China shows off new destroyer as Xi views naval parade

Chinese President Xi Jinping reviews the honor guards of the Chinese People’s Liberation (PLA) Navy before boarding the destroyer Xining for the naval parade celebrating the 70th founding anniversary of the Chinese People's Liberation Army (PLA) Navy in Qingdao, Shandong province, China April 23, 2019. Xinhua via REUTERS

By Ben Blanchard

QINGDAO, China (Reuters) – China showed off the first of its new generation of guided missile destroyers on Tuesday as President Xi Jinping reviewed a major naval parade through mist and rain to mark 70 years since the founding of China’s navy.

Xi is overseeing a sweeping plan to refurbish the People’s Liberation Army (PLA) by developing everything from stealth jets to aircraft carriers as China ramps up its presence in the disputed South China Sea and around self-ruled Taiwan, which has rattled nerves around the region and in Washington.

The navy has been a major beneficiary of the modernization, with China looking to project power far from its shores and protect its trading routes and citizens overseas.

After boarding the destroyer the Xining, which was only commissioned two years ago, Xi watched as a flotilla of Chinese and foreign ships sailed past, in waters off the eastern port city of Qingdao.

“Salute to you, comrades. Comrades, thanks for your hard work,” Xi called out to the officers standing on deck as the ships sailed past, in images carried on state television.

Chinese navy personnel perform at an event celebrating the 70th anniversary of the founding of the Chinese People's Liberation Army Navy (PLAN) in Qingdao, China, April 22, 2019. REUTERS/Jason Lee

Chinese navy personnel perform at an event celebrating the 70th anniversary of the founding of the Chinese People’s Liberation Army Navy (PLAN) in Qingdao, China, April 22, 2019. REUTERS/Jason Lee

“Hail to you, chairman,” they replied. “Serve the people.”

China’s first domestically produced aircraft carrier, which is still unnamed and undergoing sea trials, was not present, though the carrier the Liaoning was, the report said.

The Liaoning, the country’s first carrier, was bought second-hand from Ukraine in 1998 and refitted in China.

State television also showed pictures of the Nanchang at the review, the first of a new fleet of 10,000-tonne destroyers, though details of that and other ships were hard to determine from the footage, due to the intermittent thick mist and rain.

China had said it would also show new nuclear submarines, and state television did show submarines taking part in the display.

Singapore-based regional security expert Collin Koh said that based on the available evidence, the larger submarine on show was a modified version of China’s existing Jin-class nuclear-powered ballistic missile submarines – a key part of its nuclear deterrent.

The navy has four Jin-class submarines, which are based in Hainan island in the south, and the Pentagon says it believes construction on a new generation of ballistic missile submarines will start in the 2020s.

“It does appear that this is a modified version rather than an entirely new submarine, something which would have been a more significant development,” said Koh, of Singapore’s S. Rajaratnam School of International Studies.

“Outside analysts still don’t have a complete picture of the precise modifications.”

China’s last major naval parade was last year in the South China Sea, also overseen by Xi.

Tuesday’s parade featured 32 Chinese vessels and 39 aircraft, as well as warships from 13 foreign countries including India, Japan, Vietnam and Australia.

A total of 61 countries have sent delegations to the event, which includes a naval symposium on Wednesday and Thursday.

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Chinese Navy's destroyer Shijiagzuang takes part in a naval parade off the eastern port city of Qingdao, to mark the 70th anniversary of the founding of Chinese People's Liberation Army Navy, China, April 23, 2019. REUTERS/Jason Lee

Chinese Navy’s destroyer Shijiagzuang takes part in a naval parade off the eastern port city of Qingdao, to mark the 70th anniversary of the founding of Chinese People’s Liberation Army Navy, China, April 23, 2019. REUTERS/Jason Lee

‘LONG FOR PEACE’

Earlier, meeting foreign naval officers at Qingdao’s Olympic sailing center, Xi said the navies of the world should work together to protect maritime peace and order.

“The Chinese people love and long for peace, and will unswervingly follow the path of peaceful development,” Xi said, in remarks carried by the official Xinhua news agency.

“Everyone should respect each other, treat each other as equals, enhance mutual trust, strengthen maritime dialogue and exchanges, and deepen pragmatic cooperation between navies,” he added.

“There cannot be resorts to force or threats of force at the slightest pretext,” Xi said.

“All countries should adhere to equal consultations, improve crisis communication mechanisms, strengthen regional security cooperation, and promote the proper settlement of maritime-related disputes.”

China has frequently had to rebuff concerns about its military intentions, especially as its defense spending reaches new heights.

Beijing says it has nothing to hide, and invited a small number of foreign media onboard a naval ship to watch the parade, including from Reuters.

China’s last naval battles were with Vietnam in the South China Sea in 1974 and 1988, though these were relatively minor skirmishes. Chinese ships have also participated in international anti-piracy patrols off Somalia since late 2008.

The United States has sent a low-level delegation to Qingdao, led by the naval attache at its Beijing embassy, and no ships.

However, the USS Blue Ridge, the command ship of the Japan-based U.S. Seventh Fleet, is visiting Hong Kong, having arrived in the city on Saturday.

