March 14, 2018

China (中国) Today

Events Review (05.03–11.03.2018)


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

The main event in the PRC was the first session of the 13th National People’s Congress that opened in Beijing, March 5, 2018.

At the opening meeting of the session Premier Li Keqiang delivered the Government Work Report, that summered up the country's achievements for the last five years and set up the tasks for the future.

According to Li Keqiang, during the past 5 years, China pursued a consistent policy of developing mutually beneficial cooperation with other countries of the world and building an open world economy. Under this policy, Beijing made a proposal to jointly implement “The Belt and Road ” initiative and has made active efforts in this direction. With China's leading role, the Asian Investment Infrastructure Bank was created, the Silk Road Foundation was founded, a number of important projects was launched in the sphere of infrastructure and trade and economic cooperation.

Besides, a complex of internal reforms was carried out, which allowed to stabilize the economic situation in the country. Evidence of this includes: the increase in GDP from 8.5 trillion US dollars in 2012 to 13 trillion US dollars in 2017; the increase in a number of workers in cities and towns by 66 million people; basic health insurance for 1.35 billion people; reducing the number of the poor by over 68 million people; creation of a network of high-speed railways and e-commerce systems.

Meanwhile, Li Keqiang acknowledged the existence of a number of important problems, such as: the fall in economic performance in certain parts of the country; bureaucracy and formalism in state bodies of the country, which create obstacles in doing business and investment activity; a significant number of people's dissatisfaction with living conditions, education and medicine.

The first session of the 13th National People’s Congress Premier Li Keqiang delivered the Government Work Report at the opening meeting of the first session of the 13th National People’s Congress
Premier Li Keqiang delivered the Government Work Report at the opening meeting
of the first session of the 13th National People’s Congress

In view of this, Premier Li Keqiang voiced the main tasks for 2018, namely: ensuring the growth of GDP at 6.5 %; keeping inflation within 3 %; creation of more than 11 million new jobs in cities and towns; reduction of the specific energy intensity of GDP by 3 %; increase in incomes according to the growth of the economy. This assumes: support for innovative industries; continued sanation of unprofitable and outdated industries; reforming and strengthening the tax system; further development of transport infrastructure; improvement of conditions for attraction of foreign investments; takeoff of the village; improving health care and education systems.

Li Keqiang paid special attention to the issue of strengthening military security of the country. In this regard, he emphasized the need for the CPC to implement the task of building a new era army with Chinese characteristics, which should guarantee the protection China's state sovereignty, security and interests. The main prerequisites for achieving this goal were said to be: continuation of defence reform, a higher level of the combat training of troops, qualitative upgrading of armaments and military equipment, improvement of the mobilization system, as well as intensification of the work on military education of citizens. To ensure these measures in 2018, the PRC will increase its military budget by 8.1 % to 175 billion US dollars.


A series of panel discussions was also held during the session, including with the participation of Chinese President Xi Jinping. In particular, he took part in discussing the village's recovery strategy with representatives of Shandong Province. At this, the development of agriculture on the basis of modern technology was called one of the government's main priorities. At the same time, the deputies from Guangdong Province discussed innovations and training the staff.

Panel discussion of the Chinese President Xi Jinping with representatives of Shandong Province
Panel discussion of the Chinese President Xi Jinping with representatives of Shandong Province

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

The leadership of the People's Republic of China pays special attention to the development of “The Belt and Road”. According to Zhang Yesui, a spokesman for the National People's Congress, since the launch of “The Belt and Road” in 2013, the Chinese initiative has been resultful in deepening cooperation between China and its partners, which is beneficial for all parties. Thus, the infrastructure interconnectivity has intensified between more than 70 countries participating in the Chinese initiative, and institutions for their financial support has been created.

However, Zhang Yesui denied some politicians and experts' statements about China's using “The Belt and Road” as an instrument for realizing its geopolitical interests. According to him, international cooperation within the framework of the initiative is carried out on the principles of equality and mutual benefit and is aimed exclusively at economic interest. In the given context, “The Belt and Road”, above all, corresponds to the tendencies of deepening cooperation and mutual benefit, as well as the general aspirations for the possibility of joint development.


Project of the “Arctic Corridor”
Project of the “Arctic Corridor”

Against this background, the growing interest of European countries is due to Beijing's plans to create a “Polar Silk Road” from Europe to China. For example, the governments of Finland and Norway are negotiating on the creation of a so-called “Arctic Corridor”, which should be part of the Chinese initiative to create the shortest direct trade route between Europe and the Pacific Ocean through Arctic seas.

According to the project, vessels from Asia will be unloaded at the port of Kirkenes or in other ports in the North of Norway. After that, the goods will be delivered by rail to Finland and then to Estonia and the countries of Central and Western Europe. This will save time on passing through thousands of nautical miles compared to the route through the Suez Canal or the Indian Ocean.

Implementation of the project will require the construction of about 500 km of railways from Norway to Finland, as well as a railway tunnel between Finland and Estonia. The main investor should be China, which is interested in getting access to the Arctic region through the implementation of joint Arctic initiatives such as the “Polar Silk Road”.


