“The Chinese think big”

What is the secret of China’s success? How did it manage to become the world’s second economy, and continue growing despite the crisis? This is the subject of an exclusive interview with Yurii KOSTENKO, Ambassador Extraordinary and Plenipotentiary of Ukraine to the People’s Republic of China.

Ambassador Kostenko, foreign observers note that China has departed from Deng Xiaoping’s policy of “being sober-minded and keeping a low profile,” and Beijing is now more active on the global arena. Do you agree?

“I do. China is gradually departing from being exclusively engaged in the Asia-Pacific region, where it has its major interests. As a permanent Security Council member, it increasingly assumes responsibility for peace and stability all over the world. An example of this is China’s active involvement in UN peacekeeping schemes and in the Afghan reconstruction effort. The latter is in the region of their civilizational focus and national interests, especially from the angle of drug trafficking. The Chinese do everything rationally, and they always assess the impact that problems outside China may have on them.

“Ten years ago China initiated the Shanghai Cooperation Organization (SCO). We are now knocking at its door and trying to assess our interest in this project’s economic dimension. For them it is a form of contact with the surrounding world, including Russia, which is their partner and with which they have a thousand-kilometer common border. On the other hand, it means influence on Central Asia, which has the fuel and mineral resources that China needs so badly. Mongolia, where I serve as non-resident ambassador, is rather wary about the SCO because, as a result of its geographic si­tuation, it is like in a sandwich with Russia above and China below. Incidentally, Mongolia has always been suffering from the quarrels of these two giants that can strangle it in their embraces. Thus, Mongolia only enjoys observer status at the SCO. China is playing an active role in responding to global challenges, such as climatic changes. The latest conference in Cancun did not produce the expected results, though not through China’s fault. Beijing is prepared to reduce emissions in comparison with other states, but it demands, quite reasonably, that Western countries go at the same, if not a faster, pace. China is an active member of such associations as the G20 and BRIC.”

And the G2 (US and China)…

“China is taking a cautious approach to the G2, for there is a problem of ideology. China’s Foreign Minister Yang Jiechi recently spoke of a multipolar, not a bipolar, world. So China is actively developing cooperation with the European Union. The trade turnover with the EU is 320 billion dollars. Conversely, our trade turnover with China is expected to reach 7 billion dollars this year. Undoubtedly, China is an economic power, and the superbly organized EXPO, Olympic and Asian games show that the Chinese are capable of doing anything. And they are doing this wisely in order to show their successes, first of all, to their own people. So if nationalism is working for public prosperity, I will only vote my heart out for this. But if it is hostile towards some ethnic groups or neighbors, it is too bad. There are hundreds of ethnicities in China. But if they can take pride in what they are doing, it is quite normal.”

Why has private business deve­loped so much in China over the 30 years of openness?

“Because the Chinese nation has not lost the innate ability to do business, manage private property, and be able to adjust to any conditions. At the same time, there is a very thin stratum of the rich in China, while the middle class is living a rather modest life. It is not a comfort-conscious Western society. This national trait also helps them build a modern society.”

Let us get back to the SCO. Why should Ukraine “knock on the door” of this organization to become, like Mongolia, sandwiched between Russia and China?

“No, we will not become one, for the statute defines [the SCO] as a regional Asian entity. Belarus had been knocking on its door for five years or so, only to be granted an invited guest status. We cannot be a SCO member. But if we obtain the status of an invited guest, we will be able to get our construction, oil and gas industries involved in SCO pro­jects. It is not yet clear what shape this will take. In my view, if we are to develop cooperation, even if in the social plane only, with the CIS, God Himself decreed that we cautiously go this way to the SCO in order to get a status that will allow us to pursue our interests via business.”

China is known to be pursuing a strategy aimed at Central and East European countries, looking upon them as a bridge to the EU market. What place does China’s strategy hold for Ukraine?

“We must understand the following. China has amassed tremendous funds that are pressing the budget, slowing down GDP growth, and hindering the country’s development. For this reason China would like to throw these funds out onto foreign markets and reap be­ne­fits from them. This arouses interest in Ukraine, as a major country with a colossal potential: take, for example, the Euro-2012, the emerging infrastructure, etc. Our officials are scared because the Chinese offer their own workforce. We have to make a decision: either we do not have certain projects or the Chinese will build them. In particular, this concerns the project Air Express which calls for building an expressway from Darnytsia to Boryspil airport. The Mi­nistry for Fuel and Energy is mapping out, in conjunction with Chinese partners, a tentative project for a combined-cycle power plant in the Crimea. The First Automobile Plant of China and the companies Ukrauto and Eurocar are intensifying cooperation. The first Chinese car was assembled the other day in Zaporizhia. The investment here is so far small — 20 million dollars. But it is only the beginning. In the long term, the Chinese would like to capture Ukraine’s market with Cherri-type medium class family cars and small trucks. They will find it difficult to go to Europe through us. God willing, they will establish business centers here, which will be able to compete with their Czech or Dutch counterparts.

