November 7, 2017

China (中国) Today

Events Review (30.10–05.11.2017)

 

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

Political and expert circles of the People's Republic of China and other leading countries of the world continue to sum up the results of the 19th National Congress of the Communist Party of China. Thus, according to Chinese experts, the decision of the National Congress opens the prospect for resolving the main contradiction in Chinese society, defined by the President of the People's Republic of China, Secretary General of the CPC Central Committee Xi Jinping, as “the gap between the growing needs of the population and the inadequate and unbalanced development of the country”.

In this regard, at the initial stage of building socialism with Chinese characteristics, the main efforts of the CPC and the Government of the People's Republic of China will be aimed at consolidating the progress already made, which includes: gradual transition from underdevelopment to moderate development of the country and the entire Chinese nation; reducing the proportion of the poor population with the prospect of final alleviating of poverty and building a moderately prosperous society; transformation of the traditionally agricultural country into a modern industrialized, urbanized and modernized state; reducing inequality in the development of different areas of China; resolving the issue of general education of the citizens; achievement of advanced world levels in scientific, technological and innovative spheres.

October 18–24, 2017, in the PRC was held the 19th National Congress of the Communist Party of China
October 18–24, 2017, in the PRC was held the 19th National Congress of the Communist Party of China

At the same time, there remain significant problems, the main of which is the low GDP per capita; as well as the imbalance and insufficient development of the sphere of social services, modern scientific and technological branches, cultural potential and ecological safety of enterprises. All this is called the main deterrent to addressing the growing needs of the Chinese people. Given the importance of this issue, resolving these problems will be main task for the CPC and the Chinese Government for the future.

Besides, Chinese experts emphasize the unprecedented strengthening of the international status of China after the 18th National Congress of the CPC (2012). According to political scientists, China is gradually approaching the center of the world arena, but its status of the largest country with a developing economy, not of an economically developed state, remains unchanged. Thus, China ranks second in the world in terms of the total GDP, but according to the share of this indicator per capita is 90th. The PRC is also lagging behind by the level of productivity.

A similar situation persists in the humanitarian sphere. In particular, the People's Republic of China is the most populated country, but according to the index of human development occupies the 90th position among 188 countries of the world. In addition, China faces challenges such as resource scarcity, population aging and birth deficits. On this basis, the PRC needs not only to catch up with other leading countries, but also to build a new innovative model for the development and modernization of the Chinese state.

In turn, this will also contribute to the modernization of other emerging economies that have close relations with the PRC, including within the framework of the Chinese “Belt and Road” Initiative. This will be China's significant contribution to the growth of the world economy.

 

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

The consistent policy of the People's Republic of China to implement the strategic initiative “The Belt and Road” stipulates steady tendencies of its transformation into a new driver of the economic development of China and of the world economy in general. First of all it concerns the following aspects:

  • deepening cooperation within the framework of joint projects. According to the results of the first half of 2017, the total value of contracts for the implementation of various projects signed by the People's Republic of China with the countries of the “Belt and Road”, amounted to 78.09 billion US dollars, which is by 32.6 % more than in the same period in 2016;
  • increasing mutual investments. From January to June this year, China's investments into the “Belt and Road” countries reached 6.61 billion US dollars, which accounted for 13.7 % of the total volume of China's foreign investments and exceeded a similar figure of last year by 6 %. In general, since launching the “Belt and Road” Initiative, China has invested more than 50 billion US dollars into its participants' economies.
  • developing infrastructure. Implementation of the “Belt and Road” projects is accompanied by creation of new transport communications, including rail, road, sea and airways. In turn, this allows to increase the volume of trade between Europe and Central Asia and the Asia-Pacific region;
  • stimulating the growth of the Chinese economy. The PRC's participation in the implementation of the “Belt and Road” projects has been a significant contributor to the increase in the country's GDP. During the first half of this year, the indicator grew by 6.9 %. At this, 17,700 new companies with foreign capital were registered in the territory of China, which is by 12 % more than in the previous year;
  • adding to economic progress and resolving social problems of the PRC's partners. Thanks to Chinese investments into the “Belt and Road” countries, more than 200,000 jobs have been created. Besides, within this period, Chinese enterprises have formed 75 trade and economic cooperation zones, which resulted in China's partners' receiving additional 1.1 billion US dollars into their budgets.
China's Strategic Initiative “The Belt and Road”
China's Strategic Initiative “The Belt and Road”

An indication of the successful work of the “Belt and Road” is also the expansion of its geography, including at the expense of the countries of Southeast Asia. In particular, this issue became the main topic of the international conference “South Asia — China Connectivity for Regional Economic Social Development” in Katmandu at the end of October, with the participation of representatives of China, Nepal, Bangladesh, India and Pakistan. Participants of the event made a joint statement calling on the countries of the region to join the Chinese initiative.