A senior U.S. naval official aboard the ship said the Seventh Fleet would continue its extensive operations in the region, including so-called freedom of navigation operations to challenge excessive maritime claims.

China objects to such patrols close to the Chinese-held features in the Paracels and Spratlys archipelago in the South China Sea, where U.S. warships are routinely shadowed by Chinese vessels.

The U.S. official said he believed an incident last September, when a Chinese destroyer sailed within 45 meters of the American destroyer USS Decatur, was an isolated event and other routine interactions with the PLA navy had proved more professional.

(Reporting by Ben Blanchard; Additional reporting by Greg Torode in HONG HONG; Editing by Michael Perry, Robert Birsel)

In sensitive year for China, warnings against ‘erroneous thoughts’

FILE PHOTO: Workers decorate the party activity room next to a portrait of Chinese president Xi Jinping at Tidal Star Group headquarters in Beijing, China, February 25, 2019. REUTERS/Jason Lee/File Photo

By Ben Blanchard

BEIJING (Reuters) – China’s ruling Communist Party is ramping up calls for political loyalty in a year of sensitive anniversaries, warning against “erroneous thoughts” as officials fall over themselves to pledge allegiance to President Xi Jinping and his philosophy.

This year is marked by some delicate milestones: 30 years since the bloody crackdown on pro-democracy demonstrators in and around Tiananmen Square; 60 years since the Dalai Lama fled from Tibet into exile; and finally, on Oct. 1, 70 years since the founding of Communist China.

Born of turmoil and revolution, the Communist Party came to power in 1949 on the back of decades of civil war in which millions died, and has always been on high alert for “luan”, or “chaos”, and valued stability above all else.

“This year is the 70th anniversary of the founding of new China,” Xi told legislators from Inner Mongolia on Tuesday, the opening day of the annual meeting of parliament. “Maintaining sustained, healthy economic development and social stability is a mission that is extremely arduous.”

Xi has tightened the party’s grip on almost every facet of government and life since assuming power in late 2012.

Last year parliament amended the country’s constitution to remove term limits and allow him to stay in office for the rest of his life, should he so wish, though it is unclear if that will happen and Xi has not mentioned it in public.

Later in the year the party will likely hold a plenum of its top leadership focused on what China calls “party building”, diplomats and sources with ties to China’s leadership say, a concept that refers to furthering party control and ensuring its instructions are followed to the letter.

In late January the party again stressed loyalty in new rules on “strengthening party political building”, telling members they should not fake loyalty or be “low-level red”, in a lengthy document carried by state media.

“Be on high alert to all kinds of erroneous thoughts, vague understandings, and bad phenomena in ideological areas,” it warned. “Keep your eyes open, see things early and move on them fast.”

LOYALTY FIRST

On March 1, Xi spoke at the Central Party School, which trains rising officials, mentioning the word “loyalty” at least seven times, according to official accounts in state media.

Xi noted that whether an official is loyal to the party is a key gauge of whether they have ideals and convictions. “Loyalty always comes first,” he said.

Duncan Innes-Ker, regional director for Asia at the Economist Intelligence Unit, said China was concerned about resistance at lower levels to following party orders, the slowing economy and also about demands for political reforms as people get steadily richer.

“The desire for control is not something particular to any time period,” he said. “It is a fundamental tenet of autocratic governments that they are constantly paranoid about being overthrown.”

Xi looms large over this year’s session of China’s largely rubber stamp parliament, known as the National People’s Congress, which has always been stacked with people chosen for their absolute fealty to the party.

Government ministers who spoke to reporters on the sidelines of parliament’s opening session on Tuesday peppered their comments with references to Xi – 16 times in all.

Customs minister Ni Yuefeng said that Xi himself “pays great attention to not allowing foreign garbage into the country”, a reference to China’s ban on solid waste imports, part of the country’s war on pollution.

“Ideology comes first this year,” said one Western diplomat who is attending the parliamentary sessions as an observer. “It’s all about the 70th anniversary.”

ROOTING OUT DISLOYALTY

The party has increasingly been making rooting out disloyalty and wavering from the party line a disciplinary offense to be enforced by its anti-corruption watchdog, whose role had ostensibly been to go after criminal acts such as bribery and lesser bureaucratic transgressions.

The graft buster said last month it would “uncover political deviation” in its political inspections this year of provincial governments and ministries.

Top graft buster Zhao Leji, in a January speech to the corruption watchdog, a full transcript of which the party released late February, used the word “loyalty” eight times.

“Set an example with your loyalty to the party,” Zhao said.

China has persistently denied its war on corruption is about political maneuvering or Xi taking down his enemies. Xi told an audience in Seattle in 2015 that the anti-graft fight was no “House of Cards”-style power play, in a reference to the Netflix U.S. political drama.

The deeper fear for the party is some sort of unrest or a domestic or even international event fomenting a crisis that could end its rule.

Xi told officials in January they need to be on high alert for “black swan” events..

That same month the top law-enforcement official said China’s police must focus on withstanding “color revolutions”, or popular uprisings, and treat the defense of China’s political system as central to their work.

The party has meanwhile shown no interest in political reform, and has been doubling down on the merits of the Communist Party, including this month rolling out English-language propaganda videos on state media-run Twitter accounts to laud “Chinese democracy”. Twitter remains blocked in China.

