October 10, 2017

China (中国) Today

Events Review (02.10–08.10.2017)

 

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

As part of the celebration of the Day of the Peoples Republic of China, as well as the preparation of the 19th CCP Congress, the country's leadership and leading national and international experts are summing up the results achieved by China in recent years. First of all, in this regard, is mentioned the sustainable development of the Chinese economy, which allowed China to reach the level of the second potential of the world, to create its zone of influence, to build strong armed forces, and to solve major internal problems, including to eradicate poverty and to build good-quality and able-to-get education and health care systems.

According to most experts, the main reason for China's “economic miracle” is the Chinese Communist Party's effective policy on governing the country that differs greatly from that of other governments. In particular, the main feature of such a policy is the ability of the CCP to develop and successfully implement long-term plans for the country's development, taking into consideration current changes in the internal and external situation.

Besides, unlike the countries of the former “Soviet camp” who completely abandoned the socialist system, the CCP successfully combines the benefits of socialist and market approaches based on the balance between them. Thus, the CPC and the State Council (government) of the People's Republic of China determine the main directions of development of the Chinese economy, as well as control strategically important industries and enterprises of the country. At this, China's economic complex includes both state and private enterprises operating on market principles with the Chinese government's differentiated support.

The 19th National Congress of the Communist Party of China to open in Beijing on October 18
The 19th National Congress of the Communist Party of China to open in Beijing
on October 18

An important component of the CCP's policy is also the realization of the idea of a just distribution of benefits and wealth among the entire population of the country, which actually forms the basis of socialist values. China's leadership considers people, not capital, the most important factor that distinguishes the PRC from other states. In turn, this stimulates the Chinese nation for active and selfless work in the interests of the entire society.

At the same time, the Chinese authorities have given up the old policy of “closed doors” and actively cooperate with other countries in the political, economic and security spheres. Moreover, China actively supports the processes of globalization of the world economy, which contributes to both the country's own economic growth and the development of the entire world. Given this, the strengthening of China, where the fifth part of the world's population lives, leads to global changes in the world in terms of shifting the main center of political and economic activity from the West to the East.

At the present stage of world globalization, China plays a fundamentally new role in the international arena. For example, it no longer confines itself to exporting goods at available prices, but offers real solutions to global problems and makes efforts to build a fairer and more balanced world.

 

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

The PRC's strategic initiative “The Belt and Road” is increasing the interest of the world community, the leading countries of the world included. An international center devoted to the study of China's “The Belt and Road” Initiative was officially launched on the 29th of September 2017 at the University of Cambridge.

The Center is the first independent platform in the UK to research the Chinese initiative. Within the framework of the Center, it is planned to carry out an analysis of the problems associated with the implementation of “The Belt and Road” programs and to determine the ways to solve them.

Former British Prime Minister Gordon Brown on the “Sustainable Silk Roads Conference” in Edinburgh, Scotland
Former British Prime Minister Gordon Brown on the “Sustainable Silk Roads Conference” in Edinburgh, Scotland

Commenting on the Chinese initiative, former British Prime Minister Gordon Brown pointed out the importance of the “Silk Road” in terms of expanding ties between China and Europe, as well as within Eurasia. According to the British politician, this allows to create more jobs and increase the volume of mutual trade, which contributes to speeding up the development of the world trade.

The countries of the post-Soviet space are also paying a lot of attention to “The Belt and Road”. The second international “Silk Road Forum” is scheduled for November 28–29 in Tbilisi, with the participation of about a thousand representatives from different countries and organizations. It is planned to discuss the issues of deepening cooperation in the spheres of regional and international trade.

Against this background, China continues to actively develop the transport component of the “Belt and Road”, including the new air routes between the countries participating in the Chinese initiative. In particular, lately, eight new domestic and international airlines with a total length of 2.5 thousand kilometers have been opened in the People's Republic of China. Besides, the infrastructure of more than twenty domestic and international lines has been modernized. Among such achievements, the most important is the commissioning in September of Lanzhou-Shanghai Air Corridor, which is the longest airline from the East to the West of China.

 

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

3.1. Politics. Development of China's International Cooperation

Director-General of the Department of Arms Control of the China’s Foreign Ministry Wang Qun
Director-General of the Department of Arms Control of the China’s Foreign Ministry Wang Qun

China, as a leading power of the world, continues to take an active part in the construction of a new system of international security. China's proposals on this issue were expressed by Director-General of the Department of Arms Control of the China’s Foreign Ministry Wang Qun on October 6 during the 72nd Session of the General Assembly of the United Nations. In particular, the initiatives included construction of a human society with a single destiny, ensuring long-term peace and general security, as well as achieving common prosperity on the basis of mutually beneficial cooperation. In this regard, Wang Qun made a special emphasis on the need to support the credibility and effectiveness of the Treaty on the Non-Proliferation of Nuclear Weapons by all countries of the world.

