TRADE RELATIONS BETWEEN UKRAINE AND CHINA

Summary. Authors analyzed main prerequisites and features of trade relations between Ukraine and China in the global economic environment. The mechanism of the implementation of international trade relations between the two countries was considered and priority prospective areas for further development of trade relations between China and Ukraine in the context of globalization of the world economy were identified.

Key words： international trade， mutual trade relations， global economic environment， effectiveness of international trade.

Statement of the Problem. The article aims to determine the current state and prospects of trade and economic relations between Ukraine and China.

The stated goal determined the need to address the following objectives： to outline dynamic trends of Ukraine’s trade turnover with China， to calculate the balance of trade in goods， to consider the commodity structure of Ukraine - China trade turnover， to determine the role of trade and economic relations in view of the need to address the problem of overcoming the negative trade balance through increased exports of products with significant added value.

Analysis of recent research and publications. Scientists pay considerable attention to international economic processes， notably patterns of changing leadership in the global economic system are studied in the work of V.G. Herasymchuk [1]， geopolitical projects of global "power centers" in Central Asia - in the work of A.A. Sobolev [12]； dynamics of development of integration processes in the Asia-Pacific region （APR） - in research papers by D.V. Iefremenko [4]， V.A. Maika， Iu.V. Shved， A.A. Akaiev， A.V. Korotaiev， S.Iu. Malkov， priorities Ukraine's in the APR - by H.E. Lossovskyi， H.M. Perepelytsia， O.O. Chubrykova and other scholars. At the present stage the development of Ukraine - China trade and economic relations has not been fully highlighted， which determines the relevance of the study.

It is worth noting that the study of foreign trade volumes between Ukraine and China was the focus of a number of papers by domestic economists， such as Iu. Kurnyshova [5] I. Pohorelova [10] N. Fomicheva， A. Filippenko， Iu. Makohon. This issue was also investigated by Chinese scholars Wang Peng [9] Zhou Li [6].

Formulation of objectives of the article. Analysis of bilateral relations between China and Ukraine at the present stage - namely description and analysis of the main components of trade relations， the perspectives for future cooperation.

Presentation of the main material. China is one of Ukraine's main foreign trade partners. In 2010 China ranked 10th by volumes of exports and 3rd in terms of imports to Ukraine after Russia and Germany.

In turn， China regards Ukraine as a reputable state within Europe and the CIS. Among the CIS countries Ukraine ranks 3rd in bilateral trade with China.

China sees Ukraine as a promising economic partner especially in mechanical engineering， military industrial complex， high technology - in particular， space technology， aviation and shipbuilding industry， materials science， radiation safety， etc. For the PRC Ukraine is also a market for products of Chinese enterprises [2].

Over the past few years， bilateral trade between China and Ukraine has seen the dominance of Chinese imports. Commodities account for about 98%， while trade in services - 2 % [8].

From the data presented in the table it can be seen that Ukraine's bilaterial trade is characterized by a negative trade balance. This is definitely an adverse effect for Ukrainian economy as Ukraine bears more costs than profits. Having a negative balance in bilateral trade with China poses to Ukraine the task of finding ways to increase Ukrainian exports with their further diversification， as well as practical implementation of existing agreements and preparation of proposals for new projects.

A characteristic feature of trade transactions in 2010 is a gradual recovery in bilateral trade turnover between Ukraine and China， with 22% growth rates in the first six months （as opposed to a decrease by a third in 2009， due to world financial crisis impact）. Its volume is approaching that of the pre-crisis period and amounts to 2 billion 338.7 million USD.

To date， the leading position in the structure of exports is occupied by supplies of mineral products （mainly ferriferous ores）， taking up about 60%. Other major components of the Ukrainian exports to China， which are also showing increase in volumes， are as follows： chemicals （mainly organic chemistry） with share of 14.5%， machinery， equipment and mechanisms （mainly turbo-jet engines）， which account for 11.2%.

