March 6, 2018

China (中国) Today

Events Review (26.02–04.03.2018)

 

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

The main event in China was the 19th CPC Central Committee's 3rd Plenum on February 26–28, 2018. The Plenum heard Secretary General of the Communist Party of China Xi Jinping's report, adopted a proposed candidate list for the leadership of the State Counsel and the National Committee of the Chinese People's Political Consultative Conference (CPPCC), took a decision of the CPC Central Committee to deepen the reforms of the party and state structures, and adopted the amendments to the Constitution of the country.

The list of constitutional amendments was determined by the 19th CPC National Congress in October last year and provides for adding to the Basic Law of the provisions concerning: the construction of socialism in the country with Chinese characteristics; China's promotion of the building of a world community with common destiny for all mankind; the leadership role of the CPC as the main feature of the country's state system; the basic values of socialism; the obligation of public servants to publicly swear allegiance to the Constitution before taking the office; creation of a supervisory commission as a new state body.

Besides, the participants of the plenary session made a new proposal to remove from the Constitution of the state the provision that the President of the People's Republic of China and his Deputy may hold their office for no more than two consecutive terms. The list of amendments has been sent for further approval by the National People's Congress.

Experts estimate that the amendments to the Basic Law of the People's Republic of China are fully in line with the policies of Chinese President, Secretary General of the CPC, Xi Jinping, which has a number of fundamental differences from the political course of his predecessors. First of all, such differences are:

  • transferring the center of gravity of the country's economic development from external markets to creating a large domestic market;
  • giving up the race on indicators of GDP growth in favor of qualitative and balanced development;
  • a systemic anti-corruption campaign, cause its began to pose a real threat to the CPC's power and the stability of the state;
  • transition from a policy of refraining from interfering in the development of key processes in the world to an active and proactive influence on them;
  • positioning the People's Republic of China as a new world leader, as well as determining the strategic goal of the revival of the Chinese nation.
3rd Plenum of the 19th Communist Party of China Central Committee 3rd Plenum of the 19th Communist Party of China Central Committee
3rd Plenum of the 19th Communist Party of China Central Committee

The abolition of the constitutional limitation of the term of office of the President of the People's Republic of China will in fact complete the process of establishing Xi Jinping's individual rule in the country. Today, he has already concentrated in his hands all the full power authorization, holding the posts of the President of the People's Republic of China, the Secretary General of the CPC and the Chairman of the Central Military Commission of China.

 

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

The countries participating in the Chinese initiative “The Belt and Road” expand cooperation and bring it to a qualitatively new level in most important spheres.

For example, at the initiative of the Xi'an University of Posts and Telecommunications, an Energy Union was created that would work within the framework of the University Alliance of the Silk Road. The goal of this Alliance is to strengthen the cooperation of universities of the countries participating in the Chinese initiative in the spheres of scientific research, exchanges of teachers and students, as well as training of personnel. 59 universities in 20 countries joined the Energy Union, including: Tsinghua University, Shanghai University of Communications, Zhejiang University, Xi'an University of Posts and Telecommunications, as well as universities of the UAE, Kazakhstan, Portugal and Italy.

 

At the same time, leading countries of the EU are paying greater attention to “The Belt and Road”. Germany Trade & Invest (GTAI) and Association of German Chambers of Industry and Commerce (DIHK) on February 26, 2018 jointly published a study on “The Belt and Road” Initiative. According to it, “The Belt and Road” is extremely important for German business and promotes German companies' entry into new markets. The Chinese initiative has opened new and more convenient transport links between Europe and China, which not only contributed to the growth of German-Chinese trade, but also provide enormous opportunities for German enterprises in the construction of infrastructure, energy, engineering, planning and consulting.

“The Belt and Road” Initiative is extremely important for German business
“The Belt and Road” Initiative is extremely important for German business

Russia is also greatly interested in participating in “The Belt and Road” projects. February 22, the 3rd Sino-Russian Business Forum was held in St. Petersburg where issues of trade and economic cooperation between the two countries were discussed. In the words of the representative of the RF Ministry of Foreign Affairs, in 2017 the Intergovernmental Russian-Chinese Commission for Investment Cooperation determined 73 joint projects, which are implemented in accordance with the adopted plans. One of them is “The Ice Silk Road”, which involves expanding the possibilities of transportation of goods through the Arctic seas.

