China's Hu inks deals on rare Ukraine visit

KIEV (AFP) – Chinese President Hu Jintao on Monday made a rare visit to Ukraine, signing a strategic partnership declaration and $3.5 billion in deals to revive a relationship that had fallen into neglect.

Hu met President Viktor Yanukovych for talks in Kiev and afterwards the two heads of state signed the declaration of strategic partnership, a status that Beijing only bestows on its closest allies.

"This is a historic breakthrough in Ukrainian-Chinese relations," a beaming Yanukovych told reporters at a news conference with Hu, putting the value of deals signed during the Chinese president's visit at $3.5 billion.

These included a deal for China to extend a $1 billion loan to Ukraine to build a rail link between Kiev and its airport Boryspil in a project expected to involve Chinese companies.

A memorandum of understanding for cooperation in the energy sector was also signed as well as an agreement for China to extend 80 million yuan (12 million dollars) in financial aid to Ukraine.

It was not immediately clear what the other deals involved but they appeared to concern the energy sector.

Hu meanwhile described Ukraine as a "sincere friend and sure partner of China".

Relations between Beijing and Kiev fell into neglect during the presidency of Viktor Yushchenko, who launched a no-holds-barred drive for integration with the West and took little note of relations with Asia.

This has changed since the coming to power in 2010 of Yanukovych, who has switched Ukraine's foreign policy back to the neutral balance between East and West favoured by Ukraine's president to 2005 Leonid Kuchma.

Yanukovych visited China in September, overseeing multi-billion dollar contracts including for Chinese companies to build the Kiev airport link, a key project for the city which is due to host the Euro 2012 football final.

Investment from one of the world's fast growing economies is much needed for Ukraine, whose export-dependent economy was battered by the financial crisis and is still dependent on IMF credit.

Bilateral trade currently stands at $6 billion annually, officials said. The two sides are hoping to raise this figure to $10 billion by 2012, Hu added.

Ukraine appears important for China as a leading agricultural producer that can help supply the Chinese population and due to its strategic position as an energy transit hub between Russia and the European Union.

But Beijing -- which is using a defunct Ukrainian Soviet-era vessel as the base for its first aircraft carrier -- also appears interested in Ukraine's military technology inherited from the Soviet Union.

According to the daily Kommersant, Ukraine is looking to sell "up to four" Zubr giant military landing hovercraft to China, which is also interested in anti-tank missiles, air-to-air missiles and tank engines.

Hu arrived in Ukraine on Saturday, reportedly spending the weekend at a Tsarist-era hotel in Yalta on the Black Sea Crimean peninsula, a popular resort fondly remembered by many Communists who spent time in the USSR.

Yanukovych and Hu had already held closed-door talks over the weekend in Yalta.

His visit has aroused a lively interest in Ukraine, which unlike other ex-Soviet states favoured by energy-hungry China is relatively poor in oil and gas reserves.

"Some of Yanukovych's aides believe that China could be a third vector in Ukraine's foreign policy after the European Union and Russia," said Alyona Getmanchuk, director of the Institute of World Policy in Kiev.

Since coming to power, Yanukovych has moved to restore relations with Russia that were severely eroded under Yushchenko while also maintaining the ambition of EU integration.