October 17, 2017

China (中国) Today

Events Review (09.10–15.10.2017)

 

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

Within the framework of the final stage of the preparation of the 19th National Congress of the Communist Party of China (CPC), the 7th Plenary Session of the Central Committee of the CPC of the 18th convocation (October 11–14) was the main political event in the country. During the Session, were discussed the draft report of the Central Committee of the CPC of the 18th convocation, which will be presented at the 19th National Congress of the CPC, the draft amendments to the CPC Statute, as well as the draft report on the CPC Central Committee's inspection on discipline. In general, the drafts of these documents were approved by the members of the Central Committee of the CPC.

Against this background, the leadership of the PRC, as well as leading Chinese and international experts, continued to sum up China's achievements since the previous 18th National Congress of the CPC in 2012.

First of all, the positive results of the reforms that were initiated by the PRC's President, Secretary General of the CPC, Xi Jinping, are the main achievements since the beginning of China's transition to the policy of openness of the country. In particular, the main directions of such reforms were building an innovative and open economy, improving the quality of the country's management, resolving socio-economic problems and creating a new society based on the “middle” class, as well as the complex modernization of the Armed Forces.

At the expense of the implementation of the above-mentioned approaches, the PRC confidently goes to a new stage of socio-economic rise, which is characterized by an increase in labor productivity on the basis of innovative technologies, structural changes in the country's economy, as well as the introduction of geo-economic megaprojects that mobilize the resource of China's potential partners in many regions of the world. At the same time, China's multi-format relations with other countries are developing on the basis of common interests.

All this creates the basis for strengthening the international positions and authority of the People's Republic of China, as well as the implementation of the “global economic offensive” through the implementation of the strategic initiative “The Belt and Road”, as well as other projects. For example, today more than 30 thousand Chinese enterprises and several million citizens work in foreign countries. At this, the total amount of Chinese investments abroad is more than 120 billion US dollars, while accumulated assets have already exceeded 1 trillion US dollars.

The 7th Plenary Session of the Central Committee of the CPC of the 18th convocation in Beijing
The 7th Plenary Session of the Central Committee of the CPC of the 18th convocation in Beijing

Besides, international observers are paying special attention to the Chinese leadership's efforts to overcome corruption in the country, including by cleansing the Chinese Communist Party. In particular, they emphasize the importance of the CPC Central Commission for Discipline Inspection (its plenary session took place on September 9, 2007 in Beijing), which is conducting a consistent activity to eliminate corrupt practice in the party apparatus.

In the context of these estimates, particular emphasis is placed on the complexity of the internal and external situations in which China is developing. In this aspect are mentioned the problems of transformation of the Chinese society, and the contradictory nature of the development of the situation in the world. Taking into consideration these circumstances, the achievements of the country are considered evidence of a high level of work of the “fifth generation” of the leadership of the People's Republic of China led by Xi Jinping, which has opened a new stage in the development of China.

 

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

The expansion of the geography of the Chinese initiative “The Belt and Road” increases its importance as a sub-regional integration system. Evidence of this is the development of Eurasia-China cooperation. In particular, the EU-Eurasia-China Business Summit was held in Athens (Greece) on 9–10 October, 2017. It considered prospects for deepening cooperation in the above-mentioned format. The participants of the Summit supported the Chinese initiative “Belt and Road”, and also expressed their hope for strengthening mutual trust in order to achieve common benefit. Proposals were made on improving the principles and standards of international trade and economy, as well as the development of transport infrastructure between Eurasia and the Asia-Pacific region.

The EU-Eurasia-China Business Summit in Athens, Greece
The EU-Eurasia-China Business Summit in Athens, Greece

Measures to develop the transport infrastructure of “The Belt and Road” continue. Thus, the China Railway Construction Corporation (CRCC) and China Galaxy Financial Holdings Company announced the creation of a joint fund “The Belt and Road” with the task of financing infrastructure projects. The size of the fund is set at 15 billion US dollars. It’s expected to attract funds from institutional investors, including the China Investment Corporation, the Silk Road Fund and the PPP (public-private partnership) fund.

Besides, the PRC is implementing a large-scale investment program for foreign ports. Over the past five years, China's three major port holding companies — Cosco Shipping, Shanghai International Port Group (SIPG) and China Merchants Port Holdings (CMPort) — have more than quadrupled their investments into seaports in other countries. At this, the end points of the “Belt and Road” in Europe are favored. For example, this year Cosco has bought 51 % of the Noatum Port Holdings from Spain, as well as a 100 % shares in the container terminal at the port of Zeebrugge (Belgium). Apart from this, Cosco owns 51 % of the port of Piraeus (Greece) and 35 % of the Euromax terminal in Rotterdam (the Netherlands).

