February 20, 2018

China (中国) Today

Events Review (12.02–18.02.2018)


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

Last week, the main event in the PRC was the Spring Festival (New Year by Chinese or Lunar Calendar) on February 16, 2018 which is celebrated at the state level. Speaking on the occasion of the holiday, President of the People's Republic of China, Secretary General of the CPC Central Committee Xi Jinping highlighted the country's achievements of last year and determined the Chinese nation's task for the future.

First of all, among these tasks he mentioned implementation of decisive steps in fulfilling the decisions of the 19th National Congress of the CPC to build socialism with Chinese characteristics and a moderately prosperous society in the country. Besides, the next year will be the start of the implementation of the 13th National Five-Year Plan of Social-Economic Development of the People's Republic of China.

On the occasion of the Spring Festival, official receptions were held at the UN Office of the Peoples Republic of China as well as Chinese embassies in other countries, including Ukraine. In turn, the leaders of major countries of the world congratulated the leaders and the people of China, and also expressed their hope for positive development of bilateral relations.

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

According to Chinese experts, one of the main conditions for the successful operation of “The Belt and Road” is to simplify trade procedures between participants of the Initiative and other countries. In particular, this concerns harmonization of customs rules and standards.

In order to address this issue, on February 9–10, in Beijing, China's General Administration of Customs, with the support of the World Customs Organization, held the First Global Cross-border E-commerce Conference. Following the event, a “Beijing Declaration” was adopted, which consolidated the agreement of the participating countries to cooperate in removing customs barriers in trade through the Internet.

First Global Cross-border E-commerce Conference, Beijing, February 9–10, 2018
First Global Cross-border E-commerce Conference,
Beijing, February 9–10, 2018

Head of China's General Administration of Customs (GAC) Yu Guangzhou said at the Conference that in 2017, the volume of China's exports and imports through the cross-border online retailing platforms increased by 80.6 %. He also pointed out China's leading role in developing this sphere and its “enormous contribution”, in particular through the transfer of its experience to those countries that have recently begun to introduce electronic technologies at the customs.


Important for “The Belt and Road” is the expansion of its transport component, including with the participation of the countries of the Caucasus region. In this regard, a significant role is played by Azerbaijan, which has a key geographical position between the Caspian and Black Sea regions.

Minister of Economy of Azerbaijan Shahin Mustafayev
Minister of Economy of Azerbaijan Shahin Mustafayev

February 13, 2018, at the press conference devoted to Sino-Azerbaijani economic relations, Minister of Economy of Azerbaijan, Shahin Mustafayev reaffirmed his country's desire to strengthen its participation in ensuring the transit of Chinese goods to Europe. According to the Azerbaijani official, last year, trade turnover between the two countries increased by 43 % to 1.2 billion US dollars. In view of this, Azerbaijan expects to take over 10–15 % of traffic from the PRC to the European region and in the opposite direction.

Based on objective circumstances, the implementation of these plans will be beneficial for both countries: on the one hand, Azerbaijan has the necessary infrastructure to support Chinese transit, and on the other — China is interested in using the Baku-Tbilisi-Kars railway (which provides the shortest way to European market). Thus, the Trans-Caspian Transport Corridor project is fully in line with China's “Belt and Road” initiative.


Former Slovenian President Danilo Turk
Former Slovenian President Danilo Turk

The successes in “The Belt and Road” activity positively influence the development of economies in other regions, in particular, in Europe. Former President of Slovenia Danilo Turk said at the “Belt & Road Dialogue” at Cambridge University (UK) that participation of the EU countries in the Chinese initiative would contribute to the balanced development of European regions and reduction of differences between them.

This issue is of particular relevance in the context of the “new” EU members' lagging behind the leading countries of the European Union. Under these circumstances, the implementation of joint projects within “The Belt and Road” expands the opportunities for mutual trade and investment, which gives impetus to the development of less developed countries.

Accordingly, D. Turk called for Slovenia's deeper involvement in projects within “The Belt and Road”, including taking into consideration the geographical position of the country near transnational highways and railways, which could turn it into an international logistics center.


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

3.1. Politics. Development of China's International Cooperation

China's leadership attaches great importance to the strengthening of influential international organizations that are in line with its interests. In particular, Shanghai Cooperation Organization (SCO) Summit are scheduled for June 2018 in the Chinese city of Qingdao (eastern Shandong province). According to China's Foreign Ministry Spokeperson Geng Shuang, within the framework of the preparations for Summit, China is closely cooperate with all SCO members in order to maximize the effectiveness of the forthcoming meeting and provide a new impetus to the organization's development.


Consul General of China in Almaty Zhang Wei
Consul General of China in Almaty Zhang Wei

Kazakhstan is one of China's most important partners in the SCO, and also takes an active part in “The Belt and Road” and bilateral cooperation with the People's Republic of China. Thus, according to the Consul General of China in Almaty Zhang Wei, the level of the Sino-Kazakhstan relations is the highest for all their history.