Let us consider a commodity structure of Ukraine's trade with China in 2012 [10]. Ukraine's exports to China equal 1，777，177.6 thousand USD， imports 7，899，639.6 thousand USD. The trade balance is negative and substantial （-6，122，462.0 thousand USD）. Exports include fats and oils of vegetable or animal origin 4%； ores， slags and ash 80.5； organic chemical compounds 2.5； steel 1.1； nuclear reactors and machines 3.5； electrical cars 1.0%. Imports include a wide range of products， as follows： organic chemical compounds - 1，9%； plastics， polymers - 5.7； caoutchouc， rubber - 1.4； articles of leather - 3.1； clothes and acccessories， knitwear - 2.6； clothes and acccessories， textile - 4.4； pottery - 1.6； ferrous metals - 2.3； products of ferrous metals - 3.1； aluminum and articles thereof - 1.1； nuclear reactors and machines - 10.9； electrical cars - 25.4； rail locomotives - 1.4； vehicles other than railway - 4.0； devices optical， photographic - 1.5； furniture - 2.7； toys - 3.3%.

That is， exports of engineering products to China constitute a small percentage， for China Ukraine is a raw material appendage. Import is formed primarily from products that the Ukrainian industry is capable of producing. Ukraine faces the task of changing the nature of relations with China by strengthening its high-tech exports， as well as by decreasing imports of goods that can be produced domestically.

A significant part of Ukrainian exports to China belongs to the supply of base metals and their products （mostly ferrous）， which in 2012 occupied the first place. The share of this article fell sharply from 54.3% to 5.5%. Also， it is necessary to note significant sunflower oil supplies to China starting in March 2012. Their share from less than 0.1% increased to 3.7%， according to 2013 data （Fig. 1）.

Thus， Ukrainian exports to China are mostly raw materials by nature. The main reasons for this are， firstly， the orientation of the Chinese market for self-sufficiency and stimulation of domestic producers， consequently， this reduces the number industries which would enable significant imports due to lack of Chinese counterparts， and， secondly， a weak presence of Ukrainian businesses in China as well as lack of system support at the state level.

Regarding the structure of imports from China， the country remains a stable partner for Ukraine in delivering its products of engineering and instrument-making industries （30% of total supplies）， chemicals， consumer goods， including household electrical supplies， plastics， articles of stone and other （Fig. 2）.

Thus， analyzing the current state and dynamics of the trade transactions between Ukraine and China it is possible to assert the restoration of economic activity， especially not just about reaching volumes that would meet pre-crisis levels， but also the gradual optimization of product development， first of all Ukrainian exports.

Ukraine's trade relations with China were developing at a considerable pace every year （until 2012）. Chinese imports are the most diversified in both commodity and price segment. Along with this was growing discrepancy in dynamics of data on the volume of trade relations between the two countries. For the majority of commodity items the Chinese statistics accounts for bigger exports to Ukraine than Ukraine accounts for similar imports from China.

Direct budgetary costs of this difference is quite significant， especially in the pre-crisis 2008. According to estimates of the authors only analyzed for product groups such losses were estimated in the amount of 5 313 390.14 thousand UAH， 2009 - 3 191 853，7 thousand UAH， 2010 - 3 154 158.40 thousand UAH， 2011 - 4581 325.49 thousand UAH， 2012 - 2685 469.36 thousand UAH. Indirect losses of the national economy are quite difficult to count： the closure of local businesses that may produce similar products， rising unemployment， the loss of their position in world markets， etc.

Therefore， when developing a national strategy for the development of Ukraine in today's globalized world， it is necessary to take account of the "Asian" direction of global changes. Thus it is necessary to focus on the current problems in such cooperation. Most problems of economic cooperation between Ukraine and China are linked to the structure of the exports [1].

We would like to dwell separately on the specific steps that Ukraine must make to reach a qualitatively new phase in trade relations with China.

The first step is developing a political dialogue at the top level， creating a positive image of Ukraine in China’s business circles.

Ukraine should follow the principle of "one China" and Chinese sovereignty over Taiwan， exercise support for the principle of non-interference in the internal affairs of the state.