February 22, the 3rd Sino-Russian Business Forum was held in St. Petersburg
February 22, the 3rd Sino-Russian Business Forum
was held in St. Petersburg

However, expanding China's access to natural resources in Siberia and the Far East of Russia is a growing concern for local residents. First of all, it concerns massive illegal logging and export of timber by Chinese entrepreneurs. Thus, in the autumn of 2017, an initiative committee of residents of the Trans-Baikal region, Buryatia and Irkutsk region issued a petition demanding a 10-year moratorium on the export of unprocessed timber from the region to China. To date, it has already been signed by 145 thousand locals.

According to the statements of the representatives of the above-mentioned regions, Chinese enterprises are using corruption schemes in co-operation with local authorities when forest felling. They also express particular indignation over Russia's transferring to China for lease significant forest lands with a total area of more than 20 million hectares, which are used exclusively for felling.

Concerns of inhabitants of Siberia are shared by Russian scientists. According to the member of the Russian Geographical Society, P. Pashkov, “…first, the Far East, and now the Siberian spaces: everything is cut clear. Cutover patches are already visible even from space, and everybody keeps silent”.

For its part, the leadership of the Russian Federation limits itself to general promises to consider the issue raised and does not take any real steps to resolve it.

 

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

3.1. Politics. Development of China's International Cooperation

One of China's main directions in strengthening international positions of the country is its participation in the activities of influential international organizations in order to promote Chinese interests. In this context, preparations are being made for the summit of the Shanghai Cooperation Organization in June, 2018, during which the People's Republic of China should assume the functions of presidency in the Organization.

Within the framework of the preparatory measures, on February 23–25, a meeting of the diplomatic representatives of the SCO member states accredited in China (including Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Azerbaijan, Armenia, Pakistan, Nepal, Sri Lanka, Afghanistan and Belarus) was held in Chongqing (Central China). The meeting was held under the chairmanship of the SCO Secretary General R. Alimov.

Issues of deepening of partnerships between the participants of the Organization were discussed. Besides, there was a separate meeting with businessmen of Chongqing, one of the six largest industrial centers in China. In view of the specialization of the city, a number of agreements on cooperation in the fields of automotive and medical equipment were signed.

A meeting of the diplomatic representatives of the SCO member states in Chongqing
A meeting of the diplomatic representatives of the SCO member states
in Chongqing

The development of China's cooperation with EU countries continues. In particular, on February 26, 2018, during the ceremony of accepting the letter of credence from the PRC's Ambassador, Lithuanian President D. Grybauskaite expressed her country's being considerably interested in deepening cooperation with China in all spheres. According to the head of the Lithuanian state, trade, logistics, agriculture, education and culture are the main such areas. At this, D. Grybauskaitė pointed out the importance of the PRC's policy of reforms and openness, as well as the country's successes that have been achieved in recent years.

 

At the same time, there are problems in relations between the PRC and the USA. March 1, 2018, the Chinese Foreign Ministry issued another condemnation of the USA's statements regarding the “Chinese threat”, and also called on Washington to abandon the mentality of the “Cold War”. At this, the emphasis was placed on the peaceful nature of China's strategy, which focuses its efforts on the revival of the Chinese nation and establishment of peace all over the world.

The same day, China warned the United States about the unacceptability of the US side's deepening of relations with Taiwan. The reason for this was the adoption by the US Congress of “The Taiwan Travel Act”, which provides for the exchange of visits of the parties at the highest level. According to the statement by the Ministry of Foreign Affairs of the People's Republic of China, the said act is a direct violation of the principle of “One China”, which is officially supported by the United States and is the basis of the Sino-American relations.

This situation is used by Russia for its own purposes in terms of opposing the “positive character” of its relations with the PRC to the sharpened US-China relations. For example, in his message to the Federal Assembly of the Russian Federation on March 1, Russia's President V. Putin called the strategic partnership with the People's Republic of China “an example of a strong, friendly and equal relationship”.

Thus, taking into account the adoption by the United States of the National Defense Strategy, where Russia, China and North Korea are on the list of major threats, the latter seek to show co-operation and solidarity in countering Washington's policy.