In 2017, the Year of Tourism of China in Kazakhstan was held, the shooting of the first joint film named “Composer” was started, as well as a summit of the SCO and a special exhibition EXPO-2017 in Astana was held. Moreover, in the context of a significant increase in trade between China and Kazakhstan, 51 joint projects have been developed with a total investment of more than 2 billion US dollars. With this in mind, the parties intend to continue cooperation in various spheres, including: cultural, trade and economic, industrial, scientific and technical, creating a more perfect atmosphere of mutually beneficial relations.


At the same time, the PRC attaches great importance to the development of cooperation with the countries of the Asia-Pacific region. February 13, 2018, the Second Meeting of the China-Philippines Bilateral Consultation Mechanism on the South China Sea took place in Manila. Due to the permanent tensions in the region, the parties have committed themselves to maintaining restraint on South China Sea’s issues and not taking steps that can complicate the situation. Both sides reiterated their commitment to the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea in its entirety, and to begin negotiations on a Code of Conduct on the South China Sea.

Besides, the meeting approved an action plan to deepen cooperation in the sphere of marine environmental protection, fisheries, oceanographic research and in the oil and gas industry.

2nd Meeting of China-Philippines Bilateral Consultation Mechanism on the South China Sea on 13 February, 2018 in Manila
2nd Meeting of China-Philippines Bilateral Consultation Mechanism
on the South China Sea on 13 February, 2018 in Manila

Against this background, the controversy between the PRC and the USA remains, despite the parties' steps towards resolving problems in their relations. For example, Director-General of the Trade Remedy and Investigation Bureau of China's Ministry of Commerce, Wang Hejun, expressed concern over the strengthening of the US protectionist measures in the steel trade. In particular, this is about US intentions to conduct anti-dumping and countervailing duty investigations on large-diameter welded pipes supplied by China to the US market.


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

The results of the first month of 2018 indicate continued positive development of the Chinese economy.

For example, the domestic investment activity in the country is intensifying. In January the total volume of loans issued by the People's Bank of China amounted to 2.9 trillion Yuan (460 billion US dollars), which is 867 billion Yuan (137 billion US dollars) more than the same period last year. At this, the volume of lending to enterprises and non-financial sector organizations amounted to 1.78 trillion Yuan, and to households (mainly mortgages) — to 591 billion Yuan. All in all, in January 2018, the amount of Yuan loans reached a historic maximum.

According to the Ministry of Commerce of the People's Republic of China, the volume of direct foreign investments in the Chinese economy also has increased by 0.3 % — to about 12.67 billion US dollars. Last December, this figure amounted to 11.55 billion US dollars. The total last year's volume of direct foreign investments in the country reached 137.12 billion US dollars, which is by 7.9 % more than in the previous year.


In order to consolidate these trends, the leadership of the People's Republic of China is focusing on issues of support for private businesses as one of the important components of the Chinese economic system. Thus, in the words of Vice Premier of the State Council of the People's Republic of China Wang Yang at the meeting with businessmen on February 9, the government of the country will continue to take measures to improve the business environment and protect the rights and interests of private companies based on their interests.

Vice Premier of the State Council of the People's Republic of China Wang Yang at the meeting with businessmen, Beijing, February 9, 2018
Vice Premier of the State Council of the People's Republic of China Wang Yang at the meeting with businessmen, Beijing, February 9, 2018

The result of such a policy is the consistent growth of the private sector of the country. In particular, as of the end of 2017, there were 65.8 million individually owned businesses and 27.3 million private enterprises, which employed 341 million people. At this, over the past 5 years, more than 21.6 million new enterprises have been registered in China.

Despite some problems, including obstacles to access to the market and business difficulties, in 2017, the volume of retail online sales in the PRC increased by 25 %, and of operations through express delivery — by 30 %.

According to the State Administration for Industry & Commerce of the People's Republic of China, private business of the country is a powerful driver of its economic development.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. The resumption of the Inter-Korean dialogue has contributed to a certain reduction in tensions in the region. According to previous agreements, last week, the North Korean delegation headed by President of the Presidium of the Supreme People's Assembly of the DPRK Kin Yong Nam, visited Seoul for the first time over the past eight years. The visit was timed to the Winter Olympics in South Korea, which gave rise to negotiations between the parties.

In Seoul, a meeting was held between President of South Korea Moon Jae-in and Kin Yong Nam, which had a purely symbolic character, but showed the possibility of contacts between the two countries. At this, the representative of North Korea, on the part of the leader of the DPRK, invited Moon Jae-in to visit his country. Moon Jae-in accepted the invitation.