It is also necessary to concentrate on increasing investment from China into the industrial sector in Ukraine. The most promising sectors for Chinese investment are transport and port infrastructure， energy， development of natural resources， aviation and engineering industries.

It is also important to intensify scientific and technological cooperation and support the growth of bilateral trade in traditional segments （metallurgy， agriculture， chemical and raw materials）， and at the same time， increase the proportion of high technology products and products with a high degree of processing in Ukrainian exports [4].

Taking into account possibilities of export-oriented industries of the Ukrainian economy and the needs of the Chinese market， further optimization of the structure of trade turnover between Ukraine and China is seen in increased supplies to China of products in such industries： aviation industry， energy， engineering， the military-industrial complex， modern military technology， metallurgy industry， transport.

In conditions of globalization， China represents a unique model of economic development. The most important result of the "Chinese model" is high economic growth and advanced breakthrough in industrial production， which is of practical interest for Ukraine.

Ukraine could benefit from the experience of China， as over a decade ago， China was exclusively an agricultural country， and today it has economy the most attractive for investors in the world. Therefore， despite the fact that Ukraine's foreign policy priority area is the European Union， it must be remembered that China is gradually becoming an economic superpower.

China and Ukraine have a very real chance for qualitative and quantitative improvement of mutually beneficial large scale cooperation， especially in the aforementioned priority areas. Hence the urgent need for significant adjustments in the implementation of the "Chinese vector" of Ukraine’s foreign policy.

Conclusions. Ukrainian-Chinese relations in their content and nature go well beyond a mere peaceful coexistence. They are marked with mutual understanding and mutual support and sincere affection. China is fully aware of the current difficulties in the Ukraine， so from time to time it offers selfless help. Several times China has provided humanitarian assistance to victims of the Chernobyl disaster， as well as those who suffered during the floods in Zakarpattia. Beijing has presented Kyiv lighting equipment for 100 thousand dollars. Note that these generous gifts come from a country that still has enough domestic problems， including the need to address poverty for a considerable number of people.

China is of great interest for Ukraine， as it is a permanent member of the UN Security Council and a nuclear power that is rapidly evolving and emerging at the forefront of the world. According to recent reports， in terms of GDP China comes in first or second in the world， pushing from their position even the United States. Working with such a powerful partner can provide Ukraine， not yet a member of any defense alliance， with a significant advantage in the international arena.

China as a great world power is an important partner of Ukraine and can assist Kyiv in increasing its economic and political presence in the Asia-Pacific region. In addition to the mutually beneficial economic and trade exchanges， a likely prospect of shared coordinate countering the existing and potential threats and challenges， such as international terrorism， pollution， epidemics， spread of weapons of mass destruction， illegal immigration， etc.， is increasingly attractive.

Overall， there are grounds to state that Ukrainian-Chinese relations are ascending and have good prospects. A draft agreement on the principles of relations and strategic cooperation between Ukraine and China in the XXI century. This highly important document is designed for effect over 25 years. The only China’s similar big political agreement is with Russia.

Therefore， Ukraine and China are interested in establishing and developing bilateral relations， mutually beneficial for both countries. Therefore， in determining the foreign policy objectives of the Ukrainian state can not move back the possibility of cooperation with China to the background and give preference to solely establishing relations with the countries of NATO or EU integration issues， since it is the successful implementation of Ukrainian-Chinese partnership that could be the key to Ukraine for a successful resolution of internal problems.

Thus， it should be borne in mind that the Ukrainian-Chinese relations can thrive only when is well aware Ukraine that China realizes one of the few of our foreign reserves of rapid increase in export opportunities through product engineering， rocket and space， shipbuilding industry， nuclear and thermal energy， defense industry products. The most promising are those forms of cooperation that allow you to combine sale of Ukraine's high-tech products and technologies with the development of relevant industries in China. With this in mind it is possible to plan cooperation that allows for the imperatives of XXI century， experts believe.

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