June 27, 2017

China (中国) Today

Events Review (19.06–25.06.2017)


І. Major-Profile Events and Trends in the Development of the Situation around the PRC

China and the United States are establishing their strategic partnership as the countries with the largest economic and military potentials. One of the important steps in this matter was the first round of the China-US Diplomatic and Security Dialogue in Washington on the 21st of June 2017, co-chaired by State Councilor of the People's Republic of China Yang Jiechi and US Secretary of State R. Tillerson. US Secretary of Defense J. Mattis, Member of Central Military Commission of the People's Liberation Army (PLA), Chief of the Joint Staff Department of the PLA Fang Fenghui and others attended the dialogue.

At the meeting, the Chinese and American positions on the main issues of mutual interest were checked and concretized. They were determined during the meeting of the leaders of the PRC and the USA in April this year. In particular, they discussed the principles of the future strategic partnership between China and the United States of America, as well as the parties' attitude to main world and regional security problems.

First China-US Diplomatic and Security Dialogue held in Washington D.C on June 21, 2017
First China-US Diplomatic and Security Dialogue held in Washington D.C
on June 21, 2017

Representatives of the People's Republic of China and the United States reaffirmed their readiness to expand mutually beneficial cooperation within the framework of three mechanisms for a Comprehensive Dialogue — Comprehensive Economic Dialogue, Law Enforcement and Cybersecurity Dialogue, and Social and Cultural Issues Dialogue. At this, they pointed out a need to properly understand each other's strategic goals.

For the PRC one of such goals is protection of the sovereignty of the country, ensuring its security and development, as well as revival of the Chinese nation. In this regard, China stands for building a new type of international relations based on cooperation and common interests. According to the Chinese side, such relations should be based on the principles of the United Nations and mutual respect.

The USA's representatives supported the PRC's position on the need to build equal relations between the parties by intensifying the dialogue between them. It was stressed that the USA does not intend to restrain China's development, since it is interested in strengthening the PRC as its strategic partner.

Taking into consideration the common interests, the People's Republic of China and the United States agreed to unite forces to combat international terrorism, as well as to peacefully resolve the situation around the Korean Peninsula by forcing North Korea to abandon its nuclear missile program. They also emphasized the importance of deepening the military relationship between the Chinese and American armies.

At the same time, the Dialogue showed that the parties retain territorial differences in the East China and South China Seas. Thus, the Chinese side pointed to “...China's indisputable sovereignty over the archipelagos of Nansha (Spratly) and Diaoyu (Senkaku), as well as the Paracel Islands, which gives the PRC all rights to protect the territorial integrity of the country and its maritime interests”. Proceeding from this, the representatives of the PRC called on the USA “...to adhere to its obligations on neutrality in the issue of disputed islands”.

Within the framework of the Dialogue, separate meetings were held at the level of the state and military leaders of both countries, including US President D. Trump and Speaker of the House of Representatives of the US Congress P. Ryan's meeting with State Councilor of the People's Republic of China Yang Jiechi, as well as Chairman of the US Joint Chiefs of Staff J. Dunford's meeting with Member of Central Military Commission of the People's Liberation Army (PLA) and Chief of the Joint Staff Department of the PLA Fang Fenghui. The participants in the talks summed up the results of the first round of the China-US Diplomatic and Security Dialogue, calling it one of the most important platforms for deepening interaction and trust of the parties, and resolving the existing contradictions.

A meeting of Chinese delegation with US President D. Trump at the White House, June 23, 2017
A meeting of Chinese delegation with US President D. Trump at the White House, June 23, 2017

ІІ. China's Strategic “The Belt and Road” Initiative in the Context of Chinese and Regional Interests

Vision for Maritime Cooperation under the Belt and Road Initiative
Vision for Maritime Cooperation under the Belt and Road Initiative

One of the directions for the development of the PRC's strategic “The Belt and Road” initiative is to expand its scope by attracting other countries and regions. Thus, the National Development and Reform Commission (NDRC) and the State Oceanic Administration (SOA) issued “The Vision for Maritime Cooperation under “The Belt and Road” Initiative. The document provides for the creation of the so-called “blue” (sea) economic corridors for Asia's communication with Africa, the Indochina Peninsula, Europe and Oceania.

In this regard, the PRC leadership is paying special attention to the Arctic route as a new promising line of communication between China and the European region. This route includes two main lines, namely the North-Eastern and North-Western passages. In particular, the North-Eastern Passage begins in Northern Europe, goes east through the Barents Sea, the Laptev Sea and further to the Bering Strait. The North-Western Passage begins from the Bering Strait along the northern coast of North America through the Canadian Arctic Archipelago to the Davis Channel.

According to the Chinese Center for Polar Studies, the Arctic route is 2–3.5 thousand kilometers shorter than the traditional line through the Suez Canal. At this, China will be able to save up to 5 billion US dollars a year on transportation costs.


