December 19, 2017

China (中国) Today

Events Review (11.12–17.12.2017)

 

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

The significance of China as a leading center of power in the world draws other countries' attention to it. The 7th World Forum on China Studies, held on December 10–11 in Shanghai was the evidence of this. More than 180 synologists from more than 30 countries and regions participated in the Forum which became the greatest scientific event in the PRC after the 19th National Congress of the CPC. The Forum was jointly sponsored by the State Council Information Office and the Municipal People's Government of Shanghai, and hosted by Shanghai Academy of Social Sciences and the Information Office of Shanghai Municipality.

The organizers of the Forum emphasized the importance of correct understanding of China's place in the world, which creates a favorable foundation for the development of bilateral and multilateral cooperation. In turn, the participants of the event expressed considerable interest in Chinese politics, economy and culture, which concern the entire world community. At this, hopes were expressed for the success of the Chinese initiative to build open international relations and a community with common destiny.

Besides, the Forum discussed such issues as innovations, development of “The Belt and Road”, as well as global management of the world economy and other processes of geopolitical nature. In considering these issues, special emphasis was placed on China's positive contribution to resolving important international problems, including the resumption of sustainable global economic growth, resolving crises and conflicts, fight against international terrorism, and the response to challenges in the areas of ecology and climate change.

7th World Forum on China Studies
7th World Forum on China Studies

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

Successful implementation of the Chinese initiative “The Belt and Road” significantly expands the opportunities for investors. According to Hong Qi, Chairman of China Minsheng Bank (one of China's leading commercial banks), within the next five years the infrastructure construction alone within “The Belt and Road” will require investments worth about 10 trillion US dollars. First of all, this concerns the development of cities and transport communications between them. Given these perspectives, the bank has already entered into lending agreements with companies from more than 30 countries and regions totaling about 10 billion US dollars.

Other banks in China that have opened more than 60 representative offices in the participating countries are also actively involved in investing into different projects within the “The Belt and Road”. Within the first ten months of this year, they invested 11.2 billion US dollars into the development of “The Belt and Road”. In turn, the inflow of capital contributed to speeding up the economic growth of Asian countries, as well as commissioning of new infrastructure: from railways and highways to power stations, schools and hospitals.

Chinese direct investments in countries related to “Belt and Road”
Chinese direct investments in countries related to “Belt and Road”

Apart from banks, an important place in the financial markets of “The Belt and Road” is occupied by top Chinese companies, including the State Grid Corporation of China (SGCC). According to calculations of the experts of the Corporation, in 2018–2022, the need for investments into the development of energy engineering of the countries related to “The Belt and Road” will amount to 1.5 trillion US dollars, which offers great opportunities for SGCC. This first of all regards to the regions of South and Central Asia and Central Europe.

Today, SGCC is already working on a number of national electricity grid projects in “The Belt and Road” countries with a total volume of about 40 billion US dollars. The implementation of such projects has contributed to the expansion of the export market of Chinese power equipment to more than 80 countries. Over the past decade, the SGCC has built 10 cross-border electricity transmission lines between the PRC and neighboring countries, and has taken part in the development of electricity networks in the Philippines, Brazil and Italy.

 

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

3.1. Politics. Development of China's International Cooperation

Symposium on International Developments and China's Diplomacy in 2017
Symposium on International Developments and China's Diplomacy in 2017

Based on the decisions of the 19th National Congress of the CPC, the leadership of China plans to intensify the country's foreign policy and give it new content in order to more effectively implement Chinese interests around the world. This issue became the central theme of the Symposium on International Developments and China's Diplomacy in 2017, which took place on December 9, 2017 in Beijing. According to the PRC Foreign Minister Wang Yi, in 2017, it was the Chinese diplomacy that played a key role in stabilizing relations between the PRC and the United States as the two most powerful countries in the world, elaborated a long-term plan for the joint construction of “The Belt and Road”, provided stability in the surrounding regions, formed a trend to regional cooperation, and launched the second “golden decade” of cooperation between countries of the BRICS Group.

