Chinese Economics Thread


Hendrik_2000

Brigadier
Beijing is slowly turning the tide in the fight against pollution. As I said before the country has to get rich first before tackling the bad byproduct of industrialization
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Beijing may be starting to win its battle against smog
Muyu Xu, Elias Glenn

7 Min Read

BEIJING (Reuters) - Beijing may have turned a corner in its battle against the city’s notorious smog, according to Reuters calculations, and environmental consultants say the Chinese government deserves much of the credit for introducing tough anti-pollution measures.
FILE PHOTO: A traditional pavilion is seen amid smog in Beijing's Houhai area, China December 29, 2017. REUTERS/Jason Lee

The Chinese capital is set to record its biggest improvement in air quality in at least nine years, with a nearly 20 percent change for the better this year, based on average concentration levels of hazardous breathable particles known as PM2.5.

The dramatic change, which has occurred across North China, is partly because of favorable weather conditions in the past three months but it also shows that the government’s strong-arm tactics have had an impact.

The Reuters’ estimates show that average levels of the pollutants in the capital have fallen by about 35 percent from 2012 numbers, with nearly half the improvement this year.

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“The improvement in air quality is due both to long-term efforts by the government and short-term efforts this winter,” said Anders Hove, a Beijing-based energy consultant. “After 2013, the air in summers got much cleaner, but winter had not shown much improvement. This year is the first winter improvement we’ve seen during this war on pollution.”

Government officials this week signaled they were confident they were starting to get on top of the problem.

“The autumn and winter period is the most challenging part of the air pollution campaign. However, with the intensive efforts all departments have made, we believe the challenge is being successfully overcome,” Liu Youbin, spokesman for the Ministry of Environmental Protection, told reporters on Thursday.

STILL A LONG WAY TO GO

But environmental experts say that while they are optimistic, it may be too early to celebrate.

“The turning point is here but we cannot rule out the possibility we can turn back,” said Ranping Song, developing country climate action manager for the World Resources Institute. “We need to be cautious about challenges and not relax now that there have been improvements. There are lots of issues to be solved.”

And while China has scored an initial victory over smog, it still has to reverse public opinion outside China on its air quality.

New York-based travel guidebook publisher Fodor’s advised tourists in mid-November in its ‘No List” for 2018 to shun Beijing until the city’s anti-pollution campaign had reduced the “overwhelming smog”. Fodor’s did not immediately respond to a request for comment.

In Beijing there is certainly plenty of room for further progress as average air quality is still significantly worse than the World Health Organization’s recommendations.

And the region still sees bouts of heavy smog. On Friday afternoon the U.S. embassy’s website said Beijing’s air was “very unhealthy” and the city issued a pollution alert on Thursday.
EMBASSY MONITORING

The Reuters calculations showing the improvement were based on average hourly readings of PM2.5 concentrations at the United States Embassy in Beijing from April 8, 2008 to Dec. 28, 2017. The data was compiled from figures from the U.S. embassy’s air monitoring website, as well as data provided by AirVisual, a Beijing company that analyses air quality data.

The data from the embassy, though not fully verified or validated, is the only set available for PM2.5 levels in the capital over that time period. AirVisual provided the hour-by-hour air pollution data from the embassy for recent months.
FILE PHOTO: Vehicles drive towards the Central Business District (CBD) amid heavy smog in Beijing, China, November 28, 2015. REUTERS/Jason Lee/Files

PM2.5 levels are the most closely monitored because they account for the majority of air pollutants in China and can be harmful to the body when breathed.

(For a graphic on average monthly PM2.5 concentration in Beijing, click tmsnrt.rs/2zLIo0R)

Beijing’s air was actually worse in the first nine months of this year than in the same period last year, but PM2.5 concentrations from October to Dec. 28 this year were nearly 60 percent lower than last year, the Reuters figures show.

Greenpeace climate and energy campaigner Huang Wei said that less than half of the improvement is due to favorable weather - particularly stronger northerly winds and low humidity – with the government’s policies behind most of the change.

