April 11, 2018

China (中国) Today

Events Review (02.04–08.04.2018)


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

An important event in the development of trade and economic cooperation between countries of Asia and its neighboring regions was the Boao Forum for Asia Annual Conference 2018 (BFA-2018, the so-called Eastern Davos) on April 8–11, 2018 in the city of Boao, Hainan Province, China. The event was held under the slogan “An Open and Innovative Asia for a World of Greater Prosperity” with the participation of leading world and regional leaders, as well as influential international organizations, including the UN and the IMF.

At the opening of the Forum, the program speech was made by Chinese President Xi Jinping, who outlined the main directions of China's development strategy and the principles of its interaction with other countries of the world. Within the framework of covering the above-mentioned issues, he stressed the PRC's plans to continue the diplomacy of a great power with Chinese characteristics at a new era, to create a community with a shared destiny for all mankind, as well as to support peace in the whole world.

The BFA-18 became the first major international event in the PRC this year and featured a number of important issues for both, China and other countries. Firstly, new perspectives of reform and openness were shown; and secondly, the interpretation of the new era of China's development was given; thirdly, new initiatives were put forward onto jointly create the future; Fourthly, practical steps were taken to further strengthen the cooperation of the parties.

Boao Forum for Asia Annual Conference 2018
Boao Forum for Asia Annual Conference 2018

A series of Xi Jinping's meetings with the leaders of China's partner countries took place on the sidelines of the Forum. Issues of deepening interaction in different spheres were discussed both at bilateral level and in multilateral formats.


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

An important component in the development of “The Belt and Road” is the deepening of interaction with other international associations. At the end of March, the China Council for the Promotion of International Trade and the China Chamber of International Commerce reached an agreement with the World Chambers Federation on cooperation in involving trade and industry from different countries in the realization of the Chinese initiative.

According to the Chinese leadership, cooperation between the parties in this sphere will contribute to the comprehensive and sustained development of processes of economic globalization as well as liberalization and simplification of procedures in trade and innovation spheres. These issues are planned to be considered during the Forum on the “Belt and Road” Initiative that will be held on April 12 in Beijing.


At the same time, the PRC's government is taking steps to develop its internal platforms of “The Belt and Road” activity in various spheres. In particular, on April 2, Bank of Shanghai’s “Belt and Road” Cross Border Collaboration Seminar was organized in Shanghai with the participation of representatives of Chinese and international financial institutions, including Singapore's OCBC (Oversea-Chinese Banking Corporation), Spanish Banco Santande, and others. They discussed possibilities of expanding the cooperation of financial institutions of the countries-participants of the Chinese initiative.

“Belt and Road” Cross Border Collaboration Seminar was organized in Shanghai on April 2, 2018
“Belt and Road” Cross Border Collaboration Seminar was organized
in Shanghai on April 2, 2018

In this regard, Bank of Shanghai's Chairman Jin Yu made a proposal to use the Chinese Yuan as the only settlement currency within the “Belt and Road”. In turn, the leadership of the Singapore's OCBC expressed its readiness to provide support to Chinese enterprises in expanding their activities abroad.


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

3.1. Politics. Development of China's International Cooperation

A significant problem in strengthening the partnership between the PRC and the USA, which may have negative effects at the world level, is another aggravation of trade disputes between the two countries. April 2, 2018, China increased duties on 128 items of American goods that are supplied to the Chinese market. The duties on fresh and processed fruits will be 15 % and on pork — 25 %. According to the PRC Ministry of Finance, such a step was a response to the USA's decision to impose 25 % duty on steel imports and 10 % duty on aluminum. At the same time, Beijing called on the US leadership to abandon protectionist measures that violate the rules of the World Trade Organization and undermine the normal development of Sino-US relations.

However, this did not stop the USA. April 3, 2018, the Office of the US Trade Representative proposed to impose additional duties on 1.3 thousand types of Chinese goods (mainly on products of telecommunication, information, aerospace and robot industries). In response, on the 4th of April, the State Council of the PRC approved an additional 25 % duty on 106 items of American goods of other categories, including automobiles, chemical products, as well as soybeans.

US-China trade deficit Tariff war between China and the USA
Another aggravation of trade disputes between the PRC and the USA

Against this background, the active development of cooperation between China and Russia continues. April 5, 2018, Chinese Foreign Minister Wang Yi visited Moscow on a working visit and met with Russian President V. Putin and RF Foreign Minister S. Lavrov. The negotiations confirmed the strategic nature of the partnership between the two countries, as well as the intentions of the parties to further deepen their cooperation in all spheres. As the main ones were mentioned linking “The Belt and Road” with the process of creating the Eurasian Economic Union, as well as implementation of joint projects in the energy, investment, aerospace and infrastructure sectors.

