This September, the U.S. International Development Finance Corporation announced a $75 million equity commitment to the U.S.-Ukraine Reconstruction Investment Fund. Pursuant to the U.S.-Ukraine Minerals Deal signed in April, the joint fund will use the revenue from natural resource extraction to finance Ukraine’s economic recovery.
However, the total cost of reconstruction and recovery over the next decade in Ukraine is estimated to be $524 billion, which is almost 2.8 times the country’s nominal GDP for 2024. The demise of USAID, disagreements over U.S. involvement in Ukraine, and constant bickering between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy all suggest that Kyiv cannot expect any Marshall Plan-like support to aid its recovery.
Meanwhile, the EU’s ability to meaningfully assist with reconstruction beyond the 50 billion euro it pledged in 2024 is unlikely. Europe is currently preoccupied with investing in its own defenses amid deteriorating relations with the United States and looming discussions over a withdrawal of U.S. troops from the continent.
As Ukraine’s Western partners have wavered, Beijing has shown that it is eager to offer support. On March 18, Li Ming, spokesperson for the China International Development Cooperation Agency, announced readiness to “continue to provide assistance [to Ukraine] within our capacity according to the wishes of parties involved, which, of course, includes post-war reconstruction.” Beijing also made reconstruction one of the points in its 12-point Peace Plan.
Zelenskyy has expressed his hopes for China’s assistance since the start of the war, and he recently admitted that such a partnership would be “lucrative” for all countries involved. These aligned priorities make it seem inevitable that Beijing will be involved in Ukraine’s restoration. However, given that Kyiv wants to accelerate its accession to the European Union, it would behoove all parties to develop risk management strategies to navigate Chinese investments.
China’s proclivity for mixing commercial and state interests has already sparked security concerns in the EU. Restoring and improving critical infrastructure and technological capacity will be a priority in the post-war reconstruction; hence, Beijing’s investments in these areas must be treated with special caution as to avoid the kind of security challenges that previously emerged from Chinese investment in Greece, Serbia, and Romania.
In 2016, when Greece was perceived to be abandoned by the EU amid its sovereign debt crisis, Beijing offered economic relief. China’s largest shipping company, COSCO Shipping, acquired a majority stake in Greece’s largest port. Its largest utility company, the State Grid Corporation of China, acquired a minority stake in a previously fully state-owned power grid operator, ADMIE, and, most recently, acquired a 20 percent stake in Greece’s largest electricity transmission project.
Following the 2016 investments, Athens prevented the EU from officially condemning Beijing’s aggression in the South China Sea in an apparent quid pro quo. The next year, in a move dubbed “dishonorable” by an EU diplomat, Greece vetoed an EU resolution condemning China’s crackdown on human rights activists. Days later, it opposed stricter screening of Beijing’s investments in Europe. These controversial decisions seemed to be related to Chinese investments in the country.
The investments also triggered concerns over extensive Chinese influence on supply chains and critical shipping routes in the EU’s strategically important border region, as well as highly sensitive power grid technology.
In 2017, Serbia, still on a stalled path to EU membership due to its complicated political past, signed a Strategic Partnership Agreement with Huawei. With the official aim of preventing crime, close to a thousand smart cameras capable of advanced facial and license plate recognition were installed in 800 locations in Belgrade as a part of Huawei’s Safe City project.
Beijing is widely speculated to be able to access surveillance data from such “safe cities” because the data is transmitted through Chinese-controlled servers. China then uses the data to train the AI supporting its facial recognition software, which is subsequently sold to law enforcement agencies worldwide, perpetuating its “authoritarianism exports” cycle. At the time, Serbia did not have the data protection laws necessary to regulate the project’s implementation, meaning this sensitive data was indeed vulnerable to exploitation.
Chinese investment in Romania generated similar security complications. In 2015, Romanian state-owned energy company Nuclearelectrica signed an MOU with China General Nuclear Power (CGN) to build two nuclear reactors at the country’s sole nuclear power plant, Cernavodǎ. A renewed memorandum was signed in 2019, the same year that the United States placed CGN on a blacklist for trying to acquire advanced U.S. technology and material to ramp up its own nuclear arsenal. By next year, Bucharest followed Washington in instructing Nuclearelectrica to end negotiations with CGN, “citing economic and security concerns.”
Given previous examples of the baggage that comes with Chinese investment, Ukraine and the West should be prepared for Beijing to pursue a double agenda in Ukraine’s reconstruction. Whether it is currying political favors, overtaking critical infrastructure, or exporting advanced technology, Beijing is expected to gain much from helping to rebuild Europe’s second largest country.
It is necessary for Kyiv to have stringent standards for the screening of investors, contractors, and other entities to be involved in rebuilding. Every project needs to be accompanied by a thorough risk assessment and mechanisms in place to protect sensitive information. Consulting with experts in the EU and the U.S. will be critical for Ukraine to prevent incidents similar to the canceled nuclear power plant deal between Beijing and Bucharest. Washington and Brussels, for their part, should recognize that greater burden-sharing in Ukraine’s restoration would benefit all parties and prevent security concerns from spilling over should Ukraine join the EU.
