September 19, 2017

China (中国) Today

Events Review (11.09–17.09.2017)


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

The strategic goal of the PRC is to strengthen China's positions in the world by supporting the processes of globalization. According to Permanent Representative of the PRC to the UN, Liu Jieyi's statement at the opening ceremony of the 72nd Session of the UN General Assembly on 12 September 2017, favorable prerequisites for the development of such processes were created by the resolution of the previous session of the UN General Assembly on enhancing the role of the United Nations in global economic governance. The resolution was developed with the active participation of China and provides for deepening the interaction of the UN member states to ensure the stable development of the world economy and countering global challenges. Due to this, it is planned to create a more just and rational world on the basis of mutual benefit and interests. According to Liu Jieyi, the Chinese side intends to join forces with other countries and international organizations in implementing these plans to the benefit of the whole mankind.

One of the directions of such actions of the PRC is the deepening of interaction with the world financial and economic institutions in the “1 + 6” format, namely: the World Bank, the International Monetary Fund, the World Trade Organization, the International Labor Organization, the Organization for Economic Co-operation and Development, and the Financial Stability Board. Thus, on 12 September 2017, a 2nd “Roundtable Dialogue” in the format “1 + 6” was held in Beijing with the participation of the Prime Minister of the State Council of the People's Republic of China Li Keqiang and the leaders of the above-mentioned organizations. The participants discussed topical issues of the development of the Chinese economy and its impact on world economic processes.

In considering these issues, they pointed out the importance of PRC's actions to promote opening of global markets and expansion of trade and economic cooperation at the global and regional levels, which is helping for restoring the positive dynamics of global economic growth. Taking this into account, the heads of the international financial and economic institutions gave a positive assessment of China's economic policy and expressed their readiness to assist in its implementation.


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

The leadership of the PRC continues consistent measures to implement the concept of “The Belt and Road +”. Last week, the 14th China-ASEAN Expo was held in Nanning (administrative center of Guangxi Zhuang Autonomous Region, southern China) on cooperation between China, ASEAN members and countries along the “Belt and Road”. The exhibition was attended by about 3 thousand companies of different profiles and activities. Within the framework of the event, 36 forums were held dedicated to deepening the interaction between China and the ASEAN countries in the spheres of production, transport, environmental protection, culture and tourism.

During the exhibition, Vice Premier of the State Council of the People's Republic of China, Zhang Gaoli, pointed out the significant progress achieved in the development of cooperation between China and ASEAN. For example, from 1991 to 2016 the volume of bilateral trade grew 56-fold, and the volume of mutual investment increased almost 355-fold. Today, China is the ASEAN's largest trading partner, and the Organization is the third largest partner of the PRC. With this in mind, strengthening of relations between the PRC and ASEAN was called a weighty contribution to the construction of “The Belt and Road”.

Besides, the PRC continues activities to integrate information spaces along the “Belt and Road”. September 10, 2017, in the Greek city of Thessaloniki hosted the “New Silk Road” forum of the national news agencies from the countries participating in the Chinese initiative. During the Forum, the main directions of the PRC information strategy in the area of “The Belt and Road” were announced, including the deepening of contacts between the media of China and other project participants, spreading Chinese information products in the partner countries, and creation of a common information space. As a result of the meeting, a declaration was adopted on further strengthening the interaction between information agencies within the framework of “The Belt and Road”.

The PRC's strategic initiative is widely supported by the world's leading international financial institutions. According to World Bank President Jim Yong Kim, the bank has allocated 8 billion US dollars for the implementation of infrastructure projects of the “Belt and Road”. This decision should become a catalyst for infrastructure investments and promote the development of transport communications between Europe and Asia-Pacific.


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

3.1. Politics. Development of China's International Cooperation

One of the main directions of China's foreign policy is the promotion of ideas for building a “new world” as a form of expanding the sphere of Chinese influence. September 13, 2017, on China's initiative, as part of the work of the 36th Session of the UN Human Rights Council in Geneva, a meeting was held themed “Building a Community of Shared Future for Mankind and the Realization of the Right to Development”. The event was organized by the China Society for Human Rights Studies (CSHRS) and the Cross-Cultural Human Rights Centre of the Amsterdam Free University. Representatives of about 50 governmental delegations and non-governmental organizations and mass media took part in the meeting, including from Russia, Cuba, South Africa, Myanmar, Singapore, Indonesia and other countries.

During the meeting, the member of the Chinese Union for the Study of Human Rights, Director of the Center for the Study of Human Rights of Shandong University, Qi Yanping, spoke in favor of a rethinking of the entire modern civilizational system based on the idea of building a “new society with a single destiny for all mankind”. The main content of this idea was to establish international relations of a new type, which should be characterized by cooperation and mutual benefits in the economic, security and humanitarian spheres. Besides, he emphasized the fundamental importance of unconditional observance of the principles of respect for human rights, non-interference with internal affairs of other countries, parity of rights and obligations, and taking into account the political, economic and social characteristics of different countries.


