November 14, 2017

China (中国) Today

Events Review (06.11–12.11.2017)

 

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

November 8–10, 2017, President of the United States D. Trump paid an official state visit to the PRC, which gave new impetus to the development of Sino-American relations. During their meetings, D. Trump and PRC President Xi Jinping discussed a wide range of issues related to trade and economic relations between the two countries, the development of the situation around North Korea, controversies over disputed island areas, as well as other regional and world problems.

During the negotiations, the parties agreed on the existence of significant prospects for further increase in the volume of US-China trade, as well as the implementation of joint economic projects. At the same time, D. Trump pointed out the significant imbalance in trade relations between the PRC and the United States, namely China's surplus in the amount of 233 billion US dollars, which was called “beyond anything what anybody would understand”.

President of the United States D. Trump paid a visit to the PRC on November 8–10, 2017 President of the United States D. Trump paid a visit to the PRC on November 8–10, 2017
President of the United States D. Trump paid a visit to the PRC on November 8–10, 2017

The leaders of the PRC and the USA expressed a common position regarding the inadmissibility of North Korea's acquisition of nuclear weapons. At this, the emphasis was placed on the absence of any disagreements between the two countries on this issue. In D. Trump's words at the final press conference, Washington and Beijing “will not replicate failed approaches of the past” in the situation with the DPRK, which managed to achieve rapid progress in the development of nuclear weapons and ballistic missiles. On his part, Xi Jinping reaffirmed China's commitment to denuclearization of the Korean Peninsula.

D. Trump and Xi Jinping meetings resulted in agreements reached on expanding the scope of trade and economic cooperation between the parties, deepening contacts and dialogue between the armed forces of the two countries, strengthening cooperation in the containment of the DPRK's missile and nuclear program, cyber security and counter-terrorism, supporting and strengthening stability in the South China Sea, as well as increasing cooperation in the scientific, technical and humanitarian spheres.

Within the framework of D. Trump's visit to China, 15 trade and economic agreements were signed for a total amount of 253.5 billion US dollars. The largest of these concerns plans for long-term investments into the implementation of a number of energy programs in the US state of West Virginia. Within 20 years, the China Energy Investment Corp. will invest 83.7 billion US dollars into the construction of a facility for storage of natural gas, as well as chemical enterprises and power-engineering facilities.

Within the framework of D. Trump's visit to China, 15 trade and economic agreements were signed for a total amount of 253.5 billion US dollars Within the framework of D. Trump's visit to China, 15 trade and economic agreements were signed for a total amount of 253.5 billion US dollars
Within the framework of D. Trump's visit to China, 15 trade and economic agreements were signed for a total amount of 253.5 billion US dollars

Besides, the American state corporation Alaska Gasline Development Corp., Chinese Sinopec and China Investment Corp., as well as the Bank of China have reached an agreement on the allocation of 43 billion US dollars to develop the infrastructure for gas production, transportation and liquefaction in the US state of Alaska. Within the framework of this project, it is planned to put into operation a new liquefaction plant with a capacity of 27.6 billion cubic meters per year. According to the agreements, the liquefied gas will be supplied to China.

Important was the conclusion of a contract between China Aviation Supplies Holding Company (CASC) and the American Boeing to supply the Chinese side with 300 narrow-bodied and wide-bodied airplanes. The total value of the contract is estimated at more than 37 billion US dollars.

According to experts, the implementation of these agreements and contracts will reduce the USA's trade deficit with China.

Within the framework of D. Trump's visit to the United States, separate talks were held at the level of representatives of the governments of the two countries, including U.S. Commerce Secretary Wilbur Ross and Chinese Vice Premier Wang Yang. The government officials held an in-depth exchange of views on bilateral trade issues.

Chinese Vice Premier Wang Yang, U.S. Commerce Secretary Wilbur Ross and China's Commerce Minister Zhong Shan in Beijing on November 8, 2017
Chinese Vice Premier Wang Yang, U.S. Commerce Secretary Wilbur Ross and China's Commerce Minister Zhong Shan in Beijing on November 8, 2017

The results of D. Trump's visit to the PRC have confirmed the hopelessness of Russia's expectations for building strategic partnership relations with China on an anti-American basis. Moreover, the trade and economic agreements concluded between the United States and the PRC directly contradict the RF's strategic interests. First of all, this is true about the emergence of real alternatives to the Russian gas pipeline project “Strength of Siberia”, as well as Russia's plans to jointly develop and manufacture new civilian aircrafts with the People's Republic of China. In this regard, a demonstration of the Kremlin's despair was the “warning” by A. Miller, Chairman of the Russian Gazprom, regarding “the prospects of a gas shortage in China”.

