China Provides USD 3 BLN for Ukraine Agrarian Sector

Kyiv, July 2, 2012. The People’s Republic of China allocates the USD 3 billion loan for a set of projects in Ukraine’s agricultural sector. The bilateral cooperation will include Ukraine purchasing crop-protection agents, seeds, and equipment from China, land cultivation, construction of a plant for organic fertilizer processing and crop-protection agents production, selling grain to China, etc.

The loan period is 15 years with annual interest rate of six percent, according to ZN.ua.The funds, acquired from China, are set to increase trade volume, raise productivity, and stimulate equipment modernization in the agricultural sector of Ukrainian industry.

This new step in bilateral cooperation of Ukraine and China resulted from the currency swap deal between central banks of the two countries, signed in June of 2012. As negotiations with the IMF were unsuccessful, Ukraine will “rely on Chinese funds”, reported Euractiv in November 2011.

Currency swap allows Ukraine and China conduct financial transactions without the need to convert currencies to USD. The National Bank of Ukraine reckons that currency swap deal will promote investment and trade in Ukraine, as well as ensure financial stability in the country and “boost the export-import operations”.

The swap was agreed upon in November 2011, with China offering to apply swap transactions to 100 percent of bilateral trade. Eventually, the parties agreed on converting a quarter of the volume in yuan. The currency swap deal is worth CNY 15 billion (USD 2.36).

Currently, Ukraine-China cooperation revolves around such sectors as transport infrastructure, energy, and agriculture, as well as automotive and chemical industries. The two countries are building an agricultural park in Ukraine that would help manage crop and livestock, process agricultural products, and conduct scientific research.

Moreover, Ukrainian company Ukragroleasing cooperates with China National Machinery & Equipment Import & Export Corporation regarding the production of 20 modern grain elevators, informs the Embassy of Ukraine in the People’s Republic of China.

Interestingly, a roundtable on developing cooperation between China and Ukraine took place in December 2011 in Beijing. The experts representing two countries listed research, new energy sources, high technology, civil aviation, and space industry as the areas of potential cooperation. Ukrainian side suggested that the country could supply vast Chinese market with agricultural products.

Notably, bilateral trade between China and Ukraine increased by 35 percent in 2011, exceeding USD 10 billion. In 2010 the trade volume reached USD 7.7 billion.