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

3.1. Politics. Development of China's International Cooperation

The PRC and the United States are making efforts to resolve the problems in the relations and to further deepen the strategic partnership between the two countries. February 27 – March 3, 2018 Member of the Political Bureau of the CPC Central Committee and Director of the General Office of the Central Leading Group for Financial and Economic Affairs Liu He visited the USA.

During the meetings with US Treasury Secretary S. Mnuchin and Director of White House National Economic Council G. Cohn issues of the development of trade and economic cooperation between the two countries were discussed. At this, Liu He reaffirmed China's intentions to further expand the transparency of the country's policy, including within the framework of its interaction with the United States. According to him, the main goal of the PRC is to achieve a balance of trade with the USA due to the mutual opening of markets. As a result of the talks, the parties agreed to continue the dialogue on these issues in Beijing in the nearest future.

China's desire to improve and deepen its relationship with the United States was also expressed by Zhang Yesui, a spokesman for the National People's Congress, who said that the cooperation and stable development of Sino-US relations is the only right option for both countries. Zhang Yesui pointed out that China does not want to conduct a trade warfare against the United States, but will not be inactive if the United States harms the interests of the People's Republic of China.

The results of the discussion on the above-mentioned issues were summed up during a telephone conversation between the President of the People's Republic of China Xi Jinping and US President D. Trump on March 9, 2018. The parties held an in-depth exchange of views on the state of the Sino-US relations. At this, they both agreed on the need for an early resolution of the disagreements between the two countries, as well as the promotion of dialogue and cooperation in a wide range of areas.


At the same time, the development of relations between the PRC and the countries of other regions continues. In particular, March 2, 2018, China-CEEC Coordination Center for Cultural Cooperation to strengthen and enrich the cultural cooperation between 16 Central/East European countries and China (Initiative “16+1”) opened in Scopje, Macedonia.

During the solemn ceremony, Culture Minister of Macedonia R. Alagjozovski pointed out the extremely important significance of the above-mentioned event, which creates fundamentally new opportunities for deepening the relations of the parties. At the same time, according to some experts, the establishment of such centers by the People's Republic of China (based on the example of “Rossotrudnichestvo”) is a powerful tool for Chinese intelligence agencies to conduct information influence and create lobby groups in European countries.

Opening of the China-CEEC Coordination Center for Cultural Cooperation in Macedonia
Opening of the China-CEEC Coordination Center for Cultural Cooperation
in Macedonia

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

China's GDP 2013–2017
China's GDP 2013–2017

China keeps showing positive trends in the country's economic development. Thus, at the session of the National People’s Congress, the leadership of the National Development and Reform Commission of the People's Republic of China expressed confidence in the country's ability to achieve 6.5 % economic growth this year. According to Chairman of the National Development and Reform Commission He Lifeng, in this regard, the main driving forces will be an increase in domestic consumption (contribution to GDP growth — 60 %), investments (30 %) and foreign trade (10 %). The further development of new industries and the modern service sector will also be major components of the country's economic achievements.


A significant contribution to the economy of the PRC is provided by private sector enterprises. Today, 99.6 million commercial entities operate in China, including trading companies, private enterprises and rural cooperatives. According to Zhang Mao, Director of the State Administration of Industry and Commerce, the number of commercial structures in China is increasing and may reach 100 million already in March this year. All this is a consequence of China's consistent efforts to improve the business environment, namely: simplification of administrative restrictions and procedures for registration of new enterprises and real estate, as well as reduction of tax payments and slower tariffs for water, electricity and gas supply.


The development of the economy of China leads to an increase in the volume of the country's energy needs. According to the S&P Global Platts, last year China's imports of liquefied natural gas increased by 48.4 % year-on-year to 37.89 million tons. By this indicator, China has already surpassed South Korea, having taken second place in the world after Japan.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. A positive trend in the development of the situation in the region remains the continuation of the dialogue between the DPRK and South Korea. March 5, 2018, Pyongyang hosted North Korean leader Kim Jong-un's meeting with members of the special delegation of South Korean President. During the talks, Kim Jong-un expressed readiness to impose a moratorium on nuclear and missile tests and begin direct talks with the United States regarding the denuclearization of the Korean Peninsula. According to the leader of the DPRK, Pyongyang can stop the implementation of its nuclear and missile program in case of providing security guarantees for its country. He also assured that he would not use nuclear weapons against South Korea. As a result of the negotiations, agreements were reached on holding a meeting of the leaders of the two Koreas, as well as the first over the past ten years joint summit of the DPRK and South Korea to find ways of peaceful settlement of the situation in the region (scheduled for April this year in the Demilitarized Zone).

North Korean leader Kim Jong-un with members of the special delegation of South Korean President
North Korean leader Kim Jong-un with members of the special delegation of South Korean President

The deepening of the dialogue between the DPRK and South Korea has been approved by the United Nations and the United States. At this, US President D. Trump agreed in principle to meet with North Korean leader Kim Jong-un.

