December 26, 2017

China (中国) Today

Review of the Development of the Situation In and Around China in 2017


2017 was important in the development of the situation in and around China and showed the country's ultimate coming to the level of the leading center of power in the world. Based on this, there actually began a process of formation of a new bipolar system of world order headed by the United States and the People's Republic of China.

At the same time, China's sustainable economic development continued, which contributed to both strengthening the country and raising its welfare. On the basis of the successes achieved, the government of the country has moved on to innovate modernization of the reform of the Chinese economy and building a moderately prosperous society.

Against this background, deepening cooperation between the PRC and Ukraine in the trade, economic and investment spheres continued. In fact, to date, China has already reached the level of one of Ukraine's leading partners, which has largely made it possible to compensate for the loss of the Ukrainian economy from the break-up of ties with Russia.


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

The main event in the political life of the People's Republic of China was the 19th National Congress of the Communist Party of China (CPC), which took place October 18–24, 2017. The Congress summed up the results of the country's development, set tasks for the next five-year period, and partially changed the CPC governing bodies.

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

Thus, in the speech by President of the People's Republic of China, Secretary General of the Central Committee of the CPC Xi Jinping, the country's coming to a qualitatively new historical level, characterized by the growth of the Chinese economy on the basis of the latest technology, strengthening of China's military potential as a result of a comprehensive reform of the armed forces, as well as strengthening of the international stances and authority of the People's Republic of China was called the country's main achievement since the previous Congress of the CPC.

Based on this, Xi Jinping set a task of further development of the country, which included: in the period of 2020–2035, the completion of socialist modernization and China's getting to the level of innovative countries; within the next 15 years — transforming China into a rich and powerful, democratic, civilized and socialist state of the world level. By solving these problems, the country is going to achieve a strategic goal of the revival of the Chinese nation.

According to the CPC's plans, the main ways of realizing these intentions should be: to continue modernization of the country's economic system; strengthening the unity of the People's Republic of China; raising confidence in one's own culture; implementation of the main values of socialism with Chinese characteristics; enhancing the openness of China; supporting globalization processes of the world economy; intensifying China's work in the United Nations and other international organizations to improve global and regional security.

The approaches determined by Xi Jinping were fully supported by the Congress participants.


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

Within the framework of the plans to strengthen China's international positions and to create powerful incentives for the growth of the Chinese economy, the government's attention was paid to the development of the strategic initiative “Silk Road Economic Belt” and “Maritime Silk Road of the 21st Century” (“The Belt and Road”).

The PRC's remarkable achievement in the implementation of such a project is the growing volume of mutual trade of its participants, which has reached the level of about 900 billion US dollars per year. The volume of Chinese investments into the economies of the countries-participants of “The Belt and Road” has amounted to over 50 billion US dollars. Thanks to this, 56 zones of trade and economic cooperation were established, which contributed to the creation of about 200 thousand new jobs.

The Silk Road Economic Belt and the Maritime Silk Road of the 21st Century (“The Belt and Road”)
The Silk Road Economic Belt and the Maritime Silk Road of the 21st Century
(“The Belt and Road”)

On the basis of such achievements, China began to expand the scope of “The Belt and Road”, involving countries from other regions. In particular, several projects in “The Belt and Road +” format are being implemented at the moment, including the development of cooperation with countries of BRICS (Brazil, Russia, India, China, South Africa), South-Eastern, Central and North-Eastern Asia, Central-Eastern Europe, Africa and South America.

In this regard, in 2017, the most prominent were: the High-Level “The Belt and Road Forum”; the 5th China-Central Asia Cooperation Forum (held under the slogan “Build the Silk Road bridge of cooperation and jointly promote the peaceful development and prosperity”); the 9th High-Level Forum on Northeast Asia Cooperation; International Symposium “In Search for EU-China Synergies: 16+1 and Belt & Road Initiative” between the PRC and Central and Eastern European Countries; 2017 China-Arab States Expo (held under the auspices of the China-Arab States Cooperation Forum in the format of “The Belt and Road” initiative).

All this has turned “The Belt and Road” into one of Beijing's most effective mechanisms for promoting the process of globalization of the world economy as a means of forming China's own sphere of influence in the world.


