The Ukrainian-Chinese relationship was first established more than a hundred years ago and has undergone significant evolution from socio-political interaction to stable trade and economic cooperation in the modern world. It has seen rises and falls, declines and revivals, but it has never disappeared entirely.
Modern China appreciates an independent geopolitical and foreign policy course aimed at broad cooperation and peaceful coexistence. China strictly adheres to the five principles of peaceful coexistence, promoting friendly relations with all countries. The People’s Republic of China opposes hegemonism and does not strive for hegemony itself, taking responsibility for the unconditional observance and protection of its principles of fairness. Chinese diplomacy not only has certain principles but also firmly adheres to established rules.
The People’s Republic of China recognized Ukraine as an independent state on December 27, 1991, and diplomatic relations were established on January 4 of the following year. The Chinese Embassy in Ukraine opened in 1992 in Kyiv, and only in March of the next year did Ukraine open its embassy in Beijing. Cooperation between the two countries developed gradually, and in August 2001, Ukraine opened a Consulate General in Shanghai, followed by the opening of a Chinese Consulate General in Odesa in 2006.
From the early days of Ukraine’s independence, its relations with China developed quite dynamically and mutually beneficially, with the geopolitical factor playing a crucial role. Both countries are located in the Eurasian region, at the crossroads of major regional trade routes.
Geographic and socio-economic factors have significantly defined the role and position of Ukraine and China not only in Eurasia but also in the global geopolitical context. The main factor affecting the relationship between the two states is a certain compatibility of their economies and technical standards in many areas of economic and social life.
There have been no serious contradictions between the two countries, nor could there be any. Furthermore, in 1994, official Beijing, after some short deliberations, joined the Budapest Memorandum, becoming, along with the United States, the United Kingdom, France, and Russia, a guarantor of Ukraine’s security following its unilateral renunciation of nuclear weapons.
The contractual basis of bilateral relations consists of 184 documents. The most important of these include:
- Agreement between the Government of Ukraine and the Government of the PRC on Trade and Economic Cooperation dated August 8, 1992, regulating relations between the two countries, establishing the most-favored-nation regime in the field of tariffs on export and import goods;
- Agreement between the Government of Ukraine and the Government of the PRC on Scientific and Technical Cooperation;
- Agreement between the Government of Ukraine and the Government of the PRC on the Promotion and Mutual Protection of Investments;
- Treaty of Friendship and Cooperation between the PRC and Ukraine.
Additionally, on October 31, 1992, to develop trade relations between the governments of Ukraine and China, an Agreement on the Establishment of the Ukrainian-Chinese Intergovernmental Commission on Trade and Economic Cooperation was signed, with main tasks as follows:
1. Comprehensive review of measures to further expand bilateral cooperation;
2. Checking and monitoring the implementation of relevant agreements on bilateral trade and economic cooperation;
3. Development of proposals by both sides to promote the sustainable development of trade and economic relations;
4. Effective resolution of issues in the development of Ukrainian-Chinese trade and economic activities.
On April 20, 2011, this Commission ceased its activities and was replaced by a new Commission on Cooperation between the Government of Ukraine and the Government of the PRC.
The main direction of its activities became trade and economic cooperation, with the goal of enhancing the efficiency of Ukrainian-Chinese cooperation and ensuring bilateral interaction.
At the end of the 20th and the beginning of the 21st century, Ukraine’s largest exports were metallurgical products, accounting for 58%, while raw materials predominated in imports. Since 2005, Ukraine-China trade balance has become negative, caused by the raw material structure of Ukrainian exports and high competition with quantitative and qualitative limitations.
During the period 2005-2009, the median trade balance was -$1.8 billion, with export growth rates outpacing import growth by 19% and 11%, respectively. Most exports were agricultural and metallurgical products. In the import structure, the share of high-tech products increased from 2005 to 2009.
Nevertheless, in implementing a geopolitical concept based on balancing between Russia and the West and playing on contradictions between them, the Chinese direction was not a priority in Ukraine’s international course.
In 2010, efforts were made to revitalize Ukrainian-Chinese bilateral cooperation, with relations formalized as a strategic partnership and cooperation, including in the investment sphere.
