Great Powers and Syria, again

UNITED NATIONS — Russia on Tuesday cast its seventh veto to protect the Syrian government from United Nations Security Council action, blocking a bid by Western powers to impose sanctions over accusations of chemical weapons attacks during the six-year Syrian conflict.

China backed Russia and cast its sixth veto on Syria. Russia had said the vote on the resolution, drafted by France, Britain and the United States, would harm U.N.-led peace talks between the warring Syrian parties in Geneva, which began last week.

Nine council members voted in favor, Bolivia voted against, while Egypt, Ethiopia and Kazakhstan abstained. A resolution needs nine votes in favor and no vetoes by the United States, France, Russia, Britain or China to be adopted.

Russian President Vladimir Putin described the draft resolution on Tuesday as “totally inappropriate.”

“For my friends in Russia, this resolution is very appropriate,” U.S. Ambassador to the United Nations Nikki Haley told the council after the vote.

“It is a sad day on the Security Council when members start making excuses for other member states killing their own people. The world is definitely a more dangerous place,” she said.

The vote was one of the first confrontations at the United Nations between Russia and the United States since U.S. President Donald Trump took office in January, pledging to build closer ties with Moscow.

Russia’s Deputy U.N. Ambassador Vladimir Safronkov described the statements made against Moscow in the Security Council as “outrageous” and declared that “God will judge you.”

“Today’s clash or confrontation is not a result of our negative vote. It is a result of the fact that you decided on provocation while you knew well ahead of time our position,” said Safronkov.

Western powers put forward the resolution in response to the results of an investigation by the U.N. and the Organization for the Prohibition of Chemical Weapons (OPCW).

The international inquiry found Syrian government forces were responsible for three chlorine gas attacks and that Islamic State militants had used mustard gas.

British U.N. Ambassador Matthew Rycroft told the council before the vote: “This is about taking a stand when children are poisoned. It’s that simple. It’s about taking a stand when civilians are maimed and murdered with toxic weapons.”

Chlorine’s use as a weapon is banned under the Chemical Weapons Convention, which Syria joined in 2013. If inhaled, chlorine gas turns to hydrochloric acid in the lungs and can kill by burning lungs and drowning victims in body fluids.

Syrian President Bashar al-Assad’s government has denied its forces have used chemical weapons. Russia has questioned the results of the U.N./OPCW inquiry and long said there was not enough proof for the Security Council to take any action.

French U.N. Ambassador Francois Delattre said the failure by the council to act would “send a message of impunity.”

China’s U.N. Ambassador Liu Jieyi said it was too early to act because the international investigation was still ongoing.

“We oppose the use of chemical weapons,” he said.

The draft resolution would have banned the sale or supply of helicopters to the Syrian government because the U.N./OPCW inquiry found Syrian government forces had used helicopters to drop barrel bombs containing chlorine gas.

It also proposed targeted sanctions – a travel ban and asset freeze – on 11 Syrian military commanders and officials, as well as on 10 government and related entities.

(Reporting by Michelle Nichols; Editing by James Dalgleish)

UNITED NATIONS — Russia and the Trump administration clashed in a vote at the United Nations Security Council for the first time on Tuesday, as the Kremlin vetoed a measure backed by the Americans to punish Syria for using chemical weapons.

While the Russians had long signaled their intent to block the resolution, which was supported by dozens of countries, including the United States, the clash offered insights into the big divides that remain between the Kremlin and President Trump, who has vowed to improve ties.

The vote in the 15-member council was nine in favor and three against. Opponents included Russia and China, two of the five veto-wielding permanent members of the Council, and Bolivia, a nonpermanent member. Three nonpermanent members — Egypt, Ethiopia and Kazakhstan — abstained.

It was the Kremlin’s seventh Security Council veto in defense of President Bashar al-Assad of Syria over the war that has been convulsing his country for nearly six years.

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The American ambassador, Nikki R. Haley, who has called chemical weapons attacks in Syria “barbaric,” accused Russia and China of putting “their friends in the Assad regime ahead of our global security” in her blunt rebuke of the vetoes.

“It’s a sad day for the Security Council when members make excuses for other member states killing their own people,” she said in the Council chambers.

The resolution, proposed by Britain and France months ago and endorsed by the United States last week, would have imposed sanctions on a handful of Syrian military officials and entities for having dropped chlorine-filled barrel bombs on opposition-held areas on at least three occasions in 2014 and 2015, according to a United Nations panel.

Russia’s envoy, Vladimir Safronkov, defended the veto, calling the resolution “politically biased” and asserting that Russia’s concerns about the draft language had not been addressed. “This is railroading the draft by the Western troika,” he said.