Also indicative was the meeting of Chinese Foreign Minister Wang Yi and Ambassador of Japan in Beijing Yutaka Yokoi, which was dedicated to the 45th anniversary of normalization of diplomatic relations between the two countries after the Second World War. A key feature of the negotiations was recognition by both sides of mutual responsibility for the tragedy of the historical past. Proceeding from this, both the parties expressed their intentions to prevent happening of such problems in the future.

 

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

The evidence of the effectiveness of the PRC's policy is the positive dynamics of the country's economic development. Thus, in September this year, the index of business activity (PMI) in the manufacturing industry of China grew by 0.7 % in comparison with the previous month to 52.4 %, which is the highest level since May 2012. In turn, the PMI index in the non-processing industry increased from 53.4 % to 55.4 %, which is the highest since June 2014. According to Chinese experts, this is the result of improvements in the sphere of demand both domestically and in foreign markets, and the faster pace of the development of high-tech industry. The PMI index reflects the level of business activity of enterprises. The figure above 50 % indicates the expansion of the sector, and below — its reduction.

China in the Global Competitiveness Index from the World Economic Forum
China in the Global Competitiveness Index
from the World Economic Forum

All this contributed to the increase in incomes of Chinese enterprises of all forms of ownership. In particular, within the first eight months of the year revenues of public enterprises increased by 21.7 % compared to the same period last year and in the aggregate amounted to 1 trillion 911 billion Yuan (290 billion US dollars). Within the same period, state enterprises' total tax payments to the budget amounted to 2 trillion 710 billion Yuan (385 billion US dollars), which is by 12.2 % more than within the same period last year. The highest growth rates of revenue were noted in the coal, oil, petrochemical and transport sectors.

Besides, in the Global Competitiveness Index from the World Economic Forum, China has risen by one position and ranked 27th among 137 countries and regions. The first places are occupied by Switzerland, the USA and Singapore. From 4th to 10th — by the Netherlands, the Federal Republic of Germany, the Chinese Special Administrative Region Hong Kong, Sweden, Great Britain, Japan and Finland. Competitiveness of economies is assessed by 12 pillars, which are conditionally divided into three groups — basic requirements, efficiency enhancers and innovative maturity. By all indicators, China received the highest marks on the market size, macroeconomic conditions and innovation. Significant progress was made on the level of technological readiness, market efficiency, as well as in higher education and training.

 

3.3. Security and Law Enforcement Agencies

The situation around the Korean Peninsula. The aggravation of the situation in the Asia-Pacific region because of the missile and nuclear tests of North Korea is a major concern for the world community, and first of all for the countries of the region. Thus, according to experts from the US-Korea Institute at the J. Hopkins University, in case of DPRK's nuclear strikes on the capitals of South Korea and Japan, the number of human victims could be 2.1 million killed and 7.7 million wounded. According to specialists, North Korea is already capable of equipping its ballistic missiles with nuclear warheads, and its base nuclear arsenal is estimated at 20–25 warheads with a capacity of 15 to 250 kilotonnes.

On the 7th of October 2017, at the Plenum of the Central Committee of the Workers' Party of Korea, the leader of the DPRK, Kim Jong-un confirmed Pyongyang's plans to continue the creation of missile nuclear weapons despite the UN sanctions and the worsening economic situation in the country. According to him, “nuclear weapons are powerful deterrence that guarantees North Korea's sovereignty in the face of increased threats from the USA”.

The Plenum of the Central Committee of the Workers' Party of Korea in Pyongyang, October 7
The Plenum of the Central Committee of the Workers' Party of Korea in Pyongyang, October 7

Under these circumstances, the United States continues to show a tougher position towards the DPRK. According to the State Department's Spokesperson Statement on October 1, “DPRK will not obtain a nuclear capability. Whether through diplomacy or force is up to the regime”. At the same time, the USA's leadership rejects any possibility of direct talks with North Korea due to their lack of prospects.

Against this background, the USA continues to demonstrate its strength to the DPRK. Thus, the United States and South Korea are conducting joint naval exercises with the participation of the US Navy Carrier Strike Group headed by the “Ronald Reagan” aircraft carrier. Despite the PRC's negative attitude to the USA's such actions, the Chinese side gave permission for the American ships to enter Hong Kong Harbor for resting teams and replenishing stockpiles.

USS “Ronald Reagan” (CVN 76) arrives in Hong Kong for port visit, October 2

China also is intensifying pressure on North Korea. In accordance with UN sanctions, China has begun deportation of North Korean citizens working in the PRC. At the same time, the work of companies with North Korean capital stops. Besides, at the beginning of October this year, Chinese providers closed the entire Internet traffic that was transmitted through the territory of China from the DPRK.

 

On the contrary, Russia retains a double position with respect to the DPRK. In particular, China's closure of Internet traffic from North Korea was compensated by the Russian “Transtelecom” company (a subsidiary of the “Russian Railways”). According to the Western experts, this gives the DPRK more opportunities to carry out computer attacks on other countries, including with Russia's support and in cooperation with it.

