May 13, 2018
Pangoal International Situation Monthly (Vol.13)
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Pangoal International Situation Monthly (Vol.13)

Pangoal Institution

International Situation Monthly

April 2018 (Vol.13)

China Sounds the Trumpet for Further Reform and Opening Up

US and Europe Stage an Old Play in Syria

Summit with Kim Jong-un and Moon Jae-in Sets Development of Korean Peninsula on a New Path

Meeting Between Xi and Modi Alters China-India Relations

The Boao Forum for Asia Annual Conference 2018 was held from April 8th to 11th in Boao, Hainan. The theme this year is “An Open and Innovative Asia for a World of Greater Prosperity.”

This year marks the 40th anniversary of China’s reform and opening up, as well as the 30th birthday of Hainan as a province and special economic zone. So it was only natural for the forum to focus on the theme of reform and opening up. Two special sub-forums under the theme of “40 Years of Reform and Opening Up,” namely “China and the World” and “Government and the Market,” were held during the conference to review the achievements and experiences of reform and opening up, and look towards the future of further in-depth reforms.

On April 10th, President Xi Jinping attended the opening ceremony and gave a keynote speech themed with “Openness for Greater Prosperity, Innovation for a Better Future.”

Xi said that China’s reform and opening up, or the second revolution, “has not only profoundly changed the country, but also greatly influenced the whole world.” He declared that the door that China has created through opening up will not be closed, and it will only open even wider. It is a strategic decision made by China based on its need for development as well as its concrete actions taken to move economic globalization forward in a way that benefits people across the world.

Xi Jinping announced that China will adopt four new major measures to pursue opening further: significantly broaden market access, create a more attractive investment environment, strengthen protection of intellectual property rights (IPR), and take the initiative to expand imports. These measures boil down to ten specific tasks. First, ensure the implementation of measures announced at the end of last year to raise foreign equity caps in banking, securities, and insurance industries. Second, accelerate the opening up of the insurance industry, ease restrictions on the establishment of foreign financial institutions in China and expand their business scope, and open up more areas of cooperation between Chinese and foreign financial markets. Third, ease foreign equity restrictions as soon as possible, especially in automobiles. Fourth, enhance alignment with international economic and trading rules, increase transparency, strengthen property rights protection, uphold the rule of law, encourage competition, and oppose monopoly. Fifth, in the first six months of this year, finish the revision of the negative list on the areas of foreign investment and implement a management system based on pre-establishment national treatment and negative list across the board. Sixth, restructure the State Intellectual Property Office to strengthen and step up law enforcement, and significantly raise the cost for offenders. Seventh, encourage normal technology exchange and cooperation between Chinese and foreign enterprises, and protect legitimate IPR owned by foreign enterprises in China. Eighth, significantly lower the import tariffs for automobiles and reduce import tariffs for some other products. Ninth, increase imports of specialty and competitive products with great public demands, and seek faster progress toward joining the World Trade Organization Government Procurement Agreement. Tenth, hold the first China International Import Expo this November in Shanghai.

He also raised three expectations. First, China hopes that foreign governments will improve protection of Chinese IPR. Second, China does not seek a trade surplus, and has a genuine desire to increase imports and achieve greater balance in international payments under the current account. Third, China hopes developed countries will stop imposing restrictions on normal and reasonable trade in high-tech products and relax export controls on such trading with China.

Yi Gang, Governor of the People’s Bank of China, announced twelve specific measures to further open up China’s financial market during the forum. Six of them, including the lifting of foreign equity caps for banks and financial asset management companies, will be implemented in the first half of this year. Five will be put in place within five years, including the introduction of foreign capital into the banking sector. The Shanghai-London Stock Connect will open as soon as possible, hopefully within this year.

On April 11th, the State Administration of Foreign Exchange (SAFE) announced that following the general direction of macro-prudential administration and principles of fairness, equality, openness, and transparency, work related to QDII will be steadily pushed forward by taking into account business characteristics, asset size, internal control, compliance, and other factors of different QDII institutions, in order to better meet the demands for cross-border asset allocation for domestic market players.

On the same day, Xinhua News Agency was authorized to release the Guidelines on Supporting Hainan Province to Deepen Reform and Opening Up, developed by the Communist Party of China and the State Council. It proposes to turn Hainan into a pilot free trade zone and create a free trade port in a way that matches the development direction of the province. The Guidelines clearly sets forth four strategic positions for Hainan: a pilot zone for comprehensively deepening reform and opening up; a national pilot zone for ecological civilization; a national center of tourism consumption; and a major service supplier for national strategies.

