eg Chinese Voices
No. 41 | 17.04.2022
Chinese Foreign Minister Wang Yi held a meeting with representatives from Russia, US, and Pakistan on the Afghan Issue in Tunxi, Anhui Province on March 31, 2022. [Xinhua]
The development and challenges of Chinese-Russian dedollarization
Wang Xiaoquan
Wang Xiaoquan (王晓泉) is a researcher and director of the Scientific Research Department, Institute of Russian, East European, and Central Asian Studies, Chinese Academy of Social Sciences

Context

Since the beginning of the 2022 Russian-Ukrainian conflict, the US has imposed sanctions on Russia in multiple areas, but particularly in the financial area by banning Russian institutions from the SWIFT global payments system. This has triggered discussions in China about how to respond to future financial sanctions imposed by the US and Europe. Wang Xiaoquan states that due to US financial hegemony globally and its abuses, more than 40 countries have started the process of dedollarization. He expands on the progress made and challenges faced in dedollarizing Russian-Chinese financial exchanges.

Key Points

  • US hegemony in financial sectors is demonstrated mainly in the following areas: through the issuance of dollars, the US gains large seigniorage benefits; through the Federal Reserve's quantitative easing, the US transfers its economic crisis globally; through its control of SWIFT and CHIPS (Clearing House Interbank Payment System), the country has access to the vast majority of the world's dollar flows, and receives vital economic intelligence from them; through its long-arm jurisdiction, it imposes financial sanctions on other countries.
  • As of February 2021, more than 40 countries, including China, Russia, Japan, and European countries have begun the process of dedollarization. This includes shrinking dollar-denominated foreign exchange reserves and US debt, reducing the use of the dollar in international economic cooperation, and moving away from US control of global clearing.
  • Russia has launched a financial messaging system (SPFS) that currently has nearly 400 bank customers, including the Bank of China. Russia, China, and India are also developing a way to conduct emergency electronic settlements in the event of a SWIFT disconnection.
  • As of the first half of 2019, China's RMB Cross Border Payment System (CIPS), which enables the real-time transfer of funds, has 31 direct participants and 847 indirect participants.
  • Germany, France, and the United Kingdom have established the Instrument for Trade Support and Assistance (INSTEX) for oil and commodity trade with Iran. While physical shipments move to and from Iran, all funds remain in the EU.
  • The demand for China's yuan in the Russian-Chinese settlement and payment system is increasing rapidly due to the stability of the yuan's exchange rate, the yuan being Russia's third-largest foreign exchange reserve (13.8 percent), the significant growth in settlements and payments as the result of increased Russian-Chinese trade, and a meaningful improvement in the conditions for settlement in local currency.
  • Large value transactions in Chinese-Russian trade are increasingly conducted in yuan and euro. In 2020, China's yuan trade settlement amounted to US$ 48.062 billion and euro settlement amounted to US$ 40.531 billion, accounting for 44.92 percent and 37.88 percent of total Chinese-Russian trade settlement respectively. The US dollar accounts for only 14.42 percent of the bilateral trade volume between Russia and China, or US$ 15.429 billion.

Summary

Wang points out that it is difficult to extricate from SWIFT in the short term considering its dominant position in the global settlement and payment system. Cross-border settlement payments in domestic and foreign currencies between China and Russia are mainly done through interbank accounts and correspondent bank accounts with SWIFT as the channel. Therefore, the two countries should look to the experience of INSTEX and jointly build the international trade settlement support tool and apply it to the Eurasian Economic Union, Shanghai Cooperation Organization (SCO), ASEAN, and BRICS countries for trade document aggregation.

China’s diplomatic efforts with neighboring countries and its long-term strategy
Pan Guang
Pan Guang (潘光) is Director of SCO Research Center, Shanghai Academy of Social Sciences, Senior Advisor of China Middle East Society

Context

Against the backdrop of the Russian-Ukrainian conflict, China's foreign minister made visits to India, other South Asian countries, and Afghanistan. He held a meeting of foreign ministers of Afghanistan's neighbors in Tunxi, and held tripartite talks between China, Pakistan, and Afghanistan. This series of diplomatic activities has raised concerns from Western countries. Pan Guang provides a detailed interpretation of these diplomatic activities, especially regarding Chinese-Indian relations, and the global stance on the Russian-Ukrainian conflict.

Key points

  • Before the normalization of Sino-Russian relations (Gorbachev's visit to China in May 1989), India and Russia had a closer relationship than China and Russia. Since the normalization of relations between the two countries, Russia has been a bridge between China and India through SCO, BRICS, and the Russia-India-China (RIC) trilateral framework.
  • India's vote to abstain from sanctioning Russia in the Russian-Ukrainian conflict has given China and India a common position, with both sides speaking out together and calling for a peaceful negotiated settlement. However, this will not shake India's enthusiastic participation in the Quad–the US, India, Australia, and Japan – against China.
  • The UN resolution denouncing the Russian-Ukrainian military conflict was misinterpreted by many and 141 countries voted in favor of it, with the exception of three dozen countries that abstained. The West claims that Russia is isolated, but there are only 39 countries that have actually sanctioned Russia.
  • Israel and the Arab countries did not participate in the US-Western-sponsored sanctions against Russia. Israel, a loyal ally of the US, wants to help solve the Russian-Ukrainian conflict, as there is a large Jewish community in Ukraine. Also, NATO member Turkey, acting in its own interests, has actively mediated the Russian-Ukrainian conflict.

