Events Review (16.04–22.04.2018)
I. Major Events and Trends in the Development of the Situation in and Around China
Steady growth in China has promoted global economic recovery and trade growth, and provided unprecedented opportunities for other countries, according to the China's National Bureau of Statistics.
China's average annual growth was 7.2 % in 2013–2016, noticeably faster than 2.1 % for the United States, 1.2 % for the eurozone, 1.1 % for Japan and 2.7 % world growth in the same period. At this, during the mentioned period, China's share in the global economy increased from 12.5 % to 15.3 %, and the average contribution of the country to the growth of the world economy has reached 34 %.
At the same time, China is a pivotal force behind world consumption growth with around one-fifth of the world's population. In 2013–2016, China's final consumption contributed an average of 23.4 % to world consumption growth, calculated with constant dollar prices, higher than 23 % from the United States, 7.9 % from the eurozone and 2.1 % from Japan. Chinese consumption expanded by an annual rate of 7.5 % in the period, faster than 2.4 % for the world.
Besides, in 2017, China set new records for imports of crude oil, iron ore and soybeans, which played an important role in stabilizing commodity prices and stimulated the recovery of the economies of the countries-suppliers of such products.
| China's average annual growth was 7.2 % in 2013–2016 |
According to the National Bureau of Statistics of the PRC, if China's positive influences were excluded, the world's annual growth would slow by 0.6 % and the fluctuation range might increase by 5.2 %.
II. China's Strategic Initiative “The Belt and Road” in the Context of Chinese and Regional Interests
An important tool for deepening cooperation within “The Belt and Road” is holding systematic forums for the consideration of issues of mutual interest. In particular, last week (April 12, 2018) “The Belt & Road Trade and Investment Forum” was held in Beijing, with participation of more than 700 representatives from governments, business and scientific community from more than 70 countries, as well as international organizations.
During the event, vice chairperson of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC) and chairman of the All-China Federation of Industry and Commerce Gao Yunlong pointed out the main tasks of the “Belt and Road” in this sphere. First of all, among them was mentioned the creation of a platform for strengthening ties between participants of the Chinese initiative and other countries in the interests of joint development.
Gao Yunlong summed up the results of China's cooperation with the countries of “The Belt and Road” since the launch of the initiative. According to him, from 2013 to 2017 the total trade value between China and its partners in “The Belt and Road” exceeded 5 trillion US dollars. Outward foreign direct investment went up to 70 billion US dollars. Besides, 75 economic cooperation zones were build up in “The Belt and Road” countries and over 210 thousand jobs were created.
| “The Belt & Road Trade and Investment Forum” was held in Beijing on April 12, 2018 | |
The report of the International Financial Forum (IFF) and the British Central Banking Journal at the Brookings Institution in Washington, released on April 18, was also devoted to summing up the results of the activity of the Initiative. The document presents the results of surveys of about 70 banks from different countries on the “Belt and Road”'s influence on national economies. According to financial experts, the Chinese initiative contributes to an increase in the rates of economic growth of their countries by 1.5–5.5 %.
As part of further development of “The Belt and Road”, the leadership of the People's Republic of China is making efforts to expand the possibilities of transport links with neighboring regions. In particular, to this end, they are going to intensify measures to facilitate the construction of the Trans-Caspian International Transport Route, which runs from the PRC through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and further to Turkey, Ukraine and European countries. The main such measures will be financial assistance in modernizing the transport infrastructure of the transport corridor, as well as introduction of special preferential tariffs for cargo carriers.
| Project of the Trans-Caspian International Transport Route |
III. Other Trends and Developments Influencing the Situation in and Around China
3.1. Politics. Development of China's International Cooperation
In the context of the relations between China and the USA getting complicated due to the sharpening of trade and economic disputes between the parties, the leadership of the People's Republic of China intensifies cooperation with other leading countries of the world.
April 13, 2018, in Shanghai, Member of the Political Bureau of the Central Committee of the Communist Party of China (CPC) and Director of the Office of the Foreign Affairs Commission of the CPC Central Committee Yang Jiechi held talks with National Security Adviser of India, Ajit Doval. The parties emphasized changes for better in the development of Sino-Indian relations, which conforms to the fundamental interests of both countries and is also conducive to the stability, development and prosperity of Asia and the world. Therefore, an agreement was reached on continuing efforts to further deepen the interaction between the PRC and India in all spheres.
