November 21, 2017

China (中国) Today

Events Review (13.11–19.11.2017)

 

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

One of the main directions of China's actions to expand its sphere of influence in the world is the development of cooperation with the countries of neighboring regions. In this regard, significant was the participating of the Chinese President, Xi Jinping in the 25th informal meeting with leaders of the APEC (Asia-Pacific Economic Cooperation) countries on November 10–11, 2017 in Vietnam, and Premier of the State Council of China Li Keqiang in the 31st ASEAN (Association of Southeast Asian Nations) Summit on 12–24 November 2017 in the Philippines.

Following the meeting of APEC leaders in Vietnam, the Da Nang Declaration was adopted, which confirms the parties' intentions to continue the efforts to establish an Asia-Pacific Free Trade Area, as well as to deepen the cooperation of the participants of the Organization in all other areas. Summing up the summit, Chinese President Xi Jinping highly praised the progress made in developing the interaction between the APEC countries, called for closer cooperation between APEC and ASEAN, and also expressed Beijing's intentions to make every effort to implement the decisions taken in the interests of building a common space between China and ASEAN with common fate (in 2016, the mutual trade turnover of the sides reached 452.2 billion US dollars, the PRC is the largest trading partner of ASEAN, and ASEAN is China's third-largest partner after the EU and the USA).

Chinese President Xi Jinping delivers keynote speech at APEC CEO Summit in Vietnam       In 2016, the China-ASEAN trade turnover reached 452.2 billion US dollars
Chinese President Xi Jinping delivers keynote speech at APEC CEO Summit in Vietnam       In 2016, the China-ASEAN trade turnover reached 452.2 billion US dollars

In his turn, within the framework of the ASEAN Summit in the Philippines, Li Keqiang took part in the 20th meeting of the leaders of China and the Association of Southeast Asian Nations (“10+1” format), the 20th meeting of the leaders of ASEAN, China, Japan and South Korea (“10+3”), as well as the 12th East Asia Summit. After this, the Premier of the PRC held official talks with the leadership of the Philippines.

During the “10+1” meeting, Li Keqiang highlighted the positive nature of the dialogue between China and ASEAN, contributing to the development of bilateral and multilateral relations between the parties, and also allowing to solve delicate issues. In view of this, the Li Keqiang emphasized the People's Republic of China's being interested in bringing the cooperation with ASEAN to a qualitatively new level, as well as giving it more global content.

In this context, Li Keqiang outlined a number of priority tasks that need joint efforts of the countries of the region. First of all, he mentioned the need to improve security in the South China Sea, where most of the trade ties between China and ASEAN are concentrated. In this regard, the Premier of the State Council of the PRC expressed his hope for continued full and effective implementation of the Declaration on the Conduct of the Parties in the South China Sea and intensification of consultations on the adoption of the relevant Code on this issue.

20th ASEAN China Summit (“10+1” format)
20th ASEAN China Summit (“10+1” format)

A number of important issues were also considered in the “10+3” format. The participants of the meeting highly estimated the results of the interaction of the parties over the past 20 years and expressed their intention to continue the development of cooperation in all spheres. The most important were called investment, and deepening of regional ties. As a result of the meeting, the Declaration on the 20th anniversary of “10+3” Cooperation and the Statement on Food Security Cooperation were adopted.

20th ASEAN Plus Three Cooperation Summit (“10+3” format)
20th ASEAN Plus Three Cooperation Summit (“10+3” format)

The main theme of the 12th East Asia Summit was the security problems in the region and the ways of their joint resolving. Such problems include first of all the illegal migration, terrorism and extremism, as well as the unsatisfactory level of environmental protection. According to the participants of the meeting, all this requires uniting the efforts of the countries of the region within the framework of joint struggle against the challenges to their security. In addition, they stressed the need to deepen regional integration in the economic sphere. Taking into consideration the importance of this issue, the parties agreed on the continuation of the construction of the East Asian Economic Community.

12th East Asia Summit
12th East Asia Summit

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

China's consistent efforts to implement trade and economic projects within “The Belt and Road” provide a steady tendency for the country's foreign trade to grow. According to the Chinese customs authorities, from January to October of 2017, the volume of China's trade with the members of “The Belt and Road” increased by 19.4 % compared to the same period last year. In this regard, positive was the result of the simplification of customs clearance of goods, which greatly reduced the time of their passage through the customs.

Taking into consideration the above-mentioned achievements, within the ten months of the current year, the total volume of Chinese foreign trade increased by 15.9 % to 22.52 trillion Yuan. At this, the volume of exports of goods in monetary terms increased by 11.7 % to 12.41 trillion Yuan, and the volume of imports increased by 21.5 % to 10.11 trillion Yuan.