III. Other Trends and Developments Influencing the Situation in and around China

3.1. Politics. Development of China's International Cooperation

Chinese Foreign Minister Wang Yi with Chairperson of the African Union Commission Moussa Faki Mahamat, Addis Ababa, June 21, 2017
Chinese Foreign Minister Wang Yi with Chairperson of the African Union Commission Moussa Faki Mahamat, Addis Ababa, June 21, 2017

The development of strategic partnership between China and the USA is accompanied by China's active efforts to strengthen ties with other countries. Last week, Chinese Foreign Minister Wang Yi visited the African region and the Middle East, where he visited Ethiopia, Jordan and Lebanon, and met with Chairman of the African Union (AU) Commission M. Mahamat.

In particular, Wang Yi and M. Mahamat determined the main areas of cooperation between China and the AU for the future, including: coordinating development strategies, expanding cooperation in security and peace, establishing closer contacts in the spheres of health care and human resources, and improving coordination in international and regional affairs. At the same time, China will contribute to the development of the transport infrastructure of African countries, as well as poverty reduction in the region and resolving food problems.

Following Wang Yi's meeting with Prime Minister of Ethiopia H. Desalegn and Minister of Foreign Affairs of the country W. Gebeyehu, an agreement was reached on deepening bilateral relations in the political, economic and security spheres. In this context, Wang Yi said that China was ready to help Ethiopia improve its public administration system, develop industry and transport (including aviation), train personnel, and fight against terrorism.

The main topic of the negotiations between Wang Yi and Lebanese Foreign Minister G. Bassil was the settlement of the conflicts in the Middle East, as well as China's participation in the development of the Lebanese economy. In addition, Wang Yi on behalf of the PRC invited Lebanon to participate in the Chinese “The Belt and Road” initiative.

June 25–26, 2017, Wang Yi visited Afghanistan and Pakistan. Issues of combating Islamic extremism, as well as preventing its appearing in other countries of the region, were discussed. The Chinese Foreign Minister paid special attention to security issues along the “Belt and Road”, which was called one of the main guarantees of the effectiveness of its work.


3.2. Economy. Some Aspects of the Economic Situation in China

The PRC's government is taking measures to improve the investment climate in the country. In particular, it has decided to expand the access of private capital to the construction industry. The National Development and Reform Commission of China has named more than 160 promising projects in the areas of electricity, oil and gas, transport and telecommunications, which will be implemented with the involvement of private investors in the form of mixed ownership.

The leadership of the PRC is trying to rationalize the structure of the Chinese economy, including through the removal of redundant and unprofitable enterprises from service. Since the beginning of 2017, enterprises have been closed that were able to smelter 42 million tons of steel and produce 97 million tons of coal per year. This has significantly improved the state of China's metallurgical industry. Thus, in January–April of this year, about 70 large and medium-sized producers belonging to the China Iron and Steel Association (CISA) got a profit of 32.9 billion Yuan (more than 4.8 billion US dollars), while within the same period last year their losses were 1.1 billion Yuan.


The volume of the economy of the PRC (the second largest in the world after the USA), as well as its stable development, strengthen the international position of the Chinese currency. In June of this year, the European Central Bank for the first time adopted the Chinese Yuan as a reserve currency, which shows the growing importance of China as one of the most important partners of the countries of the European Union. Since October 1, 2016, the Yuan has been the fifth currency in the international currency basket of the IMF, along with the US dollar, the Euro, the Japanese Yen and the British Pound Sterling. To date, the Chinese Yuan has already been used as foreign exchange reserves in the UK, Russia, Switzerland and a number of African countries.


Besides, with the leading role of the PRC, cooperation between financial institutions of the BRICS countries is deepening. June 19, 2017, the next round of BRICS Finance Ministers and Central Bank Governors Meeting was held in Shanghai. The participants discussed the state and prospects for the development of the macroeconomic situation in the world, the direction of cooperation between the BRICS member countries in the financial sphere. At this, specific agreements were reached on coordinating the actions of the parties in the implementation of joint investment projects, in the tax policy and in the accounting and auditing control.

BRICS Finance Ministers and Central Bank Governors Meeting, Shanghai, June 19, 2017
BRICS Finance Ministers and Central Bank Governors Meeting,
Shanghai, June 19, 2017

3.3. Security and Law Enforcement Agencies

North Korea's efforts to implement its nuclear missile program have once again exacerbated the situation in the Asia-Pacific region. Last week, the DPRK conducted a test of a new engine for a long-range carrier rocket. According to experts' estimates, after appropriate refinement, an engine for an intercontinental ballistic missile can be created on its basis. Besides, according to US space intelligence, the DPRK is preparing new nuclear tests.


In this situation, June 21, 2017, US President D. Trump extended sanctions against the DPRK for another year (introduced in 2008 and extended and expanded in 2010, 2011, 2015 and 2016). Commenting on this issue, the US State Department defined North Korea's actions to develop nuclear missile weapons as “an extreme threat to the national security, foreign policy and economy of the United States of America”.

