Looking back on 2017

A momentous year

President Xi Jinping’s vision to build a ‘community with shared future for mankind’ sees China stepping up onto the global stage in 2017

P1 momentous

December 25-31, 2017
By PEARL LIU in Hong Kong
For China Daily Asia Weekly

Over 205 minutes on the morning of Oct 18, China’s top leader Xi Jinping laid out a vision of the future that would not only see the country evolve into a “moderately prosperous society” by 2020 but work with the global community to address the many challenges facing the world.

“No country can alone address the many challenges facing mankind; no country can afford to retreat into self-isolation,” Xi, general secretary of the Communist Party of China Central Committee (CPC), said in his report to the 2,338 delegates at the 19th National Congress of the CPC in Beijing and the hundreds of millions who watched around the world.

“We call on the people of all countries to work together to build a community with a shared future for mankind, to build an open, inclusive, clean, and beautiful world that enjoys a lasting peace, universal security, and common prosperity.”

Through key appearances and events in 2017, including the World Economic Forum in Davos, Switzerland, in January, the first Belt and Road forum in Beijing in May, and his epoch-making speech at the Party Congress in October and gatherings of world leaders in November and December, Xi both underlined China’s views and cemented the country’s position as a champion of globalization.

“We should continue to foster an open economy that benefits all. Openness brings progress, while self-seclusion leaves one behind,” Xi, also president, told the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Da Nang, Vietnam on Nov 10.

Xi called for seizing the opportunity of a global economy in transition and accelerating development of the Asia-Pacific. “The building of a free trade area of the Asia-Pacific (FTAAP) is the long-cherished dream of the business community in our region,” he said. The FTAAP process was launched in Beijing in 2014.

“Acting on the principle of achieving shared growth through consultation and collaboration, we will get actively involved in reforming and developing the global governance system to make the international political and economic order more just and equitable,” he said.

For China, the goal is to build bridges and a multilateral world order that drives everyone to success, all the while working to eliminate poverty and protect the environment. That was Xi’s key message throughout a busy year marked by solid economic growth and the expansion of the Belt and Road Initiative — the China-led plan to build a trade and infrastructure network that revives the ancient Silk Road routes connecting Asia to Europe and Africa.

“The problems troubling the world are not caused by globalization,” Xi said in Davos on Jan 17. “Countries should view their own interest in the broader context and refrain from pursuing their own interests at the expense of others.”

“We should not retreat into the harbor whenever we encounter a storm or we will never reach the opposite shore … No one will emerge as a winner from a trade war,” Xi said.

A child interacts with a robot at an artificial intelligence industry summit in Wuhan, Central China’s Hubei province, on Nov 19. Innovation is a major theme in China’s development. (IMAGINECHINA)

If the continued pace of growth in China is any indication, there is much to be said for this view. China’s GDP expanded 6.9 percent year-on-year to 59.3 trillion yuan ($8.98 trillion) in the first three quarters, and as 2017 comes to an end, full-year growth is expected to surpass the target of around 6.5 percent.

In its latest World Economic Outlook, the International Monetary Fund predicted the Chinese economy would grow 6.8 percent in 2017 and 6.5 percent in 2018, which was 0.1 percent higher than July’s forecast.

“President Xi’s Davos address marks that China now is leading globalization,” said Miao Lu, secretary-general of the Center for China and Globalization. “In the past, we were one of the participants of globalization. Now we are the leader.”

“A community of shared future is President Xi’s interpretation of globalization,” said Miao. “And we have put it into the Constitution of the Communist Party, which means that we officially define our role in globalization in our system.”

In his keynote speech at the opening of the Communist Party of China in Dialogue with World Political Parties High-Level Meeting on Dec 1, Xi described four scenarios of the future: a world that is safe and free of fear, a world that is prosperous and free of poverty, a world that is open, inclusive and free of isolation, as well as a world that is environmentally clean and beautiful.

His letters to the Fourth World Internet Conference on Dec 3, the 2017 Fortune Global Forum on Dec 6 and the South-South Human Rights Forum on Dec 7 all contained a common commitment to openness and cooperativeness.

In 2017, Xi not only emerged as a champion of globalization but also pushed forward with the country’s signature program aimed at facilitating it — the Belt and Road Initiative.

Even as China builds links, other countries are cutting them, and this may open up opportunities.

In Beijing in May, China wrapped up the first Belt and Road Forum for International Cooperation, attended by over 1,500 officials, scholars, entrepreneurs and journalists from more than 130 countries and 70 international organizations. Among them were 29 heads of states and governments.