On April 17th, the National Development and Reform Commission (NDRC) answered questions from the press about the newly developed negative lists for foreign investors and the opening of the manufacturing sector. The auto industry will be fully open after a transition period based on the type of vehicles. The ratio restriction of foreign shares for manufacturers of special-purpose vehicles and new energy vehicles will be canceled in 2018, and the restriction for commercial vehicles and for passenger cars will be removed in 2020 and 2022, respectively. Meanwhile, the rule that foreign car manufacturers shall have at most two joint venture partners when they enter the Chinese market is also expected to be removed by 2022. The NDRC expects to remove all restrictions over a five-year transition period.

The announcement of a series of policies opens up a new chapter in common development for China and Asia and the world at large. It shows that the Communist Party of China represents its people, opens up to the world, advances with the times, and presses forward with indomitable will. It is also proof that China is determined and willing to share opportunities of development with the rest of the world and seek common growth.

President Xi’s speech came at a time when the Trump administration pressured China with protectionist policies. The speech shows that China has made wise choices in responding to the practice of forming cliques with a strong will to break down the long-accumulated unfair and unjust interests, fighting against protectionism with the commitment to reform and opening up, and reversing anti-globalization tendencies on the principle of building a community with a shared future for mankind. It is widely applauded by the international community, and China has claimed the global moral high ground.

Only with correct ideas could one make correct action plans. Despite complex changes in internal and external circumstances, the correct way for China to maintain healthy growth moving forward is to stick to reforms and further opening up, in order to create an open pattern with interconnection between land and sea, and a mutually beneficial cycle between the East and West. This will help achieve win-win outcomes for the world and build an international united front to fight against trade protectionism.

On the morning of April 14th, the US, UK, and France launched targeted strikes against Syrian military facilities.

On the same day, the Syrian government and military strongly condemned the three countries for these strikes. They said that these strikes flouted international laws and could lead to higher international tensions and threaten global peace and security.

The Iranian Foreign Ministry issued a statement that carried a similar message, condemning the US, UK, and France for their military strikes against Syria.

Russia submitted a draft resolution to the UN Security Council to condemn military strikes against Syria, but failed to have it adopted in urgent consultations convened by the Security Council.

At an urgent meeting before the vote, the Russian Ambassador to the UN Vasily Nebenzya described military actions conducted by the US and its allies against Syria as “hooliganism in the international arena” that would worsen the humanitarian crisis in Syria.

The military strikes launched by the US-led coalition were a response to the alleged chemical weapon attacks in Eastern Ghouta in Syria.

Though the White House claimed to have important information that could prove the Syrian government had used chlorine and Sarin gas, and US President Donald Trump said multiple times that the use of chemical weapons was America’s red line for Syrian issue, the international community has not been presented any solid evidence from the US. The Syrian government also firmly denied US accusations.

British Prime Minister Teresa May’s decision to launch joint strikes was strongly challenged by opposition parties in Parliament on April 16th. Mrs. May claimed that chlorine had been extracted from the dead bodies of 75 civilians allegedly killed in chemical attacks, and that the Assad regime was locking down the chemical attack region to prevent more evidence from leaking. She also said that US and British satellites over Syria had located Syrian jets that were used to drop chemical weapons. She refused to publicize the sources of her intelligence and information for Parliament. Labor Party leader Jeremy Corbyn branded the military strikes as legally questionable.

New explosions in Damascus threw the improved situation in Syrian into stalemate.

There are profound and complicated factors of history and reality behind the Syrian issue. The country’s radicalization in recent years stemmed from the conflict that began in 2011 between the Syrian government and rebel forces and the so-called Islamic State terrorist group.

Since Syria is at a major crossroads in the Middle East and is ruled by the Shiite, a minority group in the country, the Syrian issue is complicated with factors including human rights, humanitarian problems, sectarian conflicts, and major country strategic competition.

In the past seven years, civil war, sectarian conflicts, and intervention of external forces have inflicted horrendous suffering on Syria, resulting in hundreds of thousands of deaths and millions of injuries. The war has also caused a serious, adverse spillover effect. Apart from the millions of people who are internally displaced, more than five million Syrians have fled to other countries, leading to a severe immigration crisis that affects Syria’s neighbors and European countries, and further creates a hotbed for terrorism.

The US and its allies, in pursuit of their strategic interests, brazenly interfered in the Syrian civil war. They have provided support to the rebel forces as they try to topple the Assad regime. In a response to the attempt that compromised Russia’s interests, Russia refocused on the Middle East in the name of counter-terrorism. External interference has heightened sectarian tensions and worsened people’s lives, and turned a domestic war into an international conflict. As a result, the Syrian issue has become a proxy war.