 

The development of the “Belt and Road” is important for deepening cooperation between the PRC and the USA in the financial sphere. November 9, 2017, an agreement between the Silk Road Fund and American General Electric company was signed to create a common platform for financing projects in the sphere of electric engineering, new energy sources and the oil and gas sector with the participation of the countries along the “Belt and Road”. The cooperation of the Silk Road Fund and General Electric is aimed at enhancing the joint work of Chinese and US enterprises in the hi-end manufacturing sector, as well as the combination of the advantages of Chinese and American enterprises for joint investment and joint promotion of economic development along the “Belt and Road”.

 

Special attention to “The Belt and Road” is demonstrated by Russia too. In particular, it is considering the issue of creating a so-called “Ice Silk Road”, which should provide transportation from the Asia-Pacific to Europe through the Arctic Ocean. According to experts, if this idea is implemented, China will become Russia's largest client on the above-mentioned routes, from which both countries will benefit.

 

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

3.1. Politics. Development of China's International Cooperation

The Premier of the State Council of the PRC Li Keqiang's negotiations with the President of the Philippines Rodrigo Duterte
The Premier of the State Council of the PRC Li Keqiang's negotiations with the President of the Philippines Rodrigo Duterte

On the sidelines of the international events in the Philippines, there was a series of the Premier of the State Council of the People's Republic of China, Li Keqiang's meetings with the leaders of other countries. The meetings were important for further strengthening of China's bilateral relations with them.

 

Thus, with the President of the Philippines, R. Duterte, a wide range of issues was discussed, first of all those concerning the deepening of cooperation between the parties in the economic sphere. Li Keqiang pointed out the likeliness between the Chinese and Filipino economies, which greatly complement each other. Taking this into account, he proposed to combine strategies for the economic development of the two countries in the implementation of medium- and long-term (for a period of 5–10 years) projects in the trade-economic, investment, information, infrastructure and fishing sectors. Besides, Li Keqiang and R. Duterte agreed on the importance of intensifying the interaction of the two countries in countering the common challenges for their security, as well as in other spheres, including poverty alleviation, cultural and youth exchanges. As a result of the meeting, 14 bilateral agreements and deals were signed.

 

The Premier of the State Council of the PRC Li Keqiang's meeting with Japanese Prime Minister Shinzo Abe
The Premier of the State Council of the PRC Li Keqiang's meeting with Japanese Prime Minister Shinzo Abe

In turn, during the meeting between Li Keqiang and Japan's Prime Minister S. Abe, they pointed out the changes for better in the Sino-Japanese relationship despite some delicate issues. The parties expressed their hope for the possibility of resolving such problems “based on the lessons of the past and the prospects for the future”. In particular, the Prime Ministers called strengthening of ties between their economies, establishment of cooperation in the markets of third countries, and promotion of negotiations on the creation of a free trade area between China, Japan and South Korea. For his part, S. Abe expressed Japan's intentions to take a more active part in the work of “The Belt and Road”.

 

The Premier of the State Council of the PRC Li Keqiang's meeting with South Korean President Moon Jae-in
The Premier of the State Council of the PRC Li Keqiang's meeting with South Korean President Moon Jae-in

Similar issues were discussed during the negotiations between Li Keqiang and President of South Korea Moon Jae-in. The parties pointed out having common interests on a wide range of issues. Proceeding from this, Beijing and Seoul confirmed their intentions to continue active cooperation between the two countries in the spheres of economy, trade and finance, manufacturing and environmental protection. They also are going to expand human resources exchanges and develop humanitarian contacts. However, Li Keqiang confirmed the PRC's concern about the US THAAD missile defense system in South Korea.

 

The Premier of the State Council of the PRC Li Keqiang's meeting with the President of the European Council Donald Tusk
The Premier of the State Council of the PRC Li Keqiang's meeting with the President of the European Council Donald Tusk

Besides, while in Manila, Li Keqiang met with Prime Ministers of Australia M. Turnbull, New Zealand — J. Ardern, Cambodia — Hun Sen and Vietnam — Nguyen Xuan Phuc.

 

Against this background, Li Keqiang's meeting with President of the European Council Donald Tusk, was of particular importance, having confirmed the priority character of the Sino-European relations. Representatives of China and the EU stressed the importance of expanding cooperation between the parties and building a balanced relationship between them. In this context, they emphasized the need to speed up negotiations on an investment agreement between the PRC and the European Union. The EU position to support China's accession process to the World Trade Organization was also confirmed.