At that time, China proposed to Ukraine:
1. Strengthen mutual trust and support as the political foundation of the strategic partnership between China and Ukraine;
2. Promote pragmatic mutually beneficial cooperation;
3. Effectively strengthen the material basis of the strategic partnership;
4. Expand and deepen pragmatic cooperation in the fields of trade, economy, investment, new high and information technologies, minerals, energy, and agriculture;
5. Significantly enhance the level of bilateral Chinese-Ukrainian business cooperation by prioritizing large projects;
6. Fully expand humanitarian exchanges, strengthening the social foundation of Chinese-Ukrainian relations;
7. Activate effective cooperation between the two states in international and regional affairs, greatly expanding the multilateral basis of Chinese-Ukrainian relations.
In 2010, bilateral trade reached $7.73 billion, 33.8% higher than in 2009. In 2012, China even became the leading trade partner of Ukraine in the Asia-Pacific region.
Exports of goods and services from Ukraine to China, according to Ukrainian State Statistics, in 2012 reached $1.858 billion, down 17.6% from the previous year, with exports comprising mineral products (80.9%), machinery, equipment and mechanisms (4.5%), and fats and oils (4.0%).
Ukraine’s imports from China amounted to $7.924 billion, an increase of 26.1% over the previous year in categories such as machinery, equipment, and mechanisms, which made up 36.3% of total imports, textiles and related products (11.0%), base metals and products (8.5%), footwear, headgear, and umbrellas (8.1%), plastics and rubber (7.1%). Ukraine’s trade turnover with China in 2012 amounted to $9.783 billion, with a negative balance for Ukraine of $6.66 billion.
By the end of 2012, trade turnover between the two countries exceeded $10 billion, with plans for it to triple by the end of 2013.
From 2010-2013, the trade balance with China remained negative, with a median of -$4.6 billion. During this period, there was an increase in the imbalance between exports and imports, due to a drop in raw material export prices amid global commodity market conditions. Additionally, there was a sharp rise in the import of technological products from China.
From 2009 to 2014, Ukraine ranked third in terms of arms supplies to China, as Kyiv actively supplied engines for Chinese aviation. Simultaneously, there were plans to develop a joint strategy for future cooperation in trade, economic, space, cultural, educational, agricultural, and scientific-technical areas.
In the autumn of 2013, during a series of visits to Central and Southeast Asian countries, Chinese President Xi Jinping introduced an initiative for the revival of the “Great Silk Road” in the 21st century. The primary goal of the “One Belt, One Road” initiative was to establish and deepen ties between the countries of Asia, Africa, and Europe, while elevating mutually beneficial cooperation to a new level among all nations involved. This event drastically changed Ukrainian-Chinese relations, with Kyiv continuing to hold onto hopes connected with China’s “One Belt, One Road” initiative.
China has long needed alternative routes for distributing its products. It has established sea routes connecting China’s coast through the Malacca Strait, the Indian Ocean, the Suez Canal, the Mediterranean Sea, and the Strait of Gibraltar to major ports worldwide, such as Singapore, Hamburg, and Rotterdam. Ukraine’s advantages lie in its geographical location near the EU and at the crossroads of North-South and West-East transport routes. Kyiv is positioned to extend the Mediterranean route to the Black Sea, through the Bosphorus and Dardanelles Straits, to the port of Istanbul and on to Odesa.
In 2013, agreements were reached between China and Ukraine for cooperation in implementing the “Economic Belt of the Silk Road” project, which included a program to create an Economic Development Zone in Crimea. Plans included building a deep-water port in the Saky district, reconstructing and thoroughly developing a marine fishing port and high-tech industrial zones in Sevastopol. The parties agreed in the near term to build an airport, shipbuilding docks, an oil refinery, a liquefied natural gas terminal, educational and recreational centers in Crimea. The project was planned to be implemented from 2014 to 2018.
