August 7, 2017

China (中国) Today

Events Review (31.07–06.08.2017)


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

Taking into consideration the imposition of new sanctions against Russia, Iran and the DPRK, which directly concerns Ukraine's interests, China's attitude to the international sanctions policy deserves special attention.

Thus, on 3 August 2017, the Ministry of Foreign Affairs of the People's Republic of China condemned this decision of the United States and called on Washington to continue negotiations to resolve the existing problems. Besides, this issue was raised by Permanent Representative of the People's Republic of China to the UN Liu Jieyi during the open meeting of the UN Security Council on August 4, 2017.

According to the Chinese Representative, the UN Security Council created a set of sanctions mechanisms aimed at resolving conflict situations, which in some cases contributes to the achievement of the set goals. At the same time, the implementation of international sanctions is constantly accompanied by various kinds of problems, which reduces their effectiveness.

With this in mind, Liu Jieyi expressed China's position on the possibility of applying sanctions only after exhausting all other methods of influence, in particular negotiations and mediation. At this, sanctions should be imposed solely on the basis of the relevant provisions of the UN Charter. According to Liu Jieyi, sanctions cannot be an end in themselves and should be part of a complex of political, diplomatic, economic and other measures to resolve crises.

Besides, Liu Jieyi pointed out the need to strengthen the targeted nature of sanctions, which should minimize the possibility of their negative consequences for ordinary citizens and third countries. Based on this, the UN Security Council should assess the effectiveness of sanctions in a timely manner and, if necessary, make appropriate adjustments to its sanctions policy. At the same time, the Chinese Representative expressed the PRC's negative attitude to some countries' imposing unilateral sanctions against others.

According to Liu Jieyi, as a permanent member of the UN Security Council, China will adhere to a cautious and responsible position with respect to international sanctions in order to ensure their maximum effectiveness in solving world problems and to prevent damage. In this regard, the PRC will be guided exclusively by the UN Security Council's resolutions and will demand that they be strictly observed by all members of the United Nations.

In fact, the same assessment of Western sanctions against Russia was given by the Extraordinary and Plenipotentiary Ambassador of the People's Republic of China to Ukraine, Du Wei, in his interview with the media on 27 July, 2017. For example, in Du Wei's words, Russia and Ukraine are friendly countries for the PRC, so Beijing stands for political and diplomatic negotiations within the framework of the “Normandy” format and the Minsk process.


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

The leadership of the PRC continues to take measures to fully ensure the implementation of the Chinese initiative “The Belt and Road”. In late July 2017, in the Chinese city of Chengdu (administrative center of Sichuan Province), the Union of Law Firms of “The Belt and Road” was created. The task of the new structure is to provide legal assistance in the implementation of projects, as well as to conduct legal research and expand international contacts.


As part of the development of the “Belt and Road” project, Central Asian countries, which are the “bridge” between China and other participants of the Chinese initiative, are of the utmost importance to the PRC. Last week, in the Chinese city of Lianyungang (Jiangsu Province, East China), the 5th China-Central Asia Cooperation Forum was held under the slogan “Building bridges for promoting Belt and Road cooperation and combining efforts to ensure peaceful development and prosperity”.

The event was characterized by significant progress in the development of cooperation between China and the countries of the region, achieved over 25 years after the establishment of diplomatic relations between them. At this, the main line of such cooperation was the interaction of the parties within the framework of the joint implementation of the “Belt and Road” initiative. Wang Qinmin, Vice Chairman of the National Committee of the Chinese People's Political Council, said at the opening of the Forum that China is ready to further deepen cooperation with Central Asian countries in all spheres, including trade, economy, security, as well as conducting interstate consultations on issues of mutual interest.

As a result of the forum, five agreements on production cooperation, logistics, tourism, culture and education were signed between the Lianyungang City Hall and the countries of Central Asia. Lianyungang, which is the gateway of the central and western regions of the PRC in the Pacific, plays an important role in transporting through the new Asian-European transcontinental bridge. Today, routes for international transportation to Central Asia and Europe have already been opened from Lianyungang.


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

3.1. Politics. Development of China's International Cooperation

One of the priorities of China's foreign policy is the deepening of ties with the US at all levels. August 2, 2017 Chairman of the State Council of the People's Republic of China Li Keqiang met with the Governor of the US State of Michigan Rick Snyder who arrived in Beijing at the invitation of the Chinese People's Association for Friendship with Foreign Countries. The parties discussed the prospects for the development of cooperation between the PRC and the state of Michigan in the trade, economic and investment spheres, as the basis for deepening Sino-US relations. At this, they pointed out positive effects of this process not only for the two countries, but for the whole world.


The PRC continues developing cooperation within the framework of international organizations. Thus, on 1 August 2017, within the framework of the preparation of the 9th meeting of the BRICS countries' leaders (scheduled for September this year in the Chinese city of Xiamen), a meeting of Trade Ministers from Brazil, Russia, India, China and South Africa was held. The main attention of the participants of the event was paid to the consideration of issues of simplification of investments, and contributing to the development of multilateral trade.

