China as a Driving Force of the Modern World. Part 1. China's geopolitical compass
Part 2. The Key to International Success — Loans and Investments
As part of the foreign policy and economic priorities of the People's Republic of China an important place occupies the European Union, which is second to the U.S. trade partner of China. Because the EU is one of the largest markets for Chinese goods and investments, and a provider of advanced technologies, in use of which China is interested. For example, at the beginning of 2013, Chinese investments in the European economy amounted to about 130 billion US dollars. China's major investment partners are the United Kingdom, France, Switzerland, Germany, Greece, Hungary, Norway, Portugal and Spain.
| Trade relations between the EU and its main economic partners: USA, China and Russia http://www.ru.ruseu.com/ |
As to the volume of bilateral trade between China and the European Union, following the results of 2012 the figure was 546 billion U.S. dollars.
Recently, the development of cooperation between China and the EU has accelerated due to the global financial and economic crisis, because of which the European countries have to apply for loans and investments. In this regard, China provides loans to countries of the European Union, gains their economic assets, in the first place — high-tech enterprises and transport infrastructure, in return getting access to modern Western technologies.
Soon in China's relations with the EU, as part of the plans of the parties to establish a common free trade area, qualitatively new changes can occur. Given the importance of China as an economic, trade and financial-credit partner of the European Union, the EU intends to lift the embargo on deliveries to China of arms and military technologies.
| Trade turnover between the EU and China, Russia and the USA http://www.ru.ruseu.com |
The main partner of China among the countries of the European Union is Germany, whose assets in the total trade between China and the European Union account for almost 30 % (at the level of 161 billion U.S. dollars). The parties are planning to increase this figure to 280 billion U.S. dollars in 2015, developing, in the first rate, contacts between the largest of their companies. In particular, is being built a joint car-industry plant with participation of the German company Volkswagen and China's SAIC. In petrochemical industry German companies BASF and Siemens are implementing joint projects with Chinese business structures. The Chinese company Weichai Power is increasing its investments into production of diesel engines and other machinery products of Germany.
Apart from this, China deepens relations with the countries of Eastern Europe, in particular with Belarus. As of today they have signed at least 60 agreements in political, trade and economic spheres. In general, more than 20 joint projects worth nearly 5.5 billion US dollars are being realized. The most significant of these are the construction of the China-Belarus industrial park, and the construction in the center of Minsk of a Chinese shopping center and the hotel “Beijing”.
| Chinese and Angolan engineers http://russiancouncil.ru/i |
Special attention in its geopolitics China pays to Africa, where are concentrated still not developed significant mineral resources, and there are favorable conditions for the development of agriculture and food industry. Countries of this region are in need of foreign aid to its economic development. They are also the biggest market for the sale of cheap Chinese products (both, engineering production and consumer goods).
Beijing considers spreading its interests in Africa an important part of the national strategy of turning the People's Republic of China — a leader of the Asia-Pacific region — into a global player at the world level. The main Chinese instrument in achieving this goal on the African continent is a large-scale investment into the development of African countries.
The volumes of Chinese investments into the economy of African countries today account for about 45 billion US dollars, of which 15 billion are direct investments. 60 % of these funds are investments into industry, construction and financial sector, 25 % — into the extraction of minerals (primarily energy carriers), 15 % — into agriculture and food production. More than 2 million Chinese companies are working in African countries. The main China's partners are Angola, Nigeria, Algeria, Libya, the Democratic Republic of Congo, and South Sudan.
The PRC government is planning for the next three years to invest in African economies at least 20 billion U.S. dollars, which will strengthen the strategic partnership between China and Africa, and bring it to a qualitatively new level. In particular, their plans include implementation of 60 new joint projects in 30 African countries. The funds will be allocated by both, private companies, and a special Fund for development “China-Africa.”
Active investment activity of China in Africa causes a steady trend of growth of trade between China and African countries. Thus, the volume of African exports to China has risen from 5.6 billion US dollars in 2001 to 95 billion US dollars in 2012. Mainly these are agricultural products and raw materials for Chinese industry.
In 2000 China began to write off massive multi-billion dollar debts of its African partners, and since 2006 it allows African exporters to bring to China certain goods without paying the duty. Large-scale programs are being implemented for free education in the PRC of citizens of African countries, in medical, engineering and other fields.
Significantly, China is also taking part in peacekeeping activity in the African region. Currently, in the areas of crises and conflicts in Africa are performing their tasks about 3 thousand Chinese peacekeepers.
China's interest in developing cooperation with African countries was confirmed during a visit to the region of President Xi Jinping in March 2013. He visited Tanzania, South Africa and the Republic of Congo. As a result of negotiations in these countries, it was agreed to further strengthen ties in trade, investment, infrastructure construction, agriculture, communications, as well as in the production of energy carriers and other natural resources.
| In 2012, the volumes of Chinese exports to Latin American countries exceeded 100 billion US dollars. At this the volumes of investments in Latin American countries increase. Today, their sum is nearly 250 billion US dollars http://inosmi.ru/ |
The dynamic development of the Chinese economy makes it look for partners in other regions too, particularly, in Latin America. Today, China is the main trade partner of Brazil, Chile and Peru, and is the second largest exporter of goods to Argentina, Costa Rica and Cuba.
In 2012, China's exports to Latin American countries exceeded 100 billion US dollars. At this, are increasing the amounts of investments into the economy of Latin American countries.Today, their sum is nearly 250 billion US dollars.
