February 13, 2018

China (中国) Today

Events Review (05.02–11.02.2018)


I. Major Events and Trends in the Development of the Situation Around the PRC

Lately, there has been a complication in relations between the PRC and the United States, which has a negative impact on stability in the world in general and in the Asia-Pacific region in particular. The reason for this was the US leadership's adoption of the country's new National Security Strategy, the Defense Strategy and the Nuclear Posture Review, which define the PRC as one of the main sources of threats to American interests. Besides, there has been another intensification of the controversy between China and the United States regarding ways to resolve the situation around the Korean Peninsula.

So, last week, the Foreign Ministry of the People's Republic of China issued an official statement condemning the USA's new Nuclear Posture Review, calling it the relic of the Cold War. The statement criticized the provisions of the document about “aggressive policy” of China, which allegedly “challenges a free and open world system”, as well as “increases the role of new types of nuclear weapons in its military strategy”.

According to the PRC's Foreign Ministry Spokesperson Geng Shuang, China consistently implements a nuclear strategy that is defensive in nature, advocates the prohibition and destruction of nuclear weapons, adheres to the policy of no-first-use of nuclear weapons and against non-nuclear-weapon states, it does not take or will take part in nuclear weapons races. At the same time, the Chinese Ministry of Foreign Affairs sees the USA's Nuclear Posture Review as the one reducing the level of use of nuclear weapons, and thus increasing the threat to security in the world.

Besides, China accuses the United States of impeding the process of easing tension around the Korean Peninsula as part of a resumed dialogue between the DPRK and South Korea (in the context of reaching an agreement on the North Korean athletes' participation in the 2018 Winter Olympics). According to the Chinese side, such obstacles include the constant increase by the USA's pressure on the DPRK, as well as measures to demonstrate force in the region.

In order to solve these problems, on February 9–10, at the invitation of the US leadership, Chinese State Councilor Yang Jiechi visited Washington. During his meetings with US President D. Trump and Secretary of State R. Tillerson, the sides admitted negative trends in the development of relations between the two countries, which need to be addressed appropriately. In view of this, the parties agreed to intensify the dialogue through four high-level mechanisms. In particular, the next Diplomatic & Security Dialogue is planned for the first half of 2018.

Chinese State Councilor Yang Jiechi meets with US Secretary of State R. Tillerson in Washington, February 9, 2018
Chinese State Councilor Yang Jiechi meets with US Secretary of State R. Tillerson in Washington, February 9, 2018

They also said that the PRC and the USA could regulate trade contradictions between them through mutual opening of markets, increasing the volumes of investments and implementing joint economic projects in different spheres. At this, the negotiators expressed their countries' readiness to meet each other half way in order to achieve a stable and healthy development of relations between them in future. In addition to the development of trade and economic cooperation between the parties, among these steps were mentioned the expansion of cooperation between the Armed Forces of the two countries, as well as deepening the interaction in the settlement of the situation around the Korean Peninsula, fight against terrorism and illegal proliferation of drugs.


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

One of the key directions for the development of the Chinese initiative “Belt and Road” is integration of other transport and communication projects into it.

An International Conference “The role of the Trans-Caspian East-West Trade and Transit Corridor in the realization of the Belt & Road initiative”, Beijing, February 6, 2018
A Conference “The role of the Trans-Caspian East-West Trade and Transit Corridor in the realization of the Belt & Road initiative”, Beijing, February 6, 2018

The International Conference “The role of the Trans-Caspian East-West Trade and Transit Corridor in the realization of the Belt & Road initiative” convened in the Chinese capital on February 6, 2018. The Conference was initiated by Azerbaijan, Kazakhstan, Georgia and Turkey with support of the China's Ministry of Commerce.

During the event, Deputy Minister of Commerce of the People's Republic of China, Wang Shouwen, pointed out the growing support to “The Belt and Road” by many countries of the world, which facilitates trade, industry modernization and raising the living standards of the people involved in the country's initiative. Proceeding from the importance of the Trans-Caspian route as part of the communications system between Europe and the Caspian region, Wang Shouwen called for the expediency of joining the two projects.

Minister of Economy of Azerbaijan Shahin Mustafayev revealed the transport potential of his country, including opportunities for freight transportation within the framework of the Trans-Caspian route. At this, he agreed with the expediency of combining the Trans-Caspian route with the Chinese initiative “The Belt and Road”, which would bring the work of both transport systems to a qualitatively new level. Similar views were also expressed by representatives of other countries.


A Conference “The New Silk Road after the 19th Congress of the Chinese Communist Party: What prospects for Italy?”, Rome, January 30, 2018
A Conference “The New Silk Road after the 19th Congress of the Chinese Communist Party: What prospects for Italy?”, Rome, January 30, 2018

The geography of the “Belt and Road” is expanded by attracting individual countries to it. In particular, on January 30, Rome hosted a conference “The New Silk Road after the 19th Congress of the Chinese Communist Party: What prospects for Italy?”. The event was initiated by the Chinese Embassy in Italy and Italian Society for International Organization (SIOI).

At the forum, Deputy Foreign Minister of Italy V. Amendola expressed his country's support for China's initiative “The Belt and Road”, having emphasized its importance for the Chinese and Italian economies. In support of this, data were presented on the main indicators of trade and economic cooperation between Italy and the PRC. Thus, over the past year, the volume of mutual trade between the two countries increased by 11.4 %, while Italian exports to China increased by 25.3 %.

Chinese Ambassador to Italy Li Ruiyu spoke about the need for deeper cooperation between the two countries. In this regard, the representative of the People's Republic of China put forward a series of proposals to bring the Sino-Italian relations to a qualitatively new level. First of all, such proposals included: signing of a China-Italy memorandum of mutual understanding on the joint implementation of “The Belt and Road”; achieving the parties' agreement on trade liberalization and investment; deepening cooperation in promoting the processes of world globalization.

Taking into consideration the above-mentioned circumstances, a conclusion was made on the need for Italy's comprehensive integration into the Chinese initiative “The Belt and Road”.


First Forum for Cooperation between Laos and China within “The Belt and Road”, Vientiane, February 2–3, 2018
First Forum for Cooperation between Laos and China within “The Belt and Road”,
Vientiane, February 2–3, 2018

Besides, on February 2–3, 2018, first Forum for Cooperation between Laos and China within “The Belt and Road” initiative themed “Opportunities and Outlook of Laos-China Cooperation — Strategic Integration of Laos' Strategy of Transformation from a Landlocked to a Land-linked Country and the “Belt and Road Initiative”. The development of such cooperation is to be in the spheres of finance and investment, energy, agriculture, joint construction of the Sino-Lao Economic Corridor, and assistance to the poor.


Deepening cooperation within the framework of the Chinese initiative has improves the situation in the sphere of addressing energy needs of the People's Republic of China. According to the “Oil Blue Book: China Petroleum Industry Development Report 2018”, which was released on 1st February, the work of “The Belt and Road” contributes to the diversification of oil supply routes to the country.

In 2017, China first outstripped the United States in terms of crude oil imports, which averaged 8.43 million barrels per day, up 10 % from last year's figure. According to experts, this year, demand for oil in the PRC will increase by another 3 %. In turn, this creates additional opportunities for cooperation between China and its partners in the oil sector, including by increasing mutual investments.


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

3.1. Politics. Development of China's International Cooperation

Along with the active development of relations with the United States and other Western powers, China continues to deepen its relations with neighboring countries.

February 5–7, 2018, the 8th informal meeting of defense ministers of the PRC and ASEAN countries (Association of Southeast Asia) was held in Singapore. The meeting was co-chaired by Singaporean Defense Minister Ng Eng Hen and the Chinese Defense Minister and State Councilor Chang Wanquan.

Speaking at the meeting, Chang Wanquan emphasized the importance for China of the ASEAN countries, which are part of the country's priority partners. According to him, in recent years, within the framework of the agreements reached by the President of the People's Republic of China Xi Jinping and leaders of the ASEAN countries, the defense departments of the parties have been maintaining active contacts, deepening cooperation and playing a significant role in ensuring stability in the region. On this basis, Chang Wanquan expressed China's willingness to continue its cooperation with ASEAN countries in order to strengthen common security.

Foreign ministers of the ASEAN countries supported the position of the People's Republic of China and agreed on the need to strengthen bilateral and multilateral ties for the sake of building a safe future. In particular, the parties agreed to expand scale of joint military exercises and to intensify the fight against terrorism.

8th China-ASEAN defense ministers' informal meeting, Singapore, February 5–7, 2018
8th China-ASEAN defense ministers' informal meeting,
Singapore, February 5–7, 2018

Besides, last week saw a number of bilateral meetings, including those of the President of the People's Republic of China Xi Jinping with King of the Netherlands Willem-Alexander, Minister of Foreign Affairs of China Wang Yi with Foreign Minister of Uzbekistan A. Kamilov and Indonesia R. Marsudi, China's Vice Foreign Minister Kong Xuanyou with Deputy Foreign Minister of Vietnam Lê Hoài Trung. They discussed plans to deepen ties between China and the above-mentioned countries in various spheres.


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

China's foreign trade in January, 2018
China's foreign trade in January, 2018

Since the beginning of this year, have been maintained positive trends in the development of the PRC and deepening of the country's cooperation with its trade and economic partners. According to the Chinese customs' latest data, in January 2018, China's commodity exports amounted to 206 billion US dollars with an annual growth rate of 6 % and imports made 185 billion US dollars with a growth of 30.2 %. It is pointed out that the positive balance of foreign trade of the country has amounted to 21 billion US dollars, that is, it has decreased by 59.77 %.

According to American experts, a significant contrast in the dynamics of growth in exports and imports on the one hand confirms China's compliance with its commitments to expand imports, and on the other — demonstrates China's transformation from a “major” trading country into a “powerful” trading state. At this, China is ready to further enhance the openness of its market, which will help the development of its partners, and consequently the growth of the world economy.


At the same time, the leadership of the People's Republic of China attaches great importance to optimizing the economic complex of the country at the expense of balanced development of all its components. February 4, 2018, the General Office of the Communist Party of China (CPC) Central Committee and the General Office of the State Council unveiled a three-year action plan to improve the rural living environment. The document provides for a set of measures until 2020 for ensuring stable growth of production in the agrarian sector and improving the quality of products, ensuring social needs of citizens, as well as strengthening the protection of the environment. All this will be a significant contribution to the implementation of the task set by the 19th National Congress of the CPC in building a moderately prosperous society in the PRC.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. In response to the growing external pressure, the DPRK's leadership continues active measures to demonstrate the country's military potential. A military parade was held in Kim Il Sung Square in Pyongyang on February 8, 2018 to mark the 70th anniversary of the Korean People's Army. About 13 thousand servicemen and several hundred pieces of military equipment took part in the parade. The demonstration of the DPRK's new missile systems was the culmination of the parade. Speaking on the occasion of the anniversary of the national armed forces, North Korean leader Kim Jong-un accused the USA of pursuing aggressive policy in the Asia-Pacific region and emphasized his country's capability of responding adequately to the actions of all its opponents.

A military parade in Pyongyang on February 8, 2018

Against this background, the Federal Office for the Protection of the Constitution of Germany accused the DPRK of the covert acquisition in other countries of the materials and equipment necessary for the creation of nuclear and missile weapons. According to the head of the Federal Office H. Maassen, for this North Korea uses its diplomatic representation in Berlin. In particular, through it are purchased dual-use goods, which can be used for both civilian and military purposes.


US Vice President M. Pence with Prime Minister of Japan S. Abe, Tokyo, February 7, 2018
US Vice President M. Pence with Prime Minister
of Japan S. Abe, Tokyo, February 7, 2018

Taking into consideration Pyongyang's refusal to meet the demands of the international community, the United States intends to substantially extend sanctions against North Korea. In particular, such sanctions can be imposed after the completion of the Winter Olympics in South Korea (February 9–25, 2018). The US Vice President M. Pence after his meeting with Prime Minister of Japan S. Abe, said that new sanctions would be the toughest and will be aimed at strengthening the DPRK's international isolation.


In its turn, Russia continues to hold a double position with regard to North Korea. Thus, as stated by the RF Ministry of Foreign Affairs, in compliance with the UN Security Council's decision (from December 2017) on increasing the sanctions restrictions on the DPRK, Russia has begun the deportation of North Korean workers. At the same time, those citizens of the DPRK who are in Russia on legal grounds will not be deported.


China's Military Activities. Taking into consideration the complex situation in the APR, and China's opponents' having nuclear weapons, the country's leadership is paying special attention to the issues of ensuring its ABM defense. February 5, 2018, China, within its own territory, conducted a successful test of its ground-based midcourse defense system. So, China has become the third country in the world after the United States and Russia, which has developed such technologies.


At the same time, active measures are underway for the operational and combat training of the People's Liberation Army of China, including the Air Forces. February 7, 2018, a regular training with the participation of the multifunctional Su-35 fighters was carried out. They were mastering a joint combat patrol mission. According to the PRC's Defense Ministry, such exercises enhance the Air Force's combat capability under long-distance or high-sea conditions.


3.4. Science and Technology

At the beginning of February 2018, China successfully launched “Young Pioneer-1” — first in country shared educational satellite, seismic-electromagnetic satellite “Zhangchen-1” and five mini satellites carried by the “Long March-2D” rocket.

“Young Pioneer-1” was manufactured and tested by Commsat, a Beijing-based private satellite company funded by the Xi'an Institute of Optics and Precision Mechanics under the Chinese Academy of Sciences (CAS). The main purpose of the satellite is to provide high-speed exchange of information and databases between different educational institutions.

In turn, the seismic-electromagnetic satellite “Zhangheng-1” will help scientists monitor the Earth's electromagnetic field, ionospheric plasma and high-energy particles, which allows obtaining data to predict the increase in seismic activity. The satellite was developed by DFH Satellite at the Fifth Institute of the China Academy of Space Technology and its technical equipment is up to the world-class.

China's first shared education satellite “Young Pioneer-1” Model of seismic-electromagnetic satellite “Zhangchen-1”
China's first shared education satellite “Young Pioneer-1” and seismic-electromagnetic satellite “Zhangchen-1”
Vice Premier of the State Council of the PRC Ma Kai addresses the opening ceremony of Industrial Internet Summit 2018 in Beijing
Vice Premier of the State Council of the PRC Ma Kai addresses the opening ceremony of Industrial Internet Summit 2018 in Beijing

China keeps leading positions in the world in the sphere of high technologies. February 1–2, 2018, an Industrial Internet Summit 2018 was held in Beijing. During the opening ceremony of the summit, Vice Premier of the State Council of the People's Republic of China, Ma Kai pointed out the importance of the industrial Internet as a key pillar of the new industrial revolution and the basis of intellectual production. Through the implementation of comprehensive communication between people, machines and things, the intellectual Internet contributes to the innovative development of the economy, as well as to the formation of the global industry. According to Ma Kai, taking into consideration the above-mentioned circumstances, all departments, enterprises and institutions should take full advantage of the possibilities of the industrial Internet, which will allow them to increase the efficiency of their work and bring it to a qualitatively new level.


IV. Plans and Prospects for Cooperation between China and Ukraine

The People's Republic of China and Ukraine continue active development of ties in different spheres. Thus, in 2018–2020, the Chinese company YUYUE Home Textile, one of the largest flax processing, textile production and sales, research and development of technologies in the sphere companies, is planning to enter the Ukrainian market. Moreover, the company considers Ukraine a convenient platform for business development in the European region. In 2016, YUYUE Home Textile selected Rivne region for the construction of a flax processing plant.

The beginning of the implementation of the project is scheduled for the current year. The term of work will be five years, and the total investment — 20 million US dollars. During this period investors plan to establish the whole cycle of production — from growing the flax to processing it. Upon completion of the construction, the company will create about 1 thousand jobs.

Representatives of the Chinese company YUYUE Home Textile in Ukraine Representatives of the Chinese company YUYUE Home Textile in Ukraine
Representatives of the Chinese company YUYUE Home Textile in Ukraine

In addition, relations between Ukraine and the PRC in the scientific and technology spheres are deepening. In order to create favorable conditions for the effective use of all opportunities in this sphere, creation of two Chinese-Ukrainian cooperation centers is being considered at the National Academy of Sciences of Ukraine. The centers will coordinate activities on implementation of joint projects of the National Academy of Sciences of Ukraine with the scientific institutions of the Chinese provinces of Shandong and Guangdong.