September 11, 2017

China (中国) Today

Events Review (04.09–10.09.2017)


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

September 3–5, 2017, the Chinese city of Xiamen (Fujian province, southeastern China) hosted the 9th BRICS summit, as well as the trade and industrial forum of the Organization, which was the most ambitious in its history. The event was attended by the leaders of the BRICS member states and the leaders of other countries invited to the forum, representatives of the United Nations Industrial Development Organization, the New Development Bank of BRICS and other international organizations, as well as high-level businessmen, altogether about 1.2 thousand people. The agenda of the Forum included four main aspects, namely: trade and investment; financial cooperation; interconnectedness of world economies; ecological model of the world economic development.

Within the framework of discussing these questions, as well as multilateral meetings, the Forum was used by the leadership of the PRC to promote the Chinese strategy to support the globalization of the world economy as a mechanism to strengthen China's international positions and to expand its zone of influence. In fact, it was the address of President of the People's Republic of China Xi Jinping, on the topic “BRICS: the Retrospectives of the Past Decade, Summing up of the Experience of Cooperation, the Prospects for Development”. Thus, the main idea of the speech was the PRC's initiative to build a new “more just” world order by expanding cooperation in the “BRICS Plus” format. At this, the essence of this format was called the creation of an open and diversified network of BRICS partners at the expense of developing countries and those with emerging markets.

Based on this, Xi Jinping urged the BRICS countries and their potential partners to focus on solving the problems that impede the deepening of international relations in the trade and economic sphere — imbalance in development, imperfection of global governance, as well as protectionism and orientation to their internal interests. Taking into account the above-mentioned, the main tasks of the BRICS were determined as follows: activation of dialogue, consultations and interaction in the interest of increasing the level of mutual openness and promoting the development of the world economy. Besides, according to Xi Jinping, BRICS countries should increase their contribution to strengthening stability in the world, including by intensifying the fight against international terrorism.

Within the framework of the Summit, Xi Jinping held separate meetings with the leaders of the BRICS countries, including Presidents of Russia V. Putin (fourth meeting this year), of Brazil M. Temer, of South Africa J. Zuma and Indian Prime Minister N. Mody. Issues of development of interaction between the parties in the trade-economic, political spheres, as well as in the sphere of security were discussed.

As a result of the work of the BRICS Business Forum 2017, a number of policy documents were adopted, including the Action Agenda on Economic and Trade Cooperation, the Strategic Framework of BRICS Customs Cooperation and the BRICS Action Plan for Innovation Cooperation (2017–2020). In addition, the Report on Achievements of the Strategy for BRICS Economic Partnership was presented. Also, more than 30 agreements on the implementation of different trade, economic and financial-investment projects were concluded.


Against this background, the media of the BRICS countries widely commented on the achievements in the work of the Organization. For example, since the creation of the BRICS in 2006, the share of the economies of the member countries in the world economy has grown from 12 % to 23 %, in international trade — from 11 % to 16 %, in total foreign investments — from 7 % to 12 %.

At the same time, there is a steady trend of increasing the volume of trade between the PRC and the BRICS countries. In particular, in January–July this year, this indicator grew by 26 % compared to the same period last year — up to 167.07 billion US dollars.


Considering the global potential of the BRICS group, the platform of the Forum was used by V. Putin to demonstrate “strengthening of Russia's international positions” and “restoring positive development of the Russian economy” despite Western sanctions. In addition, the President of the Russian Federation outlined the Russian position on a number of fundamental aspects of the development of the situation around Ukraine. In particular, he emphasized the negative consequences of the USA's possible providing Ukraine with lethal weapons in terms of the threat of activation of the armed confrontation in the Donbas and the expansion of the conflict zone. Besides, Putin declared Moscow's consent to the deployment of an international peacekeeping mission in the East of Ukraine, but exclusively on Russian terms.