Despite this, the United States continues to step up pressure on the DPRK. March 5, 2018, the official Washington imposed additional sanctions on North Korea for the DPRK's secret services' assassination in Kuala Lumpur (Malaisia) in February 2017 of Kim Jong-nam — brother of the leader of the country. According to US State Department spokesperson H. Nauert, the United States has evidence that the Government of North Korea used the chemical warfare agent VX.


Major Events in the Region in the Military Sphere.

The USA. The United States is expanding its military presence in the Western Pacific. March 5, 2018, the American aircraft carrier Carl Vinson, for the first time since the end of the Vietnam War in 1975, entered the Vietnamese port of Da Nang. The purpose of the five-day visit is to confirm the improvement of the USA-Vietnam relations, as well as demonstration of the American flag in the South China Sea, including near the disputable Paracel (Xisha) Islands (between China and Vietnam).

March 5, 2018, the US Navy aircraft carrier Carl Vinson entered the Vietnamese port of Da Nang March 5, 2018, the US Navy aircraft carrier Carl Vinson entered the Vietnamese port of Da Nang
March 5, 2018, the US Navy aircraft carrier Carl Vinson entered the Vietnamese port of Da Nang

Russia. Despite the demonstration of the strategic nature of Russian-Chinese relations, the Russian leadership continues to consider the PRC one of the most likely military adversaries. This is evidenced by the nature of the exercises conducted during the inspection of the troops of the Eastern Military District of the RF Armed Forces during the winter period of training. March 6, 2018, training of a Battalion Tactical Group from the 38th Separate Motorized Rifle Brigade of the 35th Combined Arms Army (Blagoveshchensk) was conducted at the Tryokhrechye training grounds in the Amur region of Russia. They mastered repulsing of an attack of prevailing forces of the enemy with retreating to the second defensive line.


3.4. Science and Technology

One of the priority directions of the PRC's activity in the scientific and technical sphere is the implementation of various space programs.

In particular, in the current year it is planned to launch the Kuaizhou-11 (Quickboat-11) solid-fuelled carrier from a mobile launch vehicle. The rocket was developed by China Aerospace Science and Industry Corporation, and has a take off weight of 78 tons and is capable of bringing in a circular orbit cargo with a maximum weight of 1.5 tons, and 1 ton — to the heliosynchronous orbit of 700 km height. Features of the carrier rocket are mobility, small start-up time, fast adaptation to different tasks, and low cost of carrying cargo (10 thousand US dollars per kilogram, which is twice cheaper than by other missile systems).

The Kuaizhou-11 allows to launch into space small satellites, mini satellites, single satellites and groups of satellites of the same system. The Kuaizhou project is referred to as an example of military civilian integration and the development of space technology for commercial purposes.

Kuaizhou-11, developed by China Aerospace Science and Industry Corporation
Kuaizhou-11, developed by China Aerospace Science and Industry Corporation

At the same time, by 2020, China is going to launch a base module of a space station. The launch is intended to test the key technologies of space station construction, and to raise the overall level of Chinese space technology. The next step is to launch two laboratory modules and connect them to the base module.


Besides, the People's Republic of China demonstrates significant progress in the development of advanced telecommunication technologies. By June 2018, it is going to have completed the development of the world's first version of the new 3GPP standard for 5G networks. For conducting relevant experiments, China has a fifth-generation mobile connection testing technology platform developed by Chinese enterprises — ChinaMobile, Huawei and ZTE. Pilot projects will start in five cities this year, including Hangzhou, Shanghai, Guangzhou, Suzhou and Wuhan.

In the words of President of the China Academy of Information and Communications Liu Duo, China is actively testing the model of commercial use of 5G communication. It should start in 2019, and officially in 2020. According to GSMA's forecast, by the year 2025, the fifth-generation communications network will cover 40 % of the world's population, and the share of 5G users will be 14 % of the total number of mobile Internet users.

5G adoption in major countries/regions (2025 forecast from GSMA)
5G adoption in major countries/regions (2025 forecast from GSMA)

IV. Plans and Prospects for Cooperation between China and Ukraine

The Ukrsadprom Association and China Haisum Engineering Co signed a Memorandum of understanding
The Ukrsadprom Association and China Haisum Engineering Co signed a Memorandum of understanding

The plans of the People's Republic of China to increase the volume of investments in different sectors of the Ukrainian economy are of great importance for Ukraine. According to Minister-Counselor of the Chinese Embassy in Ukraine Zheng Wei, the Chinese side is ready to consider all proposals for cooperation with Ukraine and can spend on this more than the previously stipulated 7 billion US dollars.


In particular, state-owned corporation China Haisum Engineering plans the next two years to invest 515 million US dollars into the Ukrainian fruit processing and construction of fruit storages, production and logistics complexes. According to the Ukrsadprom Association, all in all, it is planned to implement 18 joint projects that will bring mutual benefits for the PRC and Ukraine.