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China Wants Motor Sich

The acquisition of Motor Sich is in the interests of the company, China and Ukraine. However, the deal can fail.

GAME CHANGERS
US national-security adviser John Bolton arrived to the Ukrainian capital, the American Embassy in Kiev has confirmed.

The likely goal is to disrupt the acquisition by China of Motor Sich, Urkaine’s largest manufacturers of airplane engines.

That a group of Chinese companies are trying to buy Motor Sich, the Global Times wrote a month and a half ago.

Two days ago, Skyrizon and Xinwei Group acquired a controlling stake in the company. This transaction must be approved by the Ukrainian antimonopoly watchdog.

The acquisition would give China access to technology of making large aircraft engines. At the moment only six countries - USA, Canada, England, France, Ukraine and Russia – can make them.

However, the deal may still fall apart as the United States does not want it to happen. The acquisition also contradicts personal ambitions of some members of the Ukrainian government.

The company, which created the engines for the world's largest transport aircraft An-225, will help China increase its presence in the world’s aircraft industry and sharply reduce its technological lag.

If the Antimonopoly Committee of Ukraine approves the deal, more than 50% stake in Motor Sich would go to the Chinese companies. Currently the chief engineer and CEO of the company Vyacheslav Boguslaev owns the aviation giant.

The aquisition would allow the Ukrainian company to expand its presence in China after it lost the Russian market.

In early July, the head of the Ministry of Industry and Trade of Russia Denis Manturov said that although Russia has aircrafts equipped with Ukrainian-made engines, repairs are carried out without the involvement of Ukrainian specialists.

There are over 1,200 Motor Sich engines installed on Chinese aircrafts. More importanlty, China would become one of the leaders in the world’s aviation industry.

Yet, the deal may not take place for two reasons.

Firstly, there are people close to the Ukrainian leadership who want to gain control of the last operating world-class enterprise in Ukraine.

Secondly, the United States does not want the deal to go through. Advisor to the President of the United States John Bolton seems determined to disrupt it in order to limit "China's ambitions".

From the American perspective, the deal is a matter of "national security" and "strategic rivalry with China".

Published: August 27, 2019