China’s cooperation with the United States continues. September 12, 2017, a meeting was held in Washington between a member of the Council of the People's Republic of China, Yang Jiechi and US Secretary of State R. Tillerson. The parties pointed out the continuation of the positive development trend of China-US relations, which meets the common interests of the two countries and of the world community as a whole. At this, the sides expressed readiness to continue implementing the agreements between President of the People's Republic of China Xi Jinping and US President D. Trump. Proceeding from this, Yang Jiechi and R. Tillerson reached an agreement to continue the work on strengthening the China-US ties at all levels and in various fields. Besides, they pointed out the need for mutual respect for each other's interests, as well as for deepening cooperation in solving bilateral contradictions and international problems of world and regional levels.

Besides, on 17 September 2017, in Beijing, Yang Jiechi met with the Minister of Foreign Affairs of Germany S. Gabriel. The parties discussed the issue of Germany's assistance in continuing China-EU negotiation on an investment agreement, as well as in deepening the countries' cooperation in other spheres.

September 15–17, 2017, Minister for Foreign Affairs of the PRC Wang Yi visited the countries of Central America, namely Costa Rica and Panama. In the course of negotiations with representatives of the leadership of those countries, the possibilities to deepen their cooperation with China and its partners within the framework of the “Belt and Road” projects were discussed. The main directions of such cooperation were called as follows: development of infrastructure (including construction of ports, railways and highways), trade, use of new energy sources, protection of security and stability, humanitarian exchanges, and regional interaction.

At the same time, according to experts, China's main interest is to the possibility of Central American countries' wider involvement in the implementation of the plan for creating an alternative transport corridor from the Atlantic to the Pacific.

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

According to the statistical agencies of the PRC, the figures for August this year testify to the continuation of the stable development of the country's economy. Thus, industrial production grew by 0.46 % in the monthly and by 6 % in the annual measurement. The services sector showed a higher growth rate: the index of the manufacturing sector in this sphere grew by 8.3 % year-on-year, which is 0.9 % higher than the growth rates recorded in August last year. In turn, the volume of retail trade in consumer goods in the PRC grew in monthly terms by 0.76 %, and in the annual — by 10.1 %.

At the same time, there was a certain decrease in the rate of growth in investment into fixed assets with a general improvement in the overall investment structure. In January–August this year, the increase in investment amounted to 7.8 %, compared to 8.3 % for the same period last year. In particular, the volume of private investments showed an increase of 6.4 %, the volume of investment in high-tech production grew by 19.5 %, and real estate — by 7.9 %.

China’s Industrial Production Growth Rate China’s Investment Into Fixed Assets Growth Rate

During the first 8 months of 2017, about 20,400 new enterprises with the participation of foreign capital were created in China, which is by 10 % more than in the same period in 2016.

Also, during the first half of the year, the service sector's contribution to the country's GDP growth was 54.1 %. In this sector, by 50 % more jobs were created than in industry. According to Chinese experts, consumption has already become the main driving force of China's economic development, and its contribution to the country's economic growth since the beginning of 2017 has increased to 63.4 %. It is thanks to this factor that the Chinese economy remains stable. All this is called evidence of the transition of the Chinese economy from an export-oriented growth model to a development model based on domestic consumption while maintaining the achieved levels of investment and exports.


3.3. Security and Law Enforcement Agencies

September 12, 2017, the UN Security Council adopted a new package of sanctions against the DPRK because of the latter's nuclear tests in early September this year. New sanctions include a ban on North Korea's imports of condensates and condensates and natural gas liquids, export of textiles, as well as the employment of North Korean citizens in other countries. The volume of North Korea's import of oil products is limited to 2 million barrels a year. At the same time, the USA's proposal to ban the import of oil by North Korea and to freeze the international assets of the members of the government and its leader Kim Jong-un was rejected. September 14–15, 2017, additional sanctions against North Korea were also introduced by the European Union.


Despite the increase in external pressure, the DPRK leadership refuses to stop the implementation of its nuclear missile program. According to the Ministry of Foreign Affairs of that country, in response to new sanctions, “the DPRK will redouble the efforts to strengthen its power and to preserve security by establishing the practical equilibrium with the United States”. These intentions were confirmed personally by North Korean leader Kim Jong-un, who stated about Pyongyang's plans to create effective nuclear weapons under any circumstances.

In support of this, September 15, 2017, the DPRK carried out another launch of a long-range ballistic missile, “Hwasong-12”. The missile was launched from the Sunan air base near Pyongyang. It flew over Japan and fell 2 thousand kilometers off the island of Hokkaido (total flight range was 3.5 thousand kilometers). The event was attended by representatives of the country's leadership and the command of Strategic Troops of the Korean People's Army, as well as scientists and experts in the missile industry.

North Korea's actions caused another wave of sharply negative reaction in the world. Thus, on 17 September 2017, the United States' Permanent Representative to the United Nations N. Haley openly mentioned the possibility of “destroying North Korea in case it continues its reckless behavior”. According to her, Washington wants a peaceful settlement of the situation around the Korean Peninsula, but in case of failure of such intentions, responsibility for resolving the problem will pass to the US Department of Defence. The possibility of using military force against North Korea was also expressed by US National Security Adviser H.R. McMaster.

