April 3, 2018

China (中国) Today

Events Review (26.03–01.04.2018)

 

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

An important event in the People's Republic of China was the annual high-level “China Development Forum 2018”. The event was attended by about 100 representatives of the leaderships of the world's largest companies, influential research institutions, as well as leading international organizations.

During a meeting with the participants of the forum, Chinese Premier Li Keqiang emphasized the intentions of the People's Republic of China, as the largest developing country, to actively seize advanced foreign technology and management experience, expand cooperation in the spheres of production, science and technology. Besides, China will further facilitate access to its market for foreign business and improve the investment climate in the country.

In this context, Li Keqiang paid special attention to trade disputes between the PRC and the United States. According to him, the problem of trade imbalance between the two countries can be resolved only on the basis of pragmatic and rational approaches of the parties, increasing the volume of trade and economic cooperation, as well as resolving the existing difficulties through negotiations.

Chinese Premier Li Keqiang with participants of the “China Development Forum 2018”, Beijing, March 26, 2018
Chinese Premier Li Keqiang with participants of the “China Development Forum 2018”, Beijing, March 26, 2018

At the same time, Li Keqiang denied allegations against the PRC about theft of foreign technology and violations of intellectual property rights. According to his statement, China will work closely with all countries of the world and international organizations in the struggle against industrial espionage.

During the Forum, also other representatives of the Chinese government spoke. In particular, Vice Premier Han Zheng expressed confidence in China's ability to ensure high-quality economic development of the country. In this regard, the People's Republic of China will not only make efforts to meet the growing needs of the Chinese people, but also, together with the peoples of other countries, will contribute to formation of a world community with shared destiny for all mankind.

Vice Premier of the State Council of the PRC Han Zheng
Vice Premier of the State Council of the PRC Han Zheng

Forum participants approved the actions of the Chinese government to implement reforms and enhance the openness of the country's economic system, and expressed confidence in the positive impact of the development of the People's Republic of China on the world economy. They also stressed the importance of transnational companies in the above-mentioned processes.

 

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

China's Commercial Press released an annual report on “The Belt and Road Initiative” for 2018
China's Commercial Press released an annual report on “The Belt and Road Initiative” for 2018

March 25 China's Commercial Press released an annual report on “The Belt and Road Initiative” for 2018, which contains generalized information on the achievements, experiences and plans for developing cooperation in the above-mentioned format. The Chief-Editor of it is a Professor of the Party School of the Communist Party of China Central Committee Zhao Lei, and in the work on it participated Chinese People's Association for Friendship with Foreign Countries.

The peculiarity of this year's document is the definition of a system for evaluating “The Belt and Road” projects, which includes 6 indexes of the first category, 19 indexes of the second category and 81 index of the third category. Taking into account these indexes, a list of specific measures for risk prevention and deepening of integration in various spheres is proposed, which will allow for the stable and orderly construction of “The Belt and Road”.

 

In order to improve the work of “The Belt and Road”, in April this of year the 2018 high-level “Policy Forum on Global Governance 2018” will be hosted during April 12–13 in Guangzhou. The main issue on the agenda of the event is discussion of ways to deepen the interaction between the member countries of the Chinese initiative in the investment sphere. The Forum's organizer is the China Center for International Economic Exchanges.

 

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

3.1. Politics. Development of China's International Cooperation

One of the main priorities of Beijing's foreign policy is the development and strengthening of influential international organizations with a leading role of the PRC.

March 26, 2018, an international forum on “The New Development of Shanghai Cooperation Organization (SCO) in New Era” was held in Beijing. Participants of the event discussed a wide range of issues related to deepening cooperation within the Organization and with its partners. At this, they pointed out successes in the work of the SCO, which has already become one of the most authoritative participants in the modern system of international relations and can serve as an example for other international structures. Based on the potential of the SCO, members of the Organization agreed on the need to concentrate efforts on strengthening regional cooperation in the political, security, economic, cultural and humanitarian spheres. In addition, agreement was reached on combining strategies for the development of the SCO and “The Belt and Road”.

Forum on “The New Development of Shanghai Cooperation Organization (SCO) in New Era”, Beijing, March 26, 2018
Forum on “The New Development of Shanghai Cooperation Organization (SCO) in New Era”, Beijing, March 26, 2018

At the same time, in Chengdu on 26–27 March, 2018 there were the 10th meeting of BRICS Heads of Intellectual Property Offices and BRICS Intellectual Property Conference. The main issue on the agenda was determining the goals and principles of interaction between the parties in the above-mentioned sphere. As a result of the consideration of this issue, the participants adopted a joint declaration, which provides for the establishment of interaction between the BRICS countries in the protection of intellectual property rights, including the development of the necessary regulatory framework, exchange of information and training of professionals. According to representatives of the BRICS countries, the implementation of these plans will contribute to creating a positive climate for mutual investment and economic development.