 

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

3.1. Politics. Development of China's International Cooperation

A key event in the development of Sino-US relations should be the visit of US President D. Trump to China scheduled for November 8–10. On the eve of the visit, at the PRC Foreign Ministry there was a special briefing on this issue for representatives of Chinese and foreign media.

During the briefing the positive character of cooperation between the two countries was pointed out, which has got especially intensified after the first meeting of the leaders of the two countries in April in the USA. As an evidence of this were mentioned the close contacts between the parties at the highest level within the framework of further meetings and telephone talks, and in the format of the Sino-American dialogue in foreign policy and security, economics, humanitarian exchanges and cyber security.

A meeting of the leaders of two countries, Donald Trump and Xi Jinping on April 7, 2017, in the United States
A meeting of the leaders of two countries, Donald Trump and Xi Jinping on April 7, 2017, in the United States

In this context, was stressed the importance of D. Trump's visit, which should give an impetus to further strengthening of ties between the two countries and help bring them to a qualitatively new level. At this, the emphasis was placed on the importance of the historic moment of the forthcoming meeting of D. Trump and Xi Jinping immediately after the end of the 19th National Congress of the CPC, which opened a new stage in China's development.

First of all, it concerns the main tasks determined by the CPC — to strengthen China's international positions and to modernize its economy. In turn, this requires strengthening the coordination of the efforts of the PRC and the USA in resolving global and regional problems, as well as deepening the cooperation of the parties in trade, economic, scientific, technical and other spheres. This will prevent new contradictions between the two countries and will help achieve mutual benefit from the implementation of joint projects.

These issues will be the main theme for talks between US President D. Trump and President of the PRC Xi Jinping. Given the shared interest of the USA and the PRC in building a strategic dialogue for the long-term prospect, the Chinese Foreign Ministry expressed confidence in positive results of the meeting of the two leaders.

An additional factor that increases the relevance of D. Trump and Xi Jinping's meeting is the problems in the Sino-American relations. In particular, the assessment by the US Department of Commerce of the “non-market character” of the Chinese economy caused the PRC's negative reaction. According to the Ministry of Commerce of China, the said “is a serious distortion of the Chinese realities” and creates obstacles to deepening trade and economic cooperation between the two countries.

 

China also pays special attention to the countries of the European Union. October 30, 2017, the 2nd Sino-Spanish Forum on Exchange and Development was held in Madrid. The event was attended by about 800 people, including representatives of non-governmental organizations and business circles of the two countries. At the forum were discussed the issues of China and Spaine's mutual opening their markets and deepening cooperation in other spheres. On the side-lines of the forum was initiated implementation of the projects to strengthen cooperation between the public and private sectors of the two countries.

The 2nd Sino-Spanish Forum on Exchange and Development was held in Madrid on October 30, 2017
The 2nd Sino-Spanish Forum on Exchange and Development was held in Madrid
on October 30, 2017

Against this background, the Chinese Ministry of Foreign Affairs made a statement to support the efforts of the Spanish Government to protect national unity and preserve the territorial integrity of the country. It expressed confidence in Spain's ability to protect public order and the rights of citizens within the framework of legal and institutional norms. According to the statement, China and Spain are friendly states. In view of this, Beijing intends to continue its cooperation with Spain on the principles of mutual respect for sovereignty and territorial integrity and non-interference in internal affairs.

 

At the same time, China continues to develop its relations with Russia. November 1, 2017, in Beijing, there was a regular meeting of the heads of government of the two countries. The Prime Minister of the People's Republic of China Li Keqiang and the head of the Government of the Russian Federation, D. Medvedev, highly praised the relations between the parties at all levels and in all spheres. According to Li Keqiang, China, together with Russia, intends to develop cooperation, build confidence and increase exchanges through regular meetings of the leaders of the states and governments and other mechanisms of bilateral cooperation. On his part, D. Medvedev reaffirmed China's remarkable importance for Russia as the latter's major and strategic partner.