The official state news agency Xinhua said in an English-language commentary on Sunday that China was determined to stick to its political model and rejected Western-style democracy.

“The country began to learn about democracy a century ago, but soon found Western politics did not work here. Decades of turmoil and civil war followed,” it said.

(Reporting by Ben Blanchard; Editing by Alex Richardson)

China outlaws large underground Protestant church in Beijing

FILE PHOTO: The head pastor of the Zion church in Beijing Jin Mingri poses for picures in the lobby of the unofficial Protestant "house" church in Beijing, China, August 28, 2018. Picture taken August 28, 2018. REUTERS/Thomas Peter

By Christian Shepherd

BEIJING (Reuters) – Beijing city authorities have banned one of the largest unofficial Protestant churches in the city and confiscated “illegal promotional materials”, amid a deepening crackdown on China’s “underground” churches.

The Zion church had for years operated with relative freedoms, hosting hundreds of worshippers every weekend in an expansive specially renovated hall in north Beijing.

But since April, after they rejected requests from authorities to install closed-circuit television cameras in the building, the church has faced growing pressure from the authorities and has been threatened with eviction.

On Sunday, the Beijing Chaoyang district civil affairs bureau said that by organizing events without registering, the church was breaking rules forbidding mass gatherings and were now “legally banned” and its “illegal promotional material” had been confiscated, according to images of the notice sent to Reuters late on Sunday and confirmed by churchgoers.

“I fear that there is no way for us to resolve this issue with the authorities,” Zion’s Pastor Jin Mingri told Reuters.

China’s religious affairs and civil affairs bureaux did not immediately respond to requests for comment.

China’s constitution guarantees religious freedom, but since President Xi Jinping took office six years ago the government has tightened restrictions on religions seen as a challenge to the authority of the ruling Communist Party.

Churches across China have faced new waves of harassment and pressure to register since a new set of regulations to govern religious affairs in China came into effect in February and heightened punishments for unofficial churches.

In July, more than 30 of Beijing’s hundreds of underground Protestant churches took the rare step of releasing a joint statement complaining of “unceasing interference” and the “assault and obstruction” of regular activities of believers since the new regulations came into effect.

China’s Christian believers are split between those who attend unofficial “house” or “underground” churches and those who attend government-sanctioned places of worship.

Churchgoers were also given a notice from the district religious affairs bureau saying that the “great masses of believer must respect the rules and regulations and attend events in legally registered places of religious activity”.

Zion’s attendees were also given pamphlets of officially sanctioned churches that they might attend instead.

But for many worshippers and pastors, such as Jin, accepting the oversight and ultimate authority of the Communist Party would be a betrayal of their faith.

“On this land, the only one we can trust in is God,” Jin said.

(Reporting by Christian Shepherd; Editing by Michael Perry)

North, South Korea fix April date for first summit in years

South Korean Unification Minister Cho Myoung-gyon is greeted by his North Korean counterpart Ri Son Gwon as he arrives for their meeting at the truce village of Panmunjom, North Korea, March 29, 2018. Korea Pool/Yonhap via REUTERS

By Christine Kim

SEOUL (Reuters) – North and South Korea will hold their first summit in more than a decade on April 27, South Korean officials said on Thursday, after North Korean leader Kim Jong Un pledged his commitment to denuclearization as tensions ease between the old foes.

South Korean officials, who announced the date after high-level talks with North Korean counterparts, said the agenda would largely be denuclearization of the Korean peninsula and improving inter-Korean relations.

The two Koreas had agreed to hold the summit at the border truce village of Panmunjom when South Korean President Moon Jae-in sent a delegation to Pyongyang this month to meet North Korean leader Kim Jong Un.

Thursday’s meeting was the first high-level dialogue between the two Koreas since the delegation returned from the North.

The two sides said in a joint statement they would hold a working-level meeting on April 4 to discuss details of the summit, such as staffing support, security and news releases.

“We still have a fair number of issues to resolve on a working level for preparations over the next month,” said Ri Son Gwon, the chairman of North Korea’s committee for the peaceful reunification of the country in closing remarks to the South Korean delegation.

“But if the two sides deeply understand the historic significance and meaning of this summit and give their all, we will be able to solve all problems swiftly and amicably,” Ri added.

Tension over North Korea’s tests of nuclear weapons and ballistic missile surged last year and raised fears of U.S. military action in response to North Korea’s threat to develop a nuclear weapon capable of hitting the United States.

But tension has eased significantly since North Korea decided to send athletes to the Winter Olympics in South Korea in February. The neighbours are technically still at war after the 1950-53 conflict ended with a ceasefire, not a truce.

China commended both sides for their efforts to improve ties.

“We hope the momentum of dialogue can continue and that the peaceful situation also can last,” Chinese foreign ministry spokesman Lu Kang told a briefing.

United Nations Secretary-General Antonio Guterres said he was encouraged by the recent developments with North Korea.

“I believe that in this world where unfortunately so many problems seem not to have a solution, I think there is here an opportunity for a peaceful solution to something that a few months ago was haunting us as the biggest danger we were facing,” Guterres told reporters on Thursday.

‘RESOLVE PROBLEMS’

Kim is scheduled to meet U.S. President Donald Trump in May to discuss denuclearization, although a time and place have not been set.