On December 5, 2013, an Agreement on Friendship and Cooperation was signed between the two countries, embodying the main foundations for the development of the strategic partnership and cooperation between Ukraine and China. Priorities for developing effective cooperation were agreed upon on both bilateral and multilateral levels. At the same time, a Joint Declaration was signed to further strengthen strategic partnership relations, containing agreements reached between the parties regarding the development of future relations, primarily trade, which is of strategic importance to Ukraine.
Although Ukraine was the first European country to declare its support for Chinese initiatives at the highest level, the events in Ukraine have thus far limited its participation in this project to a mostly declarative level. The tumultuous and tragic political events of 2014 in Ukraine changed the dynamics of cooperation between the two states.
Firstly, there was a suspension of bilateral trade relations, and according to 2014–2020 data, they almost came to a halt. Secondly, while Ukraine has a significant level of imports from China, these are not accompanied by increased investment. Thirdly, Ukrainian investments in China are virtually absent.
In 2014, China demonstrated caution in its relations with post-revolutionary Ukraine. Over the next several years, Ukrainian-Chinese trade relations gradually reactivated.
The period from 2014-2018 was marked by a slowdown in bilateral trade, with export growth at an average of -5% and import growth at 9% per year. Meanwhile, the median intergovernmental trade balance in goods reached -$2.85 billion. From 2019-2021, Ukrainian exports to China grew significantly, doubling during the global pandemic, with an average annual import growth rate of 9%.
Since 2016, relations between the two states have slowly returned to their previous level, as evidenced by the gradual increase in trade turnover. A major event in restoring relations was a 2017 meeting of the Ukrainian-Chinese Intergovernmental Commission, where agreements were reached on attracting Chinese investments amounting to $7 billion.
Currently, in terms of trade turnover, China ranks second among all countries globally, with its share in Ukraine’s foreign trade turnover in 2017 being 8.28% of the total turnover in 2016 (8.62%). According to Ukrainian State Statistics, in the same year, trade turnover with China reached $7.7 billion, an increase of 17.9%. Exports were limited to $2.4 billion, growing by 11.3%, with high demand for processed fat and vegetable oils (23.49%), agricultural products (23.76%), and minerals (42.57%).
Simultaneously, imports from China amounted to $5.6 billion, up by 20.5%. At that time, imports of machinery, mechanical appliances, and electrical equipment grew (35.53%), as well as textiles (11.38%), non-ferrous metals and products (10.90%), plastics and products made of it (7.93%), chemical products (7.33%), various industrial products (7.13%), and footwear, headgear, and umbrellas (4.86%).
In 2018, bilateral trade relations increased, but the trade balance remains negative for Ukraine.
During this period, Ukraine’s negative trade balance was $3.6 billion. In the first 11 months of 2018, Ukraine’s trade turnover with China was $8.82 billion, exceeding the entire trade turnover of 2017 by $1.1 billion, aligning with Ukraine’s export strategy for 2017-2021. By then, China had moved to second place in the list of priority markets for Ukrainian exports globally. Therefore, despite the events that occurred in and around Ukraine since 2014, trade with China remains strategically important for Ukraine’s development.
Starting in June 2020, container trains began operating between China and Ukraine, and by the end of 2021, 65 trains had arrived in Ukraine, carrying high-margin imported goods as part of the China-Europe international freight rail transport system.
The route (Ukraine-Georgia-Azerbaijan-Kazakhstan-China) has both advantages and several weaknesses, including:
1. Outdated equipment in seaports;
2. Bureaucratic delays in document processing;
3. Complexity of customs procedures with European Union countries;
4. High maintenance costs for merchant ships in ports;
5. Lack of quality roads for connecting to EU countries.
As of 2020, China was Ukraine’s leading trade partner in terms of trade turnover. China exported the most goods to Ukraine — $8.3 billion, followed by Germany with $5.1 billion. Ukraine’s main export market was also China, with exports of $7.1 billion, followed by Poland with $3.3 billion. Total trade turnover between the two countries in 2020 was $103.4 billion, down $7 billion from previous years.
In this context, a critical indicator for Ukraine is the growth rate of exports. The highest values in 2019 were recorded for ferrous metals, seeds, and fruits, with respective increases of 1820% and 6098%, and in 2020 – 491% and 103%.