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

Within the framework of expanding the geography of the “Belt and Road” cooperation, September 6–9, 2017, in the city of Yinchuan (administrative center of Ningxia-Hui Autonomous Region, north-central China), an exhibition “China-Arab States Expo” was held. During the event, scientific and technical achievements of the participants were demonstrated, and conferences on trade, investment, technical and other exchanges were organized. During the discussion of these issues were mentioned that a significant progress was made in the development of relations between the PRC and the countries of the Arab world. In particular, in 2016, the total trade between them amounted to 171.1 billion US dollars, which is 11 % more than in the previous year. Based on this, the hope was expressed for the successful implementation of the “Action Plan for 2016–2018”, adopted at the Sino-Arab Cooperation Forum in the format of the “Road and Belt” initiative.

Domestic Chinese investors are also interested in the projects of “The Belt and Road”. The First Chinese Automobile Corporation (First Automobile Works, FAW) has announced plans to create an investment company focused on the markets of countries along the “Belt and Road”. The implementation of this project is aimed at expanding FAW's production facilities outside the PRC, including opening of new enterprises for the production of cars and components to them, as well as the repair of automotive equipment. A number of financial institutions are planning to join the creation of the new company, including China CITIC Bank.

The development of transport infrastructure of the “Belt and Road” continues. In early September 2017, Yinchuan (Ningxia-Hui Autonomous Region) — Tehran (Iran), and Manzhouli (Inner Mongolia Autonomous Region, northern China) — Moscow (RF) international cargo routes were put into operation.

In general, today the regular railway communication is established between more than thirty Chinese cities and twelve cities in different European countries. Since the dispatch of the first train in 2011, about 5.1 thousand railway trains have run along the route China — Europe. This route has already become the most important logistics channel of “The Belt and Road”. By 2020, it is planned to carry out a radical modernization of the entire railway infrastructure between China and Europe with bringing its capacity to more than 5 thousand trains a year.

Besides, China is developing the Northern Sea Route as one of the routes of China's maritime communication with the European region. September 6, 2017, a multi-purpose cargo ship “Tian Jian” left the port of Lianyungang (Jiangsu Province, eastern China), and headed to Denmark along the North-East sea passage.

It became the third of six merchant ships that China plans to ship via the Arctic route in 2017.

This is the largest number of Chinese vessels that will follow this route within one year.


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

3.1. Politics. Development of China's International Cooperation

Against the background of building its own zone of influence within the framework of the expansion of the “Belt and Road”, the development of relations with the United States and the leading EU countries remains the first priority of China's foreign policy.

September 6, 2017, CPR's President Xi Jinping and US President D. Trump had a telephone conversation. The Presidents discussed prospects for further deepening of cooperation between the two countries, including the preparation of the first round of the Sino-US social and cultural dialogue, as well as the dialogue on law enforcement and cyber security. At this, they pointed out positive results of the work of the groups of the two countries on foreign policy and security as well as the economy.

In this context, the leaders of the two countries confirmed their intention to continue close coordination of the activities of the United States and China on key global and regional issues. In this connection, they stressed the importance of US President D. Trump's state visit of to the PRC (planned before the end of this year).

Besides, Xi Jinping and D. Trump exchanged views on the situation around the Korean Peninsula. Taking into consideration the danger of the DPRK's actions, a common position was expressed on the need to increase pressure on Pyongyang with a view to encouraging it to end the nuclear and missile programs. At the same time, Xi Jinping stressed the invariability of China's views on the possibility of solving this problem exclusively by peaceful means.

Besides, on the 7th of September 2017, Xi Jinping held telephone talks with Federal Chancellor of Germany A. Merkel. During the conversation, they noted the importance of strengthening the Sino-German ties that have already transcended bilateral relations and are part of a dialogue between China and the European Union. First of all, it concerns politics, economics, security and the humanitarian spheres. With this in mind, the sides expressed their readiness to strengthen cooperation in the world arena. In particular, the leaders of China and Germany agreed to intensify cooperation for a political settlement of the situation around the Korean Peninsula.