 

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

The Sino-American agreements in the trade and economic sphere, concluded during US President D. Trump's visit to China
The Sino-American agreements in the trade and economic sphere, concluded during US President D. Trump's visit to China

The Government of the People's Republic of China attaches great importance to the successful implementation of the Sino-American agreements in the trade and economic sphere, which were concluded during US President D. Trump's visit to China on November 8–10, 2017. According to the estimation of the Ministry of Commerce of the People's Republic of China, the achieved results will bring the cooperation of the parties to a qualitatively new level with mutual benefit for both countries.

Firstly, it concerns the USA and China's more than 30 agreements and memoranda of intention for cooperation. Among them — 26 trade projects worth 108.8 billion US dollars, as well as 8 bilateral investment projects worth 144.7 billion US dollars (including three investment projects in the United States (131.7 billion US dollars) and five projects in China (13 billion US dollars).

Secondly, the Ministries of Commerce of the People's Republic of China and the United States held a successful dialogue with the participation of businessmen from both countries to discuss further development of cooperation between the parties. They made a list of directions and projects of common interest.

Thirdly, as part of the policy of enhancing mutual openness, the parties agreed to expand the US business' access to the financial market of the People's Republic of China and to weaken the USA's export control of high-tech products in the PRC.

The conclusion of these agreements is due to the common interests of both countries and will contribute to resolving the imbalances in their trade and economic relations.

 

At the same time, China's leadership is making consistent efforts to improve the investment climate in the country. Last week, was published a list of the State Council of the People's Republic of China's special measures to ease or lift investment restrictions for foreign businesses in the Chinese market. In particular, foreign companies will be allowed to own 51 % of shares of companies dealing with securities, funds and futures companies (established with Chinese partners). In three years, the restrictions on the number of shares owned by foreigners will be completely moved. Besides, it is planned to reduce customs duties on imported cars, as well as to mitigate the restrictions on foreign manufacturers of cars using new energy carriers in the pilot free trade areas.

The result of Beijing's consistent efforts in this sphere is the country's growing attractiveness for foreign investors. Thus, within the first ten months of this year, the number of enterprises with foreign capital increased by 15.9 %. In total, 26 thousand such enterprises were created, and the volume of actually used foreign capital amounted to 99.8 billion US dollars with an increase of 1.9 %.

 

3.3. Security and Law Enforcement Agencies

US President Donald Trump summarizes his visit to the APR
US President Donald Trump summarizes his visit
to the APR

Situation around the Korean Peninsula. November 15, 2017, summarizing his visit to the APR, US President D. Trump warned North Korea not to continue nuclear blackmailing other countries. According to him, the world community will not allow the DPRK to keep it in “nuclear hostage”. At this, D. Trump emphasized the agreement reached between the United States and the PRC on joint economic pressure on North Korea because of its missile-nuclear program. Besides, the US President emphasized the commonality of Washington and Beijing's position regarding the inadmissibility of the principle of freezing the nuclear program of the DPRK in exchange for the cessation of regular military exercises by the United States and South Korea (previously the formula was supported by China and Russia).

 

North Korea's ambassador to the United Nations in Geneva Han Tae Song
North Korea's ambassador to the United Nations
in Geneva Han Tae Song

Despite the external pressure, DPRK's leadership refuses to make concessions on the national nuclear-missile program. According to North Korea's Ambassador to the United Nations in Geneva Han Tae Song, Pyongyang will not enter into any negotiations with Washington until the USA and South Korea have not stopped military exercises in the Korean Peninsula. At this, he called the DPRK's nuclear-missile program “a deterrent to cope with the nuclear threat from America”.

 

The PRC's Activity in Security Sphere. As part of implementing the concept of building a safe and prosperous world with a single fate, China takes an active part in peacekeeping activities in crisis zones and zones of armed conflicts. In the words of Deputy Chief of the Joint Staff Department of China's Central Military Commission Major General Shao Yuanming at the UN Peacekeeping Defence Ministerial Conference, China will fulfill all its obligations in this sphere. To date, China has completed the creation of a reserve peacekeeping contingent of 8,000 people, has deployed the first helicopter detachment in Sudan, has entered into an agreement with the African Union on the first stage of military assistance in the amount of 100 million US dollars, and has prepared about a thousand peacekeepers from other countries.

2017 UN Peacekeeping Defense Ministerial Conference in Vancouver, Canada
2017 UN Peacekeeping Defense Ministerial Conference
in Vancouver, Canada

3.4. Science and Technology

Using the scientific and technological achievements of the country, China is confidently taking leading positions in the world in the development of “clean” energy technologies. Thus, at the moment, Chinese investments into “clean” energy equal 40 % of the global index. Within the first three quarters of this year, China invested 68 billion US dollars into this sphere which is 2 % more than in the same period last year.

