China caught between strategic partnership with Russia and strategic interests with USA


China's Special Representative for Eurasian Affairs Li Hui spoke about the extensive exchange of views on the Ukrainian crisis with the participants of the meeting in Jeddah. Beijing advocated continuing to strengthen dialogue with all sides for a political settlement of the situation. The Chinese Foreign Ministry said Li Hui outlined China's position, listened to the proposals of other negotiators and achieved greater international consensus. It is reported that all those gathered at the meeting favourably evaluated Li Hui's participation in the meeting.

Earlier, Li Hui visited Ukraine, Poland, France, Germany, Belgium and Russia during his European tour and discussed China's peace initiative for a political settlement of the Ukrainian crisis. Chinese authorities issued a 12-point document in February, including a call for a ceasefire and respect for the legitimate interests of all countries.

China will take an impartial stance on Ukraine, express an unbiased opinion and promote peace talks. Chinese Foreign Minister Wang Yi said this during a telephone conversation with Russian Foreign Minister Sergey Lavrov on 7 August. China also intends to actively promote peace and negotiations on Ukraine and strive to find a political solution. In addition, Wang Yi emphasised that China is ready to work with Russia and other BRICS members for the success of the summit and the development of the association's mechanisms.

During the telephone conversation Lavrov congratulated his Chinese counterpart on his appointment as Chinese Foreign Minister and wished him new success in his responsible work. The sides praised the progressive development of Russian-Chinese relations and discussed a number of topical issues on the international agenda. The Russian and Chinese Foreign Ministers gave a positive assessment of the constructive dialogue and the high level of interaction between the two countries within the UN, BRICS, SCO, G20 and other international structures.

According to a daily report by the US-based Institute for the Study of War (ISW), the Kremlin is allegedly unhappy that China continues to promote its plan for a peaceful resolution of the war at international forums. Experts believe this is evident from the nature of the communiqués issued by the two sides following talks between Russian Foreign Minister Sergei Lavrov and Chinese Foreign Minister Wang Yi after the countries met in Saudi Arabia. The Russian Foreign Ministry said the ministers touched on a number of hot regional topics, including the Ukraine crisis, while the Chinese ministry said Lavrov and Wang exchanged views on the war. ISW believes that Moscow's displeasure with Beijing's actions is in line with previous expert assessments that China is not interested in an open-ended partnership with Russia. This narrative, however, is an ongoing wish or expression of the West's strategic hope. Obviously, the recent increase in visits to Beijing by key US administration officials (Janet Yellen and Anthony Blinken) is a reflection of new US decisions regarding the PRC. Their goal is, on the one hand, to severely restrict China's access to the most productive microprocessors and artificial intelligence technologies, and, on the other hand, to continue trade and exchange of less technologically advanced goods and services. This trade structure should ensure the supply of cheap goods to the U.S. market, which is important for reducing consumer inflation. In addition, a year and a half after the start of the SMO, it became clear that blocking Russia's financial and economic ties with China could play a key role in inflicting a strategic defeat on Russia. After all, it was the supply of technologies from this country that the Russian leadership apparently counted on when talking about turning to the East. The threat of secondary sanctions has separated almost all top Chinese companies from the Russian market and turned out to be a significant tool of pressure on small no name companies involved in parallel imports. When asked by AFP about Putin's possible visit to China in October this year, a Chinese Foreign Ministry spokesman on 14 August replied in characteristic fashion: "The Chinese and Russian presidents maintain strategic communications in various ways. Their discussions cover a comprehensive set of topics. The two sides will continue to advance their comprehensive strategic coordination partnership into a new era under the strategic leadership of the two presidents."

The Chinese Foreign Ministry, commenting on the conversation between Sergey Lavrov and Wang Yi, said, "The most important task of Moscow and Beijing is to realise the leaders' consensus and develop relations. The Chinese side will actively propose Moscow and Kiev to sit down at the negotiating table."

According to the Chinese Foreign Ministry statement, "China and Russia jointly sent Japan three lists of technical problems, expressing distrust over the planned discharge of water from the Fukushima nuclear power plant into the sea." The statement pointed to the need to discuss all possible projects in detail. The Chinese Foreign Ministry stressed that if Japan is truly sincere about addressing the concerns of neighbouring countries, it should immediately halt planned actions to dump water into the sea.

US President Joseph Biden has signed an executive order that restricts US investments in China's technology industry, including the development of semiconductors and microelectronics, quantum technologies and artificial intelligence in China.

The document says the executive order addresses the threat to U.S. national security from states of concern. They are trying to develop and use technologies related to intelligence, surveillance and activities in cyberspace. At a briefing, a US administration official said the order regulates US investments in sectors of the PRC economy related to semiconductors, microelectronics, quantum information technology and some artificial intelligence systems. Washington has ordered US businessmen to report such investments, some of which will be banned.