France is also of great importance to the PRC. September 8, 2017, Xi Jinping and President of France E. Macron discussed on the phone the prospects for deepening the strategic dialogue between the two countries. The main spheres for such a dialogue were named the promotion of greater stability in the world, the economy, nuclear energy and environmental protection.


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

One of the key components of China's economic success is the purposeful policy of the country's leadership aimed at supporting small and medium-sized businesses. Thus, on 7 September 2017, in the city of Hangzhou (Zhejiang Province, eastern China) the High-Level Forum on Innovative Development was held. According to Zhang Mao, Minister of the State Administration for Industry and Commerce of the People's Republic of China, who took part in the Forum, today small and microenterprises have already become China's main market power and an important pillar in securing employment. Taking this into account, the most important task of government agencies is to increase the effectiveness of actions to promote the work of small enterprises, as well as to familiarize small businesses with the relevant policies and measures of the Chinese authorities.

All in all, today there are 73.28 million small- and microenterprises and more than 50 million individual industrial and commercial firms in China. In the first eight months of this year, 16,000 new enterprises were being created daily in the country. At this, since the beginning of the reform of the commercial system in China in 2014, there has been an accelerated growth of this indicator. Taking into account such achievements, in 2013–2014, China's position in the World Bank’s “Doing Business Report” was raising by 6 points annually.


3.3. Security and Law Enforcement Agencies

Despite the condemnation of North Korea's nuclear missile tests by most of the world community, the official Pyongyang sticks to an uncompromising position on this issue. Based on the results of the hydrogen bomb tests of September 3, 2017, the leader of the DPRK Kim Jong-un ordered to continue scientific development to enhance the country's nuclear potential.

At the same time, the North Korean leadership continues to threaten the United States and its allies. According to the DPRK Foreign Ministry, “Pyongyang will make the USA pay a due price if the UN Security Council adopts the draft resolution on strengthening sanctions against North Korea, proposed by Washington”. At this, it was noted that North Korea has “super-powerful thermonuclear weapons”.


In this situation, the USA is strengthening political, economic and military pressure on the DPRK. Thus, the UN Security Council's draft resolution prepared by the United States in connection with North Korea's new nuclear tests provides for the imposition of an embargo on oil supplies to the DPRK, freezing of the accounts of representatives of its government and a number of enterprises (including the national Air Koryo airline), as well as blocking the export of North Korean textile products.

At the same time, the USA continues to build up its military presence in the Asia-Pacific region, and also strengthens military and military-technical support for allies in the region. For example, at the beginning of September this year, on the US base Sonju in South Korea (more than 200 km south of Seoul), four more THAAD missile defense complexes were deployed. Besides, US President D. Trump agreed to increase the volume of arms supplies to South Korea and removed the restrictions on the power of warheads that are transferred to the RK for the acquisition of its missile systems (up to now, the maximum weight was 500 kg).

In turn, in response to the DPRK's nuclear tests, South Korea has conducted a series of military exercises with real launches of ground, sea and air-based combat missiles. The largest of them were the trainings of the 1st Fleet of the RK in the Sea of Japan and the 3rd Fleet in the East China Sea with the participation of missile ships and boats.

Measures of the USA's political and economic pressure on the DPRK are supported by the European Union and NATO. According to the EU High Representative for Foreign Affairs and Security Policy F. Mogherini, the European Union will impose its own sanctions against North Korea in addition to the sanctions of the UN Security Council. In particular, in this regard, the possibility of closing the European ports for the DPRK vessels (even under the flags of other countries) and imposing a ban on the work of North Korean citizens in the EU countries were mentioned.

A tough statement on the DPRK was made by the NATO Secretary General J. Stoltenberg. According to him, North Korea's nuclear tests are a global threat for the whole world, which requires a global response, including with the participation of the North Atlantic Alliance.