China’s ambassador, Liu Jieyi, recalling the now-discredited American warnings of Iraq’s “so-called W.M.D.s” in 2003, criticized the resolution as an example of “hypocrisy” by the Western powers. “It was forced through to a vote while Council members still have differences,” he said. “This is in no way helpful to finding a solution.”

Chlorine is banned as a weapon under an international treaty that Mr. Assad’s government signed in 2013.

The arguments and vote over the resolution were important because they provided new insight into how Mr. Trump, who has made clear his intent to improve ties with Russia, would deal with the Kremlin over the Syria war. Russia is Mr. Assad’s most important foreign ally.

The conflict over the resolution was in sharp contrast to a Russian-American consensus on the need to contain Syria’s use of chemical weapons. After a sarin gas attack on a suburb of Damascus in August 2013, Moscow and Washington struck a deal to force Mr. Assad to sign the chemical weapons treaty and dismantle his stockpile of the poisonous munitions under international supervision.

The Syrian government, though, violated the deal, according to a United Nations panel set up by the Security Council, known as the Joint Investigative Mechanism. It found that the government had used chemical weapons at least three times.

Russia helped to create the panel but questioned its findings when it implicated the Syrian government. The panel also found that Islamic State militants in Syria used mustard gas in August 2015.

Moscow made clear last week that it would defeat the draft measure to impose sanctions on the Syrian government, calling it unbalanced. The Russian veto signaled how far Russia was willing to go to shield its ally in Damascus.

President Vladimir V. Putin of Russia reinforced his opposition on Tuesday, adding that any Security Council penalties on the Syrian government would complicate diplomatic efforts underway in Geneva aimed at halting the war.

“As for sanctions against the Syrian leadership, I think the move is totally inappropriate now,” he told a news conference while visiting Kyrgyzstan. “It does not help, would not help the negotiation process. It would only hurt or undermine confidence during the process.”

Human Rights Watch concluded in a recent report that the Syrian military had not only violated its promises not to use chemical weapons but had systematically dropped chlorine bombs in the final weeks of the battle to take the northern city of Aleppo last fall.

Mr. Trump repeatedly has expressed admiration for Mr. Putin and said he wanted to strike a deal with him to stop the war in Syria and focus on fighting terrorism. But disagreements within Mr. Trump’s administration appear to have complicated that goal.

Ms. Haley has taken a hard line against Russia. She condemned what she called Russia’s “aggressive actions” in eastern Ukraine, vowed to maintain sanctions related to the Russia’s annexation of Crimea, and in her Senate confirmation hearing, went as far as saying that Russia was guilty of war crimes in Syria.

Her comments on Russia, often directly contradicting her boss, echo the talking points of the previous administration of Barack Obama, but they also reflect the concerns of Republicans in Congress, who distrust the Kremlin.

Ms. Haley was in Washington on Monday for meetings at the White House. A former governor of South Carolina, she has by her own admission limited foreign policy experience.

She has so far kept her comments limited to a handful of foreign policy issues that plainly deliver political dividends at home. She has maintained a tough line on Russia and Iran, pledged to defend Israel, and promised more oversight into how American funding for the United Nations is spent.

She has said nothing about the Trump administration’s travel ban on refugees and visa applicants from seven predominantly Muslim countries, which the United Nations secretary general, António Guterres, has criticized.

Ms. Haley, an American of Indian descent who grew up in a small South Carolina town, also has been silent on the attack on two Indian engineers in Kansas last week, which was suspected to be a hate crime and which threatens to cloud Indian-American relations.

Leader of Globalization. Does Xi Really Mean It?

Chinese President Xi Jin Ping spoke to defend globalization and advocated for free trade at the World Economic Forum in Davos.  While the speech has been hailed by many, commentators around the world also question whether Xi was sincere about it. See the following:

Forbes: Xi Jinping’s Davos Speech Defends Globalization But Does China Really Mean It?

http://www.forbes.com/sites/douglasbulloch/2017/01/18/xi-jinpings-davos-speech-defends-globalisation-but-does-china-really-mean-it/#36d44e787531

About this time of year, most years, journalists looking for inspiration can always turn their eyes towards the rarified atmosphere of a certain Swiss ski resort, find out what the assembled notaries are discussing, and produce a few thousand words of inconsequential burbling about technology, economics and social transformation. This year, however, the entire world is a target rich environment–excuse the pun–for the doleful hack in need of inspiration.

