April 18, 2018

China (中国) Today

Events Review (09.04–15.04.2018)


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

World and Chinese experts are summing up the Boao Forum for Asia Annual Conference-2018 (BFA-2018, the so-called Eastern Davos), which took place on April 8–11, 2018 in the city of Boao (Hainan Province, Southern China) and has become a key event in strengthening trade and economic cooperation between Asia and its neighboring regions. Thus, the Development of Emerging Economies Annual Report, which was revealed during the event, is being widely commented on.

The report analyzes the macroeconomic indicators of the main countries of the said group, which are part of the “G20” — the so-called. “E11”, namely Argentina, Brazil, China, India, Indonesia, South Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey. According to the document, in 2017, the average GDP growth of the “E11” countries amounted to 5.1 %, which is by 0.5 % higher than the indicator in 2016 and by 1.4 % above the world average. The above-mentioned countries have reached progress in such spheres as employment and incomes, price and currency policy, international trade, external investments and financial market.

Economic growth rates of major economy groups in 2007–2017
Economic growth rates of major economy groups in 2007–2017

Based on the above-mentioned achievements, a positive assessment was made of the Asian economy as an important driving force for global economic growth. However, the report points out a number of problems that hinder the economic growth of Asian countries. First of all, among them is the growing economic competition between the leading powers of the world, including their protectionist policies regarding their markets. In turn, this has a negative impact on the economies of Asia, which are mainly focused on the export of their products.

In connection with the mentioned, participants of the BFA-2018 attached importance to the PRC's strategy to support the processes of globalization, including the building of a world free trade system. In particular, they emphasized China's actions on the implementation of the “Belt and Road” initiative which is precisely the element of such a system.


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

Chinese President Xi Jinping's address at the BFA-2018 annual conference
Chinese President Xi Jinping's address
at the BFA-2018 annual conference

The development of “The Belt and Road” as one of China's most important political and economic projects, remains the focus of the country's leadership. According to Chinese President Xi Jinping's address during the press conference on the results of the BFA-2018, the Chinese initiative is open to all and aims to create a broad platform for deepening cooperation of its participants in the trade, economic, investment and infrastructure spheres. At the same time, the PRC President confirmed the unjustified conclusions by some politicians and experts about China's using “The Belt and Road” as a tool to expand its sphere of influence.


The results of the cooperation in the above-mentioned format were summarized by the Chinese Academy of Social Sciences in a blue book named “Annual Report on Development of “The Belt and Road” Construction (2018)” (published April 11, 2018 in Beijing). According to the document, so far, China has signed cooperation agreements with more than 80  countries and international organizations and set up 75 overseas economic and trade cooperation zones with 24 countries along the “Belt and Road”. All in all, Chinese companies have invested 50 billion US dollars in these countries, which contributed to the creation of about 200 thousand jobs. As a result of Chinese investments, many critical problems in developing countries have been resolved, including those related to the low level of development of their economy and infrastructure.


An important positive factor in the construction of “The Belt and Road” is the active interaction between the PRC and the world's financial institutions. In particular, on April 12, 2018, China and the International Monetary Fund established a new China-IMF Capacity Development Center to support “The Belt and Road” Initiative. The China-IMF Capacity Development Center aims to provide personnel training, support institution building and boost communication for countries along the Belt and Road.

The China-IMF Capacity Development Center was established on April 12 to support “The Belt and Road” Initiative
The China-IMF Capacity Development Center was established
on April 12 to support “The Belt and Road” Initiative


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

3.1. Politics. Development of China's International Cooperation

The First SCO People's Forum took place in the city of Xi'an on April 9–10, 2018
The First SCO People's Forum took place
in the city of Xi'an on April 9–10, 2018

The leadership of the People's Republic of China is taking consistent measures to support influential international organizations that meet Chinese interests. April 9–10, 2018, the First SCO People's Forum with participation of former political figures and representatives of “think tanks” of the member countries of the Organization and its partners took place in the city of Xi'an (Shaanxi Province, North-Western China). The event was held under the motto “Promoting regional peace and cooperation, building a community with a shared future for humanity: the mission of non-governmental organizations (NGOs)”. The main theme of the forum was the role of non-governmental structures in promoting peace, stability, development and prosperity in the region. As a result of the dialogue, the Forum participants agreed on the need to intensify informal contacts in the above-mentioned sphere.


10th UK-China Leadership Forum was held in Beijing on April 10–11, 2018
10th UK-China Leadership Forum was held
in Beijing on April 10–11, 2018

At the same time, development of cooperation between China and the leading countries of the world continues. April 10–11, 2018, 10th UK-China Leadership Forum was held in Beijing. Representatives of the leading political forces of the two countries pointed out the importance of further strengthening of the Sino-British relations. At this, the emphasis was placed on the importance of coordination of the political platforms of Beijing and London as a key prerequisite for rapprochement of the sides in all spheres. Besides, it was confirmed that China's importance for the UK has grown since Brexit.


The priority direction of the foreign policy of the People's Republic of China is also the deepening of interaction with regional partners. One of the events in this sphere was the Media Leaders Summit for Asia in Sanya (Hainan Province, Southern China) on April 12, 2018. The Forum was themed “A New Era of Media Cooperation in Asia —Interconnectivity and Innovative Development”. The integration of media space in the countries of the region was the main point on the agenda.


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

China's authorities report on the positive dynamics of the Chinese economy. According to the Ministry of Finance of China, China's fiscal revenue rose 13.6 % year on year in the first quarter 2018 compared to the same period last year. At this, the revenues of the central budget of China increased by 18.9 %, and local budgets — by 9.1 %. Tax revenue accounted for 87.7 % of fiscal revenue during the January–March 2018, up 2.5 percentage points from the year-earlier level.


At the same time, there is a tendency of growth of the PRC's foreign investments. During the first three months of 2018, the figure increased by 25.2 %, which is one of the best results in the recent period. China's most close investment cooperation is with the countries of “The Belt and Road”, including due to investing in joint projects, as well as the supply of equipment, technologies and services.


In order to support the above-mentioned trends, the PRC's government is taking steps to increase the openness of the Chinese economy and improve the investment climate in the country. According to the Governor of the Central Bank of China (PBOC) Yi Gang, this year they are going to grant equal rights of work in the country to national and foreign banks, including the management of financial assets and doing business with Chinese counterparts.

People's Bank of China Governor Yi Gang
People's Bank of China Governor Yi Gang

Against this background, despite Moscow and Beijing's statements about the positive development of trade and economic cooperation between the parties, the disagreements between the two countries in this area are growing. In particular, last week, heads of Krasnoyarsk aluminum manufacturing companies accused China of using dumping methods to protect its producers in the non-ferrous metal market. With this in mind, the Eurasian Economic Commission (the executive body of the Eurasian Economic Union led by Russia) launched an anti-dumping investigation against Chinese suppliers of aluminum products.


3.3. Security and Law Enforcement Agencies

North Korean leader Kim Jong-un at a meeting with leadership of the Workers' Party of Korea, Pyongyang, April 9, 2018
North Korean leader Kim Jong-un at a meeting with leadership of the Workers' Party of Korea, Pyongyang, April 9, 2018

Situation around the Korean Peninsula. The consistent strengthening of international sanctions against the DPRK remains a powerful factor that forces Pyongyang to make concessions in its nuclear and missile program. Thus, preparations continue for a meeting between US President D. Trump and the leader of the DPRK, Kim Jong-un, which can make a decisive contribution to resolving North Korea's nuclear disarmament problem. April 9, 2018, in Pyongyang, the issues of the future dialogue between the two countries were discussed by Kim Jong-un with the leadership of the Workers' Party of Korea. At this, was confirmed the DPRK's consent to consider the prospects for the creation of a nuclear-free zone in the Korean Peninsula. According to informal arrangements, the meeting may take place at the end of May or in June this year.

At the same time, consultations are ongoing between the DPRK and Russia, aimed at reconciling the positions of the parties on the above-mentioned issues. April 10, 2018, on the eve of Kim Jong-un's expected meetings with South Korea's President Moon Jae-in (scheduled for late May this year) and D. Trump, in Moscow were held negotiations between the Foreign Ministers of the DPRK and the Russian Federation, Ri Yong-ho and S. Lavrov. They discussed problems around the Korean Peninsula and plans for development of cooperation.

In connection with the aforesaid, rather indicative are the comments of the Russian media, which, in their typical manner, describe the visit of Ri Yong-ho to Moscow as “Kim Jong-un's appeal to Putin for permission to meet with D. Trump”. Due to this, Russia is trying to disguise the fact that it has been excluded by China and the USA from the negotiation process with the DPRK.

Foreign Minister of the DPRK Ri Yong-ho with Russian Foreign Minister S. Lavrov in Moscow, April 10, 2018
Foreign Minister of the DPRK Ri Yong-ho with Russian Foreign Minister S. Lavrov in Moscow, April 10, 2018

At the same time, the world countries continue implementation of the UN Security Council's sanctions regarding North Korea. April 9, 2018, the Chinese State Council banned exports to the DPRK of materials and technology that could be used to manufacture weapons of mass destruction and means of their delivery, as well as conventional weapons.


Major Events in the Region in the Military Sphere.

China is planning to establish a permanent military base in the island of Vanuatu
China is planning to establish a permanent military base in the island of Vanuatu

PRC. According to Australian media, in order to strengthen its position in the southern Pacific, China is planning to establish a permanent military base in the island of Vanuatu. According to experts, the realization of such intentions of the People's Republic of China will lead to a change in the strategic balance of powers in the region. For example, the Navy of China will be able to be based in less than 2 thousand kilometers from Australia. In addition, the risk of confrontation between the PRC and the USA will increase.

USA. In response to China's build-up of its military presence in the Asia-Pacific region, the United States is taking its own measures to demonstrate military power in the region. Last week, the United States conducted a naval military exercise jointly with the Philippines in the South China Sea. The exercise involved US Navy aircraft carrier group led by USS Theodore Roosevelt.

Russia. As part of the comprehensive inspection of Russia's Armed Forces for the winter period of training, exercises in the Eastern Military District of the Russian Armed Forces continue with practicing of a scenario of an armed conflict with the People's Republic of China. Last week, the tasks of a defense operation simultaneously were practiced at three training ranges in the Amur region, the Jewish Autonomous Region and the Khabarovsk Territory near the border with China. The exercises involved motorized rifle, tank and artillery units, as well as army and front (tactical) aviation.

Troops of the Eastern Military District of the RF AF continue to practice a scenario
of an armed conflict with China

3.4. Science and Technology

The People's Republic of China is making great efforts to implement large-scale programs of Arctic and Oceanographic researches aimed at expanding access to world natural resources.

Thus, the work on the construction of the first Chinese ice-breaker Xue Long-2 (“Snow Dragon-2”) of own production, which should be launched in 2019, is running to its end. The ship's design was developed by China State Shipbuilding Corporation Ltd. and Aker Arctic Technology Inc. (Finland), and its construction began in December 2016. The ice-breaker is 122.5 meters long, 22.3 meters wide, its displacement is 14 thousand tons and navigation range equals 20 thousand nautical miles. Today, China has one and only ice-breaker Xue Long, which was purchased in Ukraine in 1994.

Project of the first Chinese ice-breaker of own production Xue Long-2 (“Snow Dragon-2”)
Project of the first Chinese ice-breaker of own production
Xue Long-2 (“Snow Dragon-2”)

Along with this, China continues development and testing of deep-water vehicles. In particular, in March–April this year. China's new manned submersible, Shenhai Yongshi (Deep Sea Warrior) finished the first ocean expedition (March–April 2018). The vehicle conducted 17 dives ranging from 8 to 52 hours at a depth of 4.5 km. At the same time, in the Indian Ocean within the framework of another scientific oceanographic expedition, the testing of the Qian Long-2 unmanned vehicle is underway. April 6, 2018, this device conducted its 50th dive.

Manned submersible Shenhai Yongshi (Deep Sea Warrior) Unmanned vehicle Qian Long-2
Manned submersible Shenhai Yongshi (Deep Sea Warrior) and unmanned vehicle Qian Long-2


IV. Plans and Prospects of Cooperation between China and Ukraine

Taking into consideration Ukraine's energy problems, deepening of cooperation with China in the sphere of development of renewable energy sources is important for our country. This issue was discussed during the round table “Chinese investments in energy development of Ukraine”, on April 6, 2018 in Kyiv. The event was organized by the Ukrainian Silk Link Association, and was attended by representatives of the Ukrainian government, the Embassy of the People's Republic of China in Ukraine and the business circles of the two countries. During the round table, was confirmed Ukraine's being interested in increasing the share of alternative energy sources in the country's overall energy balance. In turn, Chinese representatives expressed readiness of the People's Republic of China, as the world leader in the sphere of renewable energy, to assist in its development also in Ukraine.

The round table “Chinese investments in energy development of Ukraine” was held on April 6, 2018 in Kyiv
The round table “Chinese investments in energy development of Ukraine” was held on April 6, 2018 in Kyiv

As part of the practical implementation of the above-mentioned plans, on April 6, 2018, DTEK and China Machinery Engineering Corporation signed a contract for the construction of a solar power plant in Nikopol (Dnipropetrovsk region).

The SPP will have a capacity of 200 MW, making it one of the largest power plants in Europe. The total cost of the project is 230 million Euros, and the commissioning of the power plant is scheduled for March 1, 2019.