Summary

The author notes that the fact that China convened a meeting with Afghanistan and its neighbors has some implications. China has gradually entered a leading role in post-war mediation in Afghanistan. At the same time, it has played a role in persuading and promoting peace talks on other hot issues. Judging from Foreign Minister Wang Yi's statement, the Taliban is moving in the right direction in the months since coming to power. Acting Afghan Foreign Minister Mottaki specifically mentioned that he hopes China will step up its investment in Afghanistan by developing, for example, the world's second-largest copper mine, Aynak Copper. Also, Afghanistan's new Taliban leadership has had a positive response to China's proposal for the China-Pakistan Economic Corridor stretching to Afghanistan. Yet terrorist activities and security issues in Afghanistan are still China's primary concern.

How are Party members mobilized to control the pandemic in grassroots communities?
Di Jinhua
Di Jinhua (狄金华) is a professor at the School of Sociology, Huazhong University of Science and Technology
Zeng Jianfeng
Zeng Jianfeng (曾建丰) is a Ph.D candidate at the School of Sociology, Huazhong University of Science and Technology

Context

The CPC's Shanghai Committee recently sent an open letter to all Party members in the city, asking them to take the initiative to participate in the epidemic prevention work in their residential communities. The pandemic situation in Shanghai continues to be severe, with 23,292 new cases reported on April 11. Grassroots communities, as the frontline in epidemic control, are, however, generally facing problems such as the lack of manpower and materials. In a study conducted in one city in Hubei Province during the 2020 Wuhan outbreak, Di Jinhua and Zeng Jianfeng found that the Party members mobilized by the city government to go into communities (党员下沉 dǎngyuán xià chén) have played an important role in epidemic control.

Key points

  • After the Covid outbreak in January 2020, the organization department of the city's Party committee immediately issued several documents, requesting Party members to join in the fight against the pandemic in the communities close to where they lived. For example, in one community with a population of 15,500, a total of 565 party members participated in the work.
  • The Party members and local community staff established a temporary Party organization and several branches that had different duties, such as community access control, patrol work, distribution of necessities of life, and handling emergencies. The temporary Party secretary of the newly-created organization was generally leading cadres in the discipline inspection committee, organizational committee, and other core departments in the city government.
  • The temporary Party organizations and Party members became the main force of epidemic control, reducing the pressure on communities, and thus grassroots communities focused on joint prevention work and logistical support. For example, when the Party members found suspicious cases of fever, the community staff would send them to centralized quarantine facilities and then return them to their homes.
  • The Party members utilized their posts and skills to solve the problems of pandemic control. For example, one deputy Party secretary of the temporary party committee is also the director of a local tobacco company. He and eight other cadres in the company developed a mobile app to help residents order and distribute supplies, while cadres from the public security bureau and discipline inspection committee often undertake emergency response and patrol work.

Summary

The authors point out that the mobilization of Party members to go to grassroots communities has helped consolidate and centralize formerly weak and disorganized forces. Significant human resources and other material support have been sent to the grassroots communities, which have strengthened the fight against the pandemic. Simultaneously, the regulations and procedures that exist within the Party's permanent administrative organizations were also implemented in the temporary Party organizations, which has enhanced the coordination within the community, and the effectiveness of prevention and control of the pandemic.

Why is fertilizer critical to China’s food security?
Zhang Fusuo
Zhang Fusuo (张福锁) is a fellow from the Chinese Academy of Engineering

Context

Recently, due to the Covid-19 pandemic and Russian-Ukrainian conflict, global fertilizer prices have soared, which could be a major factor endangering Chinese peasants' income and food security. Zhang Fusuo points out that fertilizer is a strategic national resource that affects the livelihood of hundreds of millions of peasants and is an important industry that involves the employment of more than two million people. He analyzes China's historical exploration of fertilizer technology and technological innovation, and how to solve the persistent problem of rising fertilizer prices that threaten farmers' income and food security.