Kim met Chinese President Xi Jinping in a surprise visit to Beijing this week, his first trip outside the isolated North since he came to power in 2011.

Even more surprising was Kim’s pledge to denuclearize the Korean peninsula. That commitment was reported by Chinese state media, although North Korea’s official media made no mention of it, or Kim’s anticipated meeting with Trump.

A senior Chinese official visiting Seoul on Thursday to brief South Korea on Kim’s visit to Beijing said it should help ease tension and lead to the denuclearization of the peninsula.

“We believe his visit will help the denuclearization of the Korean peninsula, ensure peace and security of the Korean peninsula and resolve problems regarding the peninsula through political negotiations and discussions,” Yang Jiechi said in opening remarks during a meeting with South Korea’s National Security Office head, Chung Eui-yong.

Yang, a top Chinese diplomat, is scheduled to meet South Korean President Moon Jae-in on Friday.

South Korean Unification Minister Cho Myong-gyon told reporters Kim’s visit to China was not discussed with North Korean officials in their Thursday talks.

Trump and Kim had exchanged insults and veiled threats of war in recent months but the U.S. leader made the surprising announcement this month that he was prepared to meet Kim to discuss the crisis over the North’s development of weapons.

The North Korean leader’s engagement with the international community has sparked speculation that he may try to meet other leaders. Japan’s Asahi newspaper said Japan had sounded out the North Korean government about a summit.

Japan’s Foreign Minister Taro Kono left open the possibility that Prime Minister Shinzo Abe might meet Kim at some point. Kono said in an interview with Reuters on Tuesday that Japan was closely watching preparations for the North-South Korean summit and the Trump-Kim meeting.

Xi promised that Beijing would uphold its friendship with North Korea after his meeting with Kim.

Trump wrote on Twitter he had received a message from Xi late on Tuesday that his meeting with Kim “went very well” and that Kim looked forward to meeting the U.S. president.

(Reporting by Christine Kim; Additional reporting by Michael Martina in BEIJING and Michelle Nichols at the UNITED NATIONS; Editing by Robert Birsel and James Dalgleish)

China says North Korea’s Kim pledged commitment to denuclearization

North Korean leader Kim Jong Un shakes hands with Chinese President Xi Jinping, in this still image taken from video released on March 28, 2018. North Korean leader Kim Jong Un visited China from Sunday to Wednesday on an unofficial visit, China's state news agency Xinhua reported on Wednesday. CCTV via Reuters TV

By Ben Blanchard and Joyce Lee

BEIJING/SEOUL (Reuters) – North Korean leader Kim Jong Un pledged his commitment to denuclearization and to meet U.S. officials, China said on Wednesday after his meeting with President Xi Jinping, who promised China would uphold friendship with its isolated neighbor.

After two days of speculation, China and North Korea both confirmed that Kim had traveled to Beijing and met Xi during what China called an unofficial visit from Sunday to Wednesday.

The visit was Kim’s first known trip outside North Korea since he assumed power in 2011 and is believed by analysts to serve as preparation for upcoming summits with South Korea and the United States.

North Korea’s KCNA news agency made no mention of Kim’s pledge to denuclearize, or his anticipated meeting with U.S. President Donald Trump that is planned for some time in May.

China has traditionally been secretive North Korea’s closest ally but ties have been frayed by its pursuit of nuclear weapons and China’s backing of tough U.N. sanctions in response.

China’s Foreign Ministry cited Kim in a lengthy statement as telling Xi the situation on the Korean peninsula was starting to improve because North Korea had taken the initiative to ease tension and put forward proposals for talks.

“It is our consistent stand to be committed to denuclearization on the peninsula, in accordance with the will of late President Kim Il Sung and late General Secretary Kim Jong Il,” Kim Jong Un said, according to the ministry.

North Korea was willing to talk with the United States and hold a summit between the two countries, he said.

“The issue of denuclearization of the Korean peninsula can be resolved, if South Korea and the United States respond to our efforts with goodwill, create an atmosphere of peace and stability while taking progressive and synchronous measures for the realization of peace,” Kim said.

‘NUCLEAR UMBRELLA’

Kim Jong Un’s predecessors, grandfather Kim Il Sung and father Kim Jong Il, both promised not to pursue nuclear weapons but secretly maintained programs to develop them, culminating in the North’s first nuclear test in 2006 under Kim Jong Il.

The North had said in previous, failed talks aimed at dismantling its nuclear program it could consider giving up its arsenal if the United States removed its troops from South Korea and withdrew its so-called nuclear umbrella of deterrence from South Korea and Japan.

Many analysts and former negotiators believe this still constitutes North Korea’s stance and remain deeply skeptical Kim is willing to give up the weapons his family has been developing for decades.

At first wrapped in secrecy, the announcement of Kim Jong Un’s visit soon became the third-most discussed topic on China’s Weibo microblogging site, although many state media outlets blocked their comments sections.

Widely read Chinese state-run newspaper the Global Times praised the meeting as proving naysayers wrong about Beijing-Pyongyang relations.

“China and North Korea maintaining their friendly relations provides a positive force for the whole region and promotes strategic stability in northeast Asia,” it said in an editorial.

