of Chinese capital. In parallel, bought up the remnants of technology, Ukraine inherited from the USSR. The last case — selling complete technical documentation of the world’s largest transport airplane an-225 “Mriya” China airspace.
While the Ukrainian authorities are fighting “Russian aggression”, for the country store silent struggle of a foreign state. Apparently, this war China is in the lead, having a clear strategy and considerable resources.
In particular, China has created a Fund of 10 billion Euro for investments in Eastern Europe. Fund established on the basis of the Chinese holding company is a Sino-CEEF, designed to strengthen cooperation between China and the EU.
The growth of Chinese influence in Ukraine, looks inevitable. Ukrainian business will be displaced Chinese, respectively, and the political influence of China in Ukraine will grow.
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