At the same time, on April 16, 2018, the 4th China-Japan High-Level Economic Dialogue was held in Tokyo, Japan. State Councilor and Foreign Minister of China Wang Yi co-chaired the Dialogue with Foreign Minister of Japan Taro Kono. The dialogue has been restored after eight years of cessation of close contacts between the two countries, which has shown positive changes in the relations between the parties. On the basis of this, Foreign Ministers of China and Japan agreed on the need to consolidate the successes and focus on strengthening the political and economic foundation of Sino-Japanese cooperation. They are also going to intensify actions on implementation of joint projects within “The Belt and Road”, to speed up negotiations on the establishment of a free trade area between China, Japan and South Korea and to promote trade and economic relations in the region. While in Tokyo, Wang Yi met with Prime Minister of Japan Shinzo Abe and representatives of political and business circles of the country.
| On April 16, 2018, the 4th China-Japan High-Level Economic Dialogue was held in Tokyo |
Along with this, the development of investment and trade and economic cooperation between China and the countries of Central and Eastern Europe continues. Prospects for strengthening the relations of the parties in the above-mentioned sphere were discussed during the Seminar for Local Cooperation between China and Central and Eastern European Countries on April 16–17, 2018 in the Chinese province of Shandong (Eastern China). During the event, the importance of the CEE countries for China, which are not only consumers of Chinese products, but also a channel for their promotion to the markets of the European Union was confirmed. In view of this, the participants of the Seminar expressed a common opinion on the positive nature of interaction in the “16+1” format.
3.2. Economy. Some Aspects of the Economic Situation in China
The Chinese government is summing up the country's economic development in the first quarter of this year. According to the National Bureau of Statistics of the People's Republic of China, the tendency of growth of all macroeconomic indicators is maintained, including: GDP of the country — by 6.8 % to about 3.2 trillion US dollars; the volume of retail sales — by 9.8 %; investment in fixed assets — by 7.5 % to 1.6 trillion US dollars; state enterprises' revenues — by 8.7 % to 1.02 trillion US dollars; budget revenues — by 13.6 % to 800 billion US dollars; real incomes of the population — by 6,6 %.
Against this background, the PRC and the United States are looking for ways to resolve trade disputes between the two countries. Consideration of this problem was the main issue of the Sino-U.S. Industrial Cooperation Summit held in Chicago on April 17–18, 2018. The event was organized by the American financial company Goldman Sachs Group and China Investment Corporation (CIC), and was attended by representatives of business circles of the two countries. The participants of the summit agreed on the need to focus on promoting mutual investments, including at the level of the governments of the PRC and the USA and of the regional and local authorities.
| China's Ambassador to the United States Cui Tiankai at the Sino-U.S. Industrial Cooperation Summit in Chicago |
The development of cooperation between China and Russia continues. April 18, 2018, in Beijing, the opening ceremony of the “Center for Support of Chinese Investors and Entrepreneurs in the Russian Federation” was held in Beijing. The main task of this centre is to facilitate the implementation of joint investment projects, including in the “Belt and Road” format. Along with this, representatives of the Rissiya Bank point out the significant growth of the scale of the shadow activity of Chinese enterprises in the Russian financial market. The turnover of such operations using the mechanisms of circulation of crypto currency has reached 9.6 billion US dollars per month.
3.3. Security and Law Enforcement Agencies
Situation around the Korean Peninsula. The consistent sanctions policy of the world community against North Korea forces the country's leadership to radically change its foreign and domestic politics. April 20, 2018, the DPRK leader Kim Jong-un made an official statement to suspend the national nuclear program without any preconditions. On the same day, the Plenum of the Central Committee of the Workers' Party of Korea decided to move to a new strategic course that envisages building a powerful socialist economy of the country and a qualitative increase in the living standard of the population on the basis of scientifically grounded and innovative approaches. Pyongyang's decisions were approved by the UN, the EU and the leading powers of the world, including the PRC, the USA and Japan.
| April 20, 2018, the DPRK leader Kim Jong-un made an official statement to suspend the national nuclear program |
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All this creates a positive background for a meeting between US President D. Trump and the DPRK leader Kim Jong-un, which can make a decisive contribution to addressing security issues in the region. In the course of consultations on this issue, US Secretary of State, acting CIA Director, Mike Pompeo, visited North Korea last week and had secret negotiations with Kim Jong-un. The details of the negotiations are not disclosed. However, according to D. Trump, they showed the possibility of achieving positive progress in nuclear disarmament of the DPRK.