 

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

Gross domestic product and the growth rates of China in 2013–2017
GDP and the growth rates of China in 2013–2017

The main driving force behind China's becoming a world's leading center of strength is the rapid growth of the country's economic potential. According to the “Statistical Communiqué of the People's Republic of China on the 2017 National Economic and Social Development”, last year, the gross domestic product of the country amounted to 15 % of the world GDP. By this indicator, China has been steadily ranked second in the world ranking.

Based on the state of the Chinese economy, Chinese experts predict its medium-high growth rate in the future. Thus, according to the “China Quarterly Macroeconomic Model — CQMM Spring 2018” report, in 2018 and 2019, the country's GDP growth rate will be 6.7 % and 6.6 %, respectively.

At the same time, a number of problems are expected to remain, including a reduction in investment activity. Accordingly, the experts recommend the Chinese government to pay more attention to stimulating the non-state sector of the economy and private investment, as well as to speed up the process of creating a modern financial and tax system.

 

Of great importance for the development of the economy of China is the expansion of foreign economic relations of the country. In this regard, important is the role of exhibition events taking place in the country. For example, March 1–4, 2018, the East China Fair of Imports and Exports was held in Shanghai, which is the greatest event of this kind in the PRC. More than 4,000 Chinese and more than 460 foreign companies took part in the fair, and signed export agreements for a total of 2.3 billion US dollars.

March 1–4, 2018, the East China Fair of Imports and Exports (ECF) was held in Shanghai
March 1–4, 2018, the East China Fair of Imports and Exports (ECF)
was held in Shanghai

3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. The situation in the region remains complex and controversial. On the one hand, the development of the dialogue between Seoul and Pyongyang is continuing, and on the other, the United States and the EU are taking steps to further increase the pressure on North Korea.

February 25–27, 2018, the high-level delegation of the DPRK visited South Korea for the second time to participate in the closing ceremony of the 23rd Winter Olympics. Within the framework of the visit, a meeting was held between the President of South Korea Moon Jae-in and the head of the delegation of the DPRK, Deputy Chairman of the Central Committee of the Labor Party of North Korea, Kim Jong Chol. The parties confirmed their readiness to continue efforts to improve the relations between the two Korean countries and to establish peace in the Korean Peninsula. In addition, Kim Jong Chol declared Pyongyang's openness to dialogue with Washington.

South Korean President Moon Jae-in and Deputy Chairman of the Central Committee of the Labor Party of North Korea Kim Jong Chol at the closing ceremony of the 23rd Winter Olympics
South Korean President Moon Jae-in and Deputy Chairman of the Central Committee of the Labor Party of North Korea Kim Jong Chol
at the closing ceremony of the 23rd Winter Olympics

At the same time, the DPRK refuses to stop the implementation of its missile and nuclear program. In view of this, the United States and the EU are intensifying pressure on North Korea.

February 23, 2018, the US Department of the Treasury enlarged the list of citizens, institutions and companies in the DPRK who are accused of involvement in Pyongyang's development of nuclear weapons and missile systems. In particular, one individual, 28 vessels and 27 companies have been added to it. In addition to the North Korean subjects, the sanction list also includes companies from Russia, China, Panama, Taiwan and Singapore.

Additional sanctions against North Korea were also introduced by the European Union:

  • four times reduced the maximum volumes of petroleum products that can be supplied to the DPRK (from 2 million to 500 thousand barrels per year);
  • a ban on imports from the DPRK of food and agricultural products, machinery, electrical equipment, earth and stone, and wood;
  • a ban on exports to the DPRK of all industrial machinery, transportation vehicles, and expansion to all iron, steel and other metals;
  • further maritime restrictive measures against vessels where there are reasonable grounds to believe that the vessel has been involved in the breach of UN sanctions;
  • the requirement to repatriate all DPRK workers abroad within 24 months, subject to applicable national and international law.

 

Under these circumstances, the PRC is trying to act as a moderator in the dialogue between the DPRK and South Korea, and to assure the USA of the need to launch peace talks with North Korea. Last week, the Foreign Ministry of China approved the beginning of joint actions by Pyongyang and Seoul to prepare for the resumption of reunification of Korean families separated during the Korean War. According to the Foreign Ministry of the People's Republic of China's statement, such a step will contribute to the restoration of peace in the Korean Peninsula.

