Ukrainian/Chinese trade set to exceed expectations‏

June 22, 2011

Well as you would expect when the President of China Hu Jintao is in town, trade and investment are high on the list of talks. Nobody wants to miss out on the ebb of cash China is strategically seeping in various directions around the globe and particularly not Ukraine.

That said, China would not overlook Ukraine. It is rich in all those things China needs to feed its economy. Ores, coal, fertilizers, chemicals, grain, metals and off-shore oil and gas which China has been invited to explore with Ukraine.

According to the Chinese and Ukrainian leaders, trade with China has increased by 80% this year. A very fortunate state of affairs for a commodity export economy like Ukraine of course. It is anticipate that Chinese/Ukrainian trade will pas $10 billion year, a figure that would exceed what both nations initially aimed to achieve.

Unsurprisingly, there is now a Chinese consulate in Odessa. You would expect nothing less for a nation projecting its influence. Odessa is a major logistics hub and a location where much going to and coming from China will enter and egress.

What the above link doesn’t say is that China also loaned Ukraine $3 billion yesterday. That said, you suspect the Chinese may feel safer loaning money to Ukraine than buying US Treasuries. At least Ukrainian loans can be repaid in ores, metals, minerals and all the things the Chinese economy needs if Ukraine should default by way of cash repayments. Raw materials and commodities must be a very attractive security in a world of fiat financing, much of which has no security at all.

I suspect a continued interest in Ukraine by China. Some mines and steel mills badly in need of investment will probably end up under Chinese ownership within the next 5 years. R&D in space will pick up by way of joint ventures. Energy, technology and raw materials will undoubtedly be a solid base for the Chinese/Ukrainian foreign and trade relations for the next 20 years.

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