 

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

According to the decisions of the 19th National Congress of the CPC, it is planned to take additional measures to speed up the process of reforming the state enterprises of China. Due to this, it is expected to resolve the main problems of this sphere of the country's economy, such as the excess capacity with outdated technologies, insufficient quality level of corporate governance, and low labor productivity. In view of this, the main spheres of reforms will be redistribution of assets and rehabilitation of enterprises, introducing innovations and changes in the ownership structure of enterprises.

Thus, in two groups of state-owned enterprises, including the electric power industry and civil aviation, the mixed principle of ownership has already been experimentally implemented with the admission of private and foreign investments. Based on the results, similar approaches can be applied in other sectors, both at the national and regional levels.

According to the leadership of the China Institute for Reform and Development, today the measures of the PRC government to support and reform the public sector of the country's economy have already yielded positive results. Thus, within the first three quarters of the current year, the total income of state-owned enterprises increased by 24.9 % year-on-year to 332 billion US dollars. At this, regional state-owned enterprises outperformed central ones by 40.3 % by the level of incomes.

 

The Chinese leadership is also paying much attention to increasing foreign investments into the Chinese economy. Thus, by the end of November, the 9th China Overseas Investment Fair and the 2017 International Industrial Capacity Cooperation Forum are planned to be held in Beijing. More than 30 Chinese enterprises, including the China National Nuclear Corporation (CNNC) and the China Food Corporation (COFCO Group), will be represented on the event, organized by the China Development Cooperation Organization (CODA) abroad.

The 2017 International Industrial Capacity Cooperation Forum and the 9th China Overseas Investment Fair to be held in Beijing on 21–22 of November, 2017
The 2017 International Industrial Capacity Cooperation Forum and the 9th China Overseas Investment Fair to be held in Beijing on 21–22 of November, 2017

In addition, on November 5, 2018, the first China International Import Expo, a platform for demonstration of China's industrial, scientific and technological achievements, planed to be open in Shanghai. As part of the Expo, there also will be held a Hongqiao International Trade Forum, business talks, industry seminars, product presentations and other events.

 

3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. DPRK's activities in the nuclear-missile sphere are of growing concern to leading countries and international organizations. Thus, in the words of NATO Secretary General J. Stoltenberg, during his meeting with Prime Minister of Japan S. Abe on October 31, 2017, Pyongyang is already able to launch a missile strike on the territory of Europe and North America, which requires a response from the North Atlantic Alliance. At the same time, he called the DPRK's nuclear-missile tests a direct neglect of the UN Security Council's decisions and a global threat to the whole world.

A meeting of the NATO Secretary General Jens Stoltenberg with Prime Minister of Japan Shinzo Abe on October 31, 2017 in Tokyo
A meeting of the NATO Secretary General Jens Stoltenberg with Prime Minister of Japan Shinzo Abe on October 31, 2017 in Tokyo

Given Pyongyang's disregard for the UN Security Council's demands, the United States is strengthening pressure on North Korea. At the end of October 2017, US Department of the Treasury expanded the list of individuals and entities of the DPRK, who/which are subject to US sanctions for involvement in the country's missile and nuclear program.

The US continues measures to demonstrate force to the DPRK. November 2, in the area of the Korean Peninsula, regular joint exercises were conducted with the participation of B-1B strategic bombers of the US Air Force and fighters of the South Korean and Japanese Air Forces. According to several assessments, nuclear strikes on the territory of North Korea were mastered.

Besides, according to the results of the meeting of representatives of defense departments of the USA and South Korea on October 28, 2017, an agreement was reached on the build-up of US strategic weapons on the territory of the Republic of Korea in the interests of “further strengthening the military alliance of the two countries”. Commenting on this issue, US Secretary of Defense J. Mattis stressed the need to strengthen the international community's diplomatic efforts to contain the nuclear-missile program of the DPRK with a powerful military force.

A meeting of the US Secretary of Defense James Mattis with South Korean minister of National Defense Song Young-moo on October 28, 2017 in Seoul
A meeting of the US Secretary of Defense James Mattis with
South Korean minister of National Defense Song Young-moo
on October 28, 2017 in Seoul

Other developments in the security sphere in the APR. October 27, 2017, the 15th China-Japan Security Dialogue was held in Tokyo with the participation of representatives of the Ministries of Foreign Affairs and Defense of the two countries. During the dialogue the issues of world and regional security, orientation and peculiarities of the policy of the PRC and Japan in the security sphere, as well as plans for bilateral exchanges and defense cooperation were discussed. As a result of the talks, agreement was reached on the continuation of the dialogue, strengthening of control over crisis situations, and intensification of measures to improve the Sino-Japanese relations.

