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Geo-Strategic Trend

Xinhua: China-Russia Oil Pipeline Reached Oil Delivery of 100 Million Tons

Xinhua recently reported that, as of May 19, the volume of oil China acquired from Russia via the China-Russia pipeline had reached 100 million tons. The Pipeline started running on January 1, 2011. The China-Russia pipeline originated at Russia’s Far East Pipeline Skovorodino Distribution Station and entered China at the Xing’an First Station in Muohe, Heilongjiang Province. The Pipeline ends in Daqing, Heilongjiang Province, with a total length of 1,000 kilometers. This pipeline completely changed the history of importing Russian oil via railway. Chinese Customs is responsible for monitoring and managing the acceptance of the imported oil, checking the personnel involved in the maintenance work, as well as coordinating communications with the importing companies. The China-Russia pipeline has so far generated an import trade volume worth of US$62.5 billion. It has also garnered import tariffs of RMB 65.7 billion (around US$9.54 billion).

Source: Xinhua, May 20, 2017

China News: For Three Years, China Has Had the Largest Number of Investment Projects in Germany

China News recently announced that, according to the latest report that Germany Trade and Invest (GTAI) released, in 2016, China had 281 investment projects in Germany. This number made China the country with the largest number of investment projects in Germany. China has held that title for three years in a row. The 2016 projects were expected to create 3,900 jobs in Germany, which was the highest number of jobs China has created in Germany. Chinese investments mainly concentrate in the field of business services and financial services, which took 27 percent of the projects. Machinery and equipment manufacturing held 11 percent. Electronics and the semiconductor industry held 10 percent, and the automobile industry also took 10 percent. Most of the Chinese investments were spent on sales and market support, which consumed 44 percent of the investments. According to the GTAI report, in 2016, a total of 1,944 foreign investment projects landed in Germany. The statistics do not include mergers. In 2016, Chinese investors were followed by investors from the United States (242 projects), Switzerland (194 projects), Great Britain (125 projects) and the Netherlands (105 projects).

Source: China News, May 19, 2017

LTN: Rodrigo Duterte Said China Threatened War over Oil Drilling Redline

Major Taiwanese news network Liberty Times Network (LTN) recently reported that, not long ago, Philippine President Rodrigo Duterte signed an agreement with China (for their countries) jointly to develop natural resources in the South China Sea. President Duterte revealed to the media that Chinese President Xi Jinping once warned him that China will take the risk of (going to) war if the Philippines decides to use The Hague Permanent Court of Arbitration (PCA) ruling to drill for oil in the South China Sea. He described how, when he mentioned that the Philippines intended to drill in the South China Sea, Xi responded, “We are friends, and I don’t want to argue with you. We should maintain a good relationship. However, if you are determined to touch this topic then, no matter what, we’ll take the military approach.

Source: LTN, May 19, 2017

China News: Hainan Airlines Group Became the Largest Shareholder of Deutsche Bank

China News recently reported that China’s Hainan Airlines Group increased its investment in Deutsche Bank to ten percent, which made the Airlines the largest shareholder of the largest bank in Germany. The earlier largest shareholder was Blackrock (United States), which held 5.88 percent. The additional investment totaled 3.4 billion euro (US$3.71 billion). The Airlines Group has disclosed the information to the U.S. Securities and Exchange Commission (SEC). Deutsche Bank is listed on the German Stock Exchange and the New York Stock Exchange. It has around 100,000 employees. The Bank had suffered financial losses in 2015 and 2016. The Bank’s spokesperson Christian Streckert refused to respond to the question of whether the bank welcomed the fact that a Chinese company had become the largest shareholder. According to Hainan Airlines Group, the Group has become an investor in a large variety of industries and market sectors, with total assets valued over RMB 1 trillion (around US$144 billion). The Group’s 2016 total income was over RMB 600 billion (around US$86 billion).

Source: China News, May 3, 2017

China’s Spokesperson on North Korean Ships Unloading Coal in China’s Ports

While the United Nations has passed a resolution to restrict North Korea’s coal exports, there have been reports that China allowed some North Korean ships to dock or to unload their coal in China’s ports. China’s spokesperson gave an explanation for two incidents.

Geng Shuang, spokesperson of the Ministry of Foreign Affairs, on April 26, 2017:

Question: “According to what we know, six ships carrying coal from North Korea unloaded the coal in Tangshan port last week. This seems to contradict the Chinese government’s claim that China has not imported any North Korean coal since February 18. Could you please provide more information and explanation?”

Answer: “Due to the fact that some ships that carried North Korean coal were severely short of supplies, out of humanitarian consideration, China allowed them to unload the cargo. However that was not to allow its importation. Unloading and importing are two different things.”

Huang Songping, spokesperson for China’s General Administration of Customs, on April 13, 2017:

Lianhe Zaobao news reported that it asked about 10 North Korean ships that were allowed to dock at China’s port, which made observers wonder if (it meant that) China has not enforced the UN’s embargo.

Huang said that China’s Customs did not let that North Korean coal go through the import process. “Since China’s Customs did not allow the import, how to deal with the coal involved in shipping is something that is up to companies themselves to handle.”

1. Sina, April 26, 2017
2. Lianhe Zaobao, April 14, 2017

Huangqiu Editorial: China Needs to Be Prepared If the Relationship between China and North Korea Gets Worse

On April 28, Huangqiu published an editorial article on the relationship between China and North Korea. Below is the translation of a few key points from the article.
1) The relationship between China and North Korea has gotten worse. Since King Jong Un became the top leader, there have been no meetings between the top leaders of the two countries. Even though a diplomatic exchange between the two remains open, little strategic trust is left and a serious communication barrier exists between the two.
2) As tension in the situation on Korean Peninsula is increasing, the relationship between China and North Korea could get worse. Pyongyang might openly criticize Beijing or make unfriendly moves. China should be prepared for this.
3) Some Chinese residents are concerned that, as the relationship between China and North Korea gets worse, China will lose its bargaining advantage with South Korea and the U. S. It will also miss the strategic shield in North East Asia. We should be aware that, at this moment, North Korea has a direct conflict of interest with China’s national strategic interest. In the long term, there is no doubt that China still has control over the relationship between these two countries. As long as North Korea gives up on nuclear weapons, these two countries can easily go back to the normal relationship that they had before. Beijing can encourage Pyongyang to loosen up on its attitude on nuclear weapons. However if Pyongyang keeps pushing the conflicts to the irrational edge, China has the ability to be in charge of the situation completely so as to protect China’s national security.
4) Frankly speaking, “double suspension” is the ultimate goal for China. China does not have much of a bargaining chip to pressure the U.S. and South Korea. We need to be very clear with the U.S. and South Korea that China is not the key party in resolving North Korea nuclear issues. China will not use the interest of the U.S. and South Korea to set its policy towards North Korea. The U.S. and South Korea should line up their thoughts close to ours rather than try to use theirs to overpower ours. Beijing wishes to find a common ground that benefits all party’s interests and advocacy. If this fails, the solution to the situation on the Korean Peninsula has to be put on table. China is not afraid of North Korea nor does it fear the U.S. and South Korea. We have enough power to fight back against any parties that will cross the red line of China’s national interest.

Source: Huanqiu, April 28, 2017

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