The results of the visit of the DPRK's delegation to Seoul were positively assessed by the leadership of North Korea. According to DPRK's leader Kim Jong-un, Pyongyang will continue to work on creating an atmosphere of reconciliation and dialogue in the Korean Peninsula and to boost positive results in this direction. At the same time, the DPRK's leader expressed confidence in the possibility of reconciliation between the two parts of the former united Korea.

Visit to Seoul of the delegation headed by President of the Presidium of the Supreme People's Assembly of the DPRK Kin Yong Nam

In turn, the leadership of the PRC also gave a positive assessment of the start of the Inter-Korean dialogue, which contributes to enhancing stability and security in the Asia-Pacific region. However, Chinese Foreign Ministry Spokesperson Geng Shuang stressed the sharpening of significant problems in the situation around the Korean Peninsula. He mentioned as the main one the aggravation of the contradictions between the United States and North Korea, which are at a critical level. With that in mind, Geng Shuang called on the United States to move from a rebellious pressure policy to negotiating with the DPRK. The Chinese Foreign Ministry Spokesperson also expressed Beijing's willingness to become a moderator in establishing such talks between Washington and Pyongyang.

Commenting on the issue, US Vice President M. Pence did not rule out the possibility of launching a United States-DPRK dialogue. At the same time, he said, the United States would continue to pressure North Korea in all directions until it ceases to implement its nuclear and missile program.


3.4. Science and Technology

The main guarantee of the PRC's success in the scientific and technical sphere is the state's focused support for its development. In 2017, the government's expenditures on research and development (R&D) amounted to 278 billion US dollars or 2.12 % of GDP, which is by 11.6 % more than in the previous year. Of these, 1.5 billion US dollars went to fundamental research, which amounted to 5.3 % of the total amount of the money for the R&D (in 2016 — 5.2 %).

Substantial support for R&D is also provided by Chinese enterprises. Thus, last year they invested 217 trillion Yuan in the above-mentioned sphere, which is by 13.1 % more than in rhe previous year. Two-digit growth rates are observed for the second year in a row.

At the same time, between China and such innovative countries as Israel, South Korea and Japan, there is still a significant gap between the expenditures on R&D as a percentage of GDP. In view of this, the PRC government plans to spend more on the domestic science in the future.


Comprehensive support for the R&D facilitates the successful implementation by China of a set of scientific and technical programs in various spheres. February 12, 2018, from the Xichang Satellite Launch Center (south-western Sichuan province), was successfully launched the carrier rocket “Changzheng-3B” with two new satellites of the “BeiDou-3” navigation system. These are the fifth and sixth satellites within the system. The successful startup rate is 100 %.

“Changzheng-3B” launches with two “BeiDou-3” satellites, Xichang Launch Center, February 12, 2018
“Changzheng-3B” launches with two “BeiDou-3” satellites,
Xichang Launch Center, February 12, 2018

The leadership of the People's Republic of China keeps paying great attention to the development of new energy sources. In particular, state-owned China General Nuclear and Tsinghua University are taking steps to implement the country's first pilot nuclear heating project. In January of this year the technical feasibility study for the project was approved by the China's National Energy Administration (NEA).

The project provides for the construction of a heat supply facility in the north of the PRC using the technologies of the low-temperature nuclear reactor NHR200-II. The heat production of the facility will be 100 MW. According to Chinese experts, these technologies are characterized by high security, are environmentally friendly and have wide prospects for use both for heating residential buildings and for thermal supply of industrial parks.

China's first pilot nuclear heating project
China's first pilot nuclear heating project

IV. Plans and Prospects for Cooperation between China and Ukraine

China and Ukraine continue to actively cooperate on different directions. In particular, the Program of Ukrainian-Chinese Investment Cooperation in the agro-industrial complex contains the main directions and key mechanisms and tools of interaction of the parties in the above-mentioned sphere. The framework intergovernmental agreement should give impetus to the intensification of business contacts between the People's Republic of China and Ukraine in the implementation of joint trade and economic projects.

In this context there are great opportunities for cooperation between the parties, opened by the Chinese “The Belt and Road” initiative. First of all, it concerns transport and logistics, production and processing of agricultural products, as well as production of various types of machinery. Thus, to date, China has already become the main market for Ukrainian flour, sunflower oil and corn. In January 2018 alone, Ukraine exported to the PRC 255.4 thousand tons of flour, which is by 45 thousand tons more than the same period last year.


The deepening of relations between Ukraine and China is accompanied by an increase in the Chinese society's interest to our country. Within last year, 30.4 thousand people of the PRC visited Ukraine, which is by 51.4 % more than in the previous year. In this regard, Ukraine's liberalization of the visa regime with China was positive. In particular, in 2016, a simplified procedure for entry into the Ukrainian territory for Chinese businessmen and tourists was introduced at the Boryspil and Odesa airports.


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