10th meeting of BRICS Heads of Intellectual Property Offices, Chengdu, 26–27 March, 2018
10th meeting of BRICS Heads of Intellectual Property Offices, Chengdu, 26–27 March, 2018

Against this background, relations between the PRC and the United States as the two leading powers in the world remain rather ambiguous. March 26, 2018, commenting on the USA's decision to impose duties on Chinese manufactured goods, the Chinese Foreign Ministry accused Washington of pursuing policies of economic blackmail and hegemony. It was stressed that China does not want a trade war with the United States, but is not afraid of it.

At the same time, China and the United States continue to engage in active dialogue at various levels in order to find solutions to existing problems. In particular, the possibility of settling contradictions between the two countries was discussed during a meeting between the Premier Li Keqiang and the delegation of American congressmen on March 27 in Beijing. The negotiators confirmed the crucial importance of this issue, which is a consequence of the interconnectedness of the Chinese and American economies, which have a decisive influence on world economic processes.

Meeting of Chinese Premier Li Keqiang with delegation of American congressmen, Beijing, March 27, 2018
Meeting of Chinese Premier Li Keqiang with delegation of American congressmen, Beijing, March 27, 2018

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

An indication of the preservation of the positive dynamics of the development of the Chinese economy is the stable growth of the country's GDP. It is forecasted that in the first quarter of this year, the gross domestic product of China will increase by 6.8 %. Besides, in January–February this year, revenues of industrial enterprises of the country increased by 16.1 % in comparison with the same period of 2017. In total, over the first two months of this year, China's industrial enterprises with an annual income of over 20 million yuan (about 3.2 million US dollars) received a profit of 969 billion yuan (155 billion US dollars).

 

However, the objective consequence of the growth of the Chinese economy is the country's increased energy needs. With this in mind, as well as in the interests of enhancing China's energy security, measures are being taken to increase shale gas production on its own territory. Thus, in March this year, the Chinese petrochemical corporation Sinopec put into operation the first production capacity for shale gas production in the Fuling shale gas field in Chongqing (South-Western China), with a capacity of 10 billion cubic meters per year. In total, about 150 billion cubic meters of gas per year are produced in the PRC, which still does not allow itself to meet the gas needs of the country, but it increases competition in the Chinese gas market. In turn, this poses a threat to Russian gas projects in the PRC, including, this can reduce the profitability of Russia's “Power of Siberia” gas pipeline.

Volumes of gas producing in the PRC does not allow to meet the gas needs of the country
Volumes of gas producing in the PRC does not allow to meet
the gas needs of the country

Besides, the leadership of the People's Republic of China continues to make efforts to expand trade and economic relations with other countries. At the end of March, 2018, the 13th round of negotiations of China-Japan-South Korea on a free trade agreement was held in Seoul. The issues of trade in services in telecommunications and financial spheres, as well as management of investment activity were discussed. As a result of the meeting, progress was made in agreeing of the positions of the parties in the mentioned spheres.

13th round of negotiations of China-Japan-South Korea on a free trade agreement, Seoul, March 23, 2018
13th round of negotiations of China-Japan-South Korea
on a free trade agreement, Seoul, March 23, 2018

3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. The aggravated economic problems in the DPRK as a result of international sanctions force Pyongyang to engage in dialogue with the leading countries of the APR to find solutions to the security problems of the region. In this regard, the meeting and talks between Chinese President Xi Jinping and the leader of North Korea Kim Jong-un were held on 26–28 March in Beijing. The sides discussed the development of ties between the two countries, as well as the prospects of denuclearization of the Korean Peninsula.

The leaders of China and the DPRK expressed their intentions to continue developing friendly relations based on common history and today's interests of the parties. Kim Jong-un agreed to possible abandoning nuclear weapons if the USA and South Korea accept the DPRK's terms of disarmament and “create an atmosphere of stability and peace in the region”.