All in all, over the past five years, China has invested 456 billion US dollars into the development of “clean” energy engineering in the country, including 147 billion US dollars — into solar power, 103 billion US dollars — into wind energy, 73 billion US dollars — into hydropower, 25 billion US dollars — into bio-energy and 20 billion US dollars — into geothermal energy.

 

The leadership of the PRC pays special attention to the development of the transport system of the country, including heavy passenger and transport aircrafts. November 10, 2017, was conducted the first long-distance flight of the large-size passenger airliner of Chinese production C919. The plane took off from Shanghai Pudong International Airport (Eastern China) and arrived at Yanliang air base near Xi'an (Shaanxi Province, Northwest China). The aircraft with five crew members aboard reached a height of 7,800 m and covered more than 1.3 thousand kilometers. Further tests of the airplane will be carried out at Yanliang air base to obtain a certificate of airworthiness. The manufacturer of the plane, the Commercial Aircraft Corporation of China (COMAC) has received orders for 730 liners of the C919 from 27 customers. The C919 is a narrow-body passenger airplane with a standard flight range of 4.1 thousand kilometers and can be compared to the modified version of Airbus 320 and the new generation of Boeing 737.

The C919 passenger airliner of Chinese production successfully completed the first long-distance flight
The C919 passenger airliner of Chinese production successfully completed
the first long-distance flight

IV. Plans and Prospects for Cooperation between China and Ukraine

November 16, 2017, Kyiv hosted the 2nd Ukrainian Silk Road Forum, which became the largest annual business event dedicated to discussing effective business mechanisms and attracting Chinese investments to Ukraine. The Forum worked in panel sessions: Trade & E-Commerce, IT & Innovation, Infrastructure & Logistics, Culture & Tourism. Within the framework of the event, investment projects of Ukraine were presented, and there were meetings of Ukrainian enterprises and Chinese companies. More than 1 thousand participants from 25 countries took part in the Forum, including Ukrainian and foreign business leaders, owners of investment projects, as well as representatives of political and business circles.

The participants of the Forum stressed the achievements already made in the cooperation between China and Ukraine, such as the PRC's active participation in the construction of infrastructure in Ukraine for one. In particular, this applies to dredging works in the port “Pivdennyi” (Odesa region), which will make it a powerful transport hub.

The assistance of China in reconstruction of highways in Ukraine and construction of the 4th line of the Kyiv subway were also pointed out. The total cost of the project to be implemented in Kyiv by the China Railway International Group is about 2 billion US dollars. Of these, 15 % will be allocated from the city budget, and 85 % will be provided by the Chinese side as a loan under state guarantees.

November 16, 2017, Kyiv hosted the 2nd Ukrainian Silk Road Forum
November 16, 2017, Kyiv hosted the 2nd Ukrainian Silk Road Forum

According to the participants of the Forum, cooperation between China and Ukraine in the sphere of alternative energy sources is also important. For example, projects for the construction of solar power stations in Kherson, Mykolaiv and Odesa regions are already being implemented. In the future it is planned to implement similar projects in other regions of Ukraine. Consideration is being given to the joint production of electric cars on lithium batteries in Ukraine and the PRC. Ukraine, which has the largest reserves of lithium in Europe, can launch a complete world-class production in this sphere.

Along with this, significant progress has been made in the Ukrainian agricultural products coming onto the Chinese market. Thus, in April of this year, the State Food Consumer Service of Ukraine and the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ) signed the Protocol of Inspection, Quarantine and Veterinary and Sanitary Requirements for the export of frozen beef of Ukrainian production to China, and in September this year — Protocols of Phytosanitary and Inspection Requirements for export of sunflower cake and beet pulp. An important result was Ukraine's getting the right to export dairy products to the People's Republic of China. Today, 27 Ukrainian enterprises already have such a right. Access to the Chinese market was also received by a number of other Ukrainian goods that are critical in terms of developing the potential of the Ukrainian agrarian sector. At present, the competent authorities of the two countries are working on opening the Chinese market also for fish, poultry and berry products of Ukrainian production.

The ceremony of signing memoranda of cooperation between the Silk Road Cities Alliance and the heads of Ukrainian cities and regions
The ceremony of signing memoranda of cooperation between the Silk Road Cities Alliance and the heads of Ukrainian cities and regions

The official part of the Forum was completed by the ceremony of signing memoranda of cooperation between the Secretary General of Silk Road Cities Alliance Wu Bixiu and the heads of Ukrainian cities and regions. This once again confirmed the importance of Ukraine as one of the links of the Chinese initiative “The Belt and Road”.