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

3.1. Politics. Development of China's International Cooperation

Based on China's geopolitical goals in assuming the role of a leading center of world-class strength, in 2017 the main priorities of Chinese foreign policy included: building strategic partnership with the United States; active participation in different international organizations; deepening interaction with the EU; development of cooperation with other countries.


In this regard, of key importance was US President D. Trump's first official meeting with President of the PRC Xi Jinping in the United States in April, 2017.

The main result of the first talks was D. Trump and Xi Jinping's strategic decision to bring relations between the two countries to a qualitatively new level. The main principles of such a dialogue were called giving up the confrontation between the PRC and the United States and resolving all disputed issues through mutual compromises. The leaders of China and the United States also agreed to intensify US-China ties in all spheres. Later, these issues were developed and concretized during D. Trump and Xi Jinping's meetings on the sidelines of the G20 summit in July, 2017, and the US President's visit to the PRC in November, 2017.

At the same time, the United States and the People's Republic of China maintain a number of disagreements and problems first of all regarding threats to the USA's global leadership from China, disagreements over the influence in the Asia-Pacific region, and the USA-China trade imbalance. Taking this into consideration, the new US National Security Strategy calls China one of the United States' main rivals.

Meetings of the leaders of China and the United States Xi Jinping and Donald Trump Meetings of the leaders of China and the United States Xi Jinping and Donald Trump
Meetings of the leaders of China and the United States Xi Jinping and Donald Trump

China takes an active part in the work of the United Nations. During the PRC's presidency in the UN Security Council in July 2017, China put forward a number of important initiatives, including reforming the UN Security Council, improving security in Africa, and resolving conflicts in the Middle East. Besides, at the 72nd Session of the UN General Assembly, China raised questions about the comprehensive support to the process of globalization, intensification of international peacekeeping, and increasing the assistance to African countries.

Important was the PRC's participation in the high-level summits of the Shanghai Cooperation Organization in Kazakhstan, BRICS in China, as well as APEC in Vietnam and ASEAN in the Philippines. China's active work on bringing these organizations to a new level has increased the role of the so-called “third world” and contributed to the emerging economies' consolidation around China.


In 2017, China and the European Union further strengthened their ties. As a result of the meeting of the leaders of the PRC and the EU in June 2017, agreements were reached on combining the Chinese “Belt and Road” initiative with the European Development Policy, including through the preparation and conclusion of a Sino-EU Investment Agreement, and the European Union's further support for the process of the PRC's joining the World Trade Organization. All this contributed to the increase in trade between China and the EU from 547 billion US dollars in 2016 to 560 billion US dollars in 2017. The total volume of China's investments into the EU economies amounted to 74 billion US dollars, and that of the EU countries into the economy of China — 115 billion US dollars.

China-European Union leaders’ meeting, Brussels, June 2
China-European Union leaders’ meeting, Brussels, June 2

Among other countries, the PRC's special attention was paid to Russia, which was related both to China's own interests and the common interests of the two countries. At this, Beijing and Moscow's increasing mutual interest in deepening relations between the parties had led to intensification of contacts between them at all levels. The year 2017 saw five personal meetings between China's leader Xi Jinping and President Putin of Russia. In November there was a meeting of the heads of governments of the two countries.

The consequence of this was the restoration of the positive dynamics of trade and economic cooperation between the parties. After a certain period of decline, from January to September 2017, the total volume of trade between the two countries increased by 22.4 % compared to the same period last year — to 61.37 billion US dollars. China, in fact, compensated Russia for the losses it suffered as a result of a reduction in trade with the EU through mutual sanctions.


The PRC's priorities also included deepening cooperation with the countries of the Asia-Pacific and South-East Asia. In particular, during the meeting of the APEC leaders in November 2017, Chinese President Xi Jinping expressed the need to deepen regional integration, accelerate the process of establishing the Asia-Pacific Free Trade Area, and to carry out structural reforms of the economies of the countries of the region. At the same time, the PRC leader stressed 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, the development of the APR will contribute to the growth and globalization of the entire world economy.

Chinese President Xi Jinping with leaders of the APEC countries in Vietnam, November 11
Chinese President Xi Jinping with leaders of the APEC countries in Vietnam, November 11

These processes are accompanied by changes in China's foreign policy — from non-interference with the internal affairs of other countries and regions to influencing them for the PRC's benefit. One of the forms of such influence is the expansion of the Chinese lobby in political-economic circles of foreign countries in the form of realization of joint economic projects, as well as the formation of China's positive image and the promotion of its integration initiatives through active media campaign.


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

China's economic achievements since 18th CPC National Congress
China's economic achievements since
18th CPC National Congress

The PRC leadership's consistent efforts in the country's economic development have led to a stable trend for its steady growth over the past five years. This fact was stated at the Central Economic Work Conference at the end of December, 2017.

During the Conference, were pointed out large-scale changes in the economy of the People's Republic of China since 2012. Thus, a powerful impetus was given to the structural and innovative reforms of the Chinese economy, and its average annual growth rate was about 7 %, which was the highest in the world. At this, China's contribution to world economic development was more than 30 %, which determined the country's role of a “locomotive” and a stabilizer of the world economy.

The active growth of the PRC's economy continued in 2017. Evidence of this was the increase in the country's GDP by 6.9 %. Besides, the development of the economy of the People's Republic of China has become more healthy, which is evidenced by: a stable increase in the share of advanced capacities in the country's industry; reduction of surplus and unprofitable enterprises (first of all, in heavy industry, including steel and coal production); strengthening the service sector; reduction of corporate debt; stability of the employment situation (last year in the cities of China were created about 12 million new jobs).

All this was a result of the PRC government's measures taken for: successful economic reforms; management improvement in the country's economic complex; mass application of the latest technologies; state support to small and medium businesses; creating a favorable investment climate; expanding China's trade and economic cooperation with other countries. A significant contribution to the country's economic growth was also made by the implementation of the “Belt and Road” projects.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. Since the beginning of 2017, the situation in the APR has sharply deteriorated, which has created a real danger of an armed conflict in the region. The reason for this was the qualitatively new level of North Korea's missile and nuclear program due to the DPRK's creation of intercontinental ballistic missiles capable of reaching the US territory, as well as nuclear warheads. The capabilities of such systems were tested during real missile launches and nuclear tests. All this was accompanied by the active anti-American rhetoric of the leadership of North Korea.


The DPRK's actions caused a serious concern of the United States and its allies in the region which saw them as a direct threat to their security. In view of this, the United States intensified joint military exercises with South Korea and Japan (including the participation of the US aircraft carrier groups and strategic aviation), and deployed a THAAD missile defense system in South Korea.

Three carrier strike groups of the US Navy led by the USS Theodore Roosevelt, USS Ronald Reagan and USS Nimitz in the Western Pacific, November 12
Three carrier strike groups of the US Navy led by the USS Theodore Roosevelt, USS Ronald Reagan and USS Nimitz in the Western Pacific, November 12

At the same time, with the USA's leading role, the UN Security Council strengthened sanctions against North Korea, which included: blocking the foreign activities of companies related to the country's leadership; imposing an embargo on the import of textile products from the DPRK; limitation of oil supply to North Korea; introduction of a ban on the employment of the DPRK citizens in foreign countries. However, this did not stop Pyongyang.


In this situation, China also condemned Pyongyang's actions to implement its missile and nuclear program and supported international sanctions against the DPRK. At this, the leadership of the People's Republic of China called for the peaceful settlement of the situation around North Korea. At the same time, Beijing negatively reacts to the USA's military activity in the Asia-Pacific and, in particular, to the deployment of the US missile defense system in South Korea.


China's Military Activities. In the wake of the aggravation of the situation in the Asia-Pacific region, China has focused its efforts on conducting the next stage of military reform in the country, which provides for the final turning of the People's Liberation Army of China from the principles of construction, characteristic of the period of the Second World War, to the creation of compact, highly maneuverable and high-tech armed forces. First of all, this refers to the reduction and optimization of the structure of the Army with the simultaneous raising the importance of the Air Force, Navy, Missile Forces and Cyber Forces. The implementation of the large-scale program of the development of the Navy continued and within its framework a new aircraft carrier was launched.

Chinese President Xi Jinping inspects the Joint Operations Command Center of the PRC's Central Military Commission, November 3
Chinese President Xi Jinping inspects the Joint Operations Command Center
of the PRC's Central Military Commission, November 3

3.4. Science and Technology

An important basis for China's innovative growth has been the consistent efforts of the government of the country to develop the latest technologies in different spheres. Experts estimate that over the past five years, China's most prominent scientific and technical achievements have been as follows:

  • the start of functioning of the Chinese space station “Tiangong-2” with astronauts on board, development and launch of a heavy space launch vehicle “Long March 5”, commissioning of the space navigation system “BeiDou”, construction of one of the world's largest FAST radio telescopes with a 500 meters reflector;
The world's largest radio telescope FAST in Guizhou Province (China) The world's largest radio telescope FAST in Guizhou Province (China)
The world's largest radio telescope FAST in Guizhou Province (China)
  • creation and beginning of practical flight tests of the first Chinese narrow-body passenger plane C919, beginning of the massive use of unmanned aerial vehicles (including the introduction of a logistics airlift network), successful tests of aviation biofuels on serial aircrafts, including at transcontinental flights;
  • development and launching the world's first quantum computer, which by its parameters considerably outstrips modern computers; obtaining significant success in the development of artificial intelligence, which allowed to move to practical implementation of automated transport systems (metro, tram lines and bus routes), production lines, city management systems, health care, etc.;
  • introduction of new high-speed vehicles, in particular the “Fuxing” train, capable of a maximum speed of 400 km/h and a cruiser speed of 350 km/h, which has led to revolutionary changes in the country's transport communication;
  • development of deep-water deposits of energy carriers, in particular beginning of the production of “combustible ice”, which is a breakthrough in access to alternative energy sources; creation of its own deep-sea “Jiaolong” bathyscaph, capable of conducting research on the ocean floor.
China's manned submersible “Jiaolong” conducted dives in Mariana Trench China's manned submersible “Jiaolong” conducted dives in Mariana Trench
China's manned submersible “Jiaolong” conducted dives in Mariana Trench

According to China's 13th Five-Year Development Plan, by 2020 China should become an “innovative state” and a global leader in this sphere.


IV. Plans and Prospects for Cooperation between China and Ukraine

The main outcome of the development of relations between China and Ukraine in 2017 was China's becoming one of the largest economic partners of our country. At this, the main directions of cooperation between the parties are the implementation of joint projects in the spheres of trade, agriculture, science and technology, transport infrastructure and energy.

Thus, in 2017, the total trade between the PRC and Ukraine amounted to 6.5 billion US dollars (14 % more than last year), while China's investments into Ukraine's economy reached about 7 billion US dollars. This money was directed to the development of: Ukraine's enterprises of agriculture, forestry and fisheries — 39.6 %; industry — 19.4 %; wholesale and retail trade — 14 %; repair of motor vehicles — 11.2 %; transport and postal activities — 11 %. The volume of Ukraine's investments into the economy of China is about 1.5 million US dollars, and the money is mainly sent to the industry and trade enterprises of the PRC.

Meeting of the Ukraine-China Intergovernmental Commission on Cooperation, Kyiv, December 5
Meeting of the Ukraine-China Intergovernmental Commission
on Cooperation, Kyiv, December 5

The PRC's largest investment projects in Ukraine are the construction of solar power plants, the construction of a transshipment complex of grain and oilseeds in Mykolaiv Commercial Port with a capacity of 2.5 million tons, as well as the development of production facilities of the Ukrainian “Motor Sich” enterprise. An important direction in the development of cooperation between China and Ukraine is the implementation of joint projects on the creation of technology parks in Ukraine.

Besides, Ukraine is important for the PRC as one of the key transport hubs in Europe. Given this, China is deeply interested in Ukraine's joining China's “The Belt and Road” initiative, which provides for the creation of a single transport and energy corridor from Europe to the Asia-Pacific region. According to Chinese experts, the main advantages of Ukraine in cooperation with the PRC within the framework of “The Belt and Road” concept are our country's geographical position, its convenient transportation system (land, air and sea), the opportunities of the Ukrainian and Chinese economies to complement each other, as well as mutual cultural interest.

In the given context, 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. The participants of the event confirmed the strategic nature of the partnership between the two countries, which creates favorable conditions for the mutual interaction of the parties to a qualitatively new level. As a result of the meeting, a number of documents were signed, first of all — Ukraine-PRC an Action Plan for jointly building the “Silk Road Economic Belt” and the “Maritime Silk Road of the 21st Century”.