Thanks to joint international crackdown, the so-called Islamic State, an organized extremist group occupying eastern Syria and parts of Iraq, has been brought to its knees. With the help of Russia, the Assad regime has gained the upper hand in the conflict and gradually stabilized the situation. As such, Russian President Vladimir Putin announced the conclusion of its fight against terrorism in Syria and the decision to withdraw Russian troops. In early April, President Trump pledged in a speech to withdraw American military forces from Syria. At the same time, multiple rounds of Geneva peace talks struggle on.

With the Islamic State’s diminishing threat, strategic competition has become fierce again. Domestic political struggles in the US and Trump’s alleged links to Russia have closed the door for the Trump administration to improve US-Russia relations. So the chemical weapon attack that came again at this point gave the US a solid reason to contain Russia through economic sanctions and pressure the Assad regime through military strikes.

The US and its allies did not bother to change the “script” of their military strikes. The Syrian people unfortunately still cannot hold the country’s future in their own hands, and there will be more and more broken families and bereft and displaced people.

Any unilateral military actions bypassing the Security Council are against the principles and purposes of the UN Charter and in violation of international laws and basic norms of international relations. These military strikes will only make the Syrian issue more difficult to solve.

As Chinese Ambassador to the UN Ma Chaoxu said at the Security Council public meeting on humanitarian problems in Syria on April 17th, a political solution is the only way to resolve the Syrian issue. With the current situation, the international community should strengthen cooperation and allow the UN to lead international efforts to resolve the issue in order to return Syria and the Middle East to peace and stability as soon as possible.

China urges all related parties to refrain from taking any actions that might escalate tensions and return to solving the issue through dialogues and consultations within the framework of international laws.

This April witnessed a rapid evolution in the Korean Peninsula situation.

After his visit to China at the end of this March, Kim Jong-un sent his foreign minister Ri Yong-ho on a visit to Russia in early April. Through these bilateral meetings, North Korea secured security and political support from China and Russia, its two major neighbors.

In mid-April, Director of CIA and Secretary of State-designate Mike Pompeo made a secret visit to North Korea and had multiple meetings with Kim Jong-un, leader of the Worker’s Party of Korea, where they discussed DPRK-US leader summit and the roadmap for North Korean denuclearization.

At the Third Plenary Session of the Seventh Central Committee held on April 20th, the Worker’s Party of Korea shifted its focus from nuclear development to economic growth, announcing a halt in nuclear and intercontinental ballistic missile tests from April 21st onwards. For the transparency in halting nuclear tests, North Korea will scrap the test site in the north of the country and join in the goal and efforts of the international community to stop nuclear tests on a full scale. The resolution adopted at the session said that North Korea, when not faced with nuclear threat or provocation, would never use nuclear weapons and would never transfer nuclear weapons and technologies under any conditions. The session made the decision to focus all attention on developing the country’s socialist economy and improving people’s living standards, and to maintain close exchanges and dialogues with neighboring countries and the international community. This session has built domestic consensus and mobilized the public opinion, making good preparations for the North-South Korea summit and North Korea-US summit.

On April 27th, the historic summit between Kim Jong-un and South Korean President Moon Jae-in was held at Peace House on the South Korean side of Panmunjom. The two leaders reversed the downward spiral in their countries’ relationships through determining the destiny of the Korean nation on their own accord and significantly relieved North Korea of the pressure caused by international sanctions.

Kim and Moon signed the Panmunjom Declaration in which the two sides pledged to cease all hostile acts that might lead to military tension and conflict, promote cooperation, exchanges and contacts, and carry out disarmament in a phased manner as military tension is alleviated and substantial progress is made in military confidence-building.

The two sides, during this year that marks the 65th anniversary of the Armistice, agreed to actively pursue trilateral meetings involving the two Koreas and the United States, or quadrilateral meetings involving the two Koreas, the United States, and China with a view to declaring an end to the War and establishing a permanent and solid peaceful regime. They also confirmed the common goal of realizing, through complete denuclearization, a nuclear weapon-free Korean Peninsula.

The Declaration is more of a general framework than a specific agreement, and it puts more focus on the inter-Korean relationship than on denuclearization. North and South Korea agreed to sign a peace treaty by the end of this year, but did not set a timetable for denuclearization. This is not considered strange, since denuclearization is the main issue between North Korea and the US. A warmer inter-Korean relationship can create a good environment for restarting the denuclearization process. If the consensus reached by North and South Korea on nuclear issues in the Declaration is solid and credible, it can be said that the consensus has officially started the restoration of talks on denuclearization and peace on the peninsula and the process of monitoring and implementing the progress in this regard.