According to the Minister of Commerce of the People's Republic of China, Zhong Shan, the global economy is still under the threat of many uncertain and unstable factors. Taking this into consideration, the BRICS countries should strengthen trade and economic cooperation, improve mechanisms for interaction and initiate new development impulses. In addition, an important task is to counteract protectionism in all its forms, developing a global open economy, and protecting common interests in foreign markets. Zhong Shan expressed hope for the parties' active participation in the implementation of the “Belt and Road” initiative.

As a result of the forum, a number of documents were signed, including the BRICS Trade in Services Cooperation Roadmap, the BRICS E-Commerce Cooperation Initiative, the BRICS IPR (intellectual property rights) Cooperation Guidelines, and the Outlines for BRICS Investment Facilitation.


Besides, on 3 August 2017, the first China-Africa Agriculture Cooperation and Development Summit was held in Lusaka. The event was attended by the PRC's Ambassador to Zambia Yang Youming and the Minister of Agriculture of the Republic of Zambia Dora Siliya, as well as representatives of Chinese and Zambian agricultural enterprises. During the summit, were confirmed the PRC's intention to provide financial assistance in the development of agriculture and other branches of the economy of Zambia. In its turn, Zambia is going to supply food products to China.

At the same time, the PRC is entering the forefront in the supply of vehicles to African countries. According to the Ministry of Commerce of China, in the first half of this year, the export of cars, ships and railway locomotives of Chinese production to the African region has almost doubled. There is also an increase in exports to Africa of other Chinese goods, including the trade between China and Africa grew by 19 % compared to the same period last year, to 12.7 billion US dollars.


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

The steady growth of China's industry causes a constant increase in the incomes of the country's main industrial enterprises. Thus, according to the PRC statistics, in June of this year, the incomes of such enterprises grew by 19.1 % year-on-year. In May 2017, the figure was 16.7 %. In general, in the first half of 2017, incomes of industrial enterprises increased by 22 % compared to the same period last year. According to experts, industrial incomes will maintain stable and high growth rates (at the level of 15–20 %).

At the same time, activity of private investors is stepping up in the PRC. In the first half of this year, private investments in fixed assets increased by 7.2 % year-on-year (last year — by 3.2 %) and accounted for 60.7 % of total investment. The reason for this was the restoration of positive trends in the development of the Chinese economy, including an increase in GDP growth rates, as well as in volumes of domestic and foreign trade. In particular, during January–June 2017, the volume of trade between China and other countries grew by 15 % year-on-year, which was the largest indicator since 2011. In general, as of the beginning of July, China has been implementing 13,500 major projects involving private Chinese investors for a total of 2.3 trillion US dollars.

The PRC's active participation in joint projects with other countries, including in the energy sector, continues. In particular, July 30, 2017, the 330 kV “Postavy” electrical substation, built by the North China Energy Company (NCPE) in Belarus, became operational. The substation will act as one of the main technological elements of the power transmission infrastructure from the future Belarusian NPP.

In turn, on 31 July 2017, the Chinese company CGN Europe Energy and the British company Jones Bros Civil Engineering signed a contract for the construction of the power system and auxiliary facilities of “Brenig” onshore wind farm in the United Kingdom. The wind farm will consist of 16 turbines at 2.35 MW with the total capacity of 37.6 MW.


3.3. Security and Law Enforcement Agencies

The main problem in the Asia-Pacific region remains North Korea's actions to develop nuclear missiles. According to US intelligence, July 30, 2017, a “cold” launch of a ballistic missile from a submarine (which uses high pressure steam to propel a missile out of the launch canister into the air before its engines ignite) was carried out in the area of the North Korean Shipyard Sinpo. Besides, according to a number of American media, citing sources in the US Department of Defense, the DPRK is developing a powerful hydrogen bomb and can achieve success in six to eight months.

Given this, the USA continues to pressure North Korea, including by demonstrating military force. August 3, 2017, the US Air Force carried out the training and combat launch of the intercontinental ballistic missile Minuteman III from the Vandenberg airbase on the west coast of the country. The missile flew 6,700 km and fell in the area of the Kwajalein atoll in the South Pacific. According to the US Military Command, the launch of the missile showed the US Armed Forces ability to provide a resolute response to any enemy.

Consideration is also being given to the question of sending two US carrier strike groups (CSG) to the Korean Peninsula. The ships should take part in the annual military exercises “Ulchi Freedom” with South Korea. According to the statements by American politicians, using of two CSG’s at once will be a tough warning to the leadership of North Korea about the inadmissibility of provocations.

At the same time, the USA has not given up dialogue with the DPRK. According to US Secretary of State R. Tillerson, Washington does not plan to remove the North Korean government from power and is ready to negotiate with it under certain conditions. First of all, among such conditions was the DPRK's abandoning its anti-American policy and giving up creation of ballistic missiles and nuclear warheads. At the same time, R. Tillerson pointed out the absence of threats to North Korea from the USA.


Against this background, a separate source of instability in the APR is the border dispute between the PRC and India. August 2, 2017, the Chinese government issued a document entitled “The Facts and the Chinese Position on the Indian Border Guards' Crossing the Boundary in the Sikkim Sector and Trespassing into the Territory of the PRC”.

According to the document, June 18, 2017, about 270 Indian border guards crossed the border in the vicinity of Sikkim and blocked the road construction on Chinese territory near Donglang (Doklam, a mountain site at the point of junction of the borders of China, India and Bhutan). According to the PRC’s Ministry of Foreign Affairs, such actions of the Indian side are irresponsible and create a threat of conflict between the two countries.

At the same time, the accusations of India and Bhutan on the inconsistency of China's construction work in the border zone were denied. According to the PRC's Ministry of Foreign Affairs, India and Bhutan were informed of plans for road construction under the mechanism of border meetings on May 18, 2017, but did not react to it.


3.4. Science and Technology

One of the basic factors contributing to the development of the PRC economy is the mass application of the latest information technologies. So, in 2016, the total value of China's digital economy grew to 22.6 trillion yuan from 18.6 trillion yuan in 2015. At the same time, it accounted for 30 % of China's GDP.

This trend continues in the current year. During the first half of 2017, the revenues of the information technology services industry grew by 15.7 % to 1.37 trillion yuan at an annual rate. First of all, there is a rapid growth in the volume of e-commerce. From December 2016 to May 2017, online retail sales in China totaled 3.02 trillion yuan, which means an increase of 35.3 % compared to the same period last year.

To date, China has about 60 Internet banks, serving more than 250 million customers. In 2016, the volume of payments through such banks exceeded 157 trillion yuan, which is by 50 % more than in the previous year.

The range of information intensive products, including mobile phones, computers, smart cars, etc., also increases. In 2016, the added value of the information industry reached 5.2 trillion yuan, which is by 8.7 % more than the previous year.


One example of the use of information technologies is the creation of unmanned vehicles of public transport, which contributes to resolving the transport problems of the country. In particular, in August 2017, in the Chinese city of Qingdao (Shandong Province), they began testing the world's first unmanned tram. The length of the vehicle is 35 m, the width is 2.6 m, the speed of movement is up to 70 km per hour. The tram can accommodate up to 380 passengers. The control system of the vehicle allows it to self-adjusts the speed of the drive and stop.


At the same time, China continues to implement its large-scale program of Arctic and oceanographic research. July 31, 2017, the Arctic expedition on the “Xuelong” icebreaker crossed the Arctic Circle. According to the plan of the expedition, it is going to study the hydrographic conditions of the Chuckchee Sea.

The icebreaker left the port of Shanghai on July 20, 2017, crossed the East China Sea, passed the Tsushima Strait, the Sea of Japan, the Strait of La Perouse and the Sea of Okhotsk, the Bering Sea and the Bering Strait, all in all — 3,600 nautical miles.


IV. Plans and Prospects for Cooperation between China and Ukraine

Strengthening trade relations between the PRC and Ukraine creates favorable opportunities for compensating for Russia's measures to close its market for Ukrainian goods. Thus, during the first half of the year, Ukraine increased its export of dairy products to China by almost 80 %. In total, China accounts for 50.4 % of exports of such products from Ukraine (including butter, whey and cheeses). Besides, Ukraine supplies sunflower oil, soybean oil, corn and wheat flour to China.

Along with this, Chinese investors show their being greatly interested in large-scale infrastructure projects in Ukraine. In particular, the “Dnipro's Development Agency” and the Chinese AVIC International Holding Corporation are considering a plan for the creation of an industrial park, as well as a number of projects to modernize the airport and urban transport communications. The main spheres of the AVIC International Holding Corporation's activity are aviation, electronics, trade operations, project management, engineering and construction of infrastructure and industrial facilities.

Cooperation between China and Ukraine in the sphere of security is also deepening. At the end of July 2017, a delegation of the National Guard of Ukraine (NGU) led by its Commander Lieutenant-General Yuriy Allerov visited China. The main purpose of the visit was the exchange of experience and establishment of cooperation with the People's Armed Police (PAP) of the People's Republic of China, sharing similar missions with the National Guard of Ukraine.

The Chinese side told the Ukrainian colleagues about the methods of actions of the PAP in securing public order. Besides, they showed samples of material and technical support of the PAP of the People's Republic of China, including modern equipment, weapons, communications means, as well as CBRN protection equipment. Representatives of the National Guard of Ukraine were shown the activities of the territorial command, control center and training complex of the PAP.

Based on the results of the visit, an agreement was reached on deepening cooperation between the National Guard of Ukraine and the People's Armed Police of the People's Republic of China, and further sharing the service and combat experience.