June 6, 2017

China (中国) Today

Events Review (29.05–04.06.2017)


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

The nineteenth meeting of the leaders of China and the EU, held on 2 June 2017 in Brussels, can be considered a significant event of the last week. Premier of the State Council of China Li Keqiang met with EU leaders, in particular President of the European Council D. Tusk, European Commission President J. Juncker and some of their colleagues to discuss the prospects for the development of “healthy and stable” relations between the PRC and the European Union. In general, the parties paid attention to the opportunities for uniting the Chinese initiative “The Belt and Road” with the European Development Policy.

China-European Union leaders’ meeting, Brussels, June 2
China-European Union leaders’ meeting,
Brussels, June 2

The basis for this was the positive outcome of China's trade and economic cooperation with the EU. For example, in 2016, the trade turnover between the PRC and the European Union amounted to 547 billion US dollars. As of May this year, the total volume of Chinese investments in the economy of the EU countries amounted to 73.3 billion US dollars and of European to the Chinese economy — 114.6 billion US dollars.

Proceeding from this, it was pointed out that it is extremely important to conclude a Sino-European investment agreement, which would help deepen the cooperation of the parties. By the way, the EU leadership promised to continue to provide assistance in the issue of China's accession to the WTO.

Special attention was paid to Russia's armed aggression against Ukraine. Parties confirmed the commonality of their positions concerning the support of the territorial integrity of the Ukrainian state.


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

As part of the implementation of the Chinese initiative “The Belt and Road”, the leadership of the PRC adheres to a consistent policy of deepening trade and economic ties with partner countries. Thus, in the first quarter of this year, bilateral trade with China's “Belt and Road” participants reached 26 billion 790 million US dollars, with the increase of 41.6 % in annual terms. In the said period, trade with them accounted for 35.2 % of the total volume of China's exports and imports.

Bilateral trade between China and Kazakhstan
Bilateral trade between China and Kazakhstan

The development of the “Belt and Road” is extremely important for other participants of the project. According to the Government of Kazakhstan, the expansion of the country's participation in the Chinese initiative will significantly increase the volume of transit of goods flows through Kazakhstan's territory. However, the solution of this issue requires a profound modernization of the transport infrastructure of Kazakhstan, including with the participation of foreign investors. This will attract more than 3 billion US dollars in foreign investments, stimulate additional GDP growth by 0.1–0.2 % per year and create at least 100,000 jobs.

The government of another project participant, Tajikistan, has developed a special program for combining the National Development Strategy of the country for the period until 2030 with the “Belt and Road”. The program provides for the creation of favorable conditions for achieving the Republic's main goals for the medium term, namely: achieving energy security of the country and using energy efficiently, breaking the communication deadlock and transforming Tajikistan into a transit country, and again — increasing employment.

The FRG's financial and economic circles are actively interested in the “Belt and Road” too. At the end of May this year, Germany's largest commercial bank Deutsche Bank and the China Development Bank (CDB) agreed on cooperation in financing relevant programs. For this purpose, Deutsche Bank promises to allocate more than 3 billion US dollars. Experts believe that investments into the development of the “Belt and Road” will ensure a broader access of the German business to the markets of both China and other countries, which will contribute to the economic growth of the FRG.

Within the framework of the implementation of the projects of the “Belt and Road” on 1 June 2017, in the port of Ganzhou, Jiangxi Province, was held the opening ceremony of a two-way rail-sea direct route between China and Europe.


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

3.1. Development of China's international cooperation

Chinese Prime Minister Li Keqiang and German Chancellor A. Merkel witnessed signing of bilateral cooperation documents, Berlin, June 1
Chinese Prime Minister Li Keqiang and German Chancellor A. Merkel witnessed signing of bilateral cooperation documents, Berlin, June 1

During his European tour, Premier of the State Council of the People's Republic of China Li Keqiang met with the leadership of Germany, as the leading EU country, and of Belgium, as a resident of the governing bodies of the European Union. During the talks between Li Keqiang and Federal Chancellor of Germany A. Merkel, the prospects for the development of Sino-German relations were discussed, in particular, the preparation of the G20 meeting in Hamburg scheduled for July 2017. Li Keqiang and A. Merkel agreed on the issues of supporting the processes of globalization in the trade, economic and investment spheres.

As a result of the meeting, a number of documents were signed on expanding cooperation between China and Germany in different spheres, including joint production of various high-tech products. The parties also agreed in principle to unite the programs “Made in China-2025” and the German “Industry 4.0”. They touched upon the theme of uniting international efforts in the struggle against global climate change.

While in the FRG, Li Keqiang participated in the Sino-German Innovation Forum in Berlin, where was discussed the need to deepen interaction of the parties in the spheres of science and modern technologies, which would contribute to the development of progress in the world.


