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International relations

Ukraine is new battleground in US-China fight for influence

Beijing casts an eager eye on military technology from ex-Soviet republic

China is looking at acquisition of Ukrainian military technology, including purchasing a stake in a military helicopter engine manufacturer.   © Reuters

TOKYO -- The U.S. and China are competing for influence in Ukraine, the latest arena in the broadening geopolitical struggle between Washington and Beijing.

U.S. national security adviser John Bolton met Ukrainian leaders, including President Volodymyr Zelensky, in Kyiv on Wednesday. The hastily arranged trip, the U.S. Embassy said, was aimed at underscoring American support for Ukraine's sovereignty and territorial integrity, as well as its "path to Euro-Atlantic integration." But its main purpose was to block China's attempt to purchase Motor Sich, a big supplier of engines for military helicopters.

Beijing Skyrizon Aviation is seeking to buy a 50% stake in the struggling Ukrainian manufacturer, according to people familiar with the matter. The Chinese aviation investor has reportedly offered $100 million to Ukraine's aircraft industry, pending approval of the deal. Wang Jing, Skyrizon's chairman, is said to have close ties to China's Communist Party and People's Liberation Army.

While the Antimonopoly Committee of Ukraine scrutinizes the proposed deal, the U.S. is reportedly considering backing a U.S. company bidding for Motor Sich through the Overseas Private Investment Corp., a government agency that provides financial support for American companies looking to invest in emerging markets.

The U.S. has not hidden its strategic interest in seeking to block the Skyrizon investment. Defense technologies, Bolton told Ukrainian media ahead of his meeting with Zelensky, should not be handed over to a "potential enemy," adding that the interests of not only Ukraine but also the U.S., Japan and others are involved.

On Friday, Bolton announced the U.S. would step up its military assistance to Ukraine, although President Donald Trump appeared to contradict that pledge the next day. According to U.S. media reports, Trump has asked Bolton and others to suspend and review a $250 million military aid package to Kyiv.

China has been seeking Ukrainian military technology for some time. Ukraine was an important supplier of equipment to the former Soviet Union's defense industry. China's first domestically built aircraft carrier, the Liaoning, is based on a Ukrainian carrier, the Varyag, that was purchased by Beijing. Skyrizon has already bought technology from Antonov, the Ukrainian maker of the world's largest transport aircraft, the Antonov 225.

In 2017, Skyrizon agreed to buy an equity stake in Motor Sich, but Ukraine's Supreme Court issued an injunction blocking the deal following behind-the-scenes lobbying by the U.S. and Japan. "The acquisition of Motor Sich will help strengthen China's military technology, and become a threat," according to one Japanese diplomatic source.

China has made Ukraine a key link in its Belt and Road Initiative infrastructure program. Under a $7 billion joint project announced at the end of 2017, China is pushing ahead with port and expressway construction in Ukraine. The largesse is having an effect. According to one senior Ukrainian official, in addition to pro-U.S., pro-Europe, and pro-Russian factions in Ukraine's political and business community, pro-China voices are emerging as well.

Ukraine is growing more important to China amid its intensifying trade war with the U.S. To counter higher U.S. tariffs, China, which has long relied on the U.S. for grain imports, sees Ukraine -- the "breadbasket of Europe" -- as an alternative supplier. Ukraine already provides around 80% of China's corn imports. Now it has sharply increased its production of soybeans, which China previously bought mostly from the U.S.

Russia, which seized Crimea from Ukraine in 2014, has so far tolerated China's overtures to Kyiv, perhaps preferring that Ukraine cozy up to China, rather than the U.S. and Europe.

China and Russia are also drawing closer together. Bilateral military cooperation is accelerating, as the two hold joint war games with growing frequency. Skyrizon' Chairman Wang is thought to have good connections with the Kremlin, and there is speculation that Russia is backing the Chinese company's attempt to take over Motor Sich.

At the recent Group of Seven summit in France, Trump argued for Russia to be readmitted to the club, which would amount to a big easing of sanctions over its annexation of Crimea.

Bolton's visit to Ukraine, even as Trump takes a more conciliatory line toward Russia, looks like an effort to keep Kyiv on its side. But its moves in Ukraine have less to do with Russia than with its desperation to contain China.

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