The Chinese government launched a winter smog “battleplan” in October for 28 northern cities that called for strict rules on emissions during the winter heating months when pollution typically worsens.

The authorities also sought to make sure that Beijing wasn’t too polluted during October’s Communist Party congress, which is only held once every five years, at which Xi Jinping consolidated his power as the nation’s leader. Some of the more-polluting businesses in and around the capital were told to shut down for a period before and during the gathering.

The plan for the winter months included switching millions of households and some industrial users to natural gas from coal for their heating and some other needs. There were also mandated cuts in steel production by up to 50 percent in some of the areas surrounding the city.
CONTRAST WITH INDIA

Beijing’s improving air quality stands in stark contrast to India’s capital New Delhi, where pollution has steadily become worse over the past few years, and is now well above Beijing‘s.

China’s improvement, and deterioration in some other countries, means China is now not among the ten worst countries for pollution in the world anymore, according to at least one measure.

“At the national level, India tops the index rankings, followed by Bangladesh and Thailand,” said Richard Hewston, global head of environment and climate change at risk consultancy Verisk Maplecroft, which measures 198 countries for air quality.

(For a graphic on Beijing average annual PM2.5 concentration, click tmsnrt.rs/2BRDCAL)

Beijing’s clean-air campaign hasn’t been without its challenges.

The government this year botched the switch from coal to natural gas, leading to recent widespread shortages of gas, soaring liquefied natural gas prices, leaving some residents freezing in their homes and some factories shuttered.

There is also a wider economic cost. Growth in industrial output, especially in northern China, has slowed because of the pollution crackdown, economists say, and the prices of some key commodities, from LNG to copper, have risen.

Some of those who had been benefiting from the poor air quality by selling air filtration products have been taking a hit.

“Overall demand in China is down... Some companies have 100 million yuan ($15.35 million) in unsold inventory this year as a result of the improved air quality,” said Liam Bates, CEO of Beijing-based Kaiterra, which makes air filters and air quality monitoring products.

“We haven’t seen huge impact because we’re expanding heavily overseas. While the air in China is getting better, the air in India is much, much worse and we just opened our India office,” he said.
 
now I read
Economic Watch: Supply-side structural reform gears up for high-quality development
Xinhua| 2017-12-30 16:55:33
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Two years on, supply-side structural reform remains the centerpiece of China's economic agenda, but priorities have shifted as high-speed growth is giving way to high-quality development.

Initiated in 2015, the reform has focused on five fronts -- pruning overcapacity, clearing up the large inventory of unsold homes, curbing debt levels, lowering business costs and tackling weak links.

It has yielded the desired results, promoted economic restructuring, and stabilized growth in the world's second-largest economy.

The country will deepen reform in 2018, focusing on eradicating ineffective capacity, fostering new drivers of growth and cutting costs in the real economy, the central authorities declared at a tone-setting economic meeting this month.

TACKLING EXCESS CAPACITY

Like many other over-staffed steel producers, Magang (Group) Holding Company, or Masteel, is in the middle of downsizing.

The steel complex in eastern Anhui Province has cut nearly 5 million tonnes of outdated capacity. The capacity reduction boosted the company's profitability. Net profit of the Masteel's Shanghai-listed branch more than doubled from a year earlier to 2.74 billion yuan (nearly 420 million U.S. dollars) in the first three quarters.

The case is common in glutted steel and coal sectors, where the government is pushing for consolidation.

Pledging continued efforts to address overcapacity, policy makers agreed on measures to eliminate ineffective supply in 2018, at the Central Economic Work Conference, with dealing with debt-ridden, loss-making "zombie enterprises" highlighted.

China has made headway in phasing out overcapacity, a significant part of its ongoing economic restructuring. Annual targets of slashing steel capacity by around 50 million tonnes and coal by at least 150 million tonnes were fulfilled in August and October, respectively.

UBS economist Wang Tao said China was likely to start promoting capacity upgrades next year in addition to reduction and further restriction of coal and thermal power from 2018 to 2020.

