China Reform Monitor: No. 1207

January 15:

A Vice Minister in the CPC's International Department, Chen Fengxian, met with Nepal's visiting Unified Maoist standing committee member Agni Sapakota for ninety minutes in Beijing to discuss the Madhesi protests in Nepal. Members of the Madhesi group have been demanding changes to the Nepal's new constitution, which they say dilutes their political voice. Sapakota lauded China for "the positive role it played in drafting a new constitution," and thanked Beijing for providing 1.3 million liters of petrol to lessen the impact of a blockade India has imposed over the Madhesi protests, as Delhi has tried to pressure Kathmandu into revising the constitution to accommodate Madhesi demands. Chen also called for closer relations between the CPC and Unified Maoist party, Nepal's Annapurna Post reports.

[Editor's Note: In the latest flare-up of political tensions over Nepal's constitution, Nepali police fired on ethnic Madhesi protesters in Rangeli on January 21, killing at least three. The protesters tried to attack a pro-Constitution rally organized by the youth wing of the governing Communist Party of Nepal (Unified Marxist Leninist). The police fired tear gas and then opened fire on the protesters in Rangeli and nearby Dainiya after they started throwing stones at the police. An estimated 35 protesters and 13 police were injured. So far clashes between protesters and the police have left more than 50 people dead, the New York Times reports.]

Pakistani Prime Minister Nawaz Sharif convened an "all parties conference" to "address the grievances of the smaller provinces and the smaller parties" over the proposed $46 billion China-Pakistan Economic Corridor (CPEC). "The opposition parties had been expressing reservations over industrial zone and western route of the CPEC. The regional parties were unanimous that the [central government] was depriving them of the fruits of the game-changing project," Pakistan's The Nationreports. The meeting "will be aiming to convince the parties to set aside differences in the larger national interest. The aggrieved parties will be assured their issues will be considered seriously," said a Pakistani government official. He said Sharif hopes "to evolve a consensus and inform China of the positive development." In 2013, China and Pakistan agreed to launch CPEC, which will connect Pakistan's deep sea Gwadar Port with Xinjiang.

January 17:

To sustain economic growth Beijing is pushing stimulus measures, building more high-speed rail lines, and encouraging state-owned banks to continue lending. Yet, more borrowing makes China more vulnerable. Last year, total Chinese debts – household, corporate and government – increased by an amount equal to 12 percent of GDP. Many Chinese industries including shipbuilding, steelmaking, coal mining and auto manufacturing, borrowed heavily from state-run banks and expanded during the good years, but now growth has slipped and many companies are in the red, the New York Times reports. Chinese firms are also coping with sharply rising labor costs: blue-collar wages are rising nearly 10 percent a year. Over-investment in many sectors is also resulting in too many factories and other businesses chasing the same limited sales.

January 19:

China has again dispatched the Haiyang Shiyou oil rig into waters claimed by Vietnam in the South China Sea, AP reports. "Vietnam demands that China not conduct any drilling activities and withdraw Hai Duong 981 oil rig from this area," a Vietnamese spokesman said, using the Vietnamese name for the oil rig. "Vietnam reserves all its legal rights and interests in the area in accordance with international law." The Haiyang Shiyou oil rig was at the center of a stand-off between the countries in May 2014 when China parked the rig off Vietnam central coast. It was towed away two months later, but the incident sparked deadly anti-China riots in Vietnam and plunged bilateral relations to their lowest point in years.

January 21:

China is in talks with Iran to redesign the latter's Arak nuclear reactor over the next three years, Nuclear Energy International reports. Chinese and Iranian officials are also discussing a contract for the construction of two nuclear units at Makran on Iran's southern coast costing $994 million, and the construction of several smaller nuclear plants. President Xi Jinping is expected to discuss the contracts during his upcoming visit to Tehran. Regarding the timescale for the redesign of Arak reactor, an Atomic Energy Organization of Iran spokesman said: "We have provided the Chinese with a preliminary plan and are waiting for their response. If our preliminary plan is approved during the Chinese president's trip to Iran, we will enter the more detailed phase for the plan which takes about a year. The implementation of the project will take about a year and a half, we anticipate the re-designing of Arak plant to take less than three years."