China's Ministry of Commerce said Beijing reserves the right to take action in response to US investment restrictions.

Beijing hopes that the US will respect the laws of market economy and the principles of fair competition, the ministry stressed. It is noted that the US authorities are severing ties in the investment sphere. The ministry said Washington's actions affect business decisions by enterprises, destroy the international trade and economic order and seriously undermine the security of global manufacturing supply chains.

US President Joseph Biden said at a fundraising event for his election campaign that he expects a rational relationship with China, which he said is a time bomb. According to Biden, the PRC faces economic problems, including high unemployment: "When the bad guys have problems, they do bad things... China is a time bomb in many senses."

The EU authorities do not rule out the possibility of introducing sanctions measures against China if Beijing refuses to lower barriers to exports from the EU.

This was stated by the Deputy Head of the European Commission (EC) and European Commissioner for Trade Valdis Dombrovskis in an interview with the Financial Times. "China-EU trade relations are very unbalanced. China has a huge trade surplus, the level of openness on the part of China and the EU does not match," he said. Dombrovskis said that at the upcoming high-level economic and trade dialogue session between Beijing and Brussels in September, the two sides will be able to discuss these issues.

The deputy head of the EC specified that if the disagreements cannot be resolved, the EU may use against China a number of tools of trade war, which it has used in recent years.

China's Ministry of Commerce published a report in English on how the US interprets WTO rules in its favour.

The document, in particular, talks about the Appellate Body, the WTO Appellate Body, which has the status of the highest court for conflicts between WTO member countries. By 2017, the Appellate Body had fewer judges than needed for its work due to the expiration of their terms. It is noted that the US has the right to veto candidates to the Appellate Body (the only WTO member with such a right) and has blocked the election of new members of the Appellate Commission more than 60 times since 2017 without explaining its decision.

The Chinese Foreign Ministry said China has made a serious representation to the Japanese side and strongly condemns that a certain Japanese politician visited China's Taiwan region and made irresponsible remarks aimed at fuelling tensions between the two sides of the Taiwan Strait.

It was reported that Taro Aso, vice-chairman of the Liberal Democratic Party and former Japanese Prime Minister, visited Taiwan the other day and met with Tsai Ing-wen, Lai Qingde and others. He also gave a speech in which he stated that there should be no war in the region, including the Taiwan Strait. However, Taro Aso called for psychological preparation for the use of powerful intimidating force and fighting.

On 13 August, the Chinese Foreign Ministry issued a statement condemning the US for arranging the transit of Taiwan's deputy chief of staff Lai Qingde through US territory.

According to the Chinese side, the US and Taiwan, under the guise of transit, organised an opportunity for Lai Qingde to carry out political activities in the US, which violates the "one China" principle. The Chinese Foreign Ministry emphasised that the Taiwan issue is a major red line in Sino-US relations.

Russian and Chinese ships off the coast of Alaska spooked the US, said Colonel Douglas McGregor, a former adviser to the Pentagon chief. "I think it was a signal to us that they too can do what we've been doing for years. We sail into other people's territorial waters or move along the borders, we periodically pass the Taiwan Strait on warships," the military officer commented on the situation in an interview with the YouTube channel Judging Freedom.

On 28 July, warships of the Russian Navy and the Chinese Navy began the third joint maritime patrol of the Pacific Ocean. A joint detachment has been formed and is travelling along a route agreed by the parties. The objectives of the patrols are to strengthen co-operation and maintain stability in the region. After that, a representative of the U.S. Northern Command said that the States had sent several destroyers to Alaska to monitor the movement of Russian and Chinese ships. At the same time, White House spokeswoman Karine Jean-Pierre noted that the US did not consider the joint patrols by Russia and China a threat. However, the patrols stirred up the US media, which labelled them as "extremely provocative".

China and the UAE will hold the first joint air force exercise. Falcon Shield 2023 will take place in August in China's Xinjiang province. The dates and scope of the exercise were not specified.

China has released a documentary film, "Chasing the Dream", which tells the story of the country's army's ability to attack Taiwan.

The eight-episode documentary series, broadcast by state broadcaster CCTV, is timed to coincide with the 96th anniversary of the establishment of the People's Liberation Army of China. The film covers military drills and cites statements by dozens of soldiers about their readiness for a potential attack on Taiwan.

The film shows Chinese army drills that simulated strikes on Taiwan.

The leaders of the three G7 countries France, Germany and Italy have not received an invitation from China to attend the third One Belt, One Road international cooperation forum to be held in China in October. Global Times (a unit of Renmin Zhibao, the official publication of the Chinese Communist Party) reported that invitations to attend the autumn forum under China's One Belt, One Road initiative will be sent mainly to leaders of developing countries rather than developed countries.

The Wall Street Journal (WSJ) has previously revealed that European leaders are avoiding participating in China's One Belt, One Road forum despite invitations from Xi Jinping. The European leaders' refusal to take part in the forum hints at deteriorating relations with Beijing, WSJ wrote. Chinese authorities had hoped that Europe would participate in the joint development of global trade and transport corridors, but European leaders are taking a step back, sharing Washington's fears of increasing its economic dependence on Beijing, the publication explains. The One Belt, One Road project has failed to live up to expectations, and Beijing's ambitious plans have been hampered by the pandemic, as well as the fallout from the Russia-Ukraine conflict. The forum that China will hold this year will show how attractive the idea is to other countries now, the newspaper notes.

China's State Council published "Guiding Considerations on Further Optimising the Environment for Foreign Investment and Strengthening Efforts to Attract Foreign Investment". The document calls for finding a better balance between the domestic and international situation, and for building an internationalised international-level business environment that is market-oriented and based on the rule of law.

The document proposes 24 specific measures in six areas. These include improving the quality of foreign capital utilisation, ensuring national treatment for foreign-invested enterprises, enhancing foreign investment protection, optimising investment and transaction facilitation mechanisms, strengthening financial and tax support, and improving foreign investment promotion methods. All regions, relevant departments and institutions are encouraged to adopt support measures in accordance with local conditions and to enhance synergy. It is noted that the Ministry of Commerce of China should strengthen guidance and coordination with relevant departments and agencies to promote the approved policies and implement policy measures in a timely manner to create a more favourable environment for foreign investors and effectively enhance their confidence.

In China in July, deflation was recorded at 0.3% (for the first time in a year), as well as a drop in exports and imports.

According to the State Statistics Committee of China, in July in China there was a decrease in prices (deflation) by 0.3% year-on-year. Food prices decreased by 1.7%, non-food prices remained unchanged, consumer goods prices decreased by 1.3%, service prices increased by 1.2%. In June, the price level remained unchanged. There has been no deflation in the country for at least a year. In China, according to July customs data, there was also a decline in exports (-5% year-on-year) and imports (-7.6% year-on-year). A drop in trade with the EU, ASEAN countries and the USA was recorded. Trade turnover with Russia, on the contrary, increased (exports from China to Russia by 73%, Chinese imports of services and goods from Russia by 15%). As Bloomberg notes, one of the reasons for the deterioration of the economic situation was the drop in property prices, which caused a number of property developers to declare bankruptcy. The fall in prices was caused by the past harsh government policy in this area for example, because of restrictions on loans for property developers. The Financial Times quoted Chinese economists as saying that they were banned from publicly discussing negative trends in the country's economy. Among the taboo topics were deflation, capital outflow and falling prices for local producers.

According to updated data from China's General Administration of Customs, since the beginning of 2023, trade turnover between Russia and China has increased by more than 36% to $134bln. For the whole of 2022, trade turnover between the two countries totalled a record $190.3bln.

During the reporting period, China imported a total of $62.545bln worth of goods to Russia, which is 73.4% more than in the same period of 2022. Supplies from Russia to China increased by more than 15% to $71.559bln. Earlier, Russian President Vladimir Putin and Chinese President Xi Jinping agreed on the goal of increasing trade turnover between the countries: the task is to bring it to $200bln by 2024. On 6 August, the Washington Post reported a 24% drop in US imports from China in the first five months of this year.

China's foreign exchange reserves reached $3.204 trillion, up from $3.193 trillion at the end of June, according to the State Administration of Foreign Exchange Control of China.

China's crude oil imports in the first seven months of 2023 rose 12.4% year-on-year to 326 million tonnes. The average price of imported crude oil was 3,977.2 yuan ($555.75) per tonne, down 16.6% year-on-year.

Major Chinese companies, fearing the introduction of new restrictions by the United States on exports to China chips used for artificial intelligence technologies, began to urgently buy chips of the American manufacturer Nvidia. This is reported by the British newspaper Financial Times with reference to sources.

According to the sources, the Chinese Internet giants, being in a state of frenzy, have already made orders for $5bln. It is about the acquisition of high-performance chips from Nvidia, necessary for the creation of generative artificial intelligence systems. Baidu, ByteDance, Tencent and Alibaba have ordered about 100 thousand A800 processors for $1bln. In addition, companies from the PRC have purchased $4bln worth of GPUs. One Baidu employee, on condition of anonymity, said that without Nvidia chips it would be impossible to continue training any major language model.

China's passenger car production and sales fell 4.3% and 3.4% year-on-year in July, respectively. The country's passenger car production totalled 2.12 million units, while sales reached 2.1 million units.