 

Given the continued tension in the Asia-Pacific region, the government of Japan keeps increasing attention to raising the level of security of the country. February 27, 2018, the Japan Aerospace Exploration Agency (JAXA) launched a new IGS Optical 6 intelligence satellite, designed to monitor the Earth's surface. The main task of the satellite is to observe the missile and nuclear facilities of the DPRK. The development of space intelligence means has been carried out by Japan since the 1990s, when the DPRK tried to launch its first Kwangmyŏngsŏng-1 satellite with the flight path of a rocket carrier over the Japanese islands.

February 27, 2018, the Japan Aerospace Exploration Agency (JAXA) launched a new IGS Optical 6 intelligence satellite
February 27, 2018, the Japan Aerospace Exploration Agency (JAXA) launched a new IGS Optical 6 intelligence satellite

3.4. Science and Technology

The Government of the People's Republic of China is expanding international cooperation in the scientific and technical sphere, which promotes the country's innovative development. According to Minister of Science and Technology of the People's Republic of China, Wan Gang, China has already established cooperation in this sphere with about 160 countries and participates in the work of more than 200 international organizations and multilateral mechanisms. In 2017, the number of the Chinese, who were executive members of international scientific and technical organizations, amounted to 280 people, which is almost 70 % more than in the previous year.

 

Against this background, China continues to expand the commercial component of its space program. Thus, China Academy of Launch Vehicle Technology has developed a new rocket upper stage “Yuanzheng-1S”, which is designed to provide launches of low- and mid-orbiting satellites. According to Wang Mingzhe, the head of the Institute, “Yuanzheng-1S” will be installed on “Changzhen-2S” rocket carriers and used for launching space-crafts into solar-synchronous orbits. “Yuanzheng-1S” is a more economical and effective version of previous models of rocket upper stage, which allows to use this stage for commercial purposes.

In addition, in 2018, China plans to conduct the first launch of the “Changzheng-11” carrier rocket from the sea platform. The development of such technologies helps to reduce the cost of missile launches and increase their efficiency, which extends the range of commercial space services.

China Academy of Launch Vehicle Technology has developed a new rocket upper stage “Yuanzheng-1S”
China Academy of Launch Vehicle Technology has developed a new rocket upper stage “Yuanzheng-1S”

The development of transport infrastructure of the country continues. In particular, measures are being taken to put in operation an intelligent high-speed railway, namely trains with varying track widths at a speed of 400 km/h and the next-generation magnetic trains at speeds of 600 km/h. The peculiarity of such trains is high energy efficiency (17 % less power consumption than that of the “Hexie” train).

 

IV. Plans and Prospects for Cooperation between China and Ukraine

Against the background of the growth of trade between Ukraine and China, our country will have an important role in the international exhibition “China International Import Expo 2018” on November 5–10, 2018, in Shanghai. The said will allow Ukraine to expand its presence on the Chinese market, which plans to import products, goods and services worth 10 trillion US dollars within the next five years.

Ukraine's participation in the exhibition fully corresponds to the plans of Ukraine's Export Strategy for the next four years, which determines the priority of the Chinese market, and has been agreed upon at the level of the governments of the two countries. Coordination of Ukraine's preparation for the exhibition is carried out by the Export Promotion Office jointly with the Ministry of Economic Development with the financial support of the European Bank for Reconstruction and Development (within the framework of the EU4Business Initiative).

 

Along with this, the PRC actively promotes the development of Ukrainian infrastructure. In particular, an agreement has been reached on involving the Chinese company “Sinohydro” to the construction a by-pass road around Zhytomyr worth 42.3 million Euros. Within the year, with the possible participation of China, they are going to start constructing two more concrete highways.

Project of the reconstruction a by-pass road around Zhytomyr
Project of the reconstruction a by-pass road around Zhytomyr

At the same time, the “China Harbor Engineering Company Ltd” is taking part in a bid for dredging works in the ports of Berdyansk and Mariupol. The cost of works is estimated at about 500 million hryvnias, and the term of their execution — 8 months.

 

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