Kim’s appearance in Beijing involved almost all the trappings of a state visit, complete with an honor guard and banquet at Beijing’s Great Hall of the People.

Kim and Xi also met at the Diaoyutai State Guest House, where Kim Il Sung planted a tree in 1959 that still stands.

State television showed pictures of the two men chatting and Kim’s wife, Ri Sol Ju, getting a warm welcome from Xi’s wife, Peng Liyuan.

TRUMP BRIEFED

China briefed Trump on Kim’s visit and the communication included a personal message from Xi to Trump, the White House said in a statement.

“The United States remains in close contact with our allies South Korea and Japan. We see this development as further evidence that our campaign of maximum pressure is creating the appropriate atmosphere for dialogue with North Korea,” it said.

Analysts said the meeting strengthened North Korea’s position ahead of any meeting with Trump by aligning Beijing and Pyongyang while reassuring China it was not being sidelined in any negotiations.

“It seems that North Korea is not ready to deal with the United States without support and help from its longtime ally China,” said Han Suk-hee, professor of Chinese Studies at South Korea’s Yonsei University.

A top Chinese diplomat, Politburo member Yang Jiechi, will brief officials, including President Moon Jae-in, in Seoul on Thursday about the Beijing talks, the presidential office in Seoul said.

Kim told a banquet hosted by Xi the visit was intended to “maintain our great friendship and continue and develop our bilateral ties at a time of rapid developments on the Korean peninsula”, according to KCNA.

North Korean leader Kim Jong Un and wife Ri Sol Ju, and Chinese President Xi Jinping and wife Peng Liyuan meet, as Kim Jong Un paid an unofficial visit to Beijing, China, in this undated photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang March 28, 2018. KCNA/via Reuters

North Korean leader Kim Jong Un and wife Ri Sol Ju, and Chinese President Xi Jinping and wife Peng Liyuan meet, as Kim Jong Un paid an unofficial visit to Beijing, China, in this undated photo released by North Korea’s Korean Central News Agency (KCNA) in Pyongyang March 28, 2018. KCNA/via Reuters

Xi had accepted an invitation “with pleasure” from him to visit North Korea, KCNA said.

China made no mention of Xi accepting an invitation, but Foreign Ministry spokesman Lu Kang pointed to a line in their statement citing Xi as saying he is willing to maintain regular communications with North Korea via visits and exchanges of envoys and messages.

“I have to say that China and North Korea have a tradition of high-level mutual visits,” Lu told a daily news briefing.

China had largely sat on the sidelines as North Korea improved relations with South Korea recently, raising worry in Beijing that it was no longer a central player in the North Korean issue, reinforced by Trump’s subsequent announcement of his proposed meeting with Kim Jong Un in May.

“China is North Korea’s lifeline, so the notion, from a Chinese perspective, that Kim Jong Un could have had these other two meetings before meeting with Xi Jinping, I think the Chinese just thought that is not going to happen,” said Paul Haenle, director of the Carnegie–Tsinghua Center in Beijing and the former White House representative to North Korea denuclearization talks from 2007-2009.

(Additional reporting by Christine Kim and Soyoung Kim in SEOUL, David Stanway and John Ruwitch in SHANGHAI and Ayesha Rascoe in WASHINGTON; Writing by Lincoln Feast; Editing by Paul Tait, Robert Birsel)

Wary of Trump, China launches EU charm offensive: diplomats

FILE PHOTO: European Commission President Jean-Claude Juncker, left and Chinese President Xi Jinping shake hands before a meeting held at the Diaoyutai State Guesthouse in Beijing, China, Tuesday, July 12, 2016. REUTERS/Ng Han Guan/Pool/File Photo

By Robin Emmott and Ben Blanchard

BRUSSELS/BEIJING (Reuters) – China has launched a charm offensive with the European Union since U.S. President Donald Trump took office, shifting its stance on trade negotiations and signaling closer cooperation on a range of other issues, European diplomats say.

European envoys in Brussels and Beijing sense a greater urgency from China to find allies willing to stand up for globalization amid fears Trump could undermine it with his protectionist “America First” policies.

“Trump is pushing China and Europe together,” said one Beijing-based diplomat, citing Chinese support for trade, combating climate change and the United Nations, all areas where the new U.S. president is seeking a change of tack.

Four senior EU diplomats and officials in close contact with the Chinese told Reuters they also see a chance for a breakthrough on business issues that have been moving slowly for years, including a special treaty to increase investment flows.

EU business groups are more skeptical, expressing growing dissatisfaction, like their U.S. counterparts, with limited market access in China and pressing for a firmer response.

Diplomats say one of the clearest outward signs of a change in tone in private diplomatic meetings has been China’s decision to drop its public campaign to be recognized by the European Union as an economy directed by the market, not the state.

The case is now being dealt with out of the limelight at the World Trade Organisation in Geneva, in what the diplomats said was a recognition by Beijing that too much pressure could provoke a protectionist backlash in Europe.

Market economy status would make it harder for the European Union to impose punitive tariffs on Chinese imports that Brussels judges as unfairly cheap.

“The market economy status issue, if it is raised at all now, is being discussed at a very low working level,” the diplomat said. “That is part of the charm offensive.”

Chinese Foreign Ministry spokeswoman Hua Chunying said the issue was still a priority for Beijing, while also noting China’s interest in having the EU as a strong partner.

“We hope that the EU can genuinely place an importance on China’s reasonable concerns and interests,” Hua said.

China has told European officials it wants to bring forward its annual summit with the European Union from its usual July date, Reuters reported in February. The diplomats said efforts to find a suitable early date were continuing.

The summit is a way, they said, for China to press home President Xi Jinping’s message at the World Economic Forum in Davos in January, a vigorous defense of open trade and global ties.

INVESTMENT TEST

European companies doing business in China say they have yet to see the change of style translating into less protectionism from Beijing.

But it contrasts sharply with a tense 2016 in which an EU-China summit, overshadowed by an international court ruling that China’s claims to the South China Sea were unlawful, ended without the usual joint statement.

Trump has changed China’s calculations, diplomats said.

During his presidential campaign, Trump frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, “stealing” American manufacturing jobs.

He also aims to reverse former President Barack Obama’s anti-fossil fuel strategy that China backed as it seeks to deal with a devastating smog crisis at home.

The Trump administration has said Xi is expected to meet Trump on April 6-7 at the U.S. leader’s Mar-a-Lago resort in the United States, although Beijing has not confirmed the talks. A Chinese diplomat said Beijing was looking for “predictability” from Trump.

The European Union remains cautious about the direction of its second-largest trading partner, concerned by China’s massive steel exports, its militarization of islands in the South China Sea and a turn toward greater authoritarianism under Xi.

But it is looking to a bilateral investment treaty to make it easier for European companies to do business in China and remove onerous rules forcing them to share know-how.

Chinese direct investment in the European Union jumped by 77 percent last year to more than 35 billion euros ($38 billion), compared to 2015, while EU acquisitions in China fell for the second consecutive year, according to the Rhodium Group.

That illustrates the imbalance in investment between the world’s two largest markets, including, on the EU side, Britain, where the government is pinning its hopes on a free trade deal with China as it splits from the rest of the bloc.

An investment treaty would go some way to quiet criticism in Europe of such unequal ties but the talks, which started in 2013, require Beijing to open sensitive sectors like technology and financial services to private firms free of the state.

China’s central bank governor Zhou Xiochuan indicated on Sunday a substantial number of sectors would be opened up while adding “we want China to get fair treatment overseas”.

One Chinese diplomat said the European Union was being “too ambitious”. Formal mention of the proposed China-EU treaty has been struck from Premier Li Keqiang’s work report this year, which diplomats said risked confusing Beijing’s message.

“We had hoped President Xi’s speech in Davos would elevate us from rhetoric about equal treatment toward a tangible commitment to walk the talk,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.

Duncan Freeman, a China expert at the College of Europe university in Belgium, said the treaty touched on the fundamentals of how the economy worked. “That makes it very, very difficult for the Chinese side to discuss,” he said.

(Additional reporting by Michael Martina in Beijing; editing by Philippa Fletcher)

Trump changes tack, backs ‘one China’ policy in call with Xi

Donald Trump

By Ben Blanchard and Steve Holland

BEIJING/WASHINGTON (Reuters) – U.S. President Donald Trump changed tack and agreed to honor the “one China” policy during a phone call with China’s leader Xi Jinping, a major diplomatic boost for Beijing which brooks no criticism of its claim to self-ruled Taiwan.

Trump angered Beijing in December by talking to the president of Taiwan and saying the United States did not have to stick to the policy, under which Washington acknowledges the Chinese position that there is only one China and Taiwan is part of it.

A White House statement said Trump and Chinese President Xi had a lengthy phone conversation on Thursday night, Washington time.

“President Trump agreed, at the request of President Xi, to honor our ‘one China’ policy,” the statement said.

A spokesman for Taiwan President Tsai Ing-wen said in a statement it was in Taiwan’s interest to maintain good relations with the United States and China.

The U.S. and Chinese leaders had not spoken by telephone since Trump took office on Jan. 20. Diplomatic sources in Beijing say China had been nervous about Xi being left humiliated in the event a call with Trump went wrong and the details were leaked to the media.

Last week, U.S. ties with staunch ally Australia became strained after the Washington Post published details about an acrimonious phone call between Trump and Prime Minister Malcolm Turnbull.

No issue is more sensitive to Beijing than Taiwan. China and the United States also signaled that with the “one China” issue resolved, they could have more normal relations.

“Representatives of the United States and China will engage in discussions and negotiations on various issues of mutual interest,” the statement said.

In a separate statement carried by China’s Foreign Ministry, Xi said China appreciated Trump’s upholding of the “one China” policy.

“I believe that the United States and China are cooperative partners, and through joint efforts we can push bilateral relations to a historic new high,” the statement quoted Xi as saying.

“The development of China and the United States absolutely can complement each other and advance together. Both sides absolutely can become very good cooperative partners,” Xi said.

Taiwan’s top China policymaker, the Mainland Affairs Council, said it hoped for continued support from the United States and called on Beijing to adopt a “positive attitude” and “pragmatic communication” in resolving differences with Taiwan.