President of the Republic of Korea Moon Jae-in observes the test-firing of “Hyunmoo-2” ballistic missile, June 23

Taking into account the actions of the DPRK in the nuclear missile sphere, other APR countries are developing their own new missile systems, which increases the level of military threats in the region. Thus, on 23 June 2017, the fourth (within a year) launch of the medium-range ballistic missile “Hyunmoo-2” of the national development was carried out in South Korea. The test-firing was watched by the new President of the Republic of Korea Moon Jae-in, who praised the missile system. According to him, the adoption of the “Hyunmoo-2” missile will allow to consolidate the advantage of South Korea's military potential over the DPRK. The missile has a range of 800 kilometers, and if it goes into service, it will complement the US THAAD Missile Defense System in South Korea.


Hull of the Type 055 class guided missile destroyer for the PLA’s Navy
Hull of the Type 055 class guided missile destroyer for the PLA’s Navy

Against this background, China is building up military capabilities of the PLA Navy, which is entering a new level of quality. In particular, the program for the development, construction and commissioning of guided missile class destroyers is being implemented. Thus, in Shanghai, at the Jiangnan Changxing shipyard, the first Type 055 class guided missile destroyer was assembled by the China State Shipbuilding Corporation (CSSC). Besides, two more hulls of such ships are being built at the shipyard, and the fourth hull is being built at the shipyard in Dalian. A total of 12 ships will be built. The first of them is planned to enter into service of the PLA Navy in 2018.

The main armament of the Type 055 class guided missile destroyer — anti-aircraft missiles “HQ-19, -26”, cruise missiles “CJ-10” and anti-ship missiles “YJ-12, -18, -83”. The missile armament is controlled by a single automated system based on radar data with a phased array antenna. So, destroyers will be able to perform anti-missile and anti-aircraft defense, as well as to launch missile strikes on ground and surface targets. The length of the ship is 183 meters, width is 22 meters, displacement is 12,000 tons, the maximum speed is 32 knots, the cruising range is 7,000 miles, and the crew is 310 men.

The PRC's Military Command pays due attention to improving the capabilities of the PLA Navy to fulfill the assigned tasks, as well as China's naval presence in the Asia-Pacific region. June 25, 2017, in the East China Sea, there was an exercise of a group of warships of the PLA Navy led by the aircraft carrier “Liaoning” began. The group also includes the “Jinan” and “Yinchuan” destroyers and the “Yantai” missile frigate.


3.4. Science and Technology

Thanks to the PRC's consistent actions, its aviation and space industries are confidently entering the leading places in the world. At the Paris air show in Le Bourget, samples of the products of more than ten Chinese enterprises were presented. In particular, the model of a fifth generation multi-purpose fighter J-31 was displayed, the models of the advanced training aircraft L-15, the “Wing Loong” UAV’s, the Y-9 military transport aircrafts, and the carrier rockets “Chang Zheng-3B”, “Chang Zheng-2G”, “Chang Zheng-5” and “Chang Zheng-11”, platforms for satellite communications and satellite sounding of the “Dongfanghong” series, reusable space vehicles.

China's expositions at the air show in Le Bourget

China is gradually moving to the leading positions in the development and production of computer technology. In the international rating “Top-500”, promulgated on 19 June 2017, the list was again headed by two Chinese computers “Sunway TaihuLight” and “Tianhe-2”. By the speed of computing operations, Chinese computers almost double the modern computer systems of other countries, including the US.


ІV. Plans and Prospects for Cooperation between China and Ukraine

Ukraine's geographical position at the intersection of transport communications Western Europe — Asia and Northern Europe — Middle East makes it one of the important potential participants of the Chinese “The Belt and Road” initiative. In this regard, the 2nd Ukrainian Silk Road Forum, scheduled for November 2017 in Kyiv, will be of particular importance. The event is expected to discuss joint Chinese-Ukrainian projects in the areas of trade, infrastructure development and modern technologies.

Ukraine's participation in the “Belt and Road” is also promoted by the already acquired experience of cooperation between Ukraine and China in the above-mentioned spheres. In particular, within the framework of the Paris air show in Le Bourget, a contract was signed for the delivery of AI-25TLK aircraft engines by the Ukrainian “Motor Sich” company to be used on Chinese K-8G aircraft manufactured by China National Aero-Technology Import&Export Corporation (CATIC). Also, preliminary questions were discussed on the delivery of 50 An-178 aircrafts to the PRC.

Ukraine's expositions at the air show in Le Bourget

June 20, 2017, Ukraine and China made an agreement to establish a special body for servicing Ukrainian-Chinese trade that will be located in Chongqing and will coordinate the delivery of Ukrainian agricultural products to south-western region of China for further distribution by trade outlets throughout China. At this, China has agreed to import dairy products from nine other Ukrainian enterprises.