On the basis of the achieved, it is planned to continue in 2018 the development of partnerships and promote the process of building a new type of international relations and promoting the Chinese initiative to create a world community with common destiny. Within the framework of such plans, the construction of “The Belt and Road” will be the main focus to the benefit of different countries of the world by deepening the cooperation between them. At the same time, China's diplomacy will continue to strengthen ties with the United States on the basis of mutual benefit, respect for the interests of the parties and the principles of international law.

 

The above-mentioned approaches of the People's Republic of China were confirmed during the 15th Meeting of the Foreign Ministers of Russia, India and China on December 11, 2017 in New Delhi. Speaking at the event, Chinese Foreign Minister Wang Yi stressed the need to combine the efforts of the three countries to address the most important issues at the world and regional levels. Besides, was pointed out the importance of joint support for the UN's leading role in international affairs and deepening of cooperation in the development and strengthening of the SCO and BRICS.

Wang Yi emphasized the joint responsibility of the People's Republic of China, India and Russia for promoting the processes of global globalization, which requires optimization of the processes of global economy management, increasing the efficiency of the multilateral trading system, and helping the implementation of transport and information communications development plans on the Eurasian continent. Along with this, the main tasks of cooperation of the three countries include the fight against terrorism and global climate change, as well as participation in the settlement of regional crises and conflicts.

On the sidelines of the meeting, Wang Yi had talks with Minister of External Affairs of India Sushma Swaraj and Russian Foreign Minister S. Lavrov. Considered the actual issues of bilateral relations.

15th Meeting of the Foreign Ministers of Russia, India and China on December 11, 2017 in New Delhi
15th Meeting of the Foreign Ministers of Russia, India and China
on December 11, 2017 in New Delhi

Besides, taking into account the aggravation of the situation in the Asia-Pacific region, very important was Chinese President Xi Jinping's meeting with South Korean President Moon Jae-in in Beijing on December 14. Having discussed the situation around the DPRK's nuclear and missile tests, the sides agreed on the need for a peaceful solution of that problem. At this, a common view was expressed regarding the need to continue the pressure on Pyongyang within the framework of UN Security Council resolutions. At the same time, Xi Jinping reconfirmed the PRC's concern about the presence of the US THAAD missile defense system in South Korea.

During the visit of Moon Jae-in's visit to China, a Sino-South Korean Business Forum was held. The participants of the event discussed a wide range of issues in the sphere of trade, economic and investment cooperation between the two countries. Special attention was paid to the successful implementation of the agreement on establishment of a free trade area, which was signed in 2015 and has already allowed to increase bilateral trade volume. Thus, between January and November of this year, trade between China and South Korea increased by 12.1 % to 253.7 billion US dollars.

Chinese President Xi Jinping met with South Korean President Moon Jae-in on December 14, 2017 in Beijing
Chinese President Xi Jinping met with South Korean President Moon Jae-in on December 14, 2017 in Beijing

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

China's economy continues to show positive dynamics of development. According to official figures from the National Bureau of Statistics of China, in November this year, industrial output in the country grew by 6.1 % compared to the same period last year, and the industrial index in the service sector increased by 7.8 % year-on-year.

Within January–November 2017 the volume of the PRC's investments into fixed assets increased by 7.2 %. At this, there was a noticeable improvement of the investment structure in the manufacturing industry. Thus, the volume of investments into high-tech industries increased by 15.9 %, while investments into high-energy production declined by 2.3 %. At the same time investments into the real estate sector of the People's Republic of China increased by 7.5 %.

In November of 2017, industrial output in China grew by 6.1 %
In November of 2017, industrial output in China grew by 6.1 %

Positive trends are also maintained in domestic and foreign trade, which is one of the main drivers of the growth of the Chinese economy. In November 2017 the volume of retail sales of consumer goods in the country increased by 10,2 % to about 5 trillion US dollars, which is by 0.2 % more than in the previous month. Such figures were achieved mainly thanks to the rapid development of e-commerce, which has increased by 32 % since the beginning of the current year.

In turn, in January–November this year, China's foreign trade increased by 15.6 % to 3.8 trillion US dollars. At this, exports from China increased by 11.6 % to 2.09 trillion US dollars, and imports — by 20,9 % to 1,7 trillion US dollars. The main export articles of the People's Republic of China were goods with high added value, including products of machine building and electronic and electrical industries, and imports — raw materials and energy. As before, China became the largest trading partners of the EU (572 billion US dollars, an increase of 13.3 %), the United States (542 billion US dollars, +16.5 %), Japan (281 billion US dollars, +13.8 %) and ASEAN countries (472 billion US dollars, + 18.4 %).