Meeting between Chinese President Xi Jinping and the leader of North Korea Kim Jong-un in Beijing, late March 2018
Meeting between Chinese President Xi Jinping and the leader of North Korea Kim Jong-un in Beijing, late March 2018

Changes in the DPRK's position are causing the USA's reserved positive response. According to the White House, the situation around the nuclear issue of the Korean Peninsula is developing in the “right direction”. Based on this this, has been confirmed US President D. Trump's readiness to meet with the leader of the DPRK, Kim Jong-un.

 

Major Events in the Region in the Military Sphere.

PRC. China's political and economic measures to strengthen its positions in the Asia-Pacific region are accompanied by China's growing military activity in the region. March 26, 2018, a training of the strike component of the PLA Air Force was conducted with participation of twelve H-6K (a copy of the Soviet Tu-16) strategic bombers.

Training of the PLA Air Force with participation of twelve H-6K strategic bombers

Preparations are also under way for large-scale naval exercises in the South China Sea. According to US space intelligence, on a route to the exercise area, a naval group of more than 40 combat ships, including an aircraft carrier, escort ships and submarines, has been noticed. The training is China's response to the plans of the United States, South Korea and Japan to conduct their own large-scale exercises around the Korean Peninsula in April this year.

PLA Navy ships on a route for large-scale naval exercises in the South China Sea
PLA Navy ships on a route for large-scale naval exercises
in the South China Sea

PRC-Pakistan. According to a report by the Chinese and Pakistani media, Beijing has supplied Islamabad with key elements of ballistic missile equipment with multiply and single warheads. This gave the impetus for the development of Pakistan's missile program, which could significantly increase its ability to strike against the enemy. According to experts, China's giving missile technology to Pakistan was the answer to India's tests of a new solid-fuel ICBM Agni-5 with an operating range of 5,000 km in January 2018. In view of the tensions in Chinese-Indian and Pakistani-Indian relations, Beijing is struggling to keep the balance of power in the region at the expense of such a step.

 

3.4. Science and Technology

The increase in passenger and cargo flows in the PRC causes the need to speed up the innovative development of the country's transport system.

Thus, experimental tests of China's first homegrown ARJ21-700 regional jet were conducted in the second half of March this year. The aircraft made several flights on the regional lines in Inner Mongolia (Northern China). Thus was demonstrated the possibility of its operation in the PRC. According to the results of the tests, reports were prepared by all interested parties on the improvement of the airplane and possibilities of its being used in regular aviation communications.

China's first homegrown ARJ21-700 regional jet
China's first homegrown ARJ21-700 regional jet

At the same time, on March 31, 2018, the trial run of the first automatic line of rail transport with driverless trains began in Shanghai. The line has a length of 6.7 km and includes six stations. The responsibility for the maintenance of the line lies with the Chinese company Shanghai Keolis, established by Shanghai Shentong Metro Group together with the French group Keolis. The line is equipped with APM (Automated People Mover system), which ensures a high level of transport safety and reduces electricity consumption.

The trial run of the first automatic line of rail transport with driverless trains began in Shanghai, March 31, 2018
The trial run of the first automatic line of rail transport
with driverless trains began in Shanghai, March 31, 2018

Besides, by 2020, China is going to launch a mass production of “smart” cars capable of taking on most of the driver's functions. The main developer of the new technology is the Chinese auto concern GAG, which works in conjunction with the national companies BAIC Group and Baidu, as well as the Internet giant Tencent.

 

IV. Plans and prospects of cooperation between the PRC and Ukraine

It is important for Ukraine to wider show to potential investors the economic capabilities of our state. One of the steps in resolving this issue was the participation of representatives of the companies “Naftogaz of Ukraine” and “Zorya-Mashproekt” in the international exhibition CIPPE-2018, which was held in Beijing on March 27–29. The CIPPE is the most prestigious event in oil, petrochemical technologies and equipment. The exhibition provided information on “Naftogaz”, which is a key structure in the oil and gas sector of Ukraine, and the strategies for the development of Ukraine's gas industry by 2020.

Participation of representatives of Ukrainian companies in CIPPE-2018 in Beijing

The cooperation between the People's Republic of China and Ukraine in the high-tech sectors, including telecommunications, is further deepening. Thus, the Chinese company ZTE is opening a long-term financial line for “Ukrtelecom” for 10 million US dollars. The said funds will be allocated for financing joint Ukrainian-Chinese projects, in particular, expanding coverage of optical access of Ukrainian consumers to the Internet.

Chinese company ZTE opened a long-term financial line for “Ukrtelecom”
Chinese company ZTE opened a long-term financial line
for “Ukrtelecom”