Sino-Ukrainian economic ties are expected to blossom in coming years with soaring trade volume and mutual investment, said Sergei Kamyshev, Ukrainian ambassador to China.

Kamyshev said that two-way trade volume between the countries may reach US$3 billion this year if current growth momentum sustains, reported China Daily.

The trade figure was up to US$1.37 billion during the first half of the year, up 42.8 per cent on a yearly basis.

The newly-appointed ambassador said solid and stable political relations between the two countries provided a basis for trade to grow.

"China and Ukraine regard each other as important and reliable partners," said Kamyshev. "There are no diplomatic clouds on the horizon, which can affect doing mutual business."

Frequent exchanges between the two countries' high-ranking officials were also sending positive signals for business communities, he said.

"The dynamic of the trade is very high," he said, using figures from 2001 to 2003 to support his view.

In the three years, the two-way trade enjoyed an annual increase of more than 60 per cent, making China the fifth largest trading partner of the Ukraine.

And trading prospects are optimistic in the next four to five years as the two nations' economic growth is soaring. It amounts to nearly 10 per cent in each country and is outperforming the world's average of less than 3 per cent.

Particularly, China's great need for steel and iron products driven by its construction-led economic growth will continue to mean a demand for Ukrainian steel products in the future, the ambassador said.

Currently, steel products account for 80 per cent to 90 per cent of Ukrainian exports to China.

"Ukraine will continue to supply China with these products to feed the growing Chinese economy," he said.

He also predicted that steel products will remain Ukraine's major export to China until 2008. And other products will flow to China on a larger scale.

Ukrainian exports of machinery and high-tech equipment have been on a rise in recent years, and the momentum would remain in the future.

Apart from commodities trading, the services trade between the two nations is also picking up pace.

"Ukrainian Airosvit Aviation Co launched a direct flight from Kiev to Beijing in April," said the ambassador. This marks the first entry of Ukrainian service companies to China.

Currently it is a weekly flight. Starting from October, there will be two flights a week, he said.

Kamyshev also holds a positive view on the prospect of mutual investment, saying it will increase rapidly in coming years.

Currently, Ukrainian investment in China is less than US$1 million, "a relatively small amount."

But the figure is expected to rise, as more Ukrainian companies cash in on China's ongoing endeavour to develop its west and northeastern provinces.

"Northeast China is now striving to upgrade its infrastructure and older factories," said the ambassador. "Ukrainian companies may play a role in this effort, as some of the infrastructure and facilities were built by ex-Soviet Union nations."

He believes Ukrainian firms are able to offer knowhow and technical support to help modernize China's northeastern region.

Kamyshev also said that a problem impeding Ukrainian companies from making bigger inroads in China was the lack of financing of these companies.

To solve the problem, he said, the Ukrainian Government will encourage more private firms, which are relatively rich in funds, to invest in China.

The ambassador said Ukraine is rolling out the red carpet for Chinese enterprises, and the Ukrainian market is potentially lucrative for them.

"Ukraine is a big market bordering the European Union (EU)," he said. "We have an inexpensive but highly-skilled labour force."

"It is an ideal platform for Chinese firms to penetrate the EU," he said.

He believes Chinese enterprises may find business opportunities in Ukraine's TV and telecommunication sectors which are undergoing modernization and reform.

At present, Chinese investment in Ukraine is about US$10 million.

Lack of knowledge and exchanges between the business communities of the two nations is one of the biggest bottlenecks hampering the further development of bilateral economic ties.

"Generally speaking, companies in one country are unfamiliar with the market in the other country," said Kamyshev. "They don't know a wealth of business opportunities are beckoning them in the other land."

"The better we know each other, the better our relations will be," he said.

Kamyshev said the two countries are now focusing efforts to bring the Chinese and Ukrainian businesspeople closer by holding a string of forums and trade fairs.

The ninth joint session of China-Ukraine international economic and scientific trade fair will be held in November in Ukraine.

The annual event has a tradition of attracting businesspeople from the two countries.

And the ambassador also wishes to promote the establishment of another annual economic forum to help medium and small sized companies to get to know each other better.

WTO matter

Commenting on China's market economy status, Kamyshev said Ukraine and China, regarded as transitional economies by many other countries, share much in common.

"I fully understand how hard China is working to improve its market economy," said the ambassador.

He also said he knows the difficulties that China is facing in handling anti-dumping cases as it is currently labeled a "non-market economy" by many other WTO members.

The ambassador said Ukraine counts much on Chinese support for its accession into the World Trade Organization (WTO), and wants to expedite a bilateral protocol needed for the accession.

"We hope the talks (on the service trade part of the protocol) can be speeded up," he said, adding the two countries have reached agreement on the trade of goods.

China joined the world trade bloc in late 2001.

(China Daily)