At the same time, the leadership of North Korea demonstrates a high level of interest in deepening relations with China, which remains the closest partner of the DPRK. In Kim Jong-un's words said during his meeting with Head of the International Liaison Department of the Central Committee of the Communist Party of China Song Tao last week in Pyongyang, he will resolutely promote traditionally friendly relations with the People's Republic of China and bring them to a qualitatively new level.
| Meeting of the DPRK leader Kim Jong-un with Head of the International Liaison Department of the Central Committee of the CPC Song Tao in Pyongyang |
Major Events in the Region in the Military Sphere
PRC. As part of the efforts to modernize the Chinese Armed Forces and increase their combat capability, in April of this year a new ballistic missile of medium and longer range was introduced into service, which allows strikes on land and sea targets. The new missile system developed on the base on the Chinese missile DF-26 of the previous generation with a range of 3–4 thousand kilometres and can be equipped with both conventional and nuclear warheads.
At the same time, the Chinese media emphasizes the fact of China's having overtaken Russia in the development and production of a number of high-tech types of military equipment, including unmanned aerial vehicles. Today, China is already producing and exporting reconnaissance and strike UAVs that are not available in Russia. In this regard, attention is drawn to the attempts of the Russian side to gain access to Chinese military technology, which completely changes the nature of the relations between the two countries in the sphere.
3.4. Science and Technology
One of the main components of scientific and technological progress in the world is the active development of information technology. China's achievements in this sphere make it a world leader in building digital economy and creating artificial intelligence systems.
According to the new report from Chinese Internet giant Tencent, published during 2018 China “Internet Plus” & Digital Economy Summit in Chongqing on April 12, the total volume of the digital economy of China in 2017 amounted to about 4.23 trillion US dollars, with an increase of 17.24 % compared to the previous year. The report took into account five key pillars, namely: digital technology; digital trading; digital government; digital culture; digital society.
| China “Internet Plus” & Digital Economy Summit was held in Chongqing, April 12, 2018 |
The development of the digital economy of the People's Republic of China provides a powerful foundation for the successful implementation of the “Made in China” program, including the construction of automated transport systems. According to the forecast of the international consulting McKinsey&Company, by 2030 China will become the world's largest market for autonomous cars. All in all it will produce 8 million cars, and by 2040 — 13.5 million.
Successful implementation of these plans requires training of a large number of highly skilled personnel. For this purpose, the China's Ministry of Education and Peking University have launched a program of training 500 teachers and 5 thousand students in the field of artificial intelligence. The program will continue for 5 years and provides for inviting leading world scientists, including Nobel laureates.
IV. Plans and Prospects of Cooperation between China and Ukraine
A significant component of deepening cooperation between the PRC and Ukraine is the development of relations at the level of regions of the two countries. In particular, over the past year, the total volume of trade between Kharkiv region of Ukraine and China amounted to 315 million US dollars, of which exports of goods of Kharkov production made 45 million US dollars. The main such products were food products, high-tech equipment and machinery. In this regard, the most illustrative was the implementation of a contract for the delivery of FED equipment for the aviation industry of the Peoples Republic of China at the amount of 25 million US dollars. Besides, close cooperation between Kharkiv and China has been established in the field of education and science. Currently, there are 400 Chinese students studying at 22 Institutes in Kharkiv, and research institutions in the two countries conduct joint researches within the framework of many innovative projects.
In turn, in April 2018, the Chinese province of Hainan has simplified the visa regime for Ukrainian citizens. Visa free regime will begin on May 1, 2018. The duration of the possible stay of tourists on the island will be increased from 21 to 30 days. The new rules will apply to both tourist groups and individuals who arrive on the island using the services of travel agencies.
| Chinese province of Hainan has simplified the visa regime for Ukrainian citizens |