China is deeply suspicious of Tsai, whose ruling Democratic Progressive Party espouses the island’s formal independence, a red line for Beijing, and has cut off a formal dialogue mechanism with the island. Tsai says she wants peace with China.

In Beijing, Chinese Foreign Ministry spokesman Lu Kang said the “one China” principle was the political basis of Sino-U.S. ties.

“Ensuring this political basis does not waver is vital for the healthy, stable development of China-U.S. relations,” Lu said.

“PAPER TIGER”

Lawyer James Zimmerman, the former head of the American Chamber of Commerce in China, said Trump should have never raised the “one China” policy in the first place.

“There is certainly a way of negotiating with the Chinese, but threats concerning fundamental, core interests are counterproductive from the get-go,” he said in an email.

“The end result is that Trump just confirmed to the world that he is a paper tiger, a ‘zhilaohu’ – someone that seems threatening but is wholly ineffectual and unable to stomach a challenge.”

Jia Qingguo, dean of the School of International Studies at Peking University and who has advised the government on foreign policy, said Trump had created a lot of uncertainty but was now back on track.

“Trump has reassured people that he will be a responsible president,” he told Reuters. “…This is good news for China, because stable U.S.-China relations are good for China. Now we can do business.”

The United States switched diplomatic recognition from Taiwan to China in 1979, but is also Taiwan’s biggest ally and arms supplier and is bound by legislation to provide the means to help the island defend itself.

Defeated Nationalist forces fled from China to Taiwan in 1949 after losing a civil war with the Communists. Beijing has never renounced the use of force to bring Taiwan under its control.

“EXTREMELY CORDIAL”

China wants cooperation with the United States on trade, investment, technology, energy and infrastructure, as well as strengthening coordination on international matters to jointly protect global peace and stability, Xi said in the statement.

The White House described the call, which came hours before Trump plays host to Japanese Prime Minister Shinzo Abe, as “extremely cordial”, with both leaders expressing best wishes to their peoples.

There was little or no mention in either the Chinese or U.S. statement of other contentious issues – trade and the disputed South China Sea – and neither matter has gone away.

A U.S. official told Reuters on Thursday that a U.S. Navy P-3 plane and a Chinese military aircraft came close to each other over the South China Sea, though the Navy believes the incident was inadvertent.

China on Friday reported an initial trade surplus of $51.35 billion for January, more than $21 billion of which was with the United States.

(Additional reporting by Michael Martina in Beijing and Adam Jourdan in Shanghai; Writing by Nick Macfie; Editing by Lincoln Feast and Alex Richardson)

Good food is worth waiting for – China media welcomes Trump letter

Donald Trump

BEIJING (Reuters) – Chinese state media on Friday broadly welcomed U.S. President Donald Trump’s letter to Chinese President Xi Jinping belatedly wishing a happy Lunar New Year, saying it was a positive sign and that “good food is worth waiting for”.

In a brief statement, the White House said that Trump told Xi he looked forward to working with him to develop relations, though the pair haven’t spoken directly since Trump took office last month.

“The letter conveys the reassuring message that bilateral relations are still on the right track despite the speculation that has arisen with Trump’s victory in the November election,” the official China Daily said in an editorial.

Trump upset China in December by taking a phone call from Taiwan President Tsai Ing-wen. China considers Taiwan a wayward province with no right to formal diplomatic relations with any other country.

In his Senate confirmation hearing, U.S. Secretary of State Rex Tillerson said China should not be allowed access to islands it has built in the disputed South China Sea. The White House also vowed to defend “international territories” in the strategic waterway.

“Against this backdrop, the letter, though terse and issued nearly three weeks after Trump’s inauguration, is still a positive signal, as it suggests that reason still prevails in the White House,” the China Daily added.

Even the normally hawkish tabloid the Global Times, published by the ruling Communist Party’s official People’s Daily and which had railed against Trump, struck an upbeat tone.

“Over the past few weeks, more positive signs have emerged between China and the U.S., making people re-evaluate the trajectory of the bilateral relationship under Trump,” it said in an editorial.

Chinese officials have downplayed the significance of Trump breaking with recent precedent and not sending greetings for the Lunar New Year, which began late last month, though state media was pleased his daughter Ivanka Trump went to a Lunar New Year reception at the Chinese embassy in Washington.

Diplomatic sources say China has also not been in a rush to have a telephone call with the unpredictable Trump, in case the call went badly, embarrassing Xi.

In a front page commentary, the overseas edition of the People’s Daily said the letter was an opening to help manage friction.

“There’s a saying in China – good food is worth waiting for.”

(Reporting by Ben Blanchard; Editing by Michael Perry)

Trump breaks ice with China’s Xi in letter seeking ‘constructive’ ties

China's president xi jinping

By Ben Blanchard and Eric Walsh

BEIJING/WASHINGTON (Reuters) – U.S. President Donald Trump has broken the ice with Chinese President Xi Jinping in a letter that said he looked forward to working with him to develop relations, although the pair haven’t spoken directly since Trump took office.

The letter thanked Xi for his congratulatory note on Trump’s inauguration and wished the Chinese people a prosperous Lunar New Year of the Rooster, the White House said in a statement on Wednesday.

“President Trump stated that he looks forward to working with President Xi to develop a constructive relationship that benefits both the United States and China,” it said.