 

Activities of the People's Liberation Army. The leadership of the People's Republic of China continues an active policy of international military cooperation, as well as a demonstration of its naval presence in different regions of the world. October 3–8, the 26th Escort Fleet of the PLA Navy arrived in London on an official visit. The visit was aimed at introducing PLA Navy to the British society, as well as providing an incentive for further development of the Sino-British interstate and inter-military relations. The event's program included a Doors Open Day and an exchange of professional experience between seamen from the PRC and the UK. Earlier, the PLA Navy ships visited Belgium and Denmark. At the same time, a similar visit was paid by a group of ships of the PLA Navy to Thailand.

The 26th Escort Fleet of the PLA Navy with a friendly visit in London

 

3.4. Science and Technology

According to Western experts' estimates, China is confidently moving to the first positions in the world by using a new technologies in different spheres. According to a report by the British “EY” (Ernst & Young), in 2017 China is the first in the ranking of the use of modern financial technology in the 20 major markets of the world. First of all, this concerns the creation of a massive system of electronic (non-cash) payments, including through social media platforms, in particular, WeChat. This opinion is shared by representatives of the American “Troops” company, which specializes in artificial intelligence, and the “Finovate Conference”, which demonstrates innovations in the field of financial technology. According to their views, China has already surpassed the United States in the sphere of financial technology by five or six years.

 

In China, the implementation of a program of exploration of marine and ocean resources continues. At the end of September 2017, the first remotely controlled deep-water vehicle of its own production, capable of immersion at depths up to 6,000 meters, was tested. During the tests, the unit performed 7 dives to the depth up to 5,611 meters. The vehicle was created with the assistance of the Chinese Academy of Sciences (CAS) and can be widely used for environmental and biological research, as well as exploration of marine minerals.

Underwater testing of the China's first domestic remotely operated deep-water vehicle
Underwater testing of the China's first domestic remotely operated deep-water vehicle

Besides, under the auspices of CAS, the first Chinese round-the-world oceanographic expedition continues. October 8, 2017, the research vessel “Xian Yang Hong 01” departed from the port of Cape Town in the South African Republic and headed to the Atlantic Ocean. In the Atlantic, the second and third stages of the expedition will take place, which include conducting research on geology and ecology of the ocean, ocean circulation, oceanic climate, and also the chemical composition of water. At the previous stage, similar studies were carried out in the Indian Ocean, in particular in the region of the deep basin in its central part, which was discovered by Chinese scientists.

 

IV. Plans and Prospects for Cooperation between China and Ukraine

Within the framework of the development of ties with China, Ukraine is an important and integral part of China's “The Belt and Road” initiative. October 4, 2017, “Ukraine Trade Finance Forum — Silk Road Trade Finance” was held with the participation of Ukrainian and foreign politicians, businessmen and experts. The forum confirmed Ukraine's significant transit and investment potential, which creates a favorable basis for expanding Ukraine's presence in international markets.

According to Minister of Economic Development and Trade of Ukraine Stepan Kubiv, on the basis of such opportunities, today, instead of the raw material-oriented economy, Ukraine is creating a reliable foundation for an innovation-investment economic model, which involves large-scale infrastructure construction and industrial development. At this, Ukraine intends to adhere to fair trade rules and refrain from excessive protectionism of its markets, as stipulated by the rules of “The Belt and Road”.

At this, the position of Russia, which for political reasons prohibits the transit of Ukrainian goods through its territory, was mentioned among the obstacles in the implementation of the “Belt and Road” projects.

Minister of Economic Development and Trade of Ukraine Stepan Kubiv at the “Ukraine Trade Finance Forum — Silk Road Trade Finance”
Minister of Economic Development and Trade of Ukraine Stepan Kubiv at the “Ukraine Trade Finance Forum — Silk Road Trade Finance”

An evidence of Ukraine's importance to China is the leading Chinese companies' increased attention to it. Thus, according to general director of “Syngenta” (owned by the Chinese state-owned “ChemChina” petrochemical corporation and which works in the Ukrainian agricultural sector) Gebhard Rogenhofer, in the near future, several more powerful companies from the PRC can create their agricultural holdings in Ukraine. Today, China's greatest interest is the sunflower sector in the agriculture of Ukraine, which, along with Argentina, plays a key role in this segment of the world market. Taking into account the growing demand for sunflower oil, the management of “Syngenta” decided to double the cost of sunflower seed selection, which should increase their productivity. Part of this money will go to Ukraine.

 

Besides, the PRC and Ukraine continue to deepen their ties in the scientific and educational spheres. In particular, at the beginning of September this year, a delegation of the Harbin Engineering Institute visited Kharkiv Karazin National University (included in a number of international ratings, among which QS World University Rankings, Times Higher Education World University Rankings and Shanghai Rankings). The parties discussed the possibility of cooperation in the implementation of educational programs in specific spheres, including shipbuilding, marine informatics, nuclear technologies, etc. As a result of the negotiations, an agreement was signed on cooperation between the two educational institutions. Of the 4,500 students currently studying at Karazin University, almost a thousand are Chinese citizens.