China’s President Xi Jinping delivers a speech on the opening day of the World Economic Forum, on January 17, 2017 in Davos.The global elite begin a week of earnest debate and Alpine partying in the Swiss ski resort of Davos on Tuesday, in a week bookended by two presidential speeches of historic import. / AFP / FABRICE COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)

Fortunately, the organizers of the World Economic Forum meeting at Davos had the inspired idea of inviting Xi, President of the People’s Republic of China, who arrived to a red carpet welcome on Monday. As brand management strategies go, this is “Grade A,” ensuring the name Davos appeared on today’s front pages around the world, rather than in comment page reflection pieces entitled “Whatever happened to … ?”

Instead, Davos showed the world the urbane figure of Xi, quoting Dickens’ A Tale of Two Cities. “It was the best of times, it was the worst of times,” he said to a flutter of applause, laying an unambiguous claim on the sort of cosmopolitan sensibility that is de rigeur in these climesUnfortunately, Xi also suggested Dickens was portraying the industrial revolution, rather the much bloodier French revolution that informs the story and constructs a metaphor for a progressive, liberal country, rising to global prominence, while its old enemy descends into bloody strife.

There is no escaping, however, that Xi delivering the opening plenary speech at Davos is also a powerful metaphor, the only question is, of what? Many headlines will refer to Xi’s defence of globalisation in the face of endless challenges. Other’s will complement the emerging helmsman for his pragmatism while sneering at Trump’s bombast.

But behind it all is public diplomacy; it is China sounding reasonable, conciliatory, patient, ready to assume the mantle of leadership that so many are so eager to thrust upon it. And the Davos crowd seemed to love it. Xi’s joke about “Schwab-onomics”– after Klaus Schwab, the founder and guiding spirit of Davos–was wooden, but everyone laughed politely anyway. There were no interruptions. No activists bursting in to scream obscenities, no impertinent questions about his private wealth, no mention of the routine censorship and suppression of dissent in China. Just Xi, holding court to a roomful of forlorn globalization disciples, searching for new hope.

The speech itself contained little of substance, many selective embellishments and quite a few glaring omissions, but was what everyone has come to expect of a Chinese leader on the world stage. The real problems, he said, were threefold: Not enough ‘driving force’ for reform and development. Inadequate global governance, by which he really meant that China did not have enough say over the rules and institutions. And lastly, unequal global development.

What is required, apparently, is innovation, and a new economic model to encourage it. One might conclude from these words that capitalism would be worth a try, but no, each country must develop “according to their own conditions,” he said. Absent from the speech was any mention of global imbalances, or closed capital markets and a history of currency manipulation. These were, however, stern demands that countries “honour promises and obey rules.”

Two developments accompanied the speech suggest a degree of predictable choreography for a set-piece performance such as this. The State Council issued new policy guidelines to help foreign investors in China, which only served to remind people that these same promises have been made many times before, indeed they were among the many conditions of China’s WTO accession agreement in 2001, but clearly sticking to those promises and obeying those rules is not in accordance with China’s conditions.

Then it transpired that “state investors bought shares to steady” a declining Chinese stock market, which reminds everyone that the Chinese state maintains its ‘driving force’ for a reason, which is to make markets do what they are told.

The difficulty of interpreting a speech like this is not really in the content of the speech itself–Chinese speeches are always about reading between the lines in any case–so much as understanding reactions to it. China watchers are used to sifting through the dense web of self-justification and misdirection that comprise a major address like this, but such a speech is not really a positive contribution to global dialogue so much as another rehearsal of China’s global outlook.

The setting, however, is of crucial importance as it creates the impression that China is keen to support globalization. An impression Klaus Schwab and the Davos elite fell over themselves to endorse. And what this rapturous reception signifies is that globalization, increasingly abandoned in the West, thinks it has found a new champion in the East.

Towards the end of his address, Xi uttered one of those amusingly mistranslated aphorisms when he said “no pie falls from the sky” when he likely meant “no such thing as a free lunch,” a saying which the applauding dignitaries appeared keen to refute.

China’s Xi Jinping Seizes Role as Leader on Globalization

‘No one will emerge as a winner in a trade war,’ Chinese president says

The Wall Street Journal,

Chinese President Xi Jinping urged the world to “say no to protectionism” with a full-throated defense of free trade at the opening of the World Economic Forum in Davos, Switzerland. Photo: Gian Ehrenzeller/European Pressphoto Agency

Chinese President Xi Jinping issued a full-throated defense of international trade and economic integration before a packed hall here, as doubts about the merits of globalization mount in the U.S. and elsewhere in the West.