China said on Thursday it attached great importance to China-U.S. ties.

“We highly appreciate President Trump’s holiday greetings to President Xi Jinping and the Chinese people,” Chinese Foreign Ministry spokesman Lu Kang said at a daily press briefing.

Asked whether it was a snub that Trump had held calls with many other world leaders as president, but not Xi, Lu said: “This kind of remark is meaningless.”

He reiterated that China and the U.S. had maintained “close communication” since Trump took office and that cooperation was the “only correct choice”.

“China is willing to work with the United States in adhering to the principles of non-confrontation, mutual respect and mutual benefit to promote cooperation, control disputes, and on a healthy and stable foundation, promote greater development in China-U.S. ties,” Lu said.

Trump and Xi have yet to speak directly since Trump took office on Jan. 20, although they did talk soon after Trump won the U.S. presidential election in November.

Diplomatic sources in Beijing say China has been nervous about Xi being left humiliated in the event a call with Trump goes wrong and the details are leaked to the U.S. media.

Last week, U.S. ties with staunch ally Australia became strained after the Washington Post published details about an acrimonious phone call between Trump and Prime Minister Malcolm Turnbull. [nL4N1FN0JR]

“That is the last thing China wants,” a source familiar with China’s thinking on relations with the United States told Reuters. “It would be incredibly embarrassing for President Xi and for Chinese people, who value the concept of face.”

A senior non-U.S. Western diplomat said China was unlikely to be in a rush to set up such a call.

“These things need to happen in a very controlled environment for China, and China can’t guarantee that with the unpredictable Trump,” the diplomat said.

“Trump also seems too distracted with other issues at the moment to give too much attention to China.”

TAIWAN, YUAN IN FOCUS

There are a number of contentious areas where China fears Trump could go off script, the diplomat said, pointing in particular to the issue of self-ruled Taiwan, as well as trade.

Trump upset China in December by taking a phone call from Taiwan President Tsai Ing-wen. China considers Taiwan a wayward province with no right to formal diplomatic relations with any other country.

Trump has also threatened to slap tariffs on Chinese imports, accusing Beijing of devaluing its yuan currency and stealing U.S. jobs.

In his Senate confirmation hearing, U.S. Secretary of State Rex Tillerson said China should not be allowed access to islands it has built in the disputed South China Sea. The White House also vowed to defend “international territories” in the strategic waterway.

China has repeatedly said it has smooth contacts with the Trump team. The Foreign Ministry in Beijing said last week the two countries were remaining “in close touch”.

That contact has been led by China’s top diplomat, State Councillor Yang Jiechi, who outranks the foreign minister.

Yang told Michael Flynn, Trump’s National Security Advisor, last week that China hopes it can work with the United States to manage and control disputes and sensitive problems. [nL4N1FO364]

The source familiar with China’s thinking said Trump’s administration was “very clear” about China’s position on Taiwan. Trump has yet to mention Taiwan since he took office.

Chinese state media has wondered whether Trump has a China policy at all.

On Thursday, the widely read Global Times tabloid, published by the ruling Communist Party’s official People’s Daily, noted that Trump had not immediately confronted China as had been expected because he had realized upsetting Beijing would backfire badly.

“He has probably realized that real tough action against China would result in a complex chain reaction, even beyond his control,” the paper said in an editorial.

Wang Yiwei, a professor of international relations at Beijing’s elite Renmin University, said the letter suggested the new U.S. administration wanted to signal the importance it attached to the U.S.-China relationship without risking being confronted on specific issues.

“Trump has sent many messages that makes the world confused, like on the South China Sea and ‘One China’ policy, so if he makes a phone call President Xi will ask ‘what do you mean?’,” Wang said. “He wants to avoid this so he just sends a letter for the first step.”

(Reporting by Ben Blanchard in BEIJING and Eric Walsh in WASHINGTON; Additional reporting by Beijing newsroom and Michael Martina; Editing by Paul Tait and Nick Macfie)

U.S. May Send Warships Near Disputed South China Sea Islands

A U.S. defense official said on Thursday that the U.S. is considering sending warships close to China’s artificial islands in the South China Sea. This would be a signal that the U.S. does not recognize the islands as Chinese territory, despite China’s claims.

The Financial Times newspaper reported that U.S. ships would sail within 12-nautical-mile zones of the disputed territory.

U.S. officials are waiting for the approval of the Obama Administration but said action would take place “within days.”

In May, Chinese officials issued eight warnings to a U.S. surveillance aircraft that had been flying near the Chinese artificial islands.

Chinese officials are aware of the United States’ potential actions and stated that they will continue to communicate with the United States regarding the South China Sea issue.

“I believe the U.S. side is extremely clear about China’s relevant principled stance,” said Chinese Foreign Ministry spokeswoman Hua Chunying. “We hope the U.S. side can objectively and fairly view the current situation in the South China Sea, and with China, genuinely play a constructive role in safeguarding peace and stability in the South China Sea.”

During the recent visit to the United States by Chinese President Xi Jinping, President Obama discussed the matter with the Chinese President, stating that he had “significant concerns.” Xi responded by telling President Obama they China intended to militarize the islands. U.S. officials report that China has already begun to create military facilities on the island and are waiting to see how much military hardware will be installed.