Negative values were shown for products such as electrical machinery, equipment, and flour-milling industry products. During this period, agriculture stood out in export and import activities. Trade turnover for the first half of 2020 reached $2.7 billion, with exports amounting to $2.4 billion, primarily consisting of corn, sunflower oil, and sunflower meal.
By 2021, bilateral trade volumes in services totaled $387.2 million. Ukrainian services accounted for $88.5 million (-28.7%), and Chinese imports were $298.7 million (+51.5%). For this period, Ukraine recorded a negative balance of $210.2 million. Ukrainian customs then reported that trade turnover between the two states reached $18.98 billion, with exports at $8 billion (11.8%) and imports again exceeding $10.98 billion (15%). As a result, China became Ukraine’s largest trade partner, accounting for 13% of trade turnover.
In the first half of 2022, global prices for all energy resources, some food products, and grain crops surged. According to official IMF analysis of global markets, prices for raw materials rose by 19.1% from February to August 2022, with energy resources up 129.2%. At the same time, prices for agricultural products fell by 5.4%, precious metals by 6%, and non-precious metals by 19.3%.
In March 2022, corn prices rose sharply to $364 per ton, then gradually decreased, reaching $290.3 per ton by March 2023. In March 2022, sunflower oil prices rose to $2,361 per ton but gradually declined by 54% due to weak demand, reaching $1,075 per ton in March 2023.
In April 2022, due to the sharp rise in prices for metals, minerals, and ores, the index for this group reached 232 points. This trend began to shift in May 2022, and by March of the following year, the index had fallen to 190 points. However, in March 2022, iron ore prices rose to $152 per ton due to reduced production in Ukraine and regional logistical barriers. Additionally, in May 2022, the food price index peaked at 159.2 points but fell to 135.6 by March of the following year.
These price fluctuations were caused by the war in Ukraine, the Black Sea Grain Initiative, climate change conditions, and the sharp rise in fertilizer costs. According to the UN, the Black Sea Grain Initiative facilitated the export of more than 32 million tons of Ukrainian food to 45 countries, with China receiving 8 million tons of grain under this initiative.
According to the State Customs Service of Ukraine, China became Ukraine’s second-largest trade partner in 2022, after Poland. Its share of Ukraine’s trade was 10.7% ($11.15 billion), with exports at 5.6% ($2.47 billion) and imports at 14.6% ($8.68 billion). At the same time, compared to 2021, total trade volumes fell by 41.3%, with exports down by 69% and imports by 21%. In 2022, raw materials and products derived from them accounted for about 92% of Ukraine’s exports to China. In that same year, exports of metallurgical products decreased by 66.5%, and ores by 61.7%. The International Grains Council reported that Ukraine’s grain production fell by 29% in 2021 and 2022, with further declines expected.
In 2023, bilateral trade turnover amounted to $12.8 billion (+15.3%). Ukrainian exports to China were $2.4 billion (-2.5%), while imports from China reached $10.4 billion (+20.4%). Naturally, the trade balance was negative for Ukraine, with a deficit of $8.4 billion.
In July 2023, the seventh meeting of the Ukrainian-Chinese Subcommittee on Trade and Economic Cooperation took place, defining conditions for opening new product categories for export from Ukrainian enterprises. These included flour, peas, animal feed, blueberries, honey, poultry meat, and fish products.
At that time, around 1,000 Ukrainian enterprises and farms had the right to export their products to China, primarily frozen berries (1,011 enterprises), corn (227), milk and dairy products (35), soybeans (55), oilseed meal and pulp (48), beef (6), and barley (51).
According to the State Statistics Service of Ukraine, trade turnover for the first 10 months of 2024 amounted to $92 billion, growing by 25.64%. Exports reached $34.6 billion, and imports amounted to $54.7 billion.
The top three Ukrainian exports included food products ($20.3 billion), metal products ($3.8 billion), and machinery and transport equipment ($2.9 billion). In the structure of food exports transported via Black Sea ports, grains accounted for 73%. This led Ukraine to rank third and fourth globally in exports of corn, rapeseed, and grain. Additionally, export duties amounting to 251.7 million hryvnias were paid into the budget.