“This initiative is from China, but it belongs to the world. It is rooted in history, but it is oriented toward the future. It focuses on the Asian, European and African continents, but it is open to all partners,” Xi said at the APEC Business Summit in Vietnam.

Concrete and detailed projects were discussed for implementing the strategy of connecting some 65 countries directly affected by the initiative. Xi pledged $124 billion to build trade infrastructure and boost the links between Asia, Africa, Europe and beyond.

“Since President Xi (first) proposed the initiative in 2013, we have talked a lot about the Belt and Road at our end, but the forum marked that it is officially an international platform, promoting global economic development,” Miao said.

This was echoed by Tang Qifang, associate research fellow with the China Institute of International Studies, who said “the biggest achievement this year is that through the forum, we accelerated the implementation of the policy, for example the construction of the mega railway project in Malaysia and the launch of the third government-to-government project with Singapore in Chongqing” in Southwest China.

Thomas Chan Man-hung, director of the One Belt One Road Research Institute at the Chu Hai College of Higher Education in Hong Kong, said: “A lot of infrastructure projects have been approved this year under the Belt and Road Initiative and this will greatly fuel economic growth through exploring the huge untapped markets in the areas such as Central Europe and Central Asia.”

Chan said globalization has served as a major factor supporting the transition of China’s economy this year and will continue to do so in the near future. As Xi said: “China’s economy has been transitioning from a phase of rapid growth to a stage of high-quality development … We must put quality first and give priority to performance.”

Chan said: “China has made important supply-side structural changes aimed at developing a modernized and more sustainable economy. The transition, so far, I see is successful and the country is going in the right direction.”

Even as China builds links, other countries are cutting them, and this may open up opportunities. With the US pulling out of multilateral deals such as the Trans-Pacific Partnership and even, perhaps, the World Trade Organization (WTO), and the United Kingdom leaving the European Union, there is room for China to fill the global leadership vacuum, said Miao of the Center for China and Globalization.

“We saw this year’s WTO meeting in Buenos Aires (Argentina) ended without any substantial agreement. The world is calling for China to take the initiative to promote free trade,” said Miao.

Tang agreed and noted that, at the same time, China may be the only trade power willing and able to take a leadership role because it meets a number of criteria.

“The economy of that (leading) country should have a large amount of demand for foreign trade and an open market. Meanwhile, the country should be at the front line of technology and innovation,” said Tang. “And China is the only one that can meet these criteria.”

One of the main issues is the continuation and completion of the grand project of eliminating poverty throughout the country.

For Xi, innovation has been another key theme. He has called for advanced technologies to be “embedded” into the real economy to foster growth.

In his speech at the Party Congress, Xi said “innovation is the primary force driving development, and it is the strategic underpinning for building a modernized economy. We will strengthen basic research in applied sciences, launch major national science and technology projects, and prioritize innovation in key generic technologies, cutting-edge frontier technologies, modern engineering technologies, and disruptive technologies.”

According to the National Bureau of Statistics, China’s spending on technology research and development rose 10.6 percent to 1.57 trillion yuan in 2016, accounting for 2.11 percent of GDP. The figure should, if anything, be larger once numbers for 2017 are calculated.

And even as it took a greater role in the global arena through 2017, China — led by Xi — continued to work on internal issues, such as pushing forward with structural reforms to the economy and working to lift more people out of poverty. The goal, as Xi made clear, is to create a “moderately prosperous society” by the end of the decade.

The president also addressed concerns over rising property prices and underscored that houses were for people to live in, not for speculation.

Chan of the One Belt One Road Research Institute said: “The cooling measures issued from the central government to local related authorities this year have seen effect. Purchasing of homes was restricted.

“While we may see more people going to those first-tier cities, like Beijing, Shanghai and Shenzhen, the population structure in the rest will be more stable, and with those restrictions we will see less speculation.”

One of the main issues is the continuation and completion of the grand project of eliminating poverty throughout the country.

In 2011, China set a line that describes people with annual incomes below 2,300 yuan per year as poor. The progress to date has been nothing short of astounding, with the rural population living in poverty decreasing from 770 million in 1978 to 55.75 million in 2015. Through 2016, another 12.4 million people were lifted out of poverty.

Fighting poverty is crucial for China to become a moderately prosperous society, Xi said in his Party Congress address. He set 2020 as the target for all provinces below the poverty line to climb above that threshold.