“No one will emerge as a winner in a trade war,” Mr. Xi, the leader of the world’s second-biggest economy, said in an hourlong speech on Tuesday to members of the world elite gathered for the annual World Economic Forum. “Pursuing protectionism is just like locking one’s self in a dark room. Wind and rain may be kept outside, but so are light and air.”

The Chinese leader’s message comes as the U.S. prepares to inaugurate President-elect Donald Trump, who has voiced skepticism about the benefits of free trade to the U.S.

Mr. Xi sought to portray Beijing as a benevolent power intent on upholding an international order that has boosted common prosperity. He exhorted world leaders to “join hands and rise to the challenge.”

The speech was portrayed by some who heard it as a response to politicians in the U.S. and Europe who are turning their focus inward.

“There is a vacuum in global leadership. Xi sees it and he seizes it,” said Carl Bildt, a former prime minister of Sweden, who was in the audience. “If the U.S. does take a more mercantilist route, overall the Asians and Europeans will have to combine to preserve global free trade.”

China has been one of the biggest beneficiaries of globalization, which opened the way for the country, with its vast and relatively low-wage workforce, to become the world’s factory floor. Inexpensive goods manufactured in China have flooded the planet.

That shift helped lift hundreds of millions of Chinese from poverty. But it was also a factor that contributed in costing millions of workers in the West their jobs, fueling mounting suspicion of transnational economic integration and the current antiestablishment backlash in politics in much of the developed world.

“Some people blame economic globalization for the chaos in our world,” Mr. Xi said. He dismissed the idea—and acknowledged that globalization had resulted in growing income inequality within many countries.

“It’s important that China is saying that there are important benefits of globalization and acknowledges that there are many problems that have to be worked through,” said David Lipton, first deputy managing director of the International Monetary Fund.

Xi Jinping is the first Chinese president to attend the World Economic Forum in Davos Switzerland; he has presented China as a benevolent global power amid differences with the incoming Trump administration. Photo: Getty

In many ways, Mr. Xi—and his government—are deeply ambivalent about globalization. Mr. Xi is an unabashed nationalist, who resents the West’s lecturing on human rights and democracy. He has sought to bulk up state-run companies and kept China’s internet isolated behind its Great Firewall.

Mr. Xi stressed that no power should attempt to dictate to other countries a specific path. Development, he said, is “of the people, by the people, and for the people,” borrowing a phrase from U.S. President Abraham Lincoln’s Gettysburg Address.

Some in the audience noted irony in the appeal from the leader of a country that has undermined competition.

Foreign companies and governments complain that China has moved to restrict foreign companies’ access to its markets, while buying up technology and assets from firms abroad. The U.S. and Europe also accuse China of selling goods from steel to solar panels at improperly low prices.

“Here, we have the global elite embracing Xi as the anti-Trump,” said Lawrence Freedman, emeritus professor of war studies at King’s College, London.

Donald Trump’s suggestion that he would use Taiwan as a negotiating chip with China to extract concessions over trade hit a raw nerve in Beijing. Photo: EPA/Reuters

Mr. Trump has pledged to defend American firms and workers against foreign competition and impose tariffs on imports from China and Mexico, among other countries. Mr. Trump also accused China of manipulating its currency to boost exports.

“China has no intention to boost its trade competitiveness by devaluing the renminbi, still less will it launch a currency war,” Mr. Xi said.

China’s yuan weakened almost 7% against the dollar last year, nearly double the drop in the year earlier. In recent weeks, China’s central bank has stepped up its effort to prop up the yuan as Beijing pledges to keep the currency largely stable.

In his speech, Mr. Xi built a case that China should have a greater formal role in guiding the world economy. He gave his endorsement to the 2015 Paris agreement on carbon emissions, calling on countries to “stick to it instead of walking away from it.”

Mr. Trump has called climate change a hoax, fueling speculation that he might pull the U.S. out of the accord.

Some in the audience questioned the readiness of China to adopt the leadership role that Mr. Xi was viewed as mapping out.

“In these times of a lack of leadership, particularly in Europe, it was quite impressive,” said Werner Hoyer, president of the European Investment Bank, which is owned by the 28 member states of the European Union.

But when asked if he thought that China’s institutions were ready to take on the leadership of the world economy, Mr. Hoyer said: “Not yet.”

Mr. Xi’s legitimacy at home depends in large measure on his ability to manage a continued slowdown in China’s own economy while continuing to assert Chinese territorial claims despite U.S. opposition.

Mr. Xi said China’s economy has entered a “new normal” of slower but more sustainable growth. Household consumption and services have become new growth drivers for the economy, Mr. Xi said.