FOSTERING NEW ENGINES

As economic growth has slowed and traditional growth engines lost steam, the country has turned to innovation, hoping new technology, industries and business models will provide the strength for future growth.

At the 19th National Congress of the Communist Party of China, which charts the course for the country's future development, innovation has been labeled as the primary driving force behind development.

China has worked to create a supportive environment for innovation, including investment, policy support and a strong market environment.

Increasing R&D input, which is second only to the United States, and favorable policies, including financial services, better protection of intellectual property rights and easier market access, fueled innovation and entrepreneurship.

For the coming year, the government will continue to foster new growth drivers, and push technological innovation and upgrading of traditional industries.

"China should strive to make major breakthroughs in basic science and technology as well as original innovations," said Zhang Xiaoqiang, executive deputy head of the China Center for International Economic Exchanges, a government think tank.

BUSINESS BURDENS DOWN

Tax reduction has been a viable option to stimulate businesses when economic growth slows.

More than 1 trillion yuan was saved for Chinese businesses from May 2016 to September 2017 due to the implementation of value-added tax, the most significant tax overhaul for two decades.

The tax reduction was only part of a bigger burden-relief plan for businesses, which will be a major task of supply-side structural reform in 2018.

Business burdens will be reduced through fewer government-imposed transaction costs and administrative charges, according to the recent economic work conference. Energy and logistics spending will decline through reforms in the power, oil and natural gas, and railway sectors.

The government has also promised to continue cutting red tape and giving full play to the market. In the first three quarters, the number of businesses registered each day stood at 16,500, up from 15,000 in 2016.

"For higher economic quality and efficiency, China needs to motivate people to innovate, create new things and set up businesses," said Wang Jun, an economist with Zhongyuan Bank.
 
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Economic Watch: What to expect for China's economy in 2018
Xinhua| 2018-01-01 16:47:51
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Once again it is time for reflections and resolutions. For China, which sailed through a difficult year safe and sound, and with government promises of a more efficient and open economy, the country is ready to start a new journey.

Despite some turbulence along the way, China's economy ended 2017 stronger than expected: headline growth is sure to meet targets, financial risks are being contained, the property market is cooling down, and key reforms are making steady progress.

So far, the world's second-largest economy has proved to be a key engine for global growth. Will its role continue to improve, and how will China navigate troubled waters? The following are some key areas to watch.

DEEPER SUPPLY-SIDE STRUCTURAL REFORMS

China's wide-ranging structural reforms, designed to improve the supply side of the economy, have produced desired outcomes in 2017 and are expected to gear up in 2018.

In the battle against overcapacity, a major task for the reforms, China has accomplished its plans to slash steel production capacity by around 50 million tonnes and coal by at least 150 million tonnes last year.

Progress has also been reported on the other four fronts, including deleveraging, destocking, lowering costs and enhancing weak links.

The annual Central Economic Work Conference last month pledged that China will press ahead with supply-side structural reform in 2018 with more efforts to improve economic quality.

CONTINUED REGULATORY STORM

In what some dubbed the "toughest year" for China's financial industry, authorities have taken real steps to curb widespread malfeasance in the rapidly expanding financial market.

Banks, insurance and securities companies have received heavy fines for flouting market rules, and internet finance companies once prospering on easy and fat profits are having a difficult time surviving with the enhanced rules.

The hardline stance is set to continue as senior leaders agreed to maintain the resolute crackdown on irregular and illegal activities in the financial sector to forestall risks.

Although a statement released after the key economic meeting did not mention deleveraging, financial risk control is still a priority given that defusing major risks is one of the three tough battles that the country has vowed to fight.

ESCALATING WAR ON POLLUTION

There is no better gauge than the clear and blue skies in Beijing this winter to demonstrate the effects of China's anti-pollution drive.

Once a rarity, blue winter skies are no longer a luxury in Beijing due to a government campaign for increased use of clean fuel for heating and tough punishments against polluting enterprises.

