China offers Ukraine to finance infrastructure projects from the Silk Road Fund

This article deals with the proposal of #Chinese government representatives to use #funding from the #Silk Road Fund in order to complete #infrastructure projects on the territory of #Ukraine.

Visit our website if you are interested in the #Ukrainian_economy or #doing_business in Ukraine.

Following signing of mutual economic cooperation agreements between Ukraine and Chine, China offered Ukraine to attract funds from the Silk Road Fund in order to support infrastructure projects on the territory of Ukraine. The Chinese representatives also emphasized the need to use the mechanism of private-public partnership for such projects.

The Silk Road was designed a couple of years ago, but its implementation and realization was accelerated in 2015, including due to a trade war between Ukraine and Russia. We note that as of 1 January 2015 transit of any goods from Ukraine via the territory of Russia is prohibited.

We note that according to some experts, transportation of goods via the New Silk Road is 30-50% more expensive and takes almost twice longer than land transportation via the territory of the Russian Federation. In addition, transportation via sea might be delayed due to poor weather conditions. Nevertheless, through implementation of the New Silk Road Ukraine seeks to establish closer economic ties with the relevant countries of the project, and with China in particular.

Also, the Ministry of the Economic Development and Trade announced that China will support construction of facilities and establishment of entities in Ukraine which will export production into the EU member states.

We note that in the first half of 2016 export of Ukrainian goods to China decreased by 34% and amounted to USD 1.1 billion. However, import of goods from China increased by 12% and amounted to USD 2 billion.

Ukraine most exported goods to China were agricultural goods and food (USD 654.8 million), mineral goods (USD 300.6 million) and machinery (USD 54.5 million). China exported to Ukraine mainly products of machinery (USD 878.7 million), chemicals (USD 415.5 million) and consumer industry products (USD 236.2 million).

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