The stable development of the PRC's economy leads to an increase in the state budget revenues. Thus, during the 11 months of 2017, China's budget revenues increased by 8.4 % to about 2.4 trillion US dollars. Such indicators were ensured mainly by the growth of tax revenues, first of all from taxes on added value. Within the same period, budget expenditures increased by 7.8 % to 2.7 trillion US dollars.

 

3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. Despite the external pressure, the leadership of North Korea refuses to stop the implementation of the national nuclear and missile program. December 13, 2017, during the ceremony of awarding scientists, military and officials who have made a significant contribution to the creation of the intercontinental ballistic missile “Hwasong-15”, the DPRK leader Kim Jong-un expressed Pyongyang's firm intentions to continue efforts to strengthen the country's military potential to the level of the most powerful nuclear state. To do this, North Korea will increase the production of both missile systems and nuclear weapons.

December 13, 2017, the DPRK leader Kim Jong-un awarded scientists, military and officials for the creation of the “Hwasong-15” missile
December 13, 2017, the DPRK leader Kim Jong-un awarded scientists, military and officials for the creation of the “Hwasong-15” missile

Commenting on this issue, US Secretary of State R. Tillerson condemned Pyongyang's position and reaffirmed Washington's plans to continue to exert pressure on North Korea to make it meet the demands of the international community. At the same time, he confirmed the USA's willingness to sit at the negotiating table with the DPRK, but only after the latter has changed its behavior.

The United States and their allies continue putting pressure on North Korea. In particular, on December 14, 2017, Japan imposed additional sanctions against the DPRK, including having frozen assets of 19 different commercial organizations.

As part of the demonstration of force in the Asia-Pacific region, on December 11–12, the United States, Japan and South Korea conducted new joint naval exercises in the Korean Peninsula. They mastered repelling missile attacks from North Korea.

In view of the growing military threats in the Asia-Pacific region, the countries of the region are strengthening their defense capabilities. Japanese Minister of Defense Itsunori Onoder has stated that the Japanese defense department is planning to acquire two types of missiles, namely long-range anti-ship missiles and air-to-surface missiles with inertial satellite guidance that can be launched beyond the enemy's air defense range.

 

In turn, the PRC is still hoping for a peaceful settlement of the situation around North Korea. According to the statement made by China's Foreign Minister, Wang Yi, despite the complexity of the situation in the Korean Peninsula, still there is hope for peace. At this, the Minister once again stressed the necessity of unconditional implementation by all parties of the UN Security Council's resolutions on the DPRK.

 

Unlike other countries, Russia continues to pursue a dual policy towards the DPRK. In particular, cooperation between the two countries in the security sphere continues. For example, last week in Pyongyang was held a meeting of the Joint Military Commission of Russia and North Korea. According to an official report, the progress of implementation of intergovernmental agreements on the prevention of dangerous military activities (signed in November 2015) was discussed. However, based on the peculiarities of the development of the situation around the Korean Peninsula, the actual topic of the negotiations could be the issue of coordinating the actions of the parties in confrontation with the United States, including by Russia's providing the DPRK with intelligence and military-technical assistance.

Against this background, the threat to world and regional security from the DPRK was discussed during the UN Security Council Ministerial Meeting on DPRK on December 15, 2017. The meeting agreed on the need to strengthen the joint pressure on Pyongyang to make it meet the demands of the world community regarding its nuclear and missile program.

 

China's Military Activities. Considering an increase in tension in the APR, December 11, 2017, the PRC's Air Force conducted regular trainings on the open sea in the area of Bashi Channel and the Miyako Strait. The trainings included the H-6K bombers, Su-30 and J-11 fighters, and reconnaissance aircrafts, an early warning plane and a refueling aircraft. The issues of increasing the readiness of the Air Force to fulfill the tasks of defending the sovereignty and territorial integrity of the country were mastered.