Green push pays off China’s actions on the environment in 2017 show firm commitment to the ideal of modernization characterized by harmony with nature

December 25-31, 2017
in Hong Kong
For China Daily Asia Weekly

The environment and the importance of fighting, and perhaps reversing, climate change took center stage this year for China and President Xi Jinping.

China’s role as an environmental leader became that much more important after United States President Donald Trump’s decision to withdraw from the Paris Agreement on climate change. Trump, who was elected in November 2016, announced in June this year that the US would pull out of the agreement, but it cannot formally leave the accord until 2020.

Xi, in his keynote speech in January 2017 at the World Economic Forum in Davos, Switzerland, made it clear that safeguarding the environment is a key priority for China. “All signatories should stick to it instead of walking away from it,” Xi said of the Paris Agreement, “as this is a responsibility we must assume for future generations.”

Speaking in October to the 19th National Congress of the Communist Party of China, Xi mentioned the environment 89 times, and quickly focused on the issue of building an “ecological civilization”.

“Taking a driving seat in international cooperation to respond to climate change, China has become an important participant, contributor, and torchbearer in the global endeavor for ecological civilization,” Xi said. “Any harm we inflict on nature will eventually return to haunt us.”

Visitors look at an electric bus during the green vehicle industry expo in Hangzhou, East China’s Zhejiang province, on Sept 15. The nation’s efforts to tackle environmental matters accelerated in 2017. (IMAGINECHINA)

The goal, he said, is to “develop a new model of modernization with humans developing in harmony with nature”.

China is backing those comments with firm action. The reforms unveiled last week to the country’s carbon market is a key example.

A new program allows companies to sell their unused carbon allocations, encouraging them to reduce carbon dioxide emissions.

Companies that emit more than 26,000 tons of carbon per year would qualify. Those who pollute less would be able to monetize their unused quota by selling it to others through a cap-and-trade system.

China’s carbon market is already the world’s largest and includes about 1,700 companies in the power sector. This already means that more than 3 billion metric tons of carbon emissions will be affected.

The exchange will eventually encompass around 6,000 companies across eight industries.

The development of this carbon market fulfils part of China’s commitments under the Paris Agreement.

In a push to develop more environmentally friendly transport, government departments were recently told to set an example by adopting domestic green energy vehicles.

China’s pursuit of more green energy has been a huge success for Xi and the country in 2017.

A goal to generate 105 gigawatts of solar power by 2020 was met in July. According to the National Energy Administration, the country had a photovoltaic power generation installation capacity of 102 GW by the end of June and then added another 10.52 GW to its national total in July to cross the goal line.

At the start of the year, China stated that it would invest $360 billion in renewable energy by 2020.

“I do notice a trend toward clean energy sources. The past seven years have had an impact on traditional energy industries, particularly coal, as people are becoming increasingly aware of its effects and the government works toward protecting citizens from it,” said Zhu Hongwen, a partner at Sunshine Law Firm.

As a lawyer focused on the energy sector, Zhu has seen a lot of investments in renewable energy like solar and wind. She expects the growth to continue.

A recently released five-year plan intends to phase out coal-fired appliances in the north of the country by 2021.

Ambitious projects include the 1 billion yuan ($151 million) investment by China’s Three Gorges New Energy Corporation to construct the world’s largest floating solar power project, a 150-megawatt power plant in the eastern province of Anhui. Construction began in July and is expected to be completed by May 2018.

China is also working to reduce its dependence on coal, even if challenges emerged after a rushed attempt to switch from coal to natural gas for heating this winter.

Huang Wei, a campaigner for environmental conservation group Greenpeace East Asia, said some local governments waited too long to build the necessary natural gas infrastructure and acquire supplies, which led to a shortage. China’s ministry of environment issued an urgent notice telling people to burn coal for heating if necessary. Despite these hiccups, the central government remains committed to making the switch.

A recently released five-year plan intends to phase out coal-fired appliances in the north of the country by 2021.

“They have also shut down coal plants in Beijing by March this year and moved them to the western regions to bond with more renewable energy resources, like solar and wind power,” said Huang.

“The Chinese government has been taking on environmental matters at an unprecedented level this year, which is great news,” said Huang, who believes policy signals are crucial in accelerating change in the mainland.

Another promising sign is the central government’s push against air pollution. A surge in air pollution in Beijing in late 2016 set the tone for efforts this year.

In January, the mayor of Beijing said the capital would keep PM2.5 (hazardous airborne particles of 2.5 microns in diameter or smaller) at an annual average of around 60 micrograms per cubic meter. Although the level is still above the World Health Organization’s recommended standard of 20-25 micrograms at most, it would mark progress.

The concentration of PM2.5 pollutants went from more than 100 micrograms per cubic meter in Beijing in 2012 and 2013 to around 75 in 2016, based on US embassy monitoring data. Huang said the government took measures to seriously tackle the problem this year.

“They found that scattered smaller factories contributed to the rise in pollution, as over 60 percent did not have the proper filtering equipment or were located in places they shouldn’t be.”

Huang also commended efforts that make local officials accountable for the pollution in their districts, which she said show “great determination” in the central government’s ongoing crackdown on air pollution.

The central government also issued a guideline this year for ecological red lines in the country, with the aim of clearly defining protected zones where development is strictly prohibited by 2020.

Xi said in his Party Congress speech in October: “The modernization that we pursue is one characterized by harmonious coexistence between man and nature.”

Zhang Jing, a food and agriculture campaigner for Greenpeace, said the concept was first floated in 2012.

“The guidelines issued in February this year show that the government is really stepping up conservation efforts. It’s a creative concept and attempt at environmental conservation. Fourteen provinces have been told to draw up the red lines by the end of the year,” said Zhang.

A landfill project in Tiaozini, in East China’s Jiangsu province, is currently under Greenpeace’s watch. The area is located along the East Asian-Australasian Flyway, one of the nine major routes for migratory birds worldwide. It is also home to a few endangered bird species.

Greenpeace has been working to get the Jiangsu provincial government to include Tiaozini within the province’s ecological red lines.

For other areas, Zhang foresees a lot of negotiation between government, conservation groups and corporations over the red lines before the 2020 end date. But the campaigner is hopeful that the government’s efforts to go green this year will translate to better outcomes, not just for flora and fauna but also for the rest of the world.

“If other countries can see the sustainability and concrete benefits of these efforts, hopefully they will adopt it as well,” Zhang said.

As Xi said in his Party Congress speech in October: “The modernization that we pursue is one characterized by harmonious coexistence between man and nature.”

Year of economic progress China’s growth exceeds expectations in 2017, reforms gain momentum and the Belt and Road bolsters global trade connections

December 25-31, 2017
For China Daily Asia Weekly

From an economic perspective, 2017 was a good year for China as President Xi Jinping led the continued push to build a “moderately prosperous society” by 2020 while at the same time pursuing growth sustainability.

With the end of 2017 upon us, the prospects for the Chinese economy remain solid. The World Bank on Dec 19 raised its forecast for China’s economic growth in 2017 to 6.8 percent, up from the 6.7 percent projection in October, surpassing the official target of around 6.5 percent.

At the annual Central Economic Work Conference from Dec 18 to 20, officials led by Xi gathered for the first big policy meeting since the 19th National Congress of the Communist Party of China in October. Their discussions were based on a relatively solid economic performance at home and an ongoing global recovery, but also some political headwinds from the United States, where President Donald Trump recently named China as a strategic competitor.

“China has maintained its growth resilience and gained reform momentum. The authorities have undertaken a host of policy and regulatory measures aimed at reducing macroeconomic imbalances and limiting financial risks without notable impact on growth,” said John Litwack, the World Bank’s lead economist for China.

“As a result, 2017 has been a successful year for China on many fronts. Economic rebalancing received a boost — the growth of household incomes and consumption accelerated this year relative to investment.”

A fully loaded container vessel waits outside a container terminal in Singapore on Feb 9. China has been the largest trading partner of the Association of Southeast Asian Nations for the last seven years. (AFP)

The year has seen regional connections and Chinese commerce come together to pay off handsomely for all. With the ideals of free trade and globalization under attack from the very countries that once championed them, China and Xi have emerged as key champions of globalization.

“China’s open door will not be closed, it will only be opened wider,” said Xi during his speech at the Party Congress, in which he underlined China’s willingness to emerge as a global leader. He said the country would liberalize its services sector, commit to negotiating more free trade agreements and push forward with the ambitious Belt and Road Initiative — the China-led drive to boost trade and connectivity by reviving the ancient Silk Road routes.

Xi also said the government will “promote strengthening, improvement and expansion of State capital, (and) effectively prevent loss of State assets, deepen reform of State-owned enterprises, develop a mixed-ownership economy and cultivate globally competitive world-class firms”.

Globalization push

The goal is to shore up the domestic economy with global trade, strengthened by the Belt and Road Initiative.