Key points

  • As the "food" for grains, the use of fertilizer has contributed 40 percent of the increase of China's grain production since the reform and opening up in 1978. Globally, thanks to ammonia technology, between 1908 and 2008, the number of people fed per hectare of arable land increased from 1.9 to 4.3.
  • In recent years, chemical fertilizer has been criticized as a source of environmental pollution, which is a result of its excessive and irrational use. Fertilizer contributes about 24 percent of China's wastewater ammonia nitrogen emissions, but the proportion is much less than that of residential water pollution. Fertilizer pollution can be reduced and avoided by improving fertilizer utilization.
  • China has become the world's largest producer and consumer of fertilizer, with annual production accounting for more than 30 percent of the world's total. Domestic fertilizer production can meet China's domestic requirements, but the annual demand for potash is about 10 million tons, around half of which needs to be imported. Influenced by various factors, such as Covid-19, potash prices rose to 4,300 yuan per ton in February, an historical record high in nearly a decade. The price is predicted to continue soaring as Russia stops the export of potash fertilizer due to the Russian-Ukrainian conflict.
  • Soaring fertilizer prices have squeezed peasants' income and endangered food security. China's wheat and rice net profit is only 15-20 yuan per mu (0.067 hectares), while recent fertilizer price hikes have led to an increase in costs of 60-100 yuan per mu (0.067 hectares).

Summary

Zhang Fusuo points out that in addition to international market factors, this round of fertilizer price spikes is also due to the problems related to China's fertilizer industry. If China improves its fertilizer utilization rate and reduces the use of potash by three million tons this year, food security will not be affected. China has made great progress in increasing its fertilizer utilization rate from 33 percent to 40 percent (2013-2020), but an increase to 60 percent would mean that China could double its grain production. The author suggests that in the future, China should continue to promote the transformation and upgrading of fertilizer usage through green, low-carbon, smart technology, and efficient methods, and to promote innovation in the management system reform and industry chain reconstruction.

The history and practices of the CPC’s “self-revolution”
Xiao Xiaohua
Xiao Xiaohua(肖小华)is a professor and director of the Teaching Planning Department of Jinggangshan Cadre College

Context

Criticism and self-criticism (批评与自我批评 pīpíng yǔ zìwǒ pīpíng) and self-revolution (自我革命 zìwǒ gémìng) – the process of constantly assessing and renewing oneself – are important methodologies to maintain the growth and vitality of CPC. Xiao Xiaohua summarizes the theories and practices of self-revolution in different periods of CPC over the past century and points out its significance to the process of Marxism's Sinicization and to the continuation of Party building in the new era.

Key points

  • At the August 7th Meeting(1927), CPC openly reviewed the lessons of the failure of the Great Revolution and corrected founding leader Chen Duxiu's right opportunism. This was an important example of self-revolution in the early years of the Party. On the basis of the review, the Party formulated the general policy of armed uprising and land revolution, which provided the correct direction for the Chinese Revolution.
  • After the Gutian Conference(1929), the Zunyi Conference(1935), and the Yan'an Rectification Movement(1942-1945), the CPC's methodology of criticism and self-criticism was inherited and developed further. In the process, CPC learned the lessons of brutal struggle within the Party, and formulated the policy of "learning from past mistakes to avoid future ones, and curing the sickness to save the patient."(惩前毖后治病救人 chéngqián bìhòu zhìbìng jiùrén) and gradually systematized self-revolution throughout the Party.
  • After the founding of New China, in order to solve the problems of detachment from the masses and bureaucratism among Party members and cadres, CPC carried out seven rectification campaigns and raised its theoretical level by studying the Selected Works of Mao Zedong and increasing Party discipline.
  • The Third Plenary Session of the Eleventh Central Committee(1979) launched the "debate on criterion for truth"(真理标准大讨论 zhēnlǐ biāozhǔn dà tǎolùn), a milestone in the Party's self-revolution. The conference closely reviewed the Party's history, shifted the focus of the Party and the state, and revolutionized the traditional understanding of socialism through liberating thoughts, pushing forward the reform and opening up, and developing socialism with Chinese characteristics.
  • Since the 18th National Congress of CPC(2012), Xi Jinping has made self-revolution at a high priority. The CPC launched the "eight-point decision on improving Party and government conduct" and rectified Party disciplinary regulations to strengthen the control and supervision of power, as well as to combat corruption with zero tolerance.

Summary

Even during the most difficult phase of the War of Resistance Against Japanese Aggression(1937-1945), the Party did not relax its efforts to strengthen itself theoretically and practically. Mao firmly stated that even if they risked losing control of their revolutionary base in Yan'an (1935-1945), a thorough rectification campaign would still be carried out. In the new era, the Party's self-revolution continues to advance. Xi Jinping has taught leading cadres to maintain self-discipline and resist corruption, and insisted on "catching tigers and flies". Xi stressed that CPC, as the ruling Party guided by Marxism, cannot rest on its laurels, but must always "maintain the same vigor as during the revolutionary war and carry out the revolutionary work to the end".

(Chinese Voices will continue to interpret the historical context and developmental logic of Marxism's Sinicization)

Subscribe to Chinese Voices. The digest is published every Sunday in English, Spanish, and Portuguese.Download the PDF of the complete articles (automatically translated) of this issue. The opinions of the articles are not necessarily shared by Dongsheng editorial collective.

Follow our social media channels: