July 11, 2017

China (中国) Today

Events Review (03.07–09.07.2017)


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

The leadership of the PRC continues to implement its strategic course to support the globalization of the world economy with China's interests as the leading power in the world being taken into consideration. The priority of this issue was confirmed by President of the People's Republic of China Xi Jinping in his speech at the G20 summit in Hamburg (7–8 July 2017).

The leader of the PRC pointed out the positive trends in the development of the world economy with the prospect of growth of 3.5 % this year, which is the best indicator in recent years. According to Xi Jinping, this became possible thanks to the G20 countries' joints efforts to implement the plan for creating an innovative, dynamic and integrated system of international relations in the economic sphere adopted at the G7's meeting in the Chinese city of Hangzhou in the autumn of last year.

China’s President Xi Jinping at the G20 summit in Hamburg
China’s President Xi Jinping at the G20 summit in Hamburg

At the same time, Xi Jinping acknowledged the preservation of global economic problems that require joint efforts to resolve them. In this regard, the PRC's President put forward a number of proposals, which included: making the world economy more open, improving the management of global economic processes, and applying the latest technologies in all spheres of the economy.

In this context, an example was given of the Chinese initiative “The Belt and Road”, which is built on precisely such principles and can serve as a model for mutually beneficial economic cooperation between different countries, both regionally and globally.


Under Xi Jinping's chairmanship, an informal meeting of the leaders of the BRICS countries was held on the sidelines of the G20 summit. The sides discussed the most important aspects of the political and economic situation in the world, as well as issues related to the G20. The participants of the meeting agreed on the importance of deepening coordination of economic activities within the BRICS and promoting greater transparency of the world economy. Besides, the President of the PRC stressed the need to expand the Organization's participation in resolving global and regional security problems, including the settlement of regional conflicts.


China’s President Xi Jinping’s visits to Russia and Germany
China’s President Xi Jinping’s visits to Russia and Germany

In Hamburg, Xi Jinping had a number of bilateral meetings with other leaders, namely: US President D. Trump; Federal Chancellor of Germany A. Merkel; President of France E. Macron; President of South Korea Moon Jae-in; Prime Minister of Great Britain T. May; Prime Minister of Japan S. Abe and Prime Minister of Singapore Lee Hsien Loong. During the talks, the sides confirmed their readiness to bring relations to a qualitatively new level of strategic partnership, including deepening cooperation in the international arena, coordinating development strategies and strengthening cooperation within the framework of the “Belt and Road” initiative. In particular, in this regard, the most indicative was the agreement between Xi Jinping and A. Merkel on combining the Chinese strategy “Made in China — 2025” with the German program “Industry — 4.0”.


Besides, on 3–4 July 2017, on his way to Germany to attend the G20 summit, Chinese President Xi Jinping visited Moscow, where he met with Russian President V. Putin and RF Prime Minister D. Medvedev. The leaders of the PRC and Russia pointed out the importance of deepening the cooperation between the two countries in the investment, energy, agricultural, humanitarian and interregional spheres, as well as in the implementation of the Chinese initiative “The Belt and Road” and of the Russian project for creating a Eurasian economic union.

The sides expressed willingness to continue close coordination of actions within the framework of the UN, the Shanghai Cooperation Organization and the G20. At this, among the general foreign policy priorities they mentioned the following ones: solution of the problem of the Korean Peninsula; ensuring stability in Northeast Asia; settling the Syrian crisis; counteracting the danger of militarization of outer space and turning it into a zone of military confrontation.

As a result of the meeting, the Action Plan was signed to implement the Treaty on Good-Neighborliness, Friendship and Cooperation between Russia and the People's Republic of China for 2017–2020, as well as a number of agreements on deepening ties between Chinese and Russian enterprises and financial institutions. In particular, Xi Jinping and V. Putin supported the agreement between the Russian Direct Investment Fund and the China Development Bank to create a joint investment fund of 65 billion Yuan.

Xi Jinping's visit to Moscow was widely commented on by the Russian media, which called it “the main event in the development of cooperation between the Russian Federation and the PRC in 2017” and “an evidence of the success in reorienting the RF's economic ties from the West to the East”. At this, “Russia and China's common position in the confrontation with the United States” was emphasized.


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

China is making significant efforts to improve the effectiveness of the implementation of “The Belt and Road” initiative on a deep scientific and technical basis.

For example, last week in Beijing, under the auspices of the National Natural Science Foundation of China (NSFC), an international symposium was held themed “Funding Science and People Cooperation for a Prosperous “Belt and Road”. Issues of support for the development of cooperation between the countries engaged in the Chinese initiative were discussed. Participants of the event agreed to intensify interaction between the parties in the sphere of fundamental studying financial and economic processes in the regions included in the “Belt and Road” initiative.

At the same time, the National Institute of Financial Research of China (Beijing) hosted a conference of representatives of financial bodies of developing countries on the experience of South-South cooperation within the framework of the “Belt and Road” initiative. The participants of the event paid special attention to the ways of resolving the problems of financial provision of relevant projects in the spheres of infrastructure construction, energy, environment, development of medium and small enterprises, health care and education, and attracting human resources.

“Belt and Road” Initiative and South-South Cooperation Forum
“Belt and Road” Initiative and South-South Cooperation Forum

The Chinese “Belt and Road ” initiative continues to make other countries more and more interested.

Thus, during the 29th African Union Summit, held in Addis Ababa, Ethiopia, the positive impact of African participation in the “Belt and Road” projects on the development of their national economies was pointed out. According to the participants of the summit, this initiative expands the access of African countries to modern technologies, as well as to financial loans and investments. Besides, they get additional opportunities for integration into the world economy.

Participants of the 29th African Union Summit in Addis Ababa
Participants of the 29th African Union Summit in Addis Ababa

At Azerbaijan's initiative, the “Belt and Road”'s support group was also established in the OSCE Parliamentary Assembly. The aim of the work of this body will be to coordinate activities to implement joint economic projects in the countries of the European, Central Asian, Caspian and Asian-Pacific regions. The task of the group is to promote the development of transport corridors, as well as to simplify trade and transport procedures.


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

3.1. Politics. Development of China's International Cooperation

Permanent Representative of the PRC to the United Nations, Ambassador Liu Jieyi
Permanent Representative of the PRC to the United Nations, Ambassador Liu Jieyi

July 1, 2017, China took over the presidency of the UN Security Council. According to Permanent Representative of the People's Republic of China to the United Nations Liu Jieyi, two open discussion sessions will be held during China's rotating presidency of the UN Security Council, including on security issues in Africa and the settlement of the situation in the conflict zones in the Middle East.

In particular, it is planned to consider peculiarities and prospects for the development of the situation around Syria, Yemen, Iraq and Lebanon, Southern Sudan, the Democratic Republic of the Congo and Burundi. Besides, the work of UN offices in West Africa and the Sahel region will be monitored.

The plans of China's presidency of the UN Security Council include adoption of resolutions on the extension of the mandate of the UN Peacekeeping Force in Cyprus and the United Nations' Assistance Mission for Iraq, as well as sending the second group of UN observers to Colombia.

A separate direction of the work of the PRC in the UN Security Council will be addressing general issues of enhancing the effectiveness of the Security Council on the basis of the principles of objectivity, fairness, transparency and openness. To discuss these issues, Chairman of the 72nd Session of the UN General Assembly M. Lajcak's visit to Beijing is scheduled for July 2017.


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

Monthly grow rate of total retail sales in China
Monthly grow rate of total retail sales in China

The stable economic development of the country remains an important basis for the implementation of China's foreign policy. According to the State Statistical Office of the People's Republic of China, in the first half of 2017, retail trade in the country increased by 10.3 %, and in May 2017 — by 10.7 %. At this, the share of sales via the Internet is increasing, which is a consequence of the application of innovative technologies in the Chinese trade sector. In particular, online sales grew by 26 %, while in conventional stores and shopping centers — by about 7.5 %.

The positive dynamics of the growth of the PRC's gold and foreign exchange reserves is maintained. In June 2017, China's financial reserves increased by 3.2 billion US dollars — to 3.0568 trillion US dollars. In total, since the beginning of this year, China's foreign exchange reserves have increased by 46.3 billion US dollars. According to the State Administration of Foreign Exchange of the PRC, this trend contributes to strengthening the stability of the country's financial system, and to attracting foreign investments.


3.3. Security and Law Enforcement Agencies

Over the past week, another aggravation of the situation in the Asia-Pacific region was due to North Korea missile tests. July 4, 2017, the first successful launch of the intercontinental ballistic missile “Hwaseon-14” was carried out from the testing ground in the North Pyongan Province (north-western region of the DPRK). According to the official report of the National Defense Academy of North Korea, the rocket reached a height of 2.8 thousand kilometers and covered 933 kilometers, striking the target in the open sea.

The launch of the missile was personally observed by the leader of the DPRK Kim Jong-un, who praised the successes in the implementation of the national nuclear missile program. Kim Jong-un said “getting his country the opportunity to strike in any part of the world.” In this context, it was noted “the readiness of the DPRK to provide a worthy rebuff to the US and American allies in the region in the event of their attack on North Korea.”

On 4 July, North Korea carried out successful launch
of the intercontinental ballistic missile

The DPRK's launching of a new ballistic missile caused a significant negative reaction in the world. Thus, US President D. Trump called such actions a new escalation of the crisis in the APR and called on the world community to increase pressure on Pyongyang. At the same time, he accused China, Russia and other North Korea's trade and economic partners of violating the UN Security Council's decisions imposing sanctions against the DPRK. Besides, in response to the launch of that ballistic missile, the United States and South Korea conducted military exercises near the Korean Peninsula. The USA's position was also supported by Japan and the leadership of the European Union.


July 5, 2017, at the initiative of the United States, the situation surrounding the DPRK's missile tests was considered at a special meeting of the UN Security Council. The US Ambassador to the United Nations, N. Haley, advocated the expansion of international sanctions against North Korea, as well as increased pressure on countries supporting Pyongyang. Besides, she did not exclude the possibility of the USA's using military force to protect its security. Similar points of view were demonstrated by Britain and France.

North Korea's actions to build nuclear missiles were also condemned by China and Russia. At the same time, they rejected the Western countries' proposals to introduce additional sanctions against the DPRK. At this, the PRC and the RF called on the USA and its allies in the APR to stop military exercises near the Korean Peninsula and other demonstrations of force.

United Nations Security Council emergency meeting on DPRK's latest ballistic missile launch, July 5, 2017

This situation was used by Russia as another reason for demonstrating a “strategic partnership” with China, as opposed to disagreements between China and the United States in the Asia-Pacific region. In particular, a manifestation of this was Russia and the PRC's joint statement about the situation surrounding the DPRK's nuclear missile program, as well as Moscow's support of Beijing's negative attitude to the USA's actions to deploy the US missile defense system in South Korea.


A separate Sino-US security problem remains the relationship of the parties because of territorial disagreements in the APR. In particular, last week the US Navy's ship once again approached the Paracel archipelago, which is the object of claims from the PRC, Taiwan and Vietnam. According to the US Navy, the US ship conducted “Freedom of Navigation Operation”. Besides, the US Department of State confirmed Washington's non-recognition of Beijing's claims to sovereignty over the islands.

In response, the Chinese Ministry of Foreign Affairs accused the USA of “illegal entry into the Chinese territory” as well as “a serious political and military provocation”. To confirm its sovereignty over the Paracel Islands, China sent an additional number of warships to the archipelago area. At the same time, the exercise of the detachment of the Naval Forces of the Chinese People's Liberation Army headed by the aircraft carrier “Liaoliang” (former Ukrainian aircraft carrier “Varyag”) continues. The detachment includes the “Jinan” and “Yinchuan” missile destroyers, as well as the “Yantai” missile frigate.


3.4. Science and Technology

China’s high-speed trains
China’s high-speed trains

Considering the rapid growth of domestic transport in China, the country's leadership is paying special attention to the development of the national transport infrastructure with the use of the latest technologies. Thus, last year, 2.6 thousand high-speed trains were put into operation. In addition, China continues to develop appropriate railway lines. In particular, until 2020, the total length of high-speed highways is planned to have increased from the current 22 thousand kilometers to 32 thousand kilometers, and until 2030 — to 45 thousand kilometers.

The development of new trains capable of receiving electricity from both, the contact network, and internal electric batteries of large capacity, continues. Due to this, it is planned to improve the possibilities of providing transport communication in the regions of the PRC with a poorly developed railway network, in particular in Inner Mongolia.


The PRC continues cooperation with leading Western companies in the aviation industry. For example, the European “Airbus” company has launched in China a demo tour of a new heavy helicopter H215 (belongs to the famous family of Super Puma/Cougar helicopters). At this, the aircraft's capabilities of transporting passengers and cargo, fulfilling tasks in the interests of the police, extinguishing fires, monitoring power lines, etc. are demonstrated. Today, the “Airbus” leads the Chinese aviation market and plans to further strengthen its positions.


IV. Plans and Prospects for Cooperation between China and Ukraine

In contrast to Russia's economic wars against Ukraine, the PRC confidently and consistently is taking over Russia's niche in the Ukrainian market. To date, China is already one of the main trade partners of Ukraine. Thus, in 2016–2017, China's share in Ukraine's foreign trade reached 12 %, which almost equaled the Russian Federation's share. In particular, within the first 5 months of this year, Ukraine imported 675,000 tons of Chinese goods for a total of 1.9 billion US dollars, which is 25 % more than in the same period last year.

Visit to the PRC of the Ukrainian State Space Agency delegation
Visit to the PRC of the Ukrainian State Space Agency delegation

At the same time, China and Ukraine continue active cooperation in the space and infrastructure sectors. Last week, a delegation of the State Space Agency of Ukraine visited the People's Republic of China with the participation of the representatives of the “Yuzhnoye State Design Office named after M. K. Yangel”. The Ukrainian delegation met with the leadership of the Chinese National Space Administration and the Chinese Aerospace Science Corporation.

During the talks, the high dynamics of the implementation of joint projects within the framework of the Program of Ukrainian-Chinese cooperation in the space sphere for 2016–2020 was pointed out, and an agreement was reached on expanding the list of such projects. In this context, was mentioned the possibility of Ukraine's participating in China's plans for exploring the Moon and Mars, as well as the development of an information space corridor within the framework of the “Belt and Road” initiative (an integrated satellite navigation, communication and system for remote sensing of the Earth).

Besides, last week a Memorandum of Cooperation was signed between China's CRBC (China Road and Bridge Corporation) and Ukravtodor on the implementation of the project for the reconstruction of the M-14/E-58 Odesa-Mykolaiv-Kherson road. The project provides for the expansion of the highway to four lanes and creation of a detour around the city of Mykolaiv. The total length of the road will be about 200 km.