Illustration: Chen Xia/GT

There is a widespread rumor on the internet recently claiming that "the Russia-Ukraine conflict has cost China over $10 billion in investment in Ukraine." However, a simple fact-check shows that the claim is far from truth. Total Chinese direct investment stock in Ukraine is less than 2 percent of the rumored loss, according to official statistics. And, for more than 10 years, the total turnover of Chinese-contracted projects in Ukraine has only been around $4 billion.

Since the 1990s, China has gradually become an important source of investment. Russia, Ukraine and Belarus were originally important destination of Chinese companies. However, due to the unstable macro-economy, unsatisfactory business environment, and the sluggish economic growth, Ukraine's international economic status has been getting worse. Meanwhile, its domestic society is seriously torn and political infighting continues, and it also makes strategic mistakes in international geopolitics. All these factors have led to a lack of confidence among international investors in the country. China's trade and contracted projects in Ukraine have developed to a certain extent, but direct investment has stalled.

From the end of 2012 to the end of 2020, the stock of Chinese direct investment in Ukraine only increased from $33.14 million to $190.34 million, according to official statistics. During 2012 to 2020, there are only four years that the annual flow of China's direct investment in Ukraine exceeded $10 million, with the highest level of $53.32 million in 2019. In 2015, it was a net outflow of $760,000. With such direct investment flow and stock, how can China's direct investment assets in Ukraine lose over $10 billion due to the conflict?

Given its leading infrastructure capacity and overseas contracting experiences, China has undertaken a certain number of engineering construction projects in Ukraine. According to data from the Ministry of Commerce, from 2008 to 2020, the annual turnover of China's contracted projects and the value of newly signed contracts in Ukraine were both more than $100 million. During the 13 years, the accumulated turnover was $4.24 billion, and the newly signed contract value was $9.56 billion. But this is China's export of services and related building materials, equipment to Ukraine, which is fundamentally different from direct investment in Ukraine. A Chinese company contracting for a part of an infrastructure project does not mean that the entire project is a Chinese asset.   

Those rumors claiming that "the Ukrainian crisis cost 10 billions of dollars of Chinese assets in Ukraine" dishonestly included all Chinese exports, the infrastructure projects participated by Chinese companies, and facilities and terminals used by Chinese-funded companies as Chinese assets. For instance, there are videos claiming that China invested the Kharkiv Metro project, but the fact is CRRC Tangshan won a bid for metro vehicle purchase for the project in June 2020, which shows the company will deliver 40 metro vehicle, equipment, tools and related services.

In addition, China's investments in Ukraine are all from Chinese companies, not the government. The rumor gives a false impression that the losses are at the expense of Chinese tax payers, which is nothing but clickbait based on falsehoods.

China's direct investment stock in Ukraine is far from the $10 billion level, and it also lags behind other major regional countries. At the end of 2020, the stock of Chinese direct investment in Ukraine was only 1.6 percent of the stock of direct investment from China to Russia ($12.07 billion), and equivalent to 31.3 percent of the stock of direct investment from China to Belarus ($607.28 million). 

The five Central Asian countries attract China's direct investment stock that is doubled, even dozens of times that of Ukraine. At the end of 2020, Turkmenistan, the least, attracted $336.47 million in direct investment from China, and Kazakhstan, the largest, attracted $5.87 billion in direct investment from China at the end of 2020, which was nearly 31 times that of Ukraine in the same period. Georgia is as far away from China as Ukraine, and its population is less than 10 percent of Ukraine's population. Its resource endowment and location are not comparable to Ukraine's. At the end of 2020, China's direct investment stock in Georgia reached $701.67 million, equivalent to 3.7 times that of Ukraine.

In terms of the engineering contracting market, gains by Chinese enterprises in Ukraine are also less than that in Russia and Belarus. As mentioned above, from 2008 to 2020, the cumulative turnover of China's contracted projects in Ukraine was $4.24 billion, and the value of newly signed contracts was $9.6 billion. During the same period, the two indicators in Russia were $23.48 billion and $50.62 billion. The two indicators for Belarus were $9.87 billion and $12.8 billion.

As a major emerging investor, China is willing to develop direct investment in all countries, including Ukraine, on the basis of equality and mutual benefit principles; and it is natural for it to pay attention to its asset safety. But any exaggeration and rumor spreading without basic professional knowledge would not help improving the security of China's overseas assets, but will, on the contrary, have a negative effect.

The author is a research fellow with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. bizopinion@globaltimes.com.cn