The true highlight should be the North Korea-US summit and consequent coordination between North and South Korea and the US. There are good chances that the North Korea-US summit will take place and significant improvements will occur. At the summit, the two leaders will talk about the steps to restart denuclearization and provide each other with security commitments. This will be a long process, and the real risks lie in the implementation of agreements reached during the summit. Due to US and North Korea’s different positions on what is “comprehensive” and “irreversible” denuclearization and weak mutual trust, the situation is likely to take a surprising turn.

As a signing party to the Armistice and the chair of the Six-Party Talks, China cannot be absent in the process. No arrangements about the peninsula’s future can be made without taking into consideration China’s interests and positions.

While China is cautiously optimistic about the current situation, it should, based on its own national interests, find the right timing and circumstances to carry out deeper intervention in the situation’s development. At present, three things are important. First, China should encourage North Korea to focus on making better policies to stimulate economic development and improve its people’s living standards. China, along with Russia and South Korea, should provide bilateral assistance to North Korea within the range allowed by the UN Security Council. Second, China should try to participate in the extended meetings of the summit between Kim Jong-un and Donald Trump directly and try to restart the Six-Party Talks at the right time to make sure that it will not be excluded by the US and North and South Korea in decision-making processes. Third, China should take advantage of the trilateral leader summit among China, Japan, and South Korea in early May to promote a restart in regional cooperation in Northeast Asia, thereby capitalizing on current good momentum.

From April 27th to 28th, Chinese President Xi Jinping held an informal meeting with Indian Prime Minister Narendra Modi in Wuhan. This was their thirteenth meeting together, and a new milestone in the history of China-India ties, given that it took place on such a special occasion and has produced fruitful results after in-depth talks. It also shows that both genuinely view each other as a great diplomatic power.

This was a long-planned meeting first proposed by Modi during the Shanghai Cooperation Organization (SCO) Summit in Astana in June 2017. The preparation was unfortunately delayed due to the Doklam face-off, after which President Xi responded positively to Modi’s proposal for an informal meeting during the BRICS summit in September 2017.

During his stay in Wuhan, Prime Minister Modi spent a total of nine hours with Xi over the course of seven events, including four one-on-one meetings, a boat ride on East Lake and a lakeside walk, tea-tasting, and a visit to an exhibition of cultural relics. They talked about the common development of China and India and the international situation, and reached extensive consensus. This shows the strong will of the two forward-looking neighbors in focusing on cooperation while reserving differences.

They spoke about strategic independence, agreed to forge a “Century of Asia,” and reiterated the importance of establishing friendship and partnership as good neighbors. They also agreed to promote trade by reducing trade deficits and expanding cooperation in more areas such as movies, sports, tourism, and youth and regional exchanges.

Xi and Modi had an in-depth exchange in ideas on governing a state, and stressed the importance of viewing each other’s development goals from a positive perspective. They agreed to seek strategies for common development by learning from each other, to establish a closer and sustainable partnership in a way that upholds equality and mutual benefits, and to support each other’s modernization.

In terms of international and regional issues, they agreed to expand “China-India Plus” cooperation in Afghanistan, accelerate economic cooperation within the framework of BCIM (Bangladesh, China, India and Myanmar), take a leadership stance on global challenges such as climate change, natural disasters and terrorism, increase the presence and voice of developing and emerging economies, and promote fair and reasonable world order, in order to contribute to economic globalization, free trade, and multilateralism.

The two leaders believe that China-India relations could influence not just their own countries, but the world as a whole. As the two biggest developing countries and emerging market economies with more than one billion people each, China and India are key drivers of global economic growth and a stabilizing force in world multipolarization and economic globalization.

Both sides said that they would control disputes through friendly negotiation, and stay committed to solving the border issue by arranging regular meetings between special representatives. They would also dedicate themselves to maintaining peace and stability in the border area by taking measures to boost confidence.

This informal meeting started a new chapter in improving the ties between the world’s top two developing economies. As two continental Asian neighbors with a long history of friendly exchanges as well as two of the world’s largest and most prosperous large scale economies, China and India should be partners rather than rivals in terms of the nature of their relations, a nature that was confirmed during this recent meeting.

One gets to choose their enemies but not their neighbors. China has no choice but to secure a foothold in Asia to implement its foreign policies, and it would be impossible for China to go far without a healthy neighborhood. China knows too well that on the one hand, the attitude of its neighbors towards its rise depends on China’s own behaviors, and on the other, the US would easily be tempted to involve India and Japan to create troubles for China, given the difficulty in containing China single handedly. Therefore, stable China-India relations featuring common growth and in-depth cooperation remain imperative to both sides.

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