Ukraine announced the nationalization of the engine manufacturer Motor Sich to prevent its acquisition by Chinese investors, because of its strategic importance to national security.
“А decision has been made according to which the Motor Sich enterprise will be returned to the Ukrainian people, will be returned to the ownership of the Ukrainian state in a legal, constitutional way,” said Danilov, secretary of Ukraine’s Security and Defence Council, adding that Chinese investors would be compensated.
Motor Sich manufactures several engines for Ukrainian and Russian aircraft. Most notably, it produces the Progress D-18 that powers the Antonov An-124 Ruslan and the An-225 Mriya, the world’s largest freighter aircraft. Motor Sich also developed several engines to equip cruise missiles, such as the MS400.
In recent years, Chinese groups including Beijing Skyrizon Aviation have acquired 75% of the shares of Motor Sich. As a consequence, the trading of the engine maker’s shares has been frozen since 2018.
In August 2020, then-US Secretary of State Michael Pompeo openly voiced his “concerns regarding malign PRC (People’s Republic of China) investment in Ukraine, including Beijing’s efforts to acquire the Motor Sich engine manufacturer.” Washington suspected that China was attempting to secure vital manufacturing capabilities for its aerospace and military industry, specifically to produce engines powering large aircraft and helicopters.
On January 29, 2021, Ukrainian President Volodymyr Zelensky signed presidential decrees sanctioning Skyrizon and its chairman Wang Jing, as well as three other companies that showed interest in acquiring Motor Sich. The sanctions prevent the parties from holding any stakes in a Ukrainian company for three years.
Chinese investors filed an international arbitration claim to recover $3.5 billion from Ukraine. Wang called the presidential sanctions and the nationalization a “continued abuse of state power and the suppression of normal business activity that violates the law and contradicts the basic principles of a market economy,” as quoted by the Kyiv Post.