Pollution control has also been listed as one of China's "three tough battles" for the next three years, targeting a significant reduction in the emissions of major pollutants and an improvement in the overall ecological environment.

To win the battle, efforts should be focused on adjusting the structure of industries, strengthening energy conservation and making the skies blue again, according to the Central Economic Work Conference.

REAL ESTATE REGULATION TO MAINTAIN

In 2017, the property market, once deemed a major risk for the broader economy, cooled down amid tough curbs such as purchase restrictions and increased downpayment requirements as the government sought to rein in speculation.

With the market holding steady, Chinese authorities aim for a "long-term mechanism" for real estate regulation and a housing system that ensures supply through multiple sources and encourages both housing purchases and rentals.

In large and medium-sized cities, the government will step up the development of housing rental market, especially long-term leases. Meanwhile, reducing unsold housing will still be a priority for the third- and fourth-tier cities and counties.

A report from the National Academy of Economic Strategy predicted that the country's property market should remain stable in 2018 if there is no major policy shock.

SOE REFORM QUICKENS

Reforms of state-owned enterprises (SOEs) will also go into deeper waters in 2018 as the Chinese government expects them to play a bigger role in leading excess capacity cuts, keeping the debt ratio under control and driving high-quality economic development.

In 2017, up to 68.9 percent of the central SOEs were involved in mixed-ownership reforms, and authorities are reviewing plans for more to join the drive.

At the 19th National Congress of the Communist Party of China (CPC), the Chinese leadership pledged to further reforms to make SOEs "stronger, better and bigger," and turn them into "world-class, globally competitive firms."

The government will press ahead with stronger restructuring and deleveraging efforts, as well as furthering mixed-ownership experiments at more SOEs, authorities said.

DOORS OPENING WIDER

The year 2018 will mark the 40th anniversary of China's reform and opening up policy, and Chinese leaders have promised that its door to the world will only open wider.

China will increase imports and cut import tariffs on some products to promote balanced trade, according to the Central Economic Work Conference.

To give foreign firms greater opportunities in China's booming market, a negative list approach to market entry, which states sectors and businesses that are off limits to foreign investment, will be expanded nationwide in 2018.

The country will also grant more power to pilot free trade zones and explore the opening of free trade ports, according to the 19th CPC National Congress.
 

Hendrik_2000

Brigadier
New year resolution of Chinese people
"Xi Jinping: China’s new era in which ‘no one must be left behind"
After 40 years of reform, opening up and development, China is standing in a “new era.” The ultimate goal of this period is the “great rejuvenation of the nation,” a blueprint set forth by Chinese President Xi Jinping, who plans to push his country forward in a “new era” during which “no one must be left behind.” GuanghuaStudio

 

Hendrik_2000

Brigadier
This is a good question Any wager here?. People forgot how poor China was in 97. Her percapita income is the same as Congo. thatis waht you got if you release the tremendous energy of Chinese people. I Just watch the rise and fall of an empire by CCTV or now CGTN. It is an attempt to find the cause of Han empire rise and their conclusion is let the people create wealth any attempt to interfere with that pursuit will only result in decline How true it is !
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AFTER ALL THOSE ‘HARD LANDING’ WARNINGS, DO YOU STILL WANT TO BET AGAINST CHINA?
In the 1980s China accounted for just 3 per cent of total global output and later naysayers lined up to criticise attempts at reform, but Beijing has prevailed and seems prepared to weather any storm

BY
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1 JAN 2018

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Job seekers attend a career fair in Zhengzhou University in Zhengzhou, Henan province, China. Photo: Reuters
In December, the China Economic Quarterly shut up shop after 20 years. To mark the print journal’s passing, the editors looked back at the lessons learnt since 1997, and what they teach about the likely course of China’s development over the next generation.

The first lesson is just how wrong many 20-year-old forecasts about
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turned out to be. From the vantage point of 2017-2018, its economic ascendance appears to have had an air of inevitability about it. But that’s not how things looked in late 1997.