In the first seven months of this year, production of passenger cars in the PRC totalled 13.4 million units, which is 6% more than a year earlier, while their sales over the same period rose by 6.7% to 13.37 million units.

Exports of passenger cars from the PRC rose to 392,000 units in July (+35.1% year-on-year). In January-July 2023, the figure reached 2.53 million units (+67.9%).

Production and sales of new energy vehicles (NEVs) in China grew significantly in July this year, with the country's NEV production volume up 30.6% year-on-year to 805,000 units and sales volume up 31.6% to 780,000 units. In July, NEV's market share in China was 32.7%.

In the first seven months of this year, NEV production in China reached 4.59 million units (up 40% year-on-year) and sales reached nearly 4.53 million units (+41.7%).

NEV exports from China in July rose 87% year-on-year to 101,000 units.

Chinese home appliance, electrical and electronics company Shenzhen Kaifa Technology Co. has won a tender from Israel's state-owned Israel Electric Corporation (IEC) to supply 200,000 smart electricity metres. Shenzhen Kaifa Technology Co. will set up a production line in Israel and provide knowledge and training to the Israeli company.

The production localisation plan is in line with an Israeli legal requirement that foreign suppliers contracting with an Israeli public body for $5 million or more must purchase Israeli goods or invest in Israeli industry.

China's Ministry of Commerce announced that a deposit will be levied on imported polycarbonate originally produced in Taiwan as an anti-dumping measure. The XXXI FISU (International University Sports Federation) World Summer Universiade has closed in Chengdu. From 28 July to 8 August, 6,500 athletes from 113 countries and regions took part in 269 competitions in 18 sports. In 12 days, FISU records were broken 22 times. The Chinese team of 411 athletes won 178 medals, including 103 gold medals, topping the final table.

According to the Washington Post, the US National Security Agency has revealed that Chinese military hackers broke into Japan's secret defence networks in the autumn of 2020. After the hack, Japanese authorities took a number of steps to strengthen computer networks and increase their defence against hacking. However, according to the publication's sources, Japanese computer networks are still considered insufficiently protected from hacking today.

CellX, a Shanghai-based company specialising in meat production using artificial cell culture technology, has launched its first pilot plant in China. According to the South China Morning Post, CellX aims to complete a large production facility with a capacity of hundreds of tonnes per year by 2025. The pilot plant in Shanghai will help draw the conclusions needed to set up a large production facility. So far, the production of artificial meat is very expensive, but when the volume of equipment grows, the cost of production will drop to $100 per pound. Then artificial meat will become competitive with premium meat.

The first group of Chinese tourists after the coronavirus pandemic arrived in Russia visa-free on 10 August.

The Chinese visa centre officially started its work in St. Petersburg on 8 August.

The Chinese Visa Service Centre was officially opened in Moscow on Vasilisa Kozhina Street, 1. It became the 100th visa service centre opened by China in the world.

Heavy rains the aftermath of Typhoon Doxuri have been battering northern China since late July, affecting the lives of millions. Floods near Beijing and in neighbouring Hebei province have killed at least dozens of people. According to hydrology experts, the floods in Hebei were more serious this time than in Beijing. Experts believe Beijing released floodwaters to divert the floods to reduce pressure on the downstream area, where the new Xiong'an district is located.

Thirty-three people have died in Beijing, five more have died in rescue operations and 18 people are missing. The city of Zhuozhou in Hebei province, with a population of 718,000, and surrounding areas were flooded, with people given just two hours to evacuate. A large number of people were trapped by the floods. Officials from the Zhuozhou Emergency Management Bureau admitted that the rapid rise in the water level in Zhuozhou was caused by the release of water from upstream (Beijing). Local authorities in Zhuozhou said the floodwaters would not recede for a month.

In December 2013, at the Central Working Conference on Urbanisation, Xi Jinping stressed the need to build sponge cities so that 70% of the city's rainfall is absorbed and used locally. Sponge cities is a drainage concept that suggests that urban areas with rich natural areas, such as lakes and parks, can absorb rain and prevent flooding.

According to Chinese state media, by the end of 2021, 5,237 sponge drainage projects had been completed in populated areas in Beijing.

In 2021, heavy rain hit Zhengzhou in Henan province, causing severe flooding that killed 71 people. Zhengzhou has been one of the pilot sponge cities since 2016 and has spent 50 billion yuan on related urban construction.

China's Supreme People's Court and the People's Procuratorate issued a joint document strengthening criminal penalties for pollution offences. In addition, criminal penalties for those who falsify data on the state of the environment have been strengthened.

By Konstantin Remchukov on August 16 2023 for the Nezavisimaya Gazeta (Russia).