“The Chinese think big: they have captured markets in their own region, which accounts for 50 percent of their overall economic effort. They have buffed so strong a muscle that they are bursting to go further. They have bought a lot of US debts and recently bought out the Greek debt. They see it as a good opportunity to invest money.”

Then, maybe, the Chinese should buy out our debts?

“This requires an explanatory effort on our part. This means Hu Jintao should visit this country and we must get rid of unnecessary problems.”

Incidentally, what should we learn from China?

“For example, the Internal Troops commander-in-chief recently went to China to learn about the experience of [maintaining public order during] mass-scale events. For they have held so many events in the past year or two: the Olympic Games, the EXPO in Shanghai, etc. A group of Party of Regions MPs recently visited China to exchange experience with representatives of the Communist Party of China (CPC), especially to learn the basic, and very interesting, principles of CPC work with the masses. But, first of all, we must learn how to overcome the crisis. For while we saw what Prime Minister Azarov called a 15-percent fall, China saw a rise. The rise was achieved thanks to a colossal domestic market. Whenever the US or the EU exports plummet, China uses all kinds of foundations and loans to throw money onto the domestic market, which enables people to buy washing machines or cars. You can’t drive across Beijing today: they have 4 million autos for 16 million residents. Something makes it all possible. People receive money thanks to deliberate [financial] infusions. While the world is tumbling down, China is lurching forward. This means there is some force, some philosophy, behind this.”

In a comment to The Day the expert from the National Institute of Strategic Studies Yevhen Sharov said that Ukraine’s goal is to help the Chinese wherever we can, while keeping our potential intact and carrying out moder­nization. What kind of help can we offer them?

“As I know, based on the examples of Germany and Austria, a wise manager will sell what he has produced, earn money, and invest it in something much better, and sell it again. If he chooses to sit on this product like a hen that hatches eggs, there will be no result. Thank God, we have what remained of the Soviet aerospace sector and military-industrial complex. Sharov is right that we must remain capable of reproducing or, in other words, of earning and re­investing funds. We still have brains. I once handed a medal to the 85-year-old Prof. Guan Qiao who had graduated from Moscow’s Physics and Technology Institute and took up electric welding after reading a textbook by Oscar Paton. There is an Electric Welding Institute in Harbin since 1956, which cooperates with the Paton Institute. They respect Borys Paton very much. They are aware that this person created an industry. Paton Institute researchers also visit China very often to deliver lectures. In other words, there are some fields which are of vital importance for the Chinese. They highly appreciate our high-tech designs. There are many other things we can give to the Chinese. Take, for example, agriculture. We have the unique black earth. While the EU gives us a quota of 15 thousand tons of barley, with our harvests being one million tons [Ukraine produced over six million metric tons in 2007 – Ed.], China can easily import much more from us. In contrast to Ukraine, China grows 400, not 40, million tons of grain [for all types of grain, including rice – Ed.], and they will gladly take farming produce from Ukraine. So it is possible to cooperate here in genetic engineering, plant protection, and nurturing new varieties.

“Besides, China evinces great interest in cooperation in the social field. There are 7,000 Chinese students in Ukraine today against 700 Ukrainians in China. What attracts Chinese is the level of education in Ukraine, especially in engineering, medicine, and civil aviation. They all come back home and, as a rule, become Ukraine’s friends. All this lays the groundwork for strategic partnership.”

Incidentally, can we ensure that China, a strategic partner of ours, will guarantee the security and territorial integrity of Ukraine as a non-nuclear state?

“This is a very ticklish issue because this document provides declarative, rather than legally binding, guarantees for our independence. It does not guarantee territorial integrity, for the question is about Ukraine joining the Nuclear Non-Proliferation Treaty as a non-nuclear state. But this was the maximum that could be expected at the time. We are now conducting a dialog, and the two sides have agreed to continue consultations about increased guarantees for Ukraine’s security. We hope we will draw up a document which might as well be part of the strategic partnership treaty. But we cannot say today that China is prepared to defend us by force of arms or make commitments of a kind it has not been making in the past 60 years. We are looking for other ways to reinforce guarantees.”

hen the former World Bank Pre­sident James Wolfensohn was delivering a lecture to Kyiv students a few years ago, he advised them all to learn Chinese. What do you say to this?

“One should learn Chinese at a young age. Chinese can speak elementary English, businesspeople can speak this language more or less well, and in a restaurant you will also be helped by somebody who speaks English. So it may be a good idea to learn Chinese, but do not forget that the Chinese who come to Ukraine can speak either Russian or English.”