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Workers weld steel bars at a construction site in Huai'an, Jiangsu province. Photo: Reuters

At the time, China was an economic also-ran. Yes, it was home to more than a fifth of the world’s population. But it accounted for just 3 per cent of global economic output, and a similar share of world trade. The average income was on a par with the Congo. Most of the state-controlled industrial base was antiquated and unprofitable.

Across the country, state-owned enterprises were kept in business only by open-ended loans from state banks, operating as a form of welfare. As a result, some 50 per cent of the banking system’s outstanding loans were reckoned to be non-performing, with the entire financial system often said to be in danger of imminent collapse.

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Worse, it seemed political appetites for economic reform had diminished since the opening up of the 1980s – an opening that led to runaway inflation and the political uprising of 1989. In the 1990s, things seemed to go backwards, with a tightening of central government control and an entrenchment of interests that saw the People’s Liberation Army (PLA) established as one of the country’s primary forces in business.

And just to cement the pessimistic view, in the summer of 1997 the tiger economies of Southeast Asia were struck by a round of devaluations, defaults and debt deleveraging that threatened, domino-fashion, to topple China, too. In early 1998, one diplomat in the economic section of the US embassy in Beijing was so sure that China’s economy was going the same way as Thailand’s and Indonesia’s that he was prepared to bet all-comers US$1,000 that Beijing would devalue the yuan by at least 20 per cent during the following 12 months.

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A worker hangs dried fish onto poles at a processing facility on the outskirts of Hangzhou, Zhejiang province. Photo: Reuters

He lost his bet. What he had failed to take into account was the remarkable political will and executive ability of premier Zhu Rongji. As China Economic Quarterly (CEQ) editor Arthur Kroeber wrote last month: “The achievements of Zhu’s five-year tenure were little short of astonishing. Were it possible to measure such things precisely, he would certainly hold the world record for the most economic reforms achieved in the least amount of time.”

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Zhu’s administration broke up China’s monolithic ministries, restructured big state concerns into something resembling commercial businesses, closed down the most inefficient rust-belt operations (ruthlessly laying off tens of millions of industrial workers in the process), sold off thousands of smaller enterprises, forced the PLA to surrender its commercial interests, cleaned up the banking system and privatised China’s housing stock to ignite a multi-year property and construction boom.

And along with his boss Jiang Zemin, Zhu secured China’s entry into the World Trade Organisation, a move that helped pave the way for the explosion of trade and investment which followed.

The economic upheavals were so deep-seated and far-reaching that many of the outside observers who had been worried that a failure to reform would lead to economic and political collapse promptly started to predict instead that an overenthusiastic approach to reform would now produce the same result.

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The Yangshan Deep-Water Port, an automated cargo wharf, in Shanghai. Photo: AFP

They were wrong. And so were the legions of economists who predicted China’s financial and economic collapse as a result of Beijing’s massive credit-fuelled investment binge during the 2008-09 global crisis, or from the rapid build up of debt in the years that followed.

For 20 years, China has defied every forecast of collapse to become the world’s second-biggest economy, and by far the most important driver of global growth. What is more, the Communist Party now appears more solidly entrenched in power than at any time in the last few decades.

So what lessons can all this teach us about the next 20 years? Most obviously, it doesn’t pay to bet against either China’s economic development or the primacy of the Communist Party.

For decades, observers have argued that China’s model of state-directed development was deeply inefficient. Repeatedly they warned that it would misallocate capital on a colossal scale, leading to declining returns on investment, a debt crisis, and stalled growth, if not an outright economic contraction.

Yet, while China’s development model was far from perfectly efficient, it has proved effective enough. And while capital misallocation may have seen the value of liabilities exceed that of assets across much of the state sector, that matters little. It is not insolvency that triggers financial and economic crises, but illiquidity. And as long as the state controls the domestic financial system and constrains flows of cross-border capital, the chances of a crippling liquidity crunch remain minimal.

