December 12, 2017

China (中国) Today

Events Review (04.12–10.12.2017)


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

The development of science and technology in the PRC is confidently bringing the country to the forefront positions in the world in the sphere of information technology. An indication of this was the 4th World Internet Conference held on December 3–5, 2017, in the Chinese town of Wuzhen (Zhejiang province).

At the conference were presented the “World Internet Development Report 2017” and “China Internet Development Report 2017”. According to the published data, today about 22 % of world GDP is connected with the digital economy, which arose on the basis of the Internet and became a new stage of scientific and technological progress. By the middle of 2017, the total number of Internet users in the world reached 3.9 billion, and the propagation coefficient was 51.7 %. In turn, it gave impetus to the development of a number of other branches, including artificial intelligence and nanotechnology.

China is the first in the world in terms of the number of Internet consumers — 751 million people. At this, in 2016, the volume of the digital economy in the PRC reached 22.58 trillion Yuan (3.2 trillion US dollars), and the share of this sector in the country's GDP was 30.3 %, which is the second indicator in the world. Chinese science are among the top ten leading global information technology companies, along with Apple, Google, Microsoft, Amazon and Facebook.

Besides, the PRC is the leader among other countries by the amount of money spent on resolving cybernetic security problems. In 2017, the Chinese companies' allocations to ensure security of their computer systems by 23.5 % exceeded the world's average expenses on the security of computer systems. The largest increase in such expenditures in China is in financial and telecommunications sectors, as well as in e-commerce and media. The reason for this is the desire of the Chinese businesses to prevent significant losses as a result of attacks on computer networks of the country and individual business entities.

According to Chief Executive Officer of Alibaba Group Yong Zhang, who took part in the conference, the deep integration of the digital economy into the real sector of the economy has become a completed reality. New generation digital technologies in the form of mobile Internet, large databases, “clouds”, Internet of things and artificial intelligence have brought the economy of China and the world to a qualitatively new level. Based on this, Yong Zhang made a forecast on the possibility of China's becoming the first in the world in the digital sphere in the nearest future.

During the conference, seven countries-participants of the Chinese initiative “The Belt and Road” (China, Laos, Saudi Arabia, Serbia, Thailand, Turkey and the UAE) initiated joining the efforts in the development of the digital economy. First of all, this concerns the expansion of access to the Internet, which would facilitate the intensification of international e-commerce and Internet business, and will stimulate an increase in the investments into information technology and telecommunications.


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

Implementation of the Chinese initiative “The Belt and Road” is accompanied by a wide range of measures to support it in the political, economic and security spheres. December 3, 2017, Beijing hosted a Forum on the theory and practice of building “The Belt and Road” and the diplomacy of a large country with the Chinese characteristics in a new era. The event was attended by over 100 representatives of diplomatic circles from different countries. In discussing the issues of the agenda, a joint opinion was expressed on the importance of “The Belt and Road” as the force uniting all parties, giving a new impetus to their diplomatic efforts in forming a global community of common destiny.

Besides, the theme of “The Belt and Road” was touched upon at the 3rd Forum of Mediterranean Dialogues in Rome (Italy). During the Forum, Chairman of the Bank of China Chen Siqing emphasized the strategic role of the Mediterranean region in building “The Belt and Road”. According to him, in the near future this region will become one of the important trading centers within the framework of “The Belt and Road”, including such kinds of goods as wine, olive oil, textiles and leather goods. At the same time, the Mediterranean will remain the most popular for Chinese tourists. To implement the PRC's joint projects with the Mediterranean countries, it is planned to actively involve the Bank of China, which is fourth in the world in terms of capital stocks.

The Government of the People's Republic of China is also paying special attention to the development and integration of the transport infrastructure of “The Belt and Road”. December 7–8, in the Chinese city of Tianjin there was an International Forum on the “Belt and Road” Port Cities. The initiators of the event were the Tianjin Municipality and “The Belt and Road” Think Tank Network, created by the International Department of the Central Committee of the Communist Party of the People's Republic of China. The Forum was attended by political figures, city governors, entrepreneurs and experts from analytics centres from about 40 countries. The Forum discussed the issues of harmonization of port development plans within “The Belt and Road” and communications between them.


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

3.1. Politics. Development of China's International Cooperation

One of the main priorities of Beijing's foreign policy is to deepen cooperation with countries, which are the main trading partners of the People's Republic of China.

December 4, 2017, in Beijing was held the 2nd Annual Dialogue between the heads of governments of China and Canada. Chairman of the State Council of China Li Keqiang and Canadian Prime Minister J. Trudeau highly praised the development of Sino-Canadian relations and expressed their firm intention to take steps to further strengthen the ties between the two countries. At this, the main directions of bilateral cooperation were said to be as follows: trade and investment, coordination of activities in the markets of third countries, implementation of joint projects in the space, aviation and energy spheres, development of agricultural technologies, and humanitarian exchanges. Besides, the PRC and Canada plan to deepen their cooperation in addressing global and regional problems of mutual interest.