Experts of the Economic Commission believe that if these trends continue, in 2015 China will overtake the European Union and the United States and will be the second after the USA main investor into countries of Latin America and the Caribbean. Such China's intentions were confirmed by the visit of President Xi Jinping to the Caribbean countries - Trinidad and Tobago, Costa Rica and Mexico.
Recently, China's getting interested in the Arctic. This can be explained by the growth of the international importance of the region as a location of impressive natural resources, as well as by the new transit route from Northern Europe to the Far East and the Asia-Pacific region.
| The new strategic goal of China: Minerals of Arctic http://www.inosmi.ru/ |
Thus, in May of this year China was granted observer status in the Arctic Council, which allows it to participate in determining the prospects for, and implementation of measures for the development of the region. As part of these plans, the China National Offshore Oil Corporation has signed an agreement with the Icelandic company Eykon Energy for exploration of oil reserves off the East coast of Iceland. Chinese state company Sichan Xine Mining has become an investor into the large international project on development of mineral deposits of Greenland's field Icya. If this project is successful, then other Chinese companies will join it, in particular, Jiangxi Zhongrun Mining and Jiangxi Union Mining, specializing in the production of gold, copper and other precious and non-ferrous metals. Conditions for the participation of Chinese businesses in other Arctic projects, including mining and processing of bauxite, are also being studied.
An important partner of China in the region is the Russian Federation. China, for example, has concluded a number of agreements with the Russian company “Rosneft” to finance projects related to development of Arctic oil deposits. They are planning to sign similar agreements with the Russian company “Gazprom”. Besides, China is investing into the development of Canada's Arctic infrastructure.
China has begun to establish its own icebreaker fleet, which will allow the country to transport cargo along the Northern (Arctic) sea way, to actively participate in the implementation of Arctic programs. Thanks to this China will have an access to the resources of the Arctic region, and to use the alternative transportation route to Europe, as well as will increase its influence in Arctic countries.
Developing cooperation with the above-mentioned countries, China deepens relations, in particular, with Ukraine. The main interests will be focused on expanding cooperation in the banking and financial sector, use of capacities and resources of Ukrainian agriculture, participation in the development of transport infrastructure, implementation of joint projects for production of modern high-tech equipment.
| Ukraine and China have become strategic partners http://podrobnosti.ua/ |
As for the banking and financial issue, the PRC will pay much attention to increasing crediting of investment projects in Ukraine. In particular, the PRC government has recently agreed to provide loans of 7 billion US dollars to finance the construction industry in Ukraine and 3 billion US dollars — for the development of agriculture.
At this, according experts' estimates, this banking and financial cooperation has several advantages over similar cooperation with other countries and international organizations, as the requirements of the PRC to Ukraine regard only to government guarantees of loans and investments, and do not provide for our state any mandatory conditions and obligations in the economic or political spheres. In particular, China does not demand any restrictions in social spending from the state budget of Ukraine or an increase of utility bills, the cost of energy for the population (as IMF and the USA demand), nor changes in the foreign policy priorities of Ukraine (the conditions imposed by Russia). Besides, investing into our country, China has more capability than the European Union, which is experiencing economic problems today.
China is interested in agriculture of Ukraine, because, in its opinion, it may help in solving the food problems of China. The PRC government sees Ukraine as a supplier of grain and other food as payment for the received loans. In the situation of the Asian food crisis, as well as when there are problems with other suppliers of grain (particularly the USA) because of high prices for their products, this question is of paramount importance for China.
The PRC government has determined the key partners of Ukraine in the agricultural industry. They are the Chinese state-owned machine industry and complex contracts (China National Machinery Industry Complete Engineering Corporation) and China National Agricultural Development Corporation. They have been given the task of opening offices in Ukraine, joint firms, as well as registration of business entities. Besides, the General Administration of Quality and Quarantine of the PRC has to proceed to the certification procedures of Ukrainian grain.
In general, this will help Ukraine in both, obtaining long-term loans for the development of agriculture, and coming out onto a large and stable market for Ukrainian agricultural products.
China is very interested in the use of industrial, scientific and technological potential of Ukraine for producing modern high-tech products and technologies, particularly in the military sphere. The Chinese Government attaches great importance to the implementation of contracts for the supply of Ukrainian amphibious hovercraft, military transport aircraft, radar and other electronic equipment. At the same time China is considering a possibility of military-technical cooperation with Ukraine, both at the state level and at the level of individual businesses, including creating joint firms financed by China.
The expansion of military-technical cooperation between Ukraine and China makes it possible to maintain the Ukrainian defense industry, which is very important in the context of limited financing from the state budget.
By promoting their own products to foreign markets, particularly the markets of Europe, China has demonstrated its interest in the implementation of programs of development and modernization of transport infrastructure in Ukraine, including motor roads, railways, sea and airports.
In this context, the Ukrainian transport infrastructure can be part of a transport corridor which is being built by China on its western borders to Europe through Central Asia, the Caspian region, the Caucasus, the Black Sea and the Black Sea states.
China's interest in Ukraine has been confirmed by a recent visit to Kiev of the Member of the Politburo of the Central Committee of the Communist Party of China and First Secretary of the CPC Central Committee Liu Yunshan. According to him, it is very important for Beijing to dynamically develop the China-Ukraine relations, and China considers Ukraine its friend and partner.