The leadership of the PRC also condemns Pyongyang's actions in the nuclear missile sphere and exerts pressure on North Korea. In particular, on September 10, 2017, the Chinese state-owned banks, including the Bank of China, the Chinese Construction Bank and the Agricultural Bank of China began to suspend operations on accounts of their North Korean customers.

At the same time, China continues to condemn the USA's activities aimed at strengthening the US military presence in the Asia-Pacific region. Thus, on 6 September 2017, the Ministry of Foreign Affairs of the PRC urged the USA and South Korea to immediately stop deploying the THAAD missile defense systems on South Korean territory. According to the Chinese Foreign Ministry, the deployment of the THAAD systems will not only fail to solve the security problems of the “interested countries”, but it will also significantly violate the strategic balance in the APR, damage the strategic interests of the PRC and other countries of the region in the security sphere, and increase tensions and confrontation in the Korean Peninsula.


3.4. Science and Technology

The PRC's achievements in the sphere of scientific and technical research on the creation of artificial intelligence contribute to the accelerated development of the country's enterprises for the production of industrial and other robots. According to the plans of the PRC's government, in 2017 the Chinese market of industrial robots should reach more than 4 billion US dollars. Since 2012, China has been the largest market of industrial robots in the world, and it accounts for more than 30 % of the total global market. It is expected that in 2017 more than 110 thousand industrial robots will be sold in China. In total, there are more than 150 enterprises for the production of robotics in China today.


At the same time, the PRC continues to implement promising programs to create new vehicles. In particular, the Chinese CASIC Corporation is developing a new high-speed pipe transport system (HyperFlight). The basis of the CASIC project is the principle of the movement of cargo and passenger capsules in special transport pipes at speeds up to 4 thousand km/h. For comparison, modern high-speed trains move at a speed of no more than 420 km/h.

CASIC Corporation has already received more than 200 patents for technologies that are implemented in a prospective transport system. At the initial stage of the tests, the developers plan to achieve the speed of the prototype capsule's movement up to 1 thousand km/h, and then — the planned indicators. To date, similar developments are carried out only by the American SpaceX and the German WARR.


Besides, the PRC's exploration of the seas and oceans continues. August 29, 2017, under the auspices of the State Oceanic Administration of China, the first comprehensive round-the-world research expedition was launched. According to the plans, a group of scientists on the Chinese research vessel “Xiang Yang Hong 01” should conduct research on the natural environment, resources and climate in the Southern Hemisphere. At one stage, the “Xiang Yang Hong 01” vessel will join the 34th Chinese Antarctic Expedition and together with the Chinese icebreaker “Xue Long” will carry out this mission.

IV. Plans and Prospects for Cooperation between China and Ukraine

One of the main directions of development of cooperation between Ukraine and China is the participation of Chinese investors in the development of the Ukrainian transport infrastructure. September 8, 2017, the Administration of Seaports of Ukraine (AMPU) and the Chinese China Harbor Engineering Company (CHEC) signed a Memorandum of Inter-Action and Close Cooperation. The document was signed during the 2nd International High-Level Transport Conference “Integrated Transport Corridors Europe-Asia”.

The parties agreed on the search for opportunities to increase the flow of goods through Ukraine within the framework of "The Belt and Road", as well as to study the issue of increasing the volume of Chinese investments into the development of Ukrainian ports and creation of industrial parks. In addition, the AMPU and CHEC plan to exchange information on promising projects for the development of port infrastructure, water areas and canals to strengthen cooperation. In particular, this concerns the project for reconstruction of the Bug-Dnieper-Liman canal.


At the same time, deepening cooperation with China in the energy sector is of great importance for Ukraine. Last week the Ukrainian state company Ukrgasvydobuvannya and Chinese Xinjiang Beiken Energy Engineering Co. signed a contract to drill 24 wells in Poltava and Kharkiv regions.

The total cost of works is 1 billion 934 million hryvnias. The beginning of drilling works is planned for the 4th quarter of 2017.