While in the PRC, J. Trudeau visited the headquarters of the Chinese Internet company Sina Corp, and also participated in the opening ceremony of the China-Canada year of tourism. To date, China is already Canada's third-largest tourism partner. By 2021, the volume of tourist flows between the two countries is planned to be doubled.


December 5, 2017, Vice Premier of the State Council of the People's Republic of China Liu Yandong met with the Prime Minister of Great Britain T. May. The parties discussed the implementation of agreements on deepening the cooperation between the two countries in the political, trade, economic and investment spheres, which were achieved in the negotiations of the leaders of the two countries in July of this year. As a result of the consideration of these issues, it was agreed to continue joint efforts to implement the plans for deepening the Sino-British relations.

Along with this, Liu Yandong and T. May reached an agreement on expanding China-UK cooperation in the humanitarian sphere. The directions of such activities were agreed during the 5th Plenary Session of the UK-China People to People Dialogue. The main theme of the event was the determination of the possibilities of establishing closer contacts of the parties in the field of health care.


China is also paying great attention to the Russian Federation. December 7, 2017, in Moscow, negotiations were held between a member of the Politburo of the Central Committee of the CPC, Vice Chairman of the Central Military Commission of the CPC Zhang Youxia and Russian President V. Putin. During the meeting, Zhang Youxia pointed out the PRC's intention to continue its cooperation with Russia in pursuit of common interests, including the protection of the security of the two countries. In his turn, V. Putin emphasized China's strategic importance for the Russian Federation as the main partner in the political, economic and security spheres. At this, he stressed the commonality of the positions of the parties on major world and regional problems.


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

The People's Republic of China's achievements in the economic sphere confirm the tendency of transforming the country into one of the most powerful world leaders. Thus, according to expert estimates, over the next five years, China will surpass the United States and become the largest importer in the world. In particular, within the first ten months of the current year, the PRC's imports increased by 21.5 % compared to the same period last year, which significantly exceeds similar figures from other countries.


The PRC's government continues efforts to improve the investment climate in the country. The State Council of China has made a decision to simplify the access of private capital to the enterprises of the country's defense industry. Besides, they are going to increase the opportunities for the exchange of resources between the military and civilian sectors of the Chinese industry. On the one hand, due to this, it is planned to increase the mobilization potential of the Defense Industrial Complex, and on the other — to more widely use the advanced military technology for the production of civilian goods.


A separate direction of actions of the State Council of the People's Republic of China is strengthening the country's energy security, both through increased production of own energy carriers and through diversification of sources of imports of hydrocarbons. According to the plans of the Chinese government, by 2020, it is planned to increase domestic crude oil production to 200 million tons, and gas — to 360 billion cubic meters. Besides, the circle of liquefied natural gas (LNG) suppliers is being expanded. In particular, at the beginning of December this year, the first consignment of LNG from the Canadian Vancouver was sent to the PRC.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. The situation in the region remains highly tense, which is due to the continuation of North Korea's implementation of its nuclear and missile program, which goes to a qualitatively new level. According to US National Security Advisor H. McMaster, “the risk of war with North Korea grows each day”. At this, he called Pyongyang's nuclear-missile ambitions the greatest immediate threat to the United States and the world. At the same time, H. McMaster pointed out the existence of opportunities for talks with North Korea, although there is not much time left.

Taking this into consideration, the United States is increasing pressure on the DPRK through demonstrating its military presence in the region. Vigilant Ace 18, the largest in the whole history flying exercise of the Air Forces of the USA and South Korea, was conducted on December 4–8, 2017 in the area of the Korean Peninsula. 12,000 military servicemen and 230 aircrafts from both countries were involved in the exercises, including US F-22 fighters, F-35A stealth multirole fighters and strategic B-1B Lancer bombers. They mastered destruction of nuclear missile facilities in North Korea.

At the same time, testing of the missile defense system was launched in the Hawaiian Islands as a possible target for the DPRK's missile attack. In particular, the siren system of alerting the population about a missile attack from the enemy is being tested. From December on such tests will be conducted on the first business day of each month.


In response to the USA's actions, the DPRK's leadership has accused Washington of a widespread military provocation and preparation of a nuclear war. According to the Foreign Ministry of North Korea, “The United States is making the war at Korean Peninsula virtually inevitable”. At the same time, Pyongyang' has affirmed its resolute intentions to use nuclear-missile weapons against the USA in case of its attack on the DPRK.


In turn, commenting on the aggravation of the situation around the Korean Peninsula, Foreign Minister of the PRC Wang Yi called on all UN member states to unconditionally implement the UN Security Council's resolutions on the DPRK. At this, Wang Yi condemned North Korea's new missile test, which undermined the chances of settling the situation in the region. At the same time, Wang Yi once again called for peaceful settling the problems around North Korea's nuclear-missile program and avoiding mutual provocations related to the demonstrations of military force.