So, yes, China’s growth will slow over the coming 20 years. That’s inevitable given the sheer size its economy has reached. But the slowdown won’t trouble most Chinese people. As the economy continues gradually to rebalance from investment to consumption, from manufacturing to services, incomes will continue to increase, with the number of households reckoned to be affluent middle-class set to triple even as growth slows.

That doesn’t mean the next 20 years will unfold entirely according to the
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script. Demographic headwinds will become increasingly strong as China ages. And exporting influence around the world will prove tough given China’s unappetising political model and the continued reliance of its economic model on capital controls. But will China’s political and economic system collapse in the next 20 years? Looking at the history of the past 20 documented by CEQ, it would be foolish to bet on it. ■
 
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China starts collecting environment tax
Xinhua| 2018-01-01 19:28:23
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China started collecting an environment tax on Monday to better protect the environment and cut pollutant discharge, as the country's Environmental Protection Tax Law took effect on Jan. 1, 2018.

The introduction of the tax called an end to the "pollutant discharge fee" which China had been collecting for nearly 40 years.

This is China's first tax clearly designed for environmental protection, which will help establish a "green" financial and taxation system and promote pollution control and treatment of pollutants, said Wang Jinnan, head of the Chinese Academy For Environmental Planning under the Ministry of Environmental Protection.

China had collected a "pollutant discharge fee" since 1979. However, some local governments exploited loopholes and exempted enterprises that were otherwise big contributors to fiscal revenue. For years, regulators had suggested replacing the fee system with a law.

Under the Environmental Protection Tax Law, which targets enterprises and public institutions that discharge listed pollutants directly into the environment, companies will pay taxes for producing noise, air and water pollutants as well as solid waste.

Tackling pollution has been listed as one of the "three tough battles" that China aims to win in the next three years, according to the Central Economic Work Conference earlier this month.
 

Hendrik_2000

Brigadier
The 2nd oil pipeline from Russia is officially begin operation doubling it to 30 million ton or 300 million barrel per year roughly 1 million barrel per day or about 15% of Chinese import Add to that another 15% from Kazakhstan and other central Asia you got 30% oil import bypassing the Malacca straits. Good news
Next will be the new gas line from Russia
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New line of China-Russian oil pipeline begins operation
Source: Xinhua| 2018-01-01 17:33:06|Editor: Lifang
MOHE, Heilongjiang Province, Jan. 1 (Xinhua) -- A second line for the China-
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oil pipeline began commercial operation Monday, raising China's annual imports of Russian crude oil from 15 million to 30 million tonnes annually through the pipeline.


Construction on the 941.8-km-long second line from Mohe, which borders Russia, to the city of Daqing in northeast China's Heilongjiang Province began in August 2016. The line passes north China's Inner Mongolia Autonomous Region.

The second line was built in parallel to the first line between Mohe and Daqing, said Jiang Changliang, general manager of PetroChina Pipeline Company. The project is intended to deepen energy cooperation between China and Russia and serve the China-proposed Belt and Road Initiative.

Originating in the Russian town of Skovorodino, the new line enters China at Mohe and terminates at Daqing. It operated smoothly and its transmission was 3,812 cubic meters per hour at the Mohe station, according to a Xinhua reporter at the scene Monday morning.

The first line from Mohe to Daqing was put into use on Jan. 1, 2011, with an annual capacity of 15 million tonnes. It has transported a total of 110 million tonnes of oil so far.

From UPI
Jan. 2 (UPI) -- China could double the amount of crude oil it receives from Russia with the start of commercial operations of a pipeline, state media reported.

The official Xinhua News Agency reported
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of a Russian oil pipeline went into commercial service on Monday. It means Chinese imports of Russian crude oil could double from about 100 million to 300 million barrels per year.



"The project is intended to deepen energy cooperation between China and Russia and serve the China-proposed Belt and Road Initiative," the news agency stated.

The initiative is part of Chinese President
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's efforts to integrate the Chinese economy with European countries. Construction on the 585-mile line second leg began in 2018 and parallels an existing network that runs through China's Inner Mongolia region.

