June 13, 2017

China (中国) Today

Events Review (05.06–11.06.2017)


І. Major-Profile Events and Trends in the Development of the Situation around the PRC

1.1. The Meeting of the Heads of State of the Shanghai Cooperation Organization

The meeting of the Heads of State of the Shanghai Cooperation Organization (SCO) of June 8–9, 2017 in Astana (Kazakhstan) can be considered one of the most important regional events in which the PRC took part. Apart from the leaders of the SCO countries, representatives of partner countries of the Organization, as well as UN Secretary General A. Guterres, Chairman of the CIS Executive Committee S. Lebedev, Deputy Secretary General of the Collective Security Treaty Organization A. Zhankuliev and Secretary General of the Association Nations of South-Eastern Asia (ASEAN) Le Luong Minh took part in the event.

The meeting discussed key international and regional issues, determined the tasks and prospects for the development of this structure, pointed out the importance of the consistent implementation of the Treaty on long-term good-neighborliness, friendship and cooperation of the SCO member countries, the need for further development of interaction with other organizations, such as the UN, CIS, CSTO and ASEAN.

The participants of the meeting called for a peaceful settlement of the situation in the zones of crises and ongoing conflicts, including in Afghanistan, Syria, in the East of Ukraine (based on the Minsk Agreements) and around North Korea. They also stressed the need for strict implementation of the Central Asian Nuclear-Weapon-Free Zone treaty. The sides paid great attention to the issues of joint fight against terrorism, extremism, separatism and cross-border crime, as well as improvement of information security, in particular, in cyber space.

Considering economic issues, the Heads of the SCO member states focused on initiatives to create favorable conditions for the development of regional interaction in the economic, trade and investment spheres. In this regard, the Chinese initiative “One Belt — One Road” was highly praised.

Following the meeting, the Heads of states of the SCO countries adopted the Astana Declaration, the SCO Convention on Countering Extremism and seven resolutions. India and Pakistan were officially accepted to the Shanghai Cooperation Organization. A decision was also agreed on China's chairmanship of the SCO in 2017–2018. The next summit of the Organization at the highest level will be held in 2018 in China.


During the summit, there were bilateral talks between the leaders of the participating countries, including Chinese President Xi Jinping's talks with Russian Presidents V. Putin, President of Kazakhstan — N. Nazarbayev, President of Turkmenistan — G. Berdymukhamedov, President of Tajikistan — E. Rahmon, President of Afghanistan — A. Ghani and Prime Minister of India N. Mody. The topic of their talks was the prospects for deepening cooperation in different spheres.

The first joint forum of the Interbank Association and the SCO Business Council, the International Exhibition “Expo Astana-2017” (included the pavilion dedicated to the SCO), as well as the meeting of the Defense Ministers of the CSTO member countries became important multilateral events.

At the meeting of the Heads of the SCO member states, Chinese President Xi Jinping delivered a speech “Upholding Solidarity, Coordination, Openness and Inclusiveness Building a Common Home of Security, Stability, Development and Prosperity”, emphasizing the growing instability in the region and calling for uniting the efforts of the SCO member countries to confront challenges to their security.

As for Russia, it kept trying to use the meeting to implement its plans for partnership with China. Thus, the substantiation of the need to strengthen the ties between Russia and the PRC was the main theme of the speech of Russian President V. Putin. He raised this question also during the meeting with Xi Jinping, where Russia initiated creation of a plan for the development of relations between the two countries in the military sphere for the period 2017–2020.


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

The leadership of the PRC seeks to systematically implement the initiative “The Belt and Road”. June 3–8 2017, the “Silk Road-2017” International Exposition was held in the administrative center of Shaanxi Province in Xi'an (North-West China). 28 countries participating in the Chinese project attended the Fair and thus confirmed their being interested in cooperation with China.

At the Exposition, Shaanxi Province presented more than 400 projects of ten industries, including agriculture, energy engineering and chemical industry. The “round table” discussed the prospects for creating a new cooperation platform based on the programs of “The Belts and Road”. Representatives of China's business and partner countries signed several dozens of contracts totaling more than 5.7 billion US dollars.


The development of transport communications between the countries participating in the “Belt and Road” and their partners continues. In particular, on 9 June 2017, the Tianjin Port Corporation and the Vladivostok Seaport signed a Memorandum of Understanding on container transportations. Several new railway routes were officially opened, including from the Xinjiang-Uygur Autonomous Region of the People's Republic of China (North-Western China) to the capital of Kazakhstan — Astana, and also from the Chinese province Heilongjiang (Daqing) to the Belgian port Zeebrugge.


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

3.1. Development of China's international cooperation

The People's Republic of China's coming to the forefront in the world, determines its role and importance in leading international organizations, including the UN. Thus, on 8 June 2017, United Nations Secretary-General A. Guterres expressed his intention to appoint Liu Zhenmin of China as the next Under-Secretary-General for Economic and Social Affairs. Thanks to this, China will have more opportunities to realize its foreign policy interests through the UN channels.


As for the China's cooperation with other leading countries, first of all, its leadership's attempts to establish working relations with the United States. June 6 2017, Chairman of the State Council of China Xi Jinping met with the Governor of California, D. Brown. The Chinese leader pointed out California's role in strengthening bilateral relations in trade-economic, scientific-technical and innovation spheres. According to Governor D. Brown, California would not mind joining the Chinese initiative “The Belt and Road”.

China's interest to California is due to the high level of development of its economy based on high-tech industries. Thus, the total gross product of California's companies is more than 2.6 trillion US dollars, which is twice the total of Russia's GDP (1.1 trillion US dollars). This is precisely what determines China's true attitudes to the United States of America and to the Russian Federation.


The PRC is deepening its relations with countries in other regions, in particular in Africa, where there are great natural resources. In this aspect the most illustrative was State Councilor of China Wang Yong's meeting with Vice President of Angola M. Vicente on 5 June 2017 in Luanda. Wang Yong pointed out the role of Angola, which is one of the main African partners of China, and confirmed readiness to increase investments into the development of the Angolan economy, to strengthen bilateral cooperation in energy, finance and infrastructure spheres. During this visit, Wang Yong participated in the signing of some intergovernmental documents and in the opening of the Bank of China branch in Luanda.


A question that deserves special attention is the strengthening of China's positions in the Arctic. June 8, 2017, Tokyo hosted the second round of the high-level dialogue between China, Japan and South Korea on Arctic issues. Participants of the meeting confirmed the role of the Arctic region as a potential hub of transport communications of global importance, as well as the location of large deposits of minerals. With this in mind, an agreement was reached on further interaction between the parties within the framework of the work of the Arctic Council and joint Arctic researches.


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

Despite the slight decline in the pace of development of the Chinese economy, China retains the leading positions in the world in terms of foreign trade and investment. According to China's statistical agencies, in May this year China's exports grew by 15.5 % and imports — by 22.1 % year-on-year. As a result, the positive balance of China's foreign trade increased from 38.6 billion US dollars to 41.4 billion US dollars.

In January-May 2017, China's foreign trade turnover increased by 19.8 % compared to the same period of the previous year and amounted to 1.6 trillion US dollars. At this, China's exports increased by 14.8 % to 865 billion US dollars, while imports — by 26.5 % to 718 billion US dollars. As before, the basis of China's exports was the production of electronic industry, engineering, high-tech products.

During the first five months, exports of these products increased by 14.2 % to 496 billion US dollars, or 57.3 % of the total volume of Chinese exports. The volume of exports of light industry products increased by 12.8 % and amounted to 176 billion US dollars. At the same time, the volume of China's imports of iron ore, crude oil, natural gas and cars (by 25 % to 470 thousand pieces) increased.

The main foreign trade partners of China are the European Union, the United States, the ASEAN countries and Japan. Since the beginning of this year, the trade turnover between the PRC and the EU has grown by 16.1 %, and amounted to 235 billion US dollars. All in all, the European Union accounts for 14.8 % of China's total foreign trade.

Since February 2017, there has been an increase in the PRC's gold and foreign exchange reserves. As of the end of May this year, their volume amounted to 3.054 trillion US dollars, that is, 24 billion US dollars more than in late April of 2017. As part of the development of the country's financial system, in early June 2017 the Chinese government bodies gave permission to open the first private bank in Zhongguancun in Beijing with an authorized capital of 589 million US dollars. The bank will be established by a number of listed companies, most of which are scientific and technical innovation enterprises.

In addition, the Government of the People's Republic of China adopted a plan to stimulate the development of the economy of the border areas of the country for the period of the 13th Five-Year Plan (2016–2020). The plan provides for the provision of state support for the modernization of local industries and the removal of their products to foreign markets, as well as to strengthen the ethnic cohesion of the population.


3.3. Security and Law Enforcement Agencies

The APR maintains high level of tension, which is first of all caused by worsening problems around North Korea. Thus, on 5 June 2017, in response to the joint maneuvers by the Navies of the USA and Japan near the Korean Peninsula, North Korea conducted its Air Force trainings with mastering strikes against American aircraft carriers. Besides, on 7 June 2017, several surface-to-surface cruise missiles were launched from the eastern coast of the DPRK. The missiles flew about 200 km and fell into the Sea of Japan. Kim Jong-un, leader of North Korea, personally watched the trainings and missile launches.

The DPRK's military activity is accompanied by active aggressive rhetoric of the country's leadership with threats to the USA and Japan. According to the North Korean Ministry of Defense, the DPRK will “turn them into ashes” if they do not abandon hostile politics. At this, as the “basic guarantee of Japan's security”, was mentioned the withdrawal of American military bases from Japanese territory. Besides, the DPRK Defense Ministry has confirmed that it intends to continue implementing the country's nuclear missile program, “despite all sorts of resolutions of the UN Security Council”.


Washington considers North Korea's actions a direct threat to security of the United States of America. In particular, this issue was raised by US Secretary of Defense J. Mattis at the Shangri-La Dialogue 2017 in early June 2017 in Singapore. In this regard, J. Mattis pointed out the intensification and expansion of the scale of North Korea's actions to build nuclear missiles.


The USA's position regarding the DPRK is fully supported by the European Union. June 8 2017, the Council of the European Union supported the decision of the UN Security Council to extend sanctions against North Korea. Besides, the European Union imposed its own sanctions on the DPRK, included against more than 40 people and about 10 companies involved in the development of nuclear missiles.


At the same time, the USA and China have disagreements over their approaches to solving military issues. June 6, 2017, the US Department of Defense released another report on China's military potential. It states the rapid expansion of the Chinese military presence in the Asia-Pacific region, China's pressure on the countries of the region, the conduct of cyber-attacks around the world, and the concealment by Beijing of the real volumes of its military expenditures (declared in 2016 by the PRC at 180 billion US dollars). Such facts provoked the Chinese leadership's negative reaction, and it accused the USA of “bias of approaches and assessments”.


3.4. Science and Technology

One of the important spheres of China's innovation development is the implementation of a large-scale program to develop outer space. On 6–8 June 2017, the Global Space Exploration Conference (GLEX-2017) was held in Beijing with the participation of more than 800 space industry professionals from around the world. The organizers of the event were the International Federation of Astronautics and the Chinese Society of Astronautics.

At the Conference, the PRC representatives announced plans to organize four manned space missions over the next five years as part of the creation of a space station. The construction of the station will begin with the launch of the main module in 2018 and will be completed by 2022. In addition, in 2018, the lunar probe “Chang-4” will be launched, which will make a soft landing on the reverse side of the Moon.


The PRC continues to develop new sources of energy, in particular, it explores the extraction of the so-called “fuel ice” on China's shelf zones. According to the Department of Marine Exploration of Guangzhou, an average of about seven thousand cubic meters of equivalent gas is being produced. Based on the experience gained, industrial development of explored deposits will begin.

As part of a study of other areas of the seabed and ocean floor, last week, China’s manned submersible Jiaolong conducted its 6.5 km deep dive into Yap Trench from the ship-carrier Xiangyanghong 09.


Besides, new shipbuilding project is being developed. The Chinese Bohai Shipbuilding Heavy Industrial Corporation is building the first prototype of a large combat ship that can effectively operate above and below the water. The new ship combines such qualities as speed and secrecy. So, the movement in the underwater mode will allow the ship to remain unnoticed for the enemy radar, and in the above-water position it will be able to develop the maximum speed.


ІV. Plans and Prospects for Cooperation between China and Ukraine

As part of China's overall policy to expand the Chinese presence in foreign markets for goods, services and capital, its business circles are interested in the financial system of Ukraine. In early June 2017, the Chinese Bohai Commodity Exchange Co., Ltd. (BOCE) and the State Property Fund of Ukraine signed an agreement on the BOCE buying 99.9 % stake in the Ukrainian Bank for Reconstruction and Development. According to the Director General of the BOCE Yang Dong Sheng, this will increase the PRC's ability to assist Ukraine in conducting effective privatization of state property.


Cooperation between Ukraine and the PRC is also continuing at the level of their individual regions. June 5–7, 2017, a delegation of Ukrainian businessmen from Bila Tserkva visited the Chinese city of Jingzhou, Hubei Province. The delegation focused on studying the city's development experience (including the construction of its infrastructure), attracting foreign investments into local industry, and interaction between the government and businesses.


Also, the Chinese public is beginning to take an active interest in the history and culture of Ukraine. In particular, in June 2017, the Chinese publishing house “Jingji Kexue” (”Economic Science”) published a book in Chinese “Ukraine: History, Contemporary Politics and Economy”. The book contains information on different periods of history, politics and economy of the modern Ukrainian state.



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