China asks Ukraine to properly resolve the conflict issue surrounding the purchase of Motor Sich shares by Chinese investors, Chinese Foreign Ministry Spokesperson Hua Chunying said at a briefing, answering a question from the RIA Novosti Russian state agency about the reaction to possible nationalization enterprises by decree of the President of Ukraine.
“China asks the Ukrainian side to protect the legitimate rights and interests of Chinese enterprises and investors in accordance with the law and properly resolve the relevant issues,” Chunying said in a transcript of the March 25 briefing on the Chinese Foreign Ministry’s website.
The spokesperson said that the Foreign Ministry was informed about the relevant documents on Motor Sich.
Some Chinese companies cooperate with Crimea on market principles, based on historical ties and practical needs, and such commercial activities should not be politicized, Chinese Foreign Ministry Spokesperson Zhao Lijian has said.
“China’s position on the Crimea issue is consistent. We hope relevant sides can properly address the issue through dialogue and consultation. Some Chinese companies, based on historically-established ties and practical needs, conduct exchanges and cooperation with Crimea on the basis of market principles. Such commercial activities should not be politicized,” he said at a press conference, the content of which was published on the website of the Chinese Foreign Ministry.
Thus, the spokesperson commented on the visit of the Chinese delegation to Crimea and the statement of Ukrainian MP from the Opposition Platform – For Life faction Vadym Rabinovych that this is “China’s retaliatory move in connection with Ukraine’s position on Motor Sich.”
As reported, President of Ukraine Volodymyr Zelensky, by decision of the National Security and Defense Council (NSDC), on January 29 imposed sanctions on Chinese citizen Wang Jing and related Beijing Xinwei Technology Group Co., Ltd; Beijing Skyrizon Aviation Industry Investment Co., Ltd (both are based in Beijing); Skyrizon Aircraft Holdings Limited (British Virgin Islands) and Hong Kong Skyrizon Holdings Limited (Hong Kong), which in recent years have been trying to implement the rights of PJSC Motor Sich shareholders, who are placed on the sanctions list of Ukraine.
According to the decision of the NSDC and Zelensky decree No. 29 dated January 28, 2021, the sanctions imposed for three years provide, in particular, the blocking of assets, restriction of trade operations, partial or complete cessation of the transit of resources, flights and transportation across the territory of Ukraine. Other restrictions include preventing the withdrawal of capital from Ukraine, a complete ban on transactions with securities of which they are issuers, and a ban on the purchase of enterprises in Ukraine. The list of sanctions also includes a ban on increasing the size of the charter capital of business entities in which sub-sanctioned persons own 10% or more, and cancellation of official visits, meetings, negotiations on the conclusion of contracts or agreements.
Beijing demands from Kyiv to protect the legitimate interests of Chinese investors in connection with the decision to nationalize Motor Sich enterprise (Zaporizhia), more than 50% of which is owned by Chinese companies, Chinese Foreign Ministry Spokesman Zhao Lijian has said.
“China demands that Ukraine, in accordance with the law, protect the legitimate interests of Chinese enterprises and investors,” Lijian said.
Earlier Secretary of the National Security and Defense Council (NSDC) of Ukraine Oleksiy Danilov said that PJSC Motor Sich would soon be legally returned to the ownership of Ukraine.
The Chinese shareholders of Motor Sich initiated an arbitration against the state of Ukraine in December 2020 seeking to recover $3.6 billion. They claim that the Ukrainian authorities expropriated their investments, as well as violated their other rights stipulated by the intergovernmental agreement on the encouragement and mutual protection of investments between Ukraine and China from October 1992. The international law firms WilmerHale, DLA Piper, and Bird&Bird are representing Chinese investors’ interests in the claim.
According to a source in the Ukrainian government, currently about 75% of Motor Sich’s shares are already owned by a group of Chinese owners, and some part of the disputed block of shares acts as collateral for financing provided, among other things, by China Development Bank.
PJSC Motor Sich is one of the world’s largest manufacturers of engines for aviation equipment, as well as industrial gas turbine units. It supplies products to more than 100 countries around the world.
Chinese buyers of shares in Motor Sich (Zaporizhia) violated their obligation to invest $250 million in 2018 and obtain permission from the Antimonopoly Committee of Ukraine (AMCU), but it is impractical to completely nationalize the enterprise and it is worth leaving 35% to the Chinese and the controlling stake to the state, President of Motor Sich Viacheslav Bohuslayev has said.
“They deceived us… There are no Chinese investors and there is no investment program. There are promises: in the agreement for the acquisition of shares in 2018, they [should have paid] $250 million – not a kopiika [was seen],” journalist Igor Solovey posted a video on his Facebook with a speech of Bohuslayev at a meeting of the national security, defense and intelligence parliamentary committee on March 4.
Bohuslayev said that in such a situation he and the trade union support the decision of the country’s president to impose sanctions against the Chinese shareholders of Motor Sich.
“I hold daily teleconferences with Chinese customers. I explain to them: if I, Bohuslayev, violate Chinese laws on the territory of China, what would you do to me? So your dear Wang Jing [was sanctioned by Ukraine] should not violate Ukrainian laws on the territory of Ukraine,” the president of the company said.
He confirmed that in 2016, Chinese partners provided a $100 million loan at a critical juncture, which must be repaid in 2026, and the company is preparing to do so.
At the same time, Bohuslayev, who before the deal with the Chinese was one of the largest shareholders of Motor Sich, after the committee meeting spoke out against the proposal to completely nationalize the enterprise, as this would entail significant budgetary expenditures.
“We need to negotiate with the Chinese: allow them to have 35%, the rest needs to be sold to the state, in a civilized manner. The ambassador must be explained (that) our state does not allow a foreign citizen to manage our enterprise,” he said, while insisting that a controlling stake belonged to the government.
“You can’t just break off relations with Chinese friends… For no reason in particular, (so that) we don’t give a damn about China, it is better not to behave like that,” Bohuslayev said.
Chairman of the Verkhovna Rada of Ukraine Dmytro Razumkov met with Ambassador of the Republic of China to Ukraine Fan Xianzhuan on Tuesday, the press service of the Rada apparatus said.
During the meeting, the sides reportedly paid attention to the discussion of economic cooperation between the two countries. Razumkov stressed that Ukraine invariably supports the position of comprehensively deepening relations with China.
“Few countries can boast of economic growth in the past year. China’s economy was the first to be hit by the coronavirus, but you have successfully passed this challenge,” the speaker said. He also thanked China for its assistance to Ukraine in the fight against the COVID-19 pandemic.
Ukraine’s Ambassador to the People’s Republic of China Serhiy Kamyshev has died, Ukrainian Foreign Minister Dmytro Kuleba said.
“Sad news… Ukraine’s Ambassador to the People’s Republic of China Serhiy Kamyshev has died at the age of 64. A well-known professional, he made an outstanding contribution to the development of Ukraine’s relations with the countries of Asia and the Middle East in the many years of his diplomatic work. Cherished memory and sincere condolences to his loved ones,” Kuleba said on Twitter on Sunday evening.