Meeting of the Chinese Foreign Minister Wang Yi with Russian President V. Putin Press-conference of the Chinese Foreign Minister Wang Yi with RF Foreign Minister S. Lavrov
Meetings of the Chinese Foreign Minister Wang Yi with Russian President V. Putin
and RF Foreign Minister S. Lavrov, Moscow, April 5, 2018

At the same time, China and Russia are ready to coordinate their efforts in security sphere. According to the statement by the Minister of Defense of the PRC Wei Fenghe, who participated in the 7th Moscow Conference on International Security on April 4–5, Beijing and Moscow stand on common positions in building a multipolar world with mutual responsibility for global security. However, Wei Fenghe emphasized the special role of the PRC as the country that makes the most significant contribution to the development of global security. This actually put Russia among China's “younger” partners.

Speech by the Minister of Defense of China Wei Fenghe at the 7thMoscow Conference on International Security, April 4, 2018
Speech by the Minister of Defense of China Wei Fenghe at the 7thMoscow Conference on International Security, April 4, 2018

Along with this, residents of Trans-Baikal region and the Far East are more and more unhappy with the Chinese entrepreneurs' activity in the region. At the beginning of April 2018, public organization “Baikal Is Our Heritage” made a sharp condemnation of the leadership of the Russian Federation, which bluntly ignores the problem of “predatory” exploitation by the Chinese of forest resources in Siberia. The reason for this was the statement by the Ministry of Economic Development of Russia (in response to the appeal of the organization) regarding the absence of violations of law in the actions of Chinese businesses.


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

According to the statistics bodies of the PRC, in March 2018 the economy of the country maintained a positive dynamics of development. According to the results of last month, the business activity indices in the manufacturing industry of China had grown from 50.3 (in February) to 51.5, and in the non-manufacturing sector — from 54.4 to 54.6.


Chinese Sinopec Group plans to increase almost threefold receiving capacity for imported LNG
Chinese Sinopec Group plans to increase almost threefold receiving capacity for imported LNG

The growth of the Chinese economy also causes an increase in energy consumption in the country. In view of this, the Chinese Sinopec Group plans to increase its receiving capacity of liquefied natural gas and lift domestic shale gas production. To this end, the Sinopec Group plans to add new receiving facilities for imported LNG along China’s east coast to a total of 26 million tons annually by 2023 (almost threefold increase). One of the major importers of LNG will be the United States. In addition, Sinopec Group intends to begin the development of Weirong shale gas field in Sichuan Province with a prospect of reaching 10 billion cubic meters per year. According to experts, implementation of these plans may increase the competition in the Chinese energy market, which will have a negative impact on Russian oil and gas projects in the PRC.


At the same time, the Chinese government is taking steps to promote the country's innovative development. At the end of March 2018, a pilot program was launched to facilitate the access of high-tech companies to the Chinese stock market. First of all, the program will apply to enterprises that work in the spheres of digital technologies, biomedicine, as well as manufacturing of chips and high-quality equipment.


3.3. Security and Law Enforcement Agencies

Situation around the Korean Peninsula. The world's leading countries are seeking solutions to the North Korean nuclear issue. Thus, Chinese President Xi Jinping in a telephone conversation with US President D. Trump last month put forward a proposal to create a new format for negotiations including China, the United States, South Korea and the DPRK. Russia and Japan are not supposed to participate in the dialogue. According to Xi Jinping's initiative, the primary outcome of the negotiations in this format should be signing of a peace treaty between the four countries, which will replace the ceasefire agreement that put an end to the Korean War of 1950–1953.

As part of implementation of the above-mentioned approach, on April 3, 2018, Foreign Ministers of the PRC and North Korea, Wang Yi and Ri Yong-ho, met in Beijing, and that was the continuation of the talks between the leaders of the two countries in March. The Chinese Foreign Minister Wang Yi reaffirmed his country's intentions to continue to actively promote the denuclearization of the Korean Peninsula by peaceful means.

All this actually excludes Russia from the negotiation process with regard to the Korean Peninsula and confirms further decrease in Moscow's real role in international politics.

