FIRM PRODUCTIVITY AND IMPORTING BETWEEN UKRAINE AND CHINA

Abstract

This paper attempts to explore China’s economic interest in Ukraine, a country which is in an advantageous geographic location with relation to China. Considering its position in the global map, Ukraine has the potential to become a transit hub for China. This has huge economic repercussions in Ukraine since China is the second most important EU trading partner after USA. Ukraine can thus take advantage of being a unique transit hub for China in the Silk Road. Instrumental background to Ukraine economic relations with China In spite of having a huge market potential, Ukraine did not share an optimistic trade relation with China. The country’s unstable political environment along with having investment risks induces China to maintain a cautious approach toward Ukraine. However, due to a positive political relationship between the two countries, Ukraine can play in favour of China’s strategy to strengthen the Silk Road Economic Belt. Although this facilitates China’s trading relationship with Russia and the EU, the current crisis in Ukraine has become a concern for China since it does not want to play the role of diplomatic intermediary in Ukraine crisis. China chooses its strategic partners usually based on a couple of factors. The country has to be China’s neighboring country as it can then become a close economic ally, and also the chosen country has to be large in size as China can use it to develop strategic partnership to fulfill its economic goals. However, Ukraine does not fall under any of the categories and so it fulfills a third category which is also another category that is considered by China. Ukraine shows a great potential for economic development, which is important for China as it needs to establish strong economic ties with the country in order to get benefitted in other areas. Moreover, China is also able to encase the history of friendly relationship that it shares with Ukraine, and also Ukraine’s strong geographical position enables China to engage in regional cooperation. Finally, China looks for opportunities of cooperation as this can enhance the strategic relationship between two countries and Ukraine serves such opportunities.