Chinese State Councilor Yang Jiechi meets with Japanese Prime Minister Shinzo Abe, Tokyo, May 31
Chinese State Councilor Yang Jiechi meets with Japanese Prime Minister Shinzo Abe,
Tokyo, May 31

The PRC's special attention is also paid to resolving contradictions with the countries of the Asia-Pacific region and strengthening ties with them. Thus, on 29–31 May 2017, the 4th round of the China-Japan dialogue was held in Tokyo with the participation of Chinese State Councilor Yang Jiechi and Japanese Prime Minister Shinzo Abe who pointed out the fundamental importance of normalizing relations between the two countries as a guarantee of stability in the APR. In this regard, an agreement was reached on further strengthening the contacts between the PRC and Japan at all levels, deepening mutually beneficial cooperation, strengthening coordination of actions in world and regional politics, as well as regarding the solution of Sino-Japanese problems, in particular, over disputed islands. Along with this, the leaders of China and Japan demonstrated their countries' common position on the issue of the inadmissibility of North Korea's creating nuclear missiles.


3rd International Conference “Russia and China: Taking on a New Quality of Bilateral Relations”, Moscow, May 29–30
3rd International Conference “Russia and China: Taking on a New Quality of Bilateral Relations”, Moscow, May 29–30

A high level of interest in strategic partnership with the PRC is demonstrated by the Russian Federation. This was confirmed by President V. Putin during the meeting with media representatives, where the results of the 3rd international conference “Russia and China: Taking on a New Quality of Bilateral Relations” were discussed (organized by the Russian Council on International Affairs on 29–30 May in Moscow).

According to the Russian President, Russia and China always find common approaches to the most difficult problems in international relations. As an example, he cited the nature of interaction between the two countries within the UN and the SCO, which testifies to the “key role of Russian-Chinese relations both for the Eurasian region and for the whole system of the world order”.

Also, V. Putin pointed out the expansion of cross-border cooperation between Russia and China in terms of increasing the volume of mutual trade and participation of Chinese business in the development of the economy of the eastern regions of the Russian Federation. In total, more than 20 joint Sino-Russian projects in the spheres of agriculture, petrochemistry, processing of natural resources and tourism for a total of about 3 billion US dollars are being implemented in the Far East of Russia today.


3.2. Some Aspects of the Economic Situation in China

According to the statistics of the PRC, in general, within the first four months of this year, the income of China's large enterprises, compared with the same period last year, increased by 24.4 % — to 330.1 billion US dollars. In 38 of the 41 main industries, there was an increase in income, and in three — a decline. In particular, the revenues of oil refining enterprises increased by 46.5 %, of ferrous metallurgy — by 1.4 times, of non-ferrous metallurgy and rolled products — by 74.5 %. While incomes of the enterprises of electric power and heat supply fell by 36.9 %.

At the same time, in April of this year, the positive balance of China's international trade in goods and services, compared with March this year, increased by 36 % — to 23.4 billion US dollars. At this, the positive balance of trade in goods amounted to 41.7 billion US dollars, while the negative balance in the sphere of trade in services was 18.3 billion US dollars.

It is also very important for the Chinese leadership that the investment climate in the country should improve. Therefore, a decision was made to simplify the rules for external investment of enterprises operating in the sphere of high-tech engineering.

One of the results is the decision of the European company “Airbus Helicopters” to open China's first final assembly line for commercial H135 helicopters. The helicopter plant in Qingdao City (Shandong Province) will be jointly managed by the “Airbus Helicopters” and “Qingdao United General Aviation Company”. The facilities of the enterprise will allow to assemble up to 20 H135 helicopters annually (the light helicopter, which is widely used in China for medical aid, search operations, police supervision, fire protection and tourism).

“Airbus Helicopters” to open China's first final assembly line
for commercial H135 helicopters

3.3. Security and Law Enforcement Agencies

Against the background of the positive dynamics in the development of trade and economic cooperation between the APR countries, the security situation in the region is becoming more complex. Thus, the leadership of the DPRK demonstratively ignores the appeals of the world community, including the UN Security Council on the cessation of work on the development of nuclear missile weapons, while continuing its active activities in this sphere. May 29, 2017, in the presence of North Korean leader Kim Jong-un, the next (third within the month) launch of a ballistic missile was conducted. In addition, according to US military intelligence, while continuing to launch ballistic missiles, North Korea is preparing for another nuclear test.