China is the second-largest economy in the world behind the United States. Oil demand from China in November, the last full month for which data are available, was 9 million barrels per day -- the second highest on record.

The World Bank estimated Chinese growth for 2017 should be around 6.8 percent, supported by improvements in household incomes and external demand.

In
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marking the New Year, Xi said China's presence on the global stage would be marked by its achievements.

"China will resolutely uphold the authority and status of the United Nations, actively fulfill China's international obligations and duties, remain firmly committed to China's pledges to tackle climate change, actively push for the Belt and Road Initiative, and always be a builder of world peace, contributor of global development and keeper of international order," he said. "The Chinese people are ready to chart out a more prosperous, peaceful future for humanity, with people from other countries."

Last year, the Chinese president said more than 13 million new jobs were created, 10 million people were lifted out of poverty and basic medical insurance was carried by 1.35 billion people.

Priorities
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for Russian energy company Gazprom, meanwhile, include the development of the Power of Siberia natural gas pipeline, a 2,500-mile network to China. The Kremlin described the pipeline as a way to tie the Russian energy sector to two poles of the economic world.
 
Thank you, Mr. Trump!
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Pakistan is ditching the dollar for trade with China — 24 hours after Trump denounced the country

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Published 14 Hours Ago Updated 11 Hours AgoCNBC.com
  • A day after President Donald Trump slammed Pakistan on Twitter, the South Asian nation announced it will replace the dollar with yuan for bilateral trade with Beijing
  • As U.S.-Pakistan relations grow increasingly strained, China has been pursuing closer links with the country
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ASIF HASSAN/AFP/Getty Images
Just 24 hours after President
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took aim at
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on Twitter, the South Asian nation already appears to be cozying up to the world's second-largest economy.

A day after the U.S. leader slammed Islamabad for harboring terrorists
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, Pakistan's central bank announced that it will be replacing the
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with the
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for bilateral trade and investment with Beijing.

The same day, Chinese Foreign Ministry spokesman Geng Shuang defended Islamabad's counter-terrorism track record, saying the country "made great efforts and sacrifices for combating terrorism" and urged the international community to "fully recognize this."


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has been watching closely as U.S.-Pakistan relations become increasingly strained. Trump has long demanded the frontier economy to
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while he simultaneously
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.

"Pakistan and the U.S. have had a fraught relationship for years, but the big change recently has been China," said Simon Baptist, Asia regional director at the Economist Intelligence Unit. "China has really gone hard in cementing its existing relationship with Pakistan, it's really the only place that's seen significant investment under the Belt and Road initiative and China has been pushing for geopolitical advantage there."

Islamabad is home to one of Beijing's central infrastructure schemes, a near $60 billion collection of land and sea projects known
And with a steady stream of Chinese capital under its belt, Pakistan may no longer be receptive to American threats, the most recent of which involves Washington
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.

"Pakistan balks far less at reductions in American aid, which, as the former points out, has dwindled in recent years anyway. China, on the other hand, has promised Pakistan $57 billion in investments on infrastructure and energy under its Belt and Road Initiative," Madiha Afzal, a nonresident fellow at Brookings, said in a recent note. "All this means that America has far less leverage over Pakistan."

"The history of Pakistan's relationships with China and the United States also shows that Pakistan's policy does not respond to strong-handedness, but to loyalty, and to being treated with dignity," she continued.

For Beijing's part, a Monday editorial published by Chinese state-run news outlet Global Times said that "China and Pakistan enjoy an all-weather strategic partnership of cooperation, Beijing will without doubt not give up on Islamabad."

Regardless of
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— Foreign Minister Khawaja Asif recently dismissed Trump's outburst as a political stunt — the two nations are expected to continue cooperating this year.

Ultimately, Washington needs Pakistani cooperation to address its concerns about
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and
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, Baptist said, adding that it remains to be seen if Trump's social media tirade will translate into real policy change.


 

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