 

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 to strengthen ties with Western countries and international organizations. In particular, on October 11, 2017, President of the People's Republic of China Xi Jinping, and President of the Federal Republic of Germany, F. Steinmeier, exchanged greetings on the 45th anniversary of the establishment of diplomatic relations between the two countries. In his telegram, Xi Jinping pointed out the positive character of the development of the Sino-German relations, which have reached a level of strategic partnership. Based on this, he expressed the People's Republic of China's being interested in further intensifying cooperation with Germany for the benefit of both countries and peoples. F. Steinmeier agreed with the Chinese leader and emphasized the possibilities of the Federal Republic of Germany to facilitate the wider access of Chinese goods to the markets of the European Union.

At the same time, on 12 October 2017, the Ministry of Foreign Affairs of China made a special statement to support Spain's Government's efforts to preserve the unity of the Spanish state. According to the a statement by a Speaker of the Chinese Foreign Ministry, the Chinese side is closely monitoring the situation in Catalonia, and understands and supports Madrid's measures to prevent separatists' plans. At this was expressed confidence in Spain's ability to maintain public order and protect rightful interests of its citizens. In addition, the Foreign Ministry of China emphasizes the friendly relations between China and Spain and Beijing's intentions to continue active cooperation between the two countries.

 

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

Ning Jizhe, director of the National Bureau of Statistics of China
Ning Jizhe, director of the National Bureau
of Statistics of China

October 11, 2017, Director of the National Bureau of Statistics of China Ning Jizhe reported on the main achievements of the country in the economic sphere. According to the Chinese official, the PRC is confidently fulfilling the task of ensuring sustainable development of the national economy and will reach the planned GDP growth rate of 6.5 % by the results of the current year. Moreover, this year's results can be even better.

In support of this, Ning Jizhe mentioned the main indicators of economic activity of the country since the 18th National Congress of the CPC. Thus, from 2012 to 2016, the annual GDP growth rate in China was at 7.2 %, which was by 2.6 % higher than the world average, and by 4 % higher than the average indicators of transition economies. At this, inflation was 2 %, and the unemployment rate — 5 %.

The rapid growth of China's economic potential has brought it to the first place in the world by the contribution to the world economic development. In 2016, China's share in the world economy was 14.8 %, which is by 3.4 % higher than the figure in 2012. At the same time, from 2013 to 2016, China's average contribution to the world economy was 30 %, which was more than the USA, the Eurozone and Japan's aggregate contribution.

The service industry accounts for 50 % of China's economy. In the first half of this year, the added value in this sphere was 54.1 %. In turn, the main driving force of the Chinese economy is consumption. From 2013 to 2014, the rate of the final consumption contribution into the country's economic growth was 55 %.

Positive trends are recorded in the development of cities and villages, which is becoming increasingly coordinated. At the end of 2016, the urbanization rate was 57.35 %, which is by 4.78 % higher compared with the end of 2012. Along with this, the difference between the incomes of urban and rural residents has decreased.

Besides, Ning Jizhe emphasized that since the 18th National Congress of the CPC, there has been a tangible improvement in the living standards of the country's population. Thus, from 2012 to 2016, real incomes increased by an average of 7.4 % and the number of the poor fell by more than 55 million people.

In order to consolidate these trends, the leadership of the People's Republic of China has decided to increase the financial support of major projects under the strategy “Made in China 2025”, which provides for the modernization of the country's manufacturing industry. Priority will be given to programs to stimulate innovation in the industry, in particular for the production of intelligent equipment and highend consumer electronics. The total funding for such programs is expected at 1.5 billion US dollars. In this regard, cooperation will be established between the Ministry of Industry and Information Technology of the People's Republic of China and China Development Bank.

 

3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. Given the continuation of Pyongyang's aggressive anti-American course, the United States reiterates its readiness to use military force against the DPRK in case of such a need. Thus, according to US Defense Secretary J. Mattis (in his speech at the annual meeting of the Association of the United States Army on 9 October 2017) the United States Armed Forces must be prepared for a military solution to the North Korean problem. At the same time, he called for peaceful resolving the situation around the DPRK's missile and nuclear program.

US Defense Secretary James Mattis at the 2017 Army Association annual meeting
US Defense Secretary James Mattis at the 2017 Army Association annual meeting

Meanwhile, the United States continue to demonstrate its strength to North Korea. On 11 October 2017, two US Air Force B-1B Lancer strategic bombers from Andersen AFB, Guam, accompanied by two South Korean F-15K fighters flew with approaching the coast of the DPRK. The planes approached the Korean Peninsula from the Sea of Japan, imitating a strike by cruise missiles on targets in the East of North Korea, crossed the territory of South Korea, carried out a U turn over the Yellow Sea, and repeated the approach to the target from the west.

Besides, the US Navy Carrier Strike Group led the aircraft carrier “Ronald Reagan” continues its sail to the Korean Peninsula. In addition, the US Navy's “Tucson” and “Michigan” nuclear submarines, equipped with Tomahawk cruise missiles, are heading for the Japanese Sea.

