Today we are offering an exclusive interview with Serhii Kamyshev, Ambassador Extraordinary and Plenipotentiary of Ukraine to the People’s Republic of China and non-resident Ambassador to Mongolia. Before being appointed to this post in March 2004, he headed the Ukrainian diplomatic mission in Lebanon and served concurrently as Charge d’Affaires of Ukraine in Syria. The following interview focuses on such questions as whether Ukraine can secure a place on the enormous Chinese market and, if so, how we can attract Chinese investments and tourists to Ukraine and eliminate a disproportion in the trade balance.
“THE CHINESE TURNED OUT TO BE BETTER MATERIALISTS”
Mr. Ambassador, let’s talk about Ukrainian-Chinese relations. Ukraine has had good contacts with China in many fields. What should our country do in order not to lose this and perhaps even secure a better place on the Chinese market?
“Addressing Ukraine’s ambassadors, President Viktor Yushchenko noted that we are a bit sluggish in Asia. But I must say that we, as a state, are not sluggish. The embassy, which represents the state, has now opened a door for Ukrainian businesses to all the promising markets where we can sell our goods or technologies, including equipment for Chinese nuclear power plants. The Chinese are going to build 32 1-MWt reactors in the next 20 years within the framework of international projects worth 50 billion dollars. But there are also a lot of other, national, projects to build nuclear power plants in China. This is an unlimited segment of the market for us to supply our turbines, pumps, and fittings.
“On our embassy’s initiative Ukraine renewed the supply of mining equipment for Chinese coal mines. This is quite obvious to those who take a serious view of things. China produces 2.4 billion tons of coal a year. The Soviet Union used to produce 750 million tons at best. This is a huge market for our equipment. For example, the Malyshev Plant has signed a multimillion-dollar contract to supply tunnel drilling machines to China. Although the Chinese also produce this kind of machine, they are not as reliable as Ukrainian ones. So now China is studying the possibility of building a factory to produce these machines.
“We should not forget that China is our old market. We have no problems where our old state-run companies, such as Ukrspetseksport, are still working. The Chinese People’s Liberation Army is being modernized, so we are supplying them with Ukrainian special-purpose equipment in compliance with current international regulations. This segment works well. As for aviation, I can say that the Ukrainian media reported recently that during the MAKS air show in Moscow the Chinese had offered to buy shares of the ANTK Antonov aircraft-building company.”
Are there any joint shipbuilding projects? China once bought the hull of the Variag aircraft carrier, and during his visit to China President Leonid Kuchma suggested that the Chinese buy the guided-missile cruiser Ukraina.
“As for shipbuilding, I must say that our customers have begun to order vessels in China. This is a global trend. It is cheaper today to build a ship in China than in Ukraine. At the same time, reducing our cooperation in shipbuilding to the question of whether or not we are selling this cruiser is a somewhat narrow approach. There were some talks on this matter, but this is a specific military and technical issue that should be dealt with by experts only. But it is true that the Chinese are interested in our experience of building large ships, including military ones.
“We cooperate very closely in the supply of engines for Chinese vessels. Quite promising negotiations are underway in connection with China placing orders for specific tankers at our dockyards. In order to carry liquidized gas from Australia, the Chinese are considering options for placing orders for special double-hull tankers with good protection systems. We have better opportunities in this field, and I think they will continue to develop as long as our businesses are aware that China today is a shipbuilding center, among other things.”
How can Ukraine attract Chinese investments, including for dockyards that produce tankers?
“We are beginning to look at China as a powerful investor. What is the chief problem of Chinese foreign investments? China is now the world’s 14th largest investor. This is not such high a ranking for that country. But the question is a little different.
“In my speech at a meeting between Ukrainian diplomats and Prime Minister Viktor Yanukovych, I suggested exploring the possibility of setting up a state-run company that would focus exclusively on attracting and utilizing large foreign investments. I think we should start by drawing up a clear-cut list of nationally important investment projects, for example, a nationwide network of highways or the reconstruction of five or six airports. China, with its gold and hard currency reserves of $1.3 trillion, is in fact forced to invest abroad so that this resource does not cause the market to overheat. On the basis of these reserves, the Chinese government is trying to form some government-controlled investment funds.
“If we hurry at this stage, when the Chinese are just beginning large-scale investments, and offer them a clear-cut work pattern and prospects, we will be able to use Chinese investments to solve our national problems. I mean transportation corridors and tunnels, which we lack, under the Dnipro River in Kyiv and perhaps under the Strait of Kerch. China can do all these things, and a few hundred million dollars is not too large a sum for them. I think that a company that deals with the utilization of foreign investments for nationally important projects could really help Ukraine implement its innovative projects in, say, infrastructure. China has an excellent infrastructure: its airports and roads are better than in the US, which the Americans readily acknowledge.
“What did poor China begin with? With the infrastructure. If a state builds roads, airports, terminals, ports, and corridors, businesses will be carrying its goods, paying tariffs and taxes, and the entire system will generally begin to work. We could do this today with China’s assistance because Ukraine could receive critically heavy investments, and we have suitable political conditions for this. There are good bilateral commissions and sub-commissions. All we need is to focus special attention and efforts on this situation. China is becoming a global investor, and we can still jump on this bandwagon.
