The government of Ukraine announced Thursday that it would seize Motor Sich, a private corporation that specializes in building jet engines and other military hardware, and return it “to the people” after multiple attempts by a Chinese company to buy it.
Last month, Ukraine sanctioned a Chinese company, Beijing Skyrizon Aviation, for attempting to take over Motor Sich.
Ukrainian officials protested that Motor Sich is too important to the Ukrainian military to allow it to be bought by a foreign actor, and thus Skyrizon posed a national security threat. Motor Sich remained nonetheless owned by majority-Chinese shareholders, which the administration of President Volodymyr Zelensky deemed concerning enough to end their ownership of the company by force.
Zelensky’s unilateral actions against China — despite Ukraine’s minimal economic power to confront China and the fact that it remains embroiled in a civil war against Russia-backed separatists in its east — defied much of Kyiv’s attitude towards China before the comedian and outsider took the presidency. Ukraine remains, due to past policy, a member of China’s “Belt and Road Initiative” (BRI), a global economic project in which the Communist Party of China offers predatory loans to developing countries.
“The decision has been taken to return Motor Sich to the Ukrainian people,” Oleksiy Danilov, the head of Ukraine’s Security and Defense Council, said this week, according to Radio Free Europe/Radio Liberty (RFERL), following a meeting to determine the fate of the company on Thursday. Danilov assured the company’s shareholders that, unlike nationalizations in socialist or communist countries, Kyiv will compensate the owners of the company for the fair price of their shares.
The declaration followed comments from ruling lawmakers last week that the administration had set a plan in motion to protect Motor Sich. The company itself responded to the reports last week by accusing the Chinese owners of the company of not paying Motor Sich for their shares. Motor Sich President Vyacheslav Bohuslayev said last week, “there are no Chinese investors and no investment program” as Motor Sich has received “not a penny.” Outraged Chinese investors denied the claim.
At the time of Danilov’s announcement, about 75 percent of Motor Sich was in the hands of Chinese nationals and companies, including the sanctioned Skyrizon, the Agence France-Presse (AFP) reported Thursday, citing Ukrainian government sources.
As China is a communist country, it controls the nation’s most powerful businessmen and “private” companies, making the nationalization of the Ukrainian company a direct challenge to Beijing’s purchasing power in the country.
The Chinese Foreign Ministry responded curtly to the move Friday.