Ukraine as intersection point of US-China commercial interests

Author : Olexandr Honcharov

It is high time for Ukraine, taking into account the hardest economic conditions, to enter a stable trend of growth, seeking to raise the country's GDP
11:25, 12 April 2017

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At the end of last week, the Chairman of the People's Republic of China, Xi Jinping, was on a visit to the United States; the main theme of his lengthy two-day talks with US President Donald Trump was trade cooperation, as more than half of America's trade deficit falls on China's share.

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The leaders of these two major powers agreed to create four effective cooperation mechanisms between the two largest economies of the world, constantly maintaining contacts in the following key areas: 1) security; 2) the economy; 3) international law, and 4) the humanitarian sphere. Also in the next three months leading experts of these two countries on behalf of Donald Trump and Xi Jinping should develop a consolidated position on the most acute economic issues, in particular, trade and the currency market.

In this regard, it is important to recall that not so long ago Trump promised his voters to impose duties on Chinese goods at a rate of 45%. Moreover, at the end of March this year the US president signed two decrees that initiated the study of the trade deficit and imposed sanctions for dishonest tricks in foreign trade. In other words, Donald Trump strives to agree on an approach that would reduce friction in those economic areas and expand cooperation in those areas where it reliably exists.

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Apparently, this was achieved by two leaders after the talks in Florida. And this meeting gave a significant positive result for both countries. For example, as experts say, now the People's Republic of China can allow foreign capital to create financial institutions with a majority stake, i.е. own a controlling stake in financial companies. Also at the final stage is the work on the preparation of a bilateral investment agreement between China and the United States.


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Of course, Trump was elected to the post of US president with a rather specific agenda, where one of the main activities should be a trade agreement with China. In turn, foreign investors for the past 2016 withdrew from the Chinese economy almost 1 trillion US dollars, which created tension in the entire financial system of China.

Therefore, until now, there are periodic speculations about the stability of the national currencies of the US and China, as well as their banking systems. Working ahead of time, the leaders of these two powers are laying the foundation for further effective and productive solutions that meet the challenges of the modern world and simplify mutual investment. And most importantly, what America is exporting today is the dollar, so there will be new agreements on access of American capital to the Chinese market. Of course, there will be some concessions, but in some ways, a tough position will remain. But nevertheless, these problems are discussed and there are ways of their solution.

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And what would happen to the economy of Ukraine in terms of this geopolitical situation and with the current conjuncture in the world markets? What are our authorities going to do? They, alas, are silent and do not disclose the plan of action. Although on January 17 this year in 2017 in Davos, Switzerland, negotiations were held between the President of Ukraine Petro Poroshenko and Xi Jinping. Then our president stressed: "We are interested in expanding political and economic cooperation between Ukraine and China."

Well, that is reasonable. It is high time for us, taking into account the hardest economic conditions, to enter a stable trend of growth, seeking to raise the country's GDP. Focus on quality economies and subjects of civilized markets, and not on the "schematosis" of local oligarchs. In this respect, a fruitful cooperation with a strategic investor from China, the largest Chinese commodity exchange "Bohai commodity exchange," which won an auction on the purchase of 99.9% of shares of the Ukrainian Bank for Reconstruction and Development, formerly owned by Ukraine’s Ministry of Finance, might be very positive in this respect.

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Last week, these investors were again in Kyiv. The agenda of the two-day visit to Ukraine included a business meeting with the chairman of the National Commission for Securities and Stock Market Timur Khromaev. Chinese investors discussed with Khromaev a number of strategic issues, in particular, intergovernmental features, immediate prospects for the adoption of the draft Law of Ukraine "On the Organized Market and Derivatives"; signing of a memorandum of cooperation on the organization of the international derivatives market in Ukraine and start of training of certified specialists for this futures market.

On the same day, the Chinese delegation met with Taras Yeleiko, Acting Director of the Department for the Consolidated Sale of Assets of the Deposit Guarantee Fund of Individuals.

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Proceeding from the fact that the redistribution of assets of large business through the Deposit Guarantee Fund is ahead, Chinese colleagues offered to share their experience in this field of activity, and most importantly - using ways of introducing securitization of assets of insolvent banks with attraction of large Asian investment capital to the Ukrainian market.

After all, the Deposit Guarantee Fund sold assets of only 3.2 billion hryvnia, including claims on loans - by 1.5 billion hryvnia. And this includes a total volume of assets in the Fund of more than 400 billion hryvnia! Therefore, soon a bill will be submitted to the Verkhovna Rada, which would make all the judicial oligarchs tricks outlaw. Loans would be placed at the disposal of the Deposit Guarantee Fund, and it would transfer them for the implementation to Ukrainian debt collection companies Debtx and First Financial Network.

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Commercial interests of the PRC and the USA have intercrossed in Ukraine. If only we did not stimulate investments to Ukrainian market, burning speculative money, which quickly come, also quickly go. Therefore, today in Ukraine we need strategic investors with long money. And we need to closely monitor the development of US-China relations.

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