“I would like to add that this is precisely the way we do our work in China, especially in the economic field. As an ambassador, I am sure that, by dint of China’s economic development China and our good partnership, Ukraine and China can jointly address any economic problem in Ukraine and respond to any challenge. Suppose the government says that the aerospace sector needs to be saved — we immediately offer our proposals. China’s very size allows responding to any national problem on a bilateral basis. Do we need a network of roads? No problem: the Construction Bank of China is prepared to provide loans.
The point is whether we are prepared to welcome large and powerful Chinese investors. Here is an example. After the joint conference ‘Ukraine-China — Gas, Oil, and Energy: Prospects of Cooperation,’ we persuaded Sinopec, one of the largest players on the Chinese oil and gas market, to offer a bid for the Kerch hydrocarbon area. The Chinese promptly calculated the funds and were ready to take part in the bidding. But they never received a quote from the Ukrainian bidding organizers nor was their money refunded. There were apologies and excuses that somebody forgot and somebody left. This raises the question: is Ukraine’s large national capital prepared to deal with Chinese investors? In my opinion, there is an alarming tendency for big Ukrainian capital, which, incidentally, is unwilling to take Ukrainian goods to the Chinese market, to buy cheap Chinese cars and sell them here at a higher price rather than show readiness to deal with such a powerful competitor.
“Why am I calling for the launch of national-scale projects and the creation of a state-run company? The answer is: to avoid rivalry. We know that we need to build a strategic road; we get China involved, and we build it. This is the way things were done in both China and Japan.”
What about scientific cooperation with China? Do we know how to commercialize our research in dealing with this country?
“Since we have traditionally good political relations and partnership and mutually understand each other in all difficult situations, and taking into account China’s economic weight, we should prioritize the development of commercial, economic, scientific, and technological relations. This also coincides with China’s priorities in its relations with us. Today we are among the top 30 bilateral priorities of China because of our high level of fundamental and applied research, space exploration, aircraft-building, shipbuilding, rocket science, dual technologies, and high level of education. We have 8,000 Chinese students today, who bring 16 million dollars to university budgets every year. We have very serious cooperation in the sphere of academic research institutions. This is a tremendous reserve.
“We are going to expand cooperation between our research institutes. We maintain a very high scope of joint research. We must see the commercial output of these relations and keep track of the findings resulting from this cooperation. I am sure we will systematize cooperation in the provision of research services and transfer of technologies; we will be able to even out the trade balance, which has not been in our favor since China began refusing to import metal worth $1 billion. The reason is that China has begun to export its own metal. This is why the embassy is seeking ways to even out the balance. Research services and technology transfers are supposed to replace this metal. That is why the program drawn up by our embassy attaches great importance to scientific and technical cooperation in space exploration and the creation of joint technoparks. We are now working on establishing the first Ukrainian-Chinese technopark in Ukraine. The technoparks that we have established in China are quite effective, but today the best Ukrainian scientists will not go to China; they prefer to stay in Kyiv, and the Chinese are aware of this. There are plans to set up a technopark on the basis of Kyiv’s Polytechnic Institute and Qinhua Polytechnic University. Incidentally, China’s President Hu Jintao graduated from this university and is still sponsoring it.”
Mr. Ambassador, what do you think should be done to attract more Chinese visitors to Ukraine?
“I think we must take a fresh look at China. Today the number of well-to-do people in China is approximately the same as the population of Ukraine. They are traveling everywhere. If you go to the central square in Budapest, half the crowd will be Chinese people. The UK has signed an agreement on group tourism with China. The EU has also signed a similar agreement. But we are still dragging our feet. We are not ruling out that this may increase illegal migration here. There are no runaways among the rich Chinese who buy a voucher for $1,000. They have other ways to go. This is an outdated view of China, all the more so as the Chinese are somewhat nostalgic about ex-Soviet symbols, such as Pavlo Korchagin. When the film How the Steel Was Tempered was showing on TV, the streets were empty and everybody was glued to the screen. Today these people are ready to travel to Boiarka, and this could be an absolutely specific destination for Chinese tourists. The Chinese are ready to spend money. Incidentally, tourism is also a reserve that could improve our trade balance.”
How can we persuade more Ukrainians to travel to China?
“There are far more Ukrainians who travel to China than Chinese who travel to Ukraine. This was once prompted by commercial interests, when business was done ‘out of suitcases.’ Now that business is being done by means of ‘large containers,’ people are really traveling throughout China. I must say frankly that the tourist infrastructure is much better in China than in Ukraine. This means hundreds of beautiful hotels, well-designed itineraries, and a lot of historic sites that are on the UNESCO heritage list: the Great Wall of Chinese, the terra-cotta soldiers, etc. To get more people travel to China, we may need a tourism lobby. But, unfortunately, I do not see one on either the Chinese or the Ukrainian side.”
