As the United States and China compete for influence in Ukraine in the wake of the vacuum left by Russia when it annexed Crimea in 2014, a court in Kyiv has rejected an appeal by China’s Skyrizon Aircraft Holdings to unfreeze shares in the Ukrainian engine manufacturer Motor Sich.

Skyrizon, an offshore company based in the British Virgin Islands but linked to China, tried to buy Motor Sich in 2016 but the deal was opposed by the United States. The shares were frozen in 2017 pending a probe by the Security Service of Ukraine.

Beijing Skyrizon Aviation Industry Investment reportedly owns 100% of the registered capital of Hong Kong Skyrizon Holdings Limited, which in turn owns 100% of the registered capital of Skyrizon Aircraft Holdings.

The Kyiv court has now opted to keep the shares frozen, ruling that the investigation must continue into whether the sale of Motor Sich jeopardizes national security by allowing valuable technology to fall into foreign hands. A lawyer told Reuters that Skyrizon plans further appeals.

Motor Sich produces the ZMBK Ivchenko-Progress D-18 turbofan, which powers variants of the An-124 and An-225 freighters that are in service for Antonov Airlines (ADB, Gostomel). China has been linked to the purchase of the programme from Ukraine's Antonov Design Bureau through the Aerospace Industry Corporation of China (AICC), which aims to restart An-225 production.

Motor Sich's subsidiary Motor Sich Airlines (M9, Zaporizhzhia), meanwhile, operates scheduled and charter passenger and cargo services.

Motor Sich cut its ties with Russia, then its biggest client, after Crimea's annexation. It is now operating at less than half capacity and observers say a resolution must be found quickly.

Like many countries, Ukraine has had to balance building ties with Beijing with staying friends with Washington, its biggest provider of military aid. In recent weeks, both China and the US have offered help to Ukraine as it battles Covid-19.

“Motor Sich has become a hostage to the geopolitical situation,” former prime minister Anatoliy Kinakh told Reuters.