May 29, North Korea carried out the next (third within the month) launch of a ballistic missile

In response, the USA is strengthening up its Missile Defense System in the APR, while trying to exert pressure on North Korea in the military sphere. May 30, 2017, the US missile defense system was tested for intercepting intercontinental ballistic missiles. ICBMs without a warhead were launched from the Marshall Islands, and an interceptor missile was launched from the US Air Force Base Vanderberg in California. To detect the trajectory of the ICBM, was used a sea-based radar near the coast of Alaska. The rocket was successfully intercepted over the Pacific Ocean.

May 30, the United States conducted a successful test of the Missile Defense System

Besides, last week, joint maneuvers were conducted between the two aircraft carrier strike groups of the US Navy (“Ronald Reagan” and “Carl Vinson”), the helicopter carrier “Hyuga” and the destroyer “Ashigara” of the Japanese Maritime Self-Defense Forces. In the maneuvers also participated Japanese Air Self Defense Force F-15s and US Navy F-18 fighters. They mastered interaction between the navies and air forces of the two countries. Along with this, composition of the exercises and nature of the actions of the participants allows us to conclude that the issues of conducting missile strikes on North Korea were worked out.

Joint exercises of the two aircraft carrier strike groups of the US Navy and the Japan Maritime Self-Defense Force, June 1
Joint exercises of the two aircraft carrier strike groups of the US Navy and the Japan Maritime Self-Defense Force, June 1

The DPRK's efforts to create and test nuclear missiles are also condemned by China's leadership. At the same time, the PRC stands for a peaceful resolving of the situation around North Korea on the basis of the resolutions of the UN Security Council. June 1, 2017, the Chinese Foreign Ministry urged all countries to show restraint and not allow any steps that could lead to an aggravation of the situation in the APR. A willingness was expressed to expand cooperation with all interested countries. China's Foreign Ministry also advocated the resumption of dialogue between South Korea and the DPRK.

True, China also demonstrates its negative perception of the USA's steps to build up its military presence in the Asia-Pacific region. June 2, 2017, the Chinese Foreign Ministry once again condemned the measures taken by the United States and South Korea to deploy the US THAAD missile defense system in the Korean Peninsula. According to the Ministry of Foreign Affairs of China, China's position on this issue remains the same: “The deployment of the US THAAD missile defense system in South Korea harms China's strategic security, violates the strategic balance of forces in the region and does not contribute to the denuclearization of the Korean Peninsula”.

As for Russia, it is trying to use the aggravation of the situation in the APR as an excuse for further militarization of the Kuril Islands. Thus, preparations began for the deployment on the islands of a new combined arms formation of the Russian Armed Forces. Commenting on this issue, Russian President V. Putin rejected any possibility of the return of the islands to Japan. According to him, “in case of Russia's losing control over the islands, US military bases would be immediately deployed there”.

The actions of the DPRK in the nuclear missile sphere are closely monitored by the UN Security Council. June 2, 2017, it extended sanctions against North Korea for the development of military missile systems and weapons of mass destruction.


3.4. Science and Technology

China's largest solar-powered “Caihong” drone
China's largest solar-powered “Caihong” drone

As part of the implementation of the space program, in May this year, China completed the deployment of a network of ground stations for the reception of satellite data. In this way, China's capabilities for remote sensing of the Earth's surface in real time have been greatly expanded. The network covers the entire territory of China and 70 % of Asia.

In the near future, China plans to launch a new space observatory. A telescope is being designed to work with hard cosmic radiation, to study physical processes in the nuclei of galaxies. The main consumer of information will be the Laboratory of Elementary Particle Physics and Astronomy of the Chinese Academy of Sciences.

At the same time, an important achievement of China's aviation industry was the development of an unmanned aircraft operating on solar energy. The first flight of the aircraft was carried out last week. The UAV can be in the air for an unlimited time. Today, only the USA and the UK possess such technologies.


The PRC also continues to conduct oceanographic research. Last week, from the research vessel “Xiangyanghong 09”, another dive of the submersible manned vehicle “Jiaolong” in the Mariana Trench was carried out. The maximum dive depth of was 6699 meters. Samples of rocks, sediments, organisms and bottom water were collected. One of the research tasks is to gain access to new sources of energy, in particular to the so-called combustible ice. The reserves of this substance at the bottom of marine areas controlled by the PRC are estimated at 80 billion tons of oil equivalent.

China's manned submersible “Jiaolong” conducted dives in Mariana Trench

ІV. Plans and Prospects for Cooperation between China and Ukraine

One of the spheres of cooperation between China and Ukraine is joint scientific research in the development of the Antarctic. At the 40th Antarctic Treaty Consultative Meeting, in Beijing, on 22 May–1 June this year, an agreement was reached to expand the China-Ukraine cooperation in the development of the Antarctic. In particular, the Ukrainian Antarctic station “Academician Vernadskyi” will be involved in this.