China's military activities. Given the tensions in the APR, China is increasing its own military activity in the region. In early December this year, the China's PLA Air Force conducted training in international waters of the Yellow and East China Seas. According to the official report, the training was aimed at mastering protecting the strategic interests of the People's Republic of China. Long-distance radar detection planes, fighters and military transport aviation planes were involved in the training, operating in new areas for the PLA Air Force. During the trainings, personnel and heavy military equipment were parachuted onto one of the islands.

At the same time, implementation of the program for building up the combat capabilities of the PLA Navy continues. In particular, is running to its end the construction of the first aircraft carrier of the project 001A (Shandong). In the near future it will undergo the running tests. The aircraft carrier was created based on the heavy aircraft-carrying cruise heavy aircraft-carrying cruiser “Varyag” (Soviet project 1143.6), which was bought by China from Ukraine and was named “Liaoning”. The new Chinese ship is 315 meters long, 75 meters wide, the displacement is 50 thousand tons and the ship can carry up to 36 J-15 fighters (“Liaoning” — only 25), as well as other types of aircrafts and helicopters. According to the plans of the Chinese Military Command, the new aircraft carrier will be included in the Chinese Navy in 2020.


3.4. Science and Technology

According to the UN World Intellectual Property Organization, China is in the first place in the world by the number of patent applications. Thus, last year, the number of such applications filed from the PRC exceeded the total number of patent applications from the USA, Japan, Republic of Korea and Europe. All in all, China filed 1.3 million patent applications out of a total of 3.1 million, a record figure. Besides, the PRC is the world leader by the number of applications for registration of trademarks and industrial projects. According to experts, all this is evidence of China's innovation development and its being ahead of other countries.


An example of this trend is the PRC's success in the development of outer space and related technologies. December 5, at the Forum on Advanced Materials and Technologies 2017 was held in Changsha (Hunan Province), China's first commercial plan for commercial space projects was announced. According to the plan, the China Aerospace Science and Industry Corporation (CASIC) will focus on implementing major commercial space programs, including the development, production and launches of space satellites for private companies and foreign countries, creation of space materials, conducting various researches, as well as training of specialists.


Another evidence of China's achievements in the development of advanced technologies is the creation of automatic control systems for public transport. In particular, at the beginning of December this year, in the Chinese city of Shenzhen (Guangdong Province), buses operating in automatic mode were successfully put into trial operation. The Alphabus system, which manages buses, combines artificial intelligence, automatic control and visual observation of the environment. The buses are equipped with cameras, a millimeter range radiolocation station, a laser radar, a GPS navigation system, and a computer capable of analyzing the situation and reacting in a timely manner to the actions of other road users.


IV. Plans and Prospects for Cooperation between China and Ukraine

An important event in the development of Ukrainian-Chinese relations was the 3rd meeting of the Intergovernmental Commission on Cooperation on December 5, 2017, in Kyiv, which was chaired by the First Vice Prime Minister of Ukraine — Minister of Economic Development and Trade Stepan Kubiv and Vice Premier of the State Council of the People's Republic of China Ma Kai.

During the meeting, the parties confirmed the strategic nature of the partnership between the two countries, which creates favorable conditions for a qualitatively new level of the cooperation. At this, the leaders of the Ukrainian and Chinese governments pointed out a consistent support to Ukraine by China, which has already entered the third place among our trade and economic partners.

Thus, today, the parties are implementing a wide range of joint projects worth a total of 7 billion US dollars. Due to this, within just 9 months of the current year the trade turnover between Ukraine and China increased by 14 % — to 5.6 billion US dollars. According to S. Kubiv, in order to further increase the volume of bilateral trade, Ukraine is implementing a set of measures aimed at attracting Chinese investments first of all into the agricultural sector, industry, banking and infrastructure projects.

In his turn, Vice Premier of the China's State Council Ma Kai emphasized the importance of Ukraine to the PRC in the development of the Chinese initiative “The Belt and Road” as one of the transport, logistics and industrial centers on the way from the Asia-Pacific to the European Union. Against this background, Ma Kai expressed the PRC's readiness to help Ukraine's growth by increasing its investments into the Ukrainian economy. Besides, he proposed to expand the cooperation between the two countries through more active participation of the Chinese side in the creation of technology parks in Ukraine, as well as deepening the cooperation of the parties in the spheres of aircraft engineering, space exploration and energy.

As a result of the meeting, a number of documents were signed, among them Ukraine-PRC an Action Plan on jointly building the “Silk Road Economic Belt” and the “Maritime Silk Road of the 21st Century”; Memorandum of Understanding on Energy Efficiency, Renewable Energy and Energy Saving; Cultural Cooperation Program for 2018–2022; Agreement on cooperation in education area; Memorandum on cooperation in the sphere of health care and medical science; Program of Ukrainian-Chinese Investment Cooperation in the agro-industrial complex.

Vice Premier of the State Council of China Ma Kai also met with President of Ukraine P. Poroshenko and the Prime Minister V. Groisman.