USS Ronald Reagan (CVN 76) USS Tucson (SSN 770) USS Michigan (SSGN 727)
The USA continues to demonstrate its strength to North Korea

In turn, in contrast to the strict policy of the UN Security Council, the United States, the EU, China and other countries to exert pressure on North Korea, Russia continues de facto to support the DPRK. For example, on 2–6 October 2017, a delegation of the State Duma of the Russian Federation paid a visit to Pyongyang, and this was widely commented on by the Russian media. At this, North Korean leader Kim Jong-un's statements, were actually approved. In this connection, illustrative was the statement by the RF Embassy in the DPRK regarding the recognition by North Korea of the Crimea's “belonging to Russia”, which again confirms the close interaction between Moscow and Pyongyang.

 

USS Chafee (DDG 90)
Guided missile destroyer USS Chafee of the US Navy

Other aspects in the development of the security situation in the region. Against the background of the aggravation of the situation around North Korea, another problematic issue is the disagreements around the disputed islands in the Asia-Pacific region. The Chinese Foreign Ministry has strongly protested against the unauthorized entry (10 October 2017) of the US Navy's “Chafee” guided missile destroyer to the Chinese territorial waters in the area of the Xisha (Paracel) Islands in the South China Sea. To prevent such actions, a missile frigate, two fighters and a helicopter of China's PLA were sent to the specified area.

 

3.4. Science and Technology

The leadership of the People's Republic of China attaches great importance to the proper financial support of the country's scientific and technological sphere, which is one of the keys to its effective development. According to the National Bureau of Statistics of China, in 2016, the funding for research and development in the country amounted to 234 billion US dollars (2,11 % of GDP), which corresponds to the level of leading developed countries. The structure of investments was also improved, namely — more funds were sent to fundamental research with the growth of contributions by leading companies. However, the funding of fundamental research is still relatively low compared to other developed countries, including the USA, the EU, Japan and South Korea.

An example of the high level of the investment activity in the PRC in the scientific and technical sphere is the Chinese corporation Alibaba Group's decision to launch an innovative research center (DAMO Academy), and to invest about 15 billion US dollars within three years into the development of advanced technologies. Among other things, it is planned to conduct research in the fields of quantum computing, machine learning, basic algorithms and network security.

Alibaba Group announces the launch of an innovative global research “DAMO Academy”
Alibaba Group announces the launch of an innovative global research
“DAMO Academy”

The Chinese are also actively working on the development of fundamentally new types of weapons and military equipment. In particular, the PLA Naval University of Engineering has announced the development of new technologies that can be used to create the so-called “rail gun”. The principle of operation of guns of this type involves the use of electromagnetic energy to boost the shell, which is part of the electric circuit and moves between two contact rails. China has been developing its own “rail gun” since 2005 and has already made some progress in this sphere.

Today, similar projects are being implemented in the USA and Russia. In July 2017, the Office of Naval Research, US DoD, together with the American company BAE Systems, tested a “rail gun” at the Dahlgren in Virginia. For the first time, two consecutive shots were made. At the same time, the Laboratory of Impulse Energy Impact on Substance in Moscow Region (Russia) tested the “rail gun”, capable (in the future) of boosting the shell to the first and second cosmic speed.

 

IV. Plans and Prospects for Cooperation between China and Ukraine

Secretary General of the China Overseas Development Association He Zhenwei
Secretary General of the China Overseas
Development Association He Zhenwei

October 9–10 2017, the Ukrainian-Chinese Forum on Economic Cooperation with the participation of representatives of Ukrainian and Chinese governments, businessmen and experts took place in the Ukrainian Chamber of Commerce and Industry. The main theme of the event was the determination of opportunities to increase the volume of Chinese investments into the Ukrainian economy, as well as the development of Ukrainian industry within the framework of the “Belt and Road”.

During the forum, there was a joint discussion on ways to deepen cooperation between Ukraine and the PRC in the “Belt and Road” format, as well as thematic presentations in spheres of construction, infrastructure development, science and technology, and innovative technologies. At that, the readiness of the Chinese side to deepen cooperation with Ukraine was confirmed. Thus, according to Secretary General of the China Overseas Development Association He Zhenwei, the PRC's Government actively encourages Chinese investments into Ukraine.

 

Ukravtodor and Chinese Xinjiang Communications Construction Group Co. Ltd. has signed agreements on the modernization of highways in Ukraine
Ukravtodor and Chinese Xinjiang Communications Construction Group Co. Ltd. signed agreements on the modernization of highways in Ukraine

Within the framework of the actual development of cooperation between Ukraine and the PRC, will be implemented a number of new joint projects with the companies of China Nuclear Energy Technology Corporation Ltd., CNI Energy Engineering Co. Ltd. and BGR Group on the introduction of clean energy technologies in Ukraine. Besides, on October 10, 2017, Ukravtodor and Chinese Xinjiang Communications Construction Group Co. Ltd. signed agreements on the improvement of road safety on Stryi-Ternopil-Kirovograd-Znamenka highway and reconstruction of Kyiv-Kharkiv-Dovzhanskyi highway.