Bashi Channel and Miyako Strait December 11, 2017, the PRC's Air Force conducted trainings in the area of Bashi Channel and the Miyako Strait
December 11, 2017, the PRC's Air Force conducted trainings
in the area of Bashi Channel and the Miyako Strait

The joint Sino-Russian computer command post exercise on missile defense “Aerospace Security-2017” was also quite indicative. They were mastering information exchange in the conditions of rocket/missile attacks on the territories of the two countries. A conditional opponent was not called openly. At this, according to American experts, the most likely training was directed against the United States and North Korea.

 

3.4. Science and Technology

The Government of the People's Republic of China continues active measures to bring the country to the forefront of the world scientific and technology sphere. Last week, the Ministry of Industry and Information Technology of China released a three-year action plan (2018-2020) to drive development and growth of artificial intelligence industry over the next three years. According to the document, by 2020, it is expected to have fulfilled four main tasks, which include:

the first — to create intelligent systems of unmanned control of cars and aircraft, as well as medical diagnostics, identification of images and voice commands;

the second — to develop “smart” sensors, neural network chips and to consolidate the software base for the development of the industry of artificial intelligence;

the third — to establish intellectual production based on the application of new generation artificial intelligence technologies in the industrial sector;

the fourth — to train a wide range of specialists in the field of artificial intelligence and to organize a comprehensive system of intelligent services.

Due to this, by 2020, the strategic goal of China's innovative modernization will be reached on a fundamentally new basis of “smart” control systems, industries and services.

 

An indication of the PRC's success in the development and application of artificial intelligence technologies is the mass production of robotic equipment. In particular, within ten months of the current year, over 100,000 industrial robots were manufactured in China (with an increase of 70 % year-on-year).

According to the “Made in China 2025” strategy, the development of robot-making is one of the priority directions of modernization of the country's industry. To this end, it is planned to create a State Innovation Center for robot-making with the task of research and development of key technologies and testing the production of basic components for robots.

To date, the PRC already accounts for about one third of the market of industrial robots in the world. According to Chinese experts, by 2020, the scale of the robotics market in China will increase to 5.9 billion US dollars from 4.2 billion US dollars this year.

Within ten months of 2017, over 100,000 industrial robots were manufactured in China
Within ten months of 2017, over 100,000 industrial robots
were manufactured in China

China is also a leader in telecommunication systems. According to the China Academy of Information and Communications Technology (CAICT), the PRC is already in the first place in the development of fifth-generation mobile communications technologies, as well as in the formation of world standards for a new format of communication and its application in practice. It is expected that by the middle of 2018 development of such standards will be completed, in 2019 new mobile communication chips will emerge, and a large-scale operation of the 5G system will begin in China in 2020.

 

IV. Plans and Prospects for Cooperation between China and Ukraine

Conference “New Industrialization: Challenges, Opportunities and Prospects”
Conference “New Industrialization: Challenges, Opportunities and Prospects”

Another step in the development of cooperation between China and Ukraine was the conference “New Industrialization: Challenges, Opportunities and Prospects”, which was held on December 15, 2017 within the framework of events devoted to the 45th anniversary of the Ukrainian Chamber of Commerce and Industry. The Conference was attended by representatives of partner countries of Ukraine, including China, which has already entered the first places in trade with our state. During the discussion on further deepening ties between the two countries in the trade and economic sphere, the Chinese side confirmed the PRC's readiness to increase the volume of financing of joint projects that have already reached 7 billion US dollars. In addition, a proposal was made to assist Ukraine in protecting and preserving investments.

 

Meeting in Zaporizhzhia with scientists from the Anhui Pedagogical University
Meeting in Zaporizhzhia with scientists from the Anhui Pedagogical University

The PRC and Ukraine continue contacts in the humanitarian, scientific and educational spheres. Last week Zaporizhzhya Regional State Administration and Zaporizhzhya National University (ZNU) met with scientists from the delegation of Anhui Pedagogical University in Zaporizhzhya. They discussed the issues of the development of the Confucius School, which operates in the ZNU, prospects for further cooperation between the Zaporizhzhya and Chinese universities, as well as plans for creation of the Dnipro-Yangtze Center for Cultural Researches, where the regional peculiarities of peoples and civilizations in the historical aspect of their formation will be studied. The parties agreed on all these issues and the relevant agreements were signed.

 

 

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