 

3.4. Science and Technology

An impressive example of China's achieving high positions in the world advanced technology is the successful implementation of the Chinese national program for the exploration of outer space. Thus, the China Aerospace Science and Technology Corporation is completing the development of a shuttle carrier. The testing of the apparatus is planned to begin in 2020. Creating such a system will reduce by about 80 % the cost of putting into orbit the payload compared with disposable carriers.

 

China's AT200 heavy cargo drone
China's AT200 heavy cargo drone

Measures to create new unmanned aerial vehicles continue. At the end of October 2017, the PRC conducted successful flight tests of heavy cargo UAV AT200. The device has a take off weight of 3.4 tons and can carry a load of up to 1.5 tons. The maximum range of UAV flight is 2.2 thousand km, cruising speed — 313 km/h, actual flight height — 6 thousand meters, the volume of the cargo compartment — 10 cubic meters. The apparatus was created at the Institute of Engineering Thermophysics under the Chinese Academy of Sciences on the basis of the lightweight, multipurpose New Zeeland P750XL utility aircraft and is one of the world's largest unmanned cargo civilian systems. The UAV will be used for freight transportation in hard-to-reach areas.

 

Besides, new land transport systems, created on the basis of advanced technologies, are being put into operation. In October this year, the world's first tram, powered by hydrogen fuel, was put into commercial operation in Tangshan, a northern province of Hebei. The main advantage of the new rail transport is environmental cleanliness, since the only waste product of its engine is water (as a result of the electrochemical reaction of hydrogen and oxygen). To refill the tram with hydrogen takes 15 minutes and allows it to overcome 40 km at a maximum speed of 70 km/h.

 

IV. Plans and Prospects for Cooperation between China and Ukraine

On October 29, 2017, the first freight train was sent from Chinese city of Urumqi to the Poltava
On October 29, 2017, the first freight train was sent from Chinese city of Urumqi to the Poltava

The development of transport links between the two countries is of great importance in strengthening the Sino-Ukrainian ties. In particular, on October 29, 2017, a new railway route was opened from the northwestern Xinjiang Uygur Autonomous Region of China to Ukraine. From the city of Urumqi to the city of Poltava was sent the first freight train with oil drill equipment of the Chinese Beiken company. The route of the train runs through the territory of Kazakhstan and Russia. The travel time is 15 days — against two months by sea. In September this year, Beiken signed an agreement with the Ukrainian side on drilling of oil wells in Kharkiv and Poltava regions.

 

Apart from this, within the framework of the implementation of the Chinese “The Belt and Road” Initiative, the routes of trains that will pass from the PRC through the territory of Ukraine to Slovakia, Poland and Hungary have been coordinated. This will allow wider export of Ukrainian goods to China. This project will include the Kharkiv plant “Svitanok”, the “Dnipro” plant (Smila, Cherkasy region), the Kyiv “Progres” plant, the Lviv “Troyanda” plant and the Uzhhorod “Ukrprodcontract” plant.

 

A meeting of representatives of the China Atomic Energy Authority (CAEA) at the Ministry of Energy and Coal Industry of Ukraine, November 1, 2017
A meeting of representatives of the China Atomic Energy Authority (CAEA) at the Ministry of Energy and Coal Industry of Ukraine, November 1, 2017

Further deepening of cooperation between Ukraine and the PRC in the energy sector is gaining momentum. In particular, issues of development of cooperation between the parties in this sphere were discussed on 1 November 2017, during the meeting of representatives of the Ministry of Energy and Coal Industry of Ukraine and the China Atomic Energy Authority (CAEA). In the course of the negotiations, among the promising objects of Chinese investments were mentioned the projects of completion of the 3rd and 4th power units of the Khmelnitsky NPP and the project “Ukraine-EU Energy Bridge”. Following the meeting, the parties reached an agreement to establish a joint working group to prepare proposals for the conclusion of an intergovernmental agreement on the use of nuclear energy and the framework documents necessary for cooperation between Ukrainian and Chinese partners.