Possible Chinese Investment in Crimea

Recently, Russian leaders and media reports claimed that China could invest more money in Crimea. Specifically, Chinese companies may help build a bridge across the Kerch Strait, creating a new link between Crimea and the Russian mainland. The Chinese may also help expand various Crimean ports, build solar power facilities, create special economic zones for manufacturing or even participate in other energy and transportation infrastructure projects. Russia has plenty of reasons to invite Chinese investment in Crimea, but ultimately Moscow wants to create a sense of strategic solidarity. Some Russian commentators have expressed obvious economic doubts about the proposed projects, which, in some cases, may not yield financial returns. In other cases, Moscow may seek to protect its own companies from Chinese competition, seeing as Russia will want to benefit from exports to the region and from heavy industry and construction contracts there. Commentators have also raised familiar complaints about Chinese quality standards and the prospective inflow of Chinese construction workers.

Ukraine is a part of China's regional investment strategy but not a particularly important one. Since 2005, Beijing has committed roughly $2.4 billion in investment, slightly less than what it has invested in Belarus and far less than its investment in Hungary (though more than Poland or the Caucasus countries). Nevertheless, Ukraine's size, resources and key position as a portal to Eastern and Central Europe will always attract some Chinese attention. The Russians appear most interested in using Chinese investment as a means of lessening the costs of developing the peninsula, signaling that Crimea is indeed part of Russia. With Chinese cooperation, Moscow can also show the West that other states cannot be intimidated out of investing in areas under Russian control. Beijing probably will invest in Crimea and deepen its footprint -- it does not tend to pass up such opportunities, especially if Russia offers special incentives -- but Crimea will ultimately remain a small part of China's Black Sea interests. Strategic relations with Russia, however, give greater impetus to cut deals on Crimea, especially as Beijing looks to manage Russia while maintaining ties with Ukraine proper and the rest of the Russian periphery.

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