China Reform Monitor: No. 964

April 17:

Between January and March China’s State Food and Drug Administration (SFDA) has discovered 33,648 illegal advertisements for drugs, 3,239 illegal ads for medical instruments, and 6,551 ads for health supplements. SFDA referred the illegal ads to market supervisory authorities for investigation and suspended sales for 11 products mentioned in them. Authorities also revoked 29 licenses for drug and health supplement advertising for serious offenses, including the release of ads without authorities’ prior approval and making unapproved changes to drugs’ content, the official People’s Daily reports.

China has called upon Russia to remove its commercial presence in the South China Sea, particularly its oil investments with Vietnam, presenting “the Kremlin with a choice, the price of which may prove very high,” Dmitriy Mosyakov, head of Southeast Asia, Australia, and Oceania Centre at Russian Academy of Sciences Institute of Oriental Studies writes in Russia’s Kommersant newspaper. If Moscow agrees “it will subordinate its national interests in Asia to the interests of China. In that case the bottom line for Russia will be not only ‘a loss of face in Asia,’ affecting its image, but also a loss of very lucrative oil and gas contracts worth billions of dollars.” Mosyakov argues that Moscow should not suspend operations because “Russian companies’ work in the South China Sea can provide Russia with additional trump cards when resolving other disputed issues in relations with China.”

April 18:

The Kyrgyz Ministry of Transport and Communications and the China Road and Bridge Corporation (CRBC) have signed a memorandum of cooperation on construction of the China-Kyrgyzstan- Uzbekistan railway. Under the agreement CRBC will fund and conduct a feasibility study of the project this year and develop a detailed construction plan. The railroad, which will be built between 2012-2018 at a preliminary cost of $2 billion, will create 10,000 jobs to operate the railway and another 3,500 related jobs. The Kyrgyz Telegraph Agency reports that the railway was conceived of in 1996 after China began construction on the South Xinjiang Railway between Korla and Kashgar.

April 21:

The official PLA Daily has issued Beijing’s harshest warning yet about tensions with the Philippines, claiming that U.S.-Philippine military exercises have increased the likelihood of armed confrontation over the disputed South China Sea. “Behind these drills is a mentality that will lead the South China Sea issue down a fork in the road towards military confrontation and resolution through armed force. Through this kind of meddling and intervention, the United States will only stir up the entire South China Sea situation towards increasing chaos and this will inevitably have a massive impact on regional peace and stability. The U.S. strategy of returning to the Asia-Pacific carries the implication of a shift in military focus and there is no better strategic opening than China’s sovereignty disputes with the Philippines and other countries in the South China Sea. The United States’ intention of trying to draw more countries into stirring up the situation in the South China Sea is being brandished to the full,” said the newspaper according to Reuters. This week U.S. and Filipino troops launched a fortnight of annual naval drills amid a stand-off between Beijing and Manila, who have accused each other of encroaching on sovereign seas near the Scarborough Shoal. The joint exercises are held in various locations around the Philippines including the South China Sea.

April 23:

President Salva Kiir of South Sudan is in China to open a new embassy and meet with President Hu Jintao. Kiir is seeking Chinese financing for an oil pipeline through Kenya that would bypass Sudan. Beijing has already pledged technical assistance for the pipeline and will contribute heavily to the project, including labor, loans and development aid. Chinese construction companies and oil companies are likely to bid for the project, the Associated Press reports. This month Japan’s Toyota Tsusho Corporation completed a feasibility study for the pipeline and is putting together a proposal to begin construction. Landlocked South Sudan is also considering building a pipeline through Ethiopia and Djibouti and using trucks to move crude to Port Mombasa, Reuters reports. China is the top investor in South Sudan’s oilfields and the biggest buyer of oil from both Sudan and South Sudan, purchasing about 13 million barrels last year, roughly five percent of China’s 2011 crude imports.

[Editor’s Note: South Sudan seceded from Sudan last year, but the two countries are fighting over a vital oilfield on their border after tensions rose following a dispute over how much South Sudan should pay to transport its oil output through Sudan to Djibouti's Red Sea port.]