On March 7, the Chinese ambassador in Kyiv signed two agreements to import large quantities of Ukrainian farm goods. “They will “contribute to the China-Ukraine strategic partnership,” he said.
Beijing is considering whether to send its soldiers as part of a multinational force to monitor a future ceasefire between Russia and Ukraine. “It is to be hoped that a 30-day ceasefire will be agreed and that it does prove to be the harbinger of the political settlement of the Ukraine crisis,” the China Daily said in an editorial on March 13.
Since last autumn, Ukraine drone operators have been using Chinese-made fibre-optic drones to counter similar ones used by Russia since August 2024. These are the most advanced drones on the battlefield and cannot be tracked by conventional electronic warfare systems.
For the first time, this month a Chinese television station – Phoenix – carried a report filmed in the trenches with Ukrainian soldiers. Previously, it only showed footage from the Russian side.
All these are signs that China is subtly changing its stance on the war. It is preparing for a ceasefire and a possible end to the war. For this, it wants to be on good terms with both sides, giving it access to trade and investment opportunities.
Remarkably, during the three years of the war, China has been the biggest trading partner of both Russia and Ukraine. In 2024, trade with Russia reached a record US$245 billion, compared to US$147 billion in 2021, the year before Vladimir Putin started his invasion.
This astonishing increase of 67 per cent shows how quickly Chinese companies have seized the opportunities created by the departure of Western, Japanese and South Korea companies from the Russian market. But Chinese investment in Russia has been limited, because of concerns over the rule of law, a depreciating currency and arbitrary control and interference by officials.
In 2023, Sino-Ukrainian trade was US$12.6 billion, with China exporting US$10.1 billion and importing US$2.5 billion. The main Chinese exports were broadcasting equipment, computers and cars. Exports increased by 28 per cent from US$7.87 billion in 2018. Ukraine’s main exports to China in 2023 were corn, seed oil and vegetable derivatives.
In economic terms, China has been the biggest winner in the war. It has greatly increased exports to Russia and imported its oil and gas at discount prices. Exports have included a wide range of civilian goods used by the Russian military, including microelectronics, machine tools, radar and navigation equipment and vehicles used by Putin’s soldiers on the front line. For this, about three dozen companies – none of them major ones -- have been sanctioned by the West.
But, unlike North Korea and Iran, China has not supplied weapons or men. Chinese serving in the Russian army have been volunteers. The number of them appears to have been very small. Russia has recruited thousands of foreigners, from Nepal, India, Cuba, Nigeria and other African countries, to serve, and die, in its invasion. But it has not carried out such recruiting campaigns in China.
China has avoided major sanctions despite the “unlimited friendship” between the two countries and President Xi Jinping’s willingness to be photographed with Putin, a man regarded by the West as the second Adolf Hitler.
Beijing is looking beyond the war, especially at Ukraine, a country with enormous potential, especially in agriculture. China is the world’s largest importer of farm products.
Ukraine is the largest agricultural country in Europe, with 41.3 million hectares utilised in 2022, including 32.7 million hectares of arable land. Of this, 45 per cent is humus-rich, fertile oil known as “rich chernozems”. Its main commodities are sugar beet, maize, wheat and sunflower oil.
In 2013, Xinjiang Production and Construction Corps, better known as Bingtuan, signed a contract with Ukrainian state firm KSG Agro to lease 100,000 hectares in the eastern Dnipropetrovsk region, very close to what is now the front line in the war.
Chinese media at the time said that the Bingtuan planned eventually to lease three million hectares for 50 years, to grow crops and raise pigs, in a deal worth US$2.6 billion a year. The Kyiv Post called it the largest ever foreign investment in Ukraine’s farm sector and China’s biggest overseas agricultural investment.
Also in 2013, the Bingtuan signed a memorandum with the government of Crimea, then under Ukrainian control, to build an expressway, a government housing project and a bridge. Russia’s invasion has made all these projects impossible.
Like everyone else, the Bingtuan is waiting to see the end of the war and whether the border between Russia and Ukraine will change. Like other companies, it would like to take advantage of Ukraine’s rich earth. Can the politicians create the conditions for them to invest?