Meeting of the Foreign Ministers of the PRC and North Korea, Wang Yi and Ri Yong-ho in Beijing, April 3, 2018
Meeting of the Foreign Ministers of the PRC and North Korea,
Wang Yi and Ri Yong-ho in Beijing, April 3, 2018

Meanwhile, the world community continues to put pressure on the DPRK over its nuclear program. March 30, 2018, the UN Security Council Sanctions Committee on North Korea approved additional sanctions against North Korea concerning vessels and shipping companies involved in oil and coal smuggling. April 6, the new package of UN sanctions against the DPRK was also supported by the European Union.


Major Events in the Region in the Military Sphere.

USA, South Korea, PRC. The United States and the Republic of Korea continue to demonstrate force in the region. April 1, 2018, the Armed Forces of the two countries began the planned joint exercises “Foal Eagle”, which were postponed due to the Winter Olympics in South Korea. About 11,500 American and 290,000 South Korean servicemen, a group of US Navy warships led by the multipurpose amphibious assault ship USS Wasp, as well as F-35 fighters, participate in the exercise.

In turn, April 5, 2018, China began a large-scale naval training in the South China Sea. More than 40 warships, including the “Liaoning” aircraft carrier, from the Northern, Eastern and Southern Fleets of the Chinese PLA Navy are involved in the training. The training is actively commented by Russia as “a manifestation of the exacerbation of relations between China and the United States due to the trade and economic disagreements between the parties”.

US Navy multipurpose amphibious assault ship USS Wasp Chinese aircraft carrier Liaoning
US Navy multipurpose amphibious assault ship USS Wasp and Chinese aircraft carrier Liaoning

Russia. Despite the demonstration of the strategic nature of Russian-Chinese relations, the Russian leadership continues to consider China as one of Russia's military opponents. Last week, during the integrated check out of the RF Armed Forces for the winter period, Russians were mastering various scenarios of an armed conflict between the RF and the PRC. In particular: at the Telemba training range in Buryatia the task of repulsion of an air attack of the enemy was practiced; in the Belgorod garrison in Amur region — of the search and elimination of sabotage and reconnaissance groups; and at the Bakinsky training range in the Khabarovsk Krai — of a repulsion of a massive offensive.


3.4. Science and Technology

The development of the scientific and technical base of China makes the country one of the leaders in developing the latest models of military equipment.

In April 2018, the Key Laboratory of High Temperatuer Gas Dynamics of the Chinese Academy of Sciences began experiments to test the model of a hypersonic gliding combat unit capable of developing speeds from 10 to 25 Mach. Similar combat units will be put on promising ICBMs “Dongfeng-51”, as well as on SLBMs “Julang-3”. For testing, the hypersonic aerodynamic tube JF-12 is used, which allows to provide a speed of up to 9 Mach and a temperature up to 3000 degrees Celsius.

In turn, in March this year, the Chinese Norinco Corporation completed the development of a new generation of military exoskeletons for troops on the battlefield. The system has improved hydraulics and pneumatic actuators, as well as more efficient rechargeable batteries, which allowed to improve its tactical and technical characteristics. Thus, the new exoskeleton allows to walk 10 km at a speed of 4 km/h with a load of up to 45 kg.

Chinese Norinco Corporation completed the development of a new generation of military exoskeletons
Chinese Norinco Corporation completed the development
of a new generation of military exoskeletons

IV. Plans and Prospects of Cooperation between China and Ukraine

Ukraine's important geographical position draws the PRC's special attention to the Ukrainian transport infrastructure as part of “The Belt and Road”. An indication of this is the active participation of Chinese businesses in modernizing Ukrainian ports and motorways.

In particular, on April 6 2018, the Administration of Sea Ports of Ukraine (AMPU) and China Harbor Engineering Company (CHEC) signed an agreement to implement a dredging project at Ukraine's southern Black Sea port of Chornomorsk (CHEC won a tender in March 2018). Today, CHEC is already implementing a dredging project at the Black Sea port of Pivdennyi in southern Ukraine. Chornomorsk is an important transport hub, which connects Ukraine with about 100 countries of the world. In 2017, 17.23 million tons of cargo were transported through the port with an increase of 8.1 % compared to the previous year.

AMPU and CHEC signed an agreement to implement a dredging project at Ukraine's port of Chornomorsk, Kyiv, April 6, 2018

AMPU and CHEC signed an agreement to implement a dredging project
at Ukraine's port of Chornomorsk, Kyiv, April 6, 2018

Besides, in March 2018, the CHEC company won the tender for operational dredging on the maritime approach channel and inland water approaches in the Dnipro-Buzkyi port, as well as on the approach channel to the port of Mykolaiv. The client is the administration of the Mykolaiv Sea Port (regional branch of the AMPU).