Patrick Ip, managing director of the China-ASEAN Investment Cooperation Fund, said that with the US turning toward protectionism, the United Kingdom stepping away from the European Union and Japan battling a sluggish economy, “there is increasing room for a new superpower to emerge and lead the push toward globalization around the world generally and in Asia specifically”.

The China-ASEAN Investment Cooperation Fund is sponsored by the Export-Import Bank of China and works under the State Council, China’s cabinet, and economic planning body the National Development and Reform Commission.

The World Bank’s recently adjusted forecast is attributed to rising household incomes and improving external demand.

One way China is facilitating that external demand is through the sprawling Belt and Road Initiative that became increasingly prominent this year, with growing amounts of investment, the inclusion of more countries, and the launch of more projects aimed at improving the infrastructure of trade in Asia, Africa, Europe and the Middle East.

“We have signed Belt and Road cooperation agreements with 80 countries and organizations, conducted institutionalized cooperation on industrial capacity with over 30 countries, and built 75 overseas economic and trade cooperation zones in 24 countries under the Belt and Road framework,” said China’s Foreign Minister Wang Yi during a Dec 11 speech in Beijing at the Symposium on International Developments and China’s Diplomacy in 2017.

“Chinese businesses have invested over $50 billion and created near 200,000 local jobs in countries along the Belt and Road,” Wang said.

China’s growing role of global leader has been particularly visible in its relationship with the 10 members of the Association of Southeast Asian Nations (ASEAN). In large part due to its investments linked to the Belt and Road Initiative, China is not only helping shore up trade but is also facilitating development by helping meet one of the most pressing needs in the region — infrastructure.

A new report by law firm Baker McKenzie and consultancy Silk Road Associates places the value for new Belt and Road projects at around $350 billion over the next five years. With China providing funding, expertise and material for those projects, the Belt and Road itself creates opportunity for Chinese companies to find new markets.

However, China’s growth is not only fed by recent initiatives. And its rising global stature this year is not the result of a single year’s efforts, but rather, the work of several decades.

Long-term vision

“Sustained rapid growth in (the People’s Republic of China) since 1978 and the economy’s transformation into a regional and global economic giant have contributed to sustained rapid growth in ASEAN and developing Asia as a whole,” said Minsoo Lee, a senior economist at the Asian Development Bank (ADB).

“The positive economic impact of the spectacular rise of the PRC has been most tangible in how East Asia and ASEAN collectively form ‘factory Asia’, with the PRC at its center. The impact was not confined to those economies but reverberated across the whole region.”

According to the ADB, China has been ASEAN’s largest trading partner for the last seven years while ASEAN has been China’s third-largest trading partner for the last four years. And this expanded relationship may be at a relatively nascent stage. ASEAN has projected that total two-way trade between the bloc and China will reach $1 trillion by 2020.

Terence Foo, a co-managing partner at the Beijing office of international law firm Clifford Chance, believes there is plenty of room for growth.

“We are likely to see more cooperation due to the Belt and Road Initiative. China clearly sees ASEAN as an important relationship to nurture for that,” Foo said.

And with Japan indicating a readiness to cooperate with the initiative, China now has a powerful new partner in opening up economic possibilities in the region.

“I believe Japan will be able to cooperate well with China, which has been putting forward its (Belt and Road Initiative) in a “free and open Indo-Pacific region”, Japanese Prime Minister Shinzo Abe said at the third Sino-Japanese Entrepreneurs and Former High-level Officials Dialogue held in Tokyo recently.

“Meeting robust infrastructure demand in Asia through cooperation between Japan and China will contribute greatly to the prosperity of Asian people, in addition to the economic development of the two countries.”

Despite growth exceeding expectations this year, the World Bank predicts that GDP growth may decelerate to 6.4 percent in 2018 and 6.3 percent in 2019.

“Favorable economic conditions make this a particularly opportune time to further reduce macroeconomic vulnerabilities and pursue reforms that target ‘better quality, more efficient, fairer, and more sustainable development’, as emphasized by President Xi during the 19th Party Congress in October,” said Elitza Mileva, a senior economist at the World Bank.

The Washington-based lender cites prudent monetary policy, stricter financial sector regulation, and the Chinese government’s continuing efforts to restructure the economy and to rein in the pace of leveraging as factors for growth moderation.

Foreign Minister Wang, in his symposium speech, said: “The outgoing year 2017 is of special, high significance to both China and the world.”

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