 

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

The leadership of the People's Republic of China expands the scope of cooperation within the “Belt and Road”. The 24th China Yangling Agricultural High-tech Fair was held last week in Shaanxi Province (northwest China) under the slogan “Boosting Agricultural Modernization Via “The Belt and Road”. The event was attended by representatives of 55 countries. Within the framework of the Fair, a business forum was held, during which the issues of development of international relations and exchanges in the agricultural sector, as well as modernization of agriculture were discussed. In total, the fair was visited by 1.7 million people.

24th China Yangling Agricultural High-tech Fair
24th China Yangling Agricultural High-tech Fair

At the same time, Ministerial Conference on Energy Cooperation in China — Central and Eastern European Countries format “16+1” and the Energy Fair and Conferences were held in Bucharest (Romania) on November 8–10. The topics of the Forum included consideration of prospects for strengthening energy cooperation between the PRC and CEE countries, as well as plans for creation of a modern, efficient and sustainable global energy structure. Participants of the event adopted a statement on deepening of energy cooperation at the level of the governments of the member countries of “16+1” format. At this, was stressed the importance of the energy component in the implementation of the “Belt and Road” projects.

Ministerial Conference on Energy Cooperation in China — Central and Eastern European Countries format “16+1” and the Energy Fair in Bucharest, Romania
Ministerial Conference on Energy Cooperation in China — Central and Eastern European Countries format “16+1” and the Energy Fair in Bucharest, Romania

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 developing relations between China and the United States as the two leading centers of power in the world, the Asia-Pacific region remains the main priority of Beijing at the regional level.

November 10–14, 2017, Chinese President Xi Jinping visited Vietnam and Laos on state visits. With the leaders of the mentioned countries he discussed the development of bilateral relations in various spheres, as well as plans for deepening interaction in world and regional international organizations. According to Xi Jinping, China and Vietnam are friendly neighbors; their political systems are identical, the ways of development are rather close, and the future and the fate are interconnected. All this creates a good basis for strengthening relations between the two countries in favor of their peoples and in the interests of strengthening regional security.

While in Vietnam, Xi Jinping took part in the 25th APEC Economic Leaders' Meeting which was held under the slogan “Creating New Dynamism, Fostering a Shared Future”. At the APEC CEO Summit, the leader of the People's Republic of China made a speech “Seizing the Opportunity of a Global Economy in Transition and Accelerating Development of the Asia-Pacific”, in which he spoke on Beijing's new approaches to the development of China and strengthening its international positions in accordance with the decisions of the 19th National Congress of the CPC.

President of the PRC Xi Jinping at the 25th APEC Economic Leaders' Meeting in Vietnam President of the PRC Xi Jinping at the 25th APEC Economic Leaders' Meeting in Vietnam
President of the PRC Xi Jinping at the 25th APEC Economic Leaders' Meeting in Vietnam

Besides, Xi Jinping emphasized the need for deepening regional integration, accelerating the creation of the Asia-Pacific Free Trade Area, implementing structural reforms in the economies of the countries of the region, and addressing the urgent problems of the Asia-Pacific region. Among such problems he mentioned the continued instability and the high level of poverty in the region.

Apart from this, the PRC leader pointed out the importance of the Asia-Pacific region, which accounts for 60 % of the world GDP, almost half of the global trade and 40 % of the world's population. According to Xi Jinping, based on this, development of the APR will contribute to the growth and globalization of the entire world economy. In this context, the President of the People's Republic of China mentioned special importance of the strategic Chinese initiative “The Belt and Road”, which is one of the largest and most effective mechanisms of integration of the countries of the Asia-Pacific. At the same time, the leader of the People's Republic of China called on the Forum participants to deepen the interaction between APEC and ASEAN (Association of Southeast Asian Nations).

Xi Jinping had meetings with leaders from other countries, including Presidents of Russia V. Putin, of South Korea Moon Jae-in, of Philippines R. Duterte, of Peru P. Kuczynski, of Chile M. Bachelet, and Japanese Prime Minister S. Abe.

President of the PRC Xi Jinping with leaders of the APEC countries in Vietnam
President of the PRC Xi Jinping with leaders of the APEC countries in Vietnam

A meeting of representatives of business circles of the region was organized on the sidelines of the APEC Summit under the auspices of the China Council for the Promotion of International Trade. The participants discussed the prospects of business cooperation and development of the regional economy and agreed on the importance of those issues for strengthening political stability and security in the region.

