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Overlapping interests of China and Japan in Ukraine

Overlapping interests of China and Japan in UkraineChina and Japan are two powerful East Asian countries with regional and global interests. Geographically, Ukraine is far from East Asia and it may seem that there are no Chinese or Japanese interests. Yet, they are present in Ukraine and even more, some of these interest’s overlap. Below I will briefly elaborate on the specifics of these interests and areas of competition.

China’s strategic vision is reflected in the One Belt One Road (OBOR) initiative announced in 2013 by the President Xi Jinping. For Beijing presence in as many countries as possible via OBOR is a tool by which it can exert its quiet influence by making the countries dependent on China’s trade routes and economy. China’s interest towards Ukraine is driven by several key factors: geographic location and its potential to become a transit hub within OBOR; the Deep and Comprehensive Free Trade agreement (DCFTA) between Ukraine and the EU.

China is the second most important EU trading partner behind the US, accounting for 14% of total extra EU trade in 2014. The EU import of goods from China has significantly increased over the last decade, from €129.2 billion ($141.7 billion) in 2004 to €302.5 billion in 2014. Exports have more than tripled in 2004-2014, to hit €164.7 billion in 2014. This trend will continue since both the EU and China are eager to deepen their trade relations while China-EU free trade agreement is not on the agenda.

Japan has an interest toward Ukraine in both the political and economic spheres. In politics, Japan is a democratic country, a responsible global player, and G7 member. It is interested in assisting Ukraine in reforming the country’s political landscape, especially fighting corruption and restoring national territorial integrity. After the 2014 Ukrainian Revolution, following the G7 summit in 2014, Abe declared that Japan will provide assistance “to the greatest extent possible in order to foster the stability of the new Ukraine”.

In economic sphere, as in case with China, Ukraine’s proximity to and DCFTA with the EU are important for Japan. According to Japan External Trade Organization (JETRO), in 2015 Japanese export in goods to the EU were worth $66 billion, 11% of its total exports. However, negotiations over a Japan-EU free trade agreement – ongoing since 2013 – have hit roadblocks, and are unlikely to see progress for at least the next two to three years.

Under these circumstances, advantageous geographic closeness to the EU, the DCFTA between Ukraine and the EU are two strong motivators for Japanese and Chinese companies to move their production sites to Ukrainian territory. Moreover, Ukraine has a 43-million populations with qualified workers and managers available at lower wages than in the EU. Ukraine also neighbors non-EU Moldova, Belarus, and Russia by land, as well as Turkey and Georgia by the sea. Obviously, it increases Ukraine’s attractiveness for investments.

Hence, as we see, China and Japan have overlapping interests in Ukraine due to its geographic proximity to the EU and potential for investment especially due to UA-EU DCFTA. Moreover, even if just some of the goods that make their way to and from China and the EU were to pass through Ukrainian territory, Ukraine would be able to leverage its unique geographical position and become an important new cargo transit link in the OBOR.

Olena Mykal is Assistant Professor in Political Science at National University Kyiv-Mohyla Academy. Her main areas of expertise are foreign policy of Ukraine, bilateral relations of Ukraine with East Asian countries. She received her PhD at Waseda University in Tokyo.
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