Ukraine plans to nationalize Motor Sich, an aerospace manufacturer that is majority-owned by Chinese companies, due to its strategic importance to national defense.
"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 following a meeting of the body on March 11.
The nationalization will proceed in “a legal, constitutional way” and investors will be compensated, he added.
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The nationalization of the jet engine manufacturer is likely to irk China but please the United States, Ukraine’s chief foreign backer against Russian aggression.
Washington has opposed Chinese investment in Motor Sich in recent years out of concern it would help transfer its advanced technology to Beijing.
In January, the United States blacklisted Chinese aviation firm Skyrizon, which has sought to acquire control of Motor Sich, and said the firm's "predatory investments and technology acquisitions in Ukraine represent an unacceptable risk of diversion to military end use” in China.
Two weeks later, Ukrainian President Volodymyr Zelenskiy signed a decree imposing sanctions on four Chinese companies including Skyrizon that were seeking to gain control of the aerospace firm.
In December, the Chinese investors behind Skyrizon filed a $3.5 billion arbitration case against Ukraine, accusing Kyiv of expropriating its investment in Motor Sich after the government froze its shares in the company in 2018.
Motor Sich makes engines for helicopters and aircraft. It also makes engines that can be used for cruise missiles and drones.