 

The PRC is paying special attention to the countries of the European Union. November 7, 2017, Premier of the State Council of the People's Republic of China Li Keqiang held telephone talks with Chancellor of the Federal Republic of Germany A. Merkel. The parties highly assessed the development of cooperation between the two countries and expressed their readiness to further deepen bilateral cooperation. In this regard, Li Keqiang expressed the PRC's being especially interested in increasing the volume of German investments into the Chinese economy, as well as the expansion of bilateral cooperation in the sphere of science and technology. According to the Premier of the State Council of the People's Republic of China, to achieve this goal, Beijing will continue to provide all foreign enterprises with equal and favorable opportunities to work in the Chinese market. For her part, A. Merkel showed the intention of the Federal Republic of Germany to continue contacts with China at all levels, including increasing the volume of mutual trade.

 

Besides, China continues to take an active part in the work of the United Nations. November 7, 2017, during the consideration of the reform of the UN Security Council as part of work of the 72nd  Session of the UN General Assembly, China's Deputy Permanent Representative to the United Nations, Wu Haitao spoke on the need to extend the Security Council to include countries with developing economies. In this regard, he highlighted the countries of Africa that are in a complex situation and need additional means to protect their interests, as well as addressing economic, security and other problems

 

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

China-US mutual trade over the past 10 years
China-US mutual trade over the past 10 years

Against the background of D. Trump's visit to the PRC, American and Chinese experts emphasize the success of the development of trade and economic cooperation between the two countries. Thus, within ten months of the current year, the total volume of mutual trade grew by 17.2 % to 472 billion US dollars. At this, for the first time in the last 14 years, the export of American beef to China has been restored.

There are wide prospects for deepening cooperation also in the infrastructure sphere. In particular, in this regard, there is a common interest in China's participation in the restoration of the American city of Houston, which was hit by a hurricane in August this year. Besides, based on its experience, the PRC offers the United States assistance in the development of high-speed railways.

 

Favorable conditions for expanding foreign trade activities of the People's Republic of China are being created by the steady growth of the Chinese economy. According to the statement made by Premier Li Keqiang, in order to consolidate this trend, in 2018 the government will continue to pursue a consistent macroeconomic policy based on innovative reforms. In addition, in order to reduce institutional and operating costs, the PRC government will keep reducing taxes and fees from enterprises.

The leadership of the People's Republic of China will also be giving special support to small businesses, including through allocation of special government loans. In this context, it is planned to introduce changes to the Chinese financial system, which will reduce the cost of such loans. It will also encourage the use of innovative technologies in small businesses.

 

3.3. Security and Law Enforcement Agencies

US President Donald Trump and South Korean President Moon Jae-in in Seoul on November 7, 2017
US President Donald Trump and South Korean President Moon Jae-in in Seoul on November 7, 2017

Situation around the Korean Peninsula. November 7, 2017, while in Seoul during the visit to the Asia-Pacific region, US President D. Trump expressed readiness to use Washington's full range of military forces to prevent a possible attack by North Korea. According to D. Trump, the United States and its allies will strongly defend the common security, freedom and future. The US President stressed the need to unite the efforts of all countries to isolate North Korea and to stop economic cooperation with it.

D. Trump confirmed the USA's intentions to take all available non-military measures to contain the DPRK's missile and nuclear program. Based on this, the US President called on the leadership of North Korea to sit down at the negotiation table and reach agreements that would have positive effects both for the DPRK and for the whole world.

 

Against this background, the US Department of Defense has prepared an assessment of possible scenarios for the development of the situation around the Korean Peninsula. According to them, the ground invasion of North Korea is the only way to neutralize its nuclear arsenal. At the same time, in response to the external invasion, the DPRK could use biological or chemical weapons. As a result, in the first days of operation alone, up to 300 thousand people would be killed, of which up to 100 thousand would be American citizens. According to experts, in such a situation, Russia and the PRC could avoid getting involved in the conflict or take sides with the United States. Taking this into consideration, last week, a group of American congressmen called on D. Trump to take into account the potential dangers and refrain from aggressive rhetoric and threats to North Korea.

 

Despite such assessments, the United States continues active measures to demonstrate military power in the APR. November 11–14, 2017, in the Western Pacific, there were joint military exercises involving three nuclear aircraft carriers “Theodore Roosevelt”, “Ronald Reagan” and “Nimitz”, and naval support ships of the US Navy, as well as three destroyers and four convoy vessels of the Navy of the Republic of Korea. Those were the first exercises of that large scale for past decade.

Three carrier strike groups led by the USS Theodore Roosevelt (CVN 71), USS Ronald Reagan (CVN 76) and USS Nimitz (CVN 68) in the Western Pacific on November 12, 2017
Three carrier strike groups of the US Navy led by the USS Theodore Roosevelt, USS Ronald Reagan and USS Nimitz in the Western Pacific on November 12, 2017

In turn, Russia continues to hold a double position with respect to the DPRK, namely, on the one hand, the RF maintains close economic relations with it, and on the other — it tries to use the North Korean problem to resume cooperation with the United States. According to the Director of the Department of Security and Disarmament of the Ministry of Foreign Affairs of Russia M. Ulyanov, in two or three years North Korea will be able to launch a missile-nuclear strike on the United States. Referring to this, he pointed out the existence of an objective basis for establishing an interaction between the United States and Russia on the issue of containment of the DPRK's nuclear and missile program.