The top three imports included machinery, equipment, and transport ($20.3 billion), chemicals ($9.3 billion), and fuel and energy products ($8.7 billion). Taxable imports amounted to $47.4 billion or 83% of total imports, while imports from China during this period reached $11.6 billion.
Following the signing and ratification of the Association Agreement with the EU, Ukraine has the potential to become a bridge between Europe and Asia, which is extremely beneficial for Ukrainian-Chinese relations, especially in the context of reviving the Great Silk Road. Ukraine’s current aspirations and practical steps to establish close and mutually beneficial relations with China do not impede its European integration.
At present, Ukraine and China have every opportunity to realize significant potential, deepen cooperation, and form a joint stance to effectively address crucial issues in Ukrainian-Chinese relations. However, despite having a legal framework and a high level of strategic partnership with China, Ukraine has yet to fully utilize the opportunities for cooperation with this dynamic global economy that offers virtually unlimited trade and investment potential.
For the Chinese government, which pursues an impressively pragmatic international policy, cooperation with Ukraine is important and advantageous, especially in trade, investment, and agriculture. Ukrainian producers have found a reliable market in China for their primarily agricultural products. Meanwhile, China has a keen interest in Ukrainian food products, due to its limited land resources. China cannot fully meet its own population’s food needs, so Beijing actively seeks opportunities to import quality food products. Engaging Ukrainian producers in this process allows Ukraine to access the world’s largest consumer market.
In today’s context, cooperation with China should be a priority for Ukraine, as it represents a vast market for high-tech goods and quality agricultural products.
The importance of bilateral cooperation is further emphasized by the fact that in the coming two decades, China is expected to face a shortage of internal resources to build its food base. Beijing is looking for a partner who can become a source of supply. In this scenario, Ukraine can become China’s best strategic partner.
The strategic partnership between Ukraine and China exists at a declared level but is not fully realized in practice. At the same time, China has strategic plans in Ukraine and does not intend to abandon the opportunities for diversifying trade routes. Beijing believes that the primary concern is benefit, and it expects Ukraine’s readiness to align with its goals and wishes. Investments in Ukraine remain a priority, and Kyiv should decisively address the issue of a free trade zone and visa-free regime with China.
Based on the analysis above, the following conclusions can be drawn regarding the prospects for trade relations between China and Ukraine:
1. In the future, it is necessary to continue conducting detailed analysis of China’s interests to adjust Ukraine’s exports to deepen cooperation;
2. It is advisable to develop bilateral relations in mutually beneficial directions for both states;
3. Significant potential exists in developing favorable trade balance sectors (corn, dairy products, honey, soybeans, barley) and negative ones (poultry, pork, vegetables, fruits), as well as a wide range of food products not requiring special government permits;
4. The most profitable direction for Ukraine is to develop exports of high-value-added goods, which currently have a negative trade balance, indicating an import surplus over exports;
5. Most goods have a positive trade balance, so it is necessary to stabilize exports in product categories where export growth indicators have increased;
6. To increase profits in export operations, special attention should be given to goods with a negative balance and export growth, as these hold significant importance and have the greatest export potential;
7. Ukraine must show initiative, persistence, and tremendous efforts to join the “One Belt, One Road” initiative as a participant or observer and support these projects globally.
Considering the above, the following proposals and prospects for the development of Ukrainian-Chinese trade relations are advisable:
1. Improve infrastructure and regulatory frameworks;
2. Diversify Ukrainian exports;
3. Explore and utilize alternative paths, routes, and means of export;
4. Involve interactive methods, communication tools, and e-commerce;
5. Establish Ukrainian-Chinese joint export enterprises capable of effectively competing in promising global markets;
6. Meet the demand of Chinese consumers for high-quality and competitive Ukrainian products as fully as possible.
Ultimately, by effectively developing mutually beneficial trade relations, both states can contribute to economic prosperity and seize new global markets.
Oleksandr St. Lozovytkyi, Ph.D. in Political Science, Professor, European Association of Chinese Studies (Paris, France, EU)