The USA's position was confirmed by the leadership of the North Atlantic Alliance. According to the Secretary General of NATO, J. Stoltenberg, “the DPRK's latest missile launch is a major threat and demands a global response”.

Tough statements about the DPRK's missile launches were made by the leaderships of Japan and South Korea (Republic of Korea; RK). Thus, the governments of the two countries expressed their intention to increase joint pressure on Pyongyang “to an unprecedented level”. One of the measures to put this pressure was the demonstration of missile launches that were carried out by South Korea on September 15. Immediately after the launch of the ballistic missile by the DPRK, two “Hyunmoo-2” short-range missiles were sent in the direction of the Sea of Japan from the RK’s training field near the inter-Korean border. The range was 250 km, which corresponds to the distance from the field to the North Korean air base Sunan.

Taking into consideration the latest complication of the situation in the APR, in October 2017, in the area of the Korean Peninsula, new joint military exercises of the United States and South Korea are planned with the participation of an carrier strike group of the US Navy and strategic aviation aircrafts.


Against this background, the PRC maintains its previous position with regard to North Korea. Thus, the Ministry of Foreign Affairs of China condemned the missile launches of the DPRK and called on all interested parties to implement the UN Security Council resolutions on North Korea. At the same time, the need for a peaceful settlement of existing problems was emphasized. China's Ministry of Foreign Affairs has also expressed its negative attitude to the United States, South Korea and Japan's increased military activity, as well as to their demonstration of force to the DPRK.


September 15, 2017, at the request of the United States and Japan, an emergency meeting of the UN Security Council was held to assess the DPRK's latest actions. Members of the UN Security Council spoke in favor of continuing international efforts to exert pressure on Pyongyang over its nuclear missile program, and also advocated the preservation of peace in the APR.


3.4. Science and Technology

One of the important directions of development of space technologies in China is a creation of a national satellite navigation system. At the end of 2016, the total value of the gross output of the Chinese satellite navigation and geolocation services industry reached 31 billion US dollars, which is by 22.1 % more than in 2015. In 2020, this figure will be 35 billion US dollars.

According to the Chinese government's plans, in 2018, the navigation system “Beidou” should cover all countries and areas along the “Belt and Road”. Besides, China offers the countries-participants of the “Belt and Road” services of space communications, earth surface sensing, as well as launching space vehicles, building ground stations and training relevant specialists.

To date, China has 17 commercial communications and navigation satellites in orbit, and the total number of transponders is about 300 units. By the end of 2017, it is planned to launch four more navigation satellites “Beidou-3”, and a complete system will be in place by 2020.

Besides, China has extensive cooperation with the world's leading countries in the development, production and operation of modern aviation equipment. September 14, 2017, in the Chinese city of Tianjin, the 4th China Helicopter Exhibition 2017 began its work. More than 400 companies from 22 countries and regions of the world are taking part in the event, including the world leaders in the aircraft industry such as: Airbus Helicopters, Bell Helicopter, Sikorsky, Leonardo, Russia's Helicopters and the Chinese Aviation Industry Corporation (AVIC). At the exhibition are presented helicopters of various modifications, engines, avionics, simulators and ground equipment. In particular, AVIC for the first time is demonstrating the model of a heavy helicopter with Ukrainian engines, which is planned to be manufactured in China.

Considerable efforts are also being made to develop the country's automobile industry on the basis of new technical principles. Thus, China is considering stopping the production of cars with traditional fuel and a complete transition to biofuels, electricity and hydrogen. According to the Technology Roadmap for Energy Saving and New Energy Vehicles, by 2020, sales of cars on such sources should reach 2.1 million units per year, and penetration rate will be 7 %. By 2025 and 2030, sales will be 5.25 million and 15.2 million cars, and the penetration rate will be 15 % and 40 %, respectively.


IV. Plans and Prospects for Cooperation between China and Ukraine

The main direction of the investment cooperation between China and Ukraine is the participation of Chinese companies in the implementation of infrastructure projects on Ukrainian territory.

September 11, 2017, Chinese company China Harbor Engineering Company Ltd. (CHEC) launched the second project in the Ukrainian port “Pivdennyi” (Odesa region), which provides for the reconstruction of the maritime approach channel and inland water approaches to the deep-water berths. This will help bring the depth of channels and the operational zone of the port to 21 meters. The works will last until the end of 2019.


Along with this, China shows great attention to the scientific sphere of Ukraine.

Last week, a delegation of representatives of local committees of the CPC and municipal authorities of the Chinese city of Hangzhou (Zhejiang Province, estern China) visited Kyiv Ihor Sikorsky Polytechnic Institute (KPI). Plans were discussed for expanding the cooperation of the KPI with scientific and educational institutions in Hangzhou, taking into account the experience of the Institute's existing ties with the relevant Chinese institutions (all in all, more than 20 different projects are being implemented).

As a result of the talks, a Memorandum of Understanding was signed to deepen the cooperation of the KPI with the Chinese company Zhejiang Golden Egg Science and Technology Co., Ltd in a number of spheres, including educational, scientific and innovative activities, particularly in the commercialization of scientific research.