 

Activities of the Armed Forces of the People's Republic of China. In early November this year, the Secretary General of the CPC Central Committee, the President of the People's Republic of China, the head of the Central Military Council (CMC) of the PRC, Xi Jinping, inspected the Joint Operations Command Center of the CMC in Beijing. During the inspection, he set the task of increasing the combat capability and combat readiness of the People's Liberation Army of China, which should become a strategic guarantee of national security. This task is going to be fulfilled on the basis of a wide implementation of innovations in the preparation and planning of combat operations, taking into account changes in the development of the military-political situation in the world and in the APR, as well as the achievements in the development of armies of other countries.

Chinese President Xi Jinping inspects the Joint Operations Command Center of the PRC's Central Military Commission
Chinese President Xi Jinping inspects the Joint Operations Command Center
of the PRC's Central Military Commission

3.4. Science and Technology

Within the framework of the modernization of the country, the leadership of the People's Republic of China pays great attention to the development of modern technologies in the aerospace, transport, energy and other leading sectors of the Chinese economy.

 

At the beginning of November, the 2nd China Aerospace Summit Forum under the slogan “Modern Innovations, Integration Development” was held in China. During the event, issues of space technology, space science, the use of outer space and space law were discussed. At the Forum, the China Aerospace Science and Technology Corporation (CASC) made public its plans to expand the commercial component of Chinese astronautics.

For this purpose, it is going to use the “Long March-6” and “Long March-11” rocket systems, which allow the delivery of loads to a low near-Earth orbit at a cost of 5,000 US dollars a kilo. Besides, in 2018 it is planned to conduct tests of key technologies for commercial launches of “Long March” rockets from the naval platform. The development of such technologies will reduce the cost of launching missiles, which will increase their competitive ability on the market.

 

Chinese RX1E-A electric airplane made its maiden flight
Chinese RX1E-A electric airplane made its maiden flight

At the same time, China has made another breakthrough in the aircraft industry. At the beginning of November, 2017, in Shenyang (Liaoning Province) RX1E-A electric airplane made its maiden flight. Developed by Shenyang Aerospace University, the apparatus has one pilot and one passenger seat. The electric airplane is equipped with an electric engine and an advanced lithium battery, does not require hydrocarbon fuel and is environmentally friendly.

 

China continues its efforts to develop its continental shelves with the use of advanced equipment. At the end of October China’s self-developed semi-submersible drilling platform A5000 recently finished deep-sea testing. The platform is 104.5 meters in length, 70.5 meters in width, and 105.8 meters in height. It can drill to a maximum depth of 9,144 meters at an operation depth of 1,500 meters. Through technological innovation, the installed capacity of the platform has been expanded by 20 % without additional cost. Wind-resistant performance has also been largely improved.

 

IV. Plans and Prospects for Cooperation between China and Ukraine

The energy sector remains one of the most important spheres of cooperation between China and Ukraine. In particular, last week, China National Nuclear Corporation (CNNC) and the Industrial & Commercial Bank of China (ICBC) offered Ukraine to consider completing Block 4 of Khmelnitsky NPP on the Hualong One (HPR-1000)'s own technology. At this, the Chinese side is ready to finance up to 85 % of the project.

Besides, at the end of October this year, Ukrainian company Ukrgasvydobuvannya signed contracts with Chinese companies Shandong Kerui Petroleum Equipment Co. and RG Petro-Machinery Group Co. for supplying the Ukrainian with five mobile drilling rigs with the capacity of 180 to 320 tons. The contract is worth almost 30 million US dollars. The terms of the agreement provide for the possibility to pay 60 % of the cost of the equipment within 2 years after its receiving. The platforms will be used to develop oil and gas fields in Poltava and Kharkiv regions of Ukraine.

A meeting of representatives of the scientific and business circles of Ukraine and China in Kharkiv, November 6, 2017
A meeting of representatives of the scientific and business circles of Ukraine and China in Kharkiv, November 6, 2017

Ukraine and the PRC continue their cooperation in the scientific sphere. November 6, 2017, the Kharkiv National University of Radio-Electronics (KNURE) hosted a meeting of representatives of the scientific and business circles of Ukraine and China.

The results of the implementation of preliminary agreements on scientific and technical cooperation, as well as exchange of students and scientists were discussed. Besides, an official agreement was reached with a Chinese consulting company that will deal with the implementation of Ukrainian scientific developments in the PRC. Along with this, Chinese scientists were introduced to the KNURE's latest scientific developments.