He said China’s economy grew at 6.7% last year, within the range of between 6.5% and 7% targeted for 2016.

Still, that growth came through easy credit and other stimulus that revved up industries and the property market, contributing to overcapacity and soaring house prices. Mr. Xi acknowledged those headwinds. China’s leadership has made fending off asset bubbles a key economic task for 2017.

Write to Stephen Fidler at stephen.fidler@wsj.com, Te-Ping Chen at te-ping.chen@wsj.com and Lingling Wei at lingling.wei@wsj.com

 

At Davos, a clarion call by world leaders, including Xi Jinping and Joe Biden, to defend global order

Biden pulls no punches as he warns against protectionism and Russia’s shenanigans

DAVOS (SWITZERLAND) – With the clock ticking down on his last 48 hours in office, US Vice-President Joe Biden delivered a rallying call to government and business leaders here in Davos to keep up their fight to defend the liberal global economic and political order that has come under pressure from populist challengers in recent months.

Leaders in Western countries, led by the United States, had to defend the liberal global order that their forefathers had shown “foresight, audacity and big-heartedness” in building. Institutions and initiatives such as the United Nations, Nato, the European Union, the Marshall Plan and Bretton Woods had helped secure the decades of peace and prosperity that the world has enjoyed, he told his audience at the World Economic Forum (WEF).

Urging leaders not to lose sight of the years of effort it took to build these institutions and foster the community of values that underpinned them, he added that leaders in the West “could not wait for others to write the future they want to see”.

They should reject the impulse to “hunker down, shut the gates, build walls, exit at this moment”, in the face of challenges thrown up by globalisation, from growing income inequalities to a deepening sense of insecurity among voters that the system would deliver on the promise of better lives for their children, he said.

Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal worl
Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal world order against the backdrop of a possible hunkering down by the US under a Trump administration. PHOTO: XINHUA

Noting the unease felt around the world following recent events, he addressed the Republican elephant that has been hanging about the WEF’s cavernous Congress Hall for the past two days. Although he insisted his remarks were not directed at the incoming Donald Trump administration – mention of which prompted a loud boo from someone in the crowd – he set out in plain terms what he thought the world wanted to see from an American leadership.

As is his style, he did not mince his words. He pointedly called out Russian President Vladimir Putin, who, he said, “has a different vision of the future”. He charged that Mr Putin was behind cyber attacks and misinformation to influence electoral outcomes in Western democracies, including the recent US elections. He said the Russian leader also aimed to undermine Western alliances like Nato, seeking instead to build a world divided into spheres of influence where regional players, like Russia, would hold sway. The US, for its part, had stood for an international order where countries were free to decide their own futures and associate with others as they saw fit. “That was our position, is our position, and should be our position,” Mr Biden asserted, noting that he had chosen to deliver his last speech in Davos, in much the same vein as he had set out the Obama administration’s foreign policy agenda in Europe, in a speech in Munich, soon after taking office eight years ago.

BEAR ON THE PROWL

Under President Putin, Russia is working with every tool available to them to whittle away at the edges of the European project, test the fault lines of Western nations and return to a politics defined by spheres of influence… With many countries in Europe slated to hold elections this year, we should expect further attempts by Russia to meddle in the democratic process. It will occur again, I promise you. And again the purpose is clear: to collapse the liberal international order.

US VICE-PRESIDENT JOE BIDEN

TACKLING PROBLEMS HEAD-ON

There is no point in blaming economic globalisation for the world’s problems because that is simply not the case… And that will not help to solve the problems… The history of mankind has shown us that problems are not to be feared. What should concern us is the refusal to face up to the problems.

CHINESE PRESIDENT XI JINPING

These were welcome words for the crowd gathered in this Swiss Alpine resort for the annual WEF meeting, who gave him a standing ovation. There was a note of wistfulness about the passing of the baton to a new team in the US whose commitment to the liberal order seems in doubt, following recent remarks by incoming president Trump, who has called Nato “obsolete” and the EU a “vehicle for Germany”. Just as disconcertingly for observers in Asia, he has said he was ready to bargain with Beijing over the US’ one-China policy, and also seemed headed for a confrontation with China over trade.

Against this backdrop, it was little wonder that, a day earlier, delegates here had clung to the words of Chinese President Xi Jinping, who hit all the right notes in voicing his support for the liberal economic order.

In a speech on Tuesday, Mr Xi rejected protectionism, urged against a “trade war in which there are no winners”, and pledged that China would keep its economy open to the world.

It was pointless blaming globalisation for economic challenges, he said, as this was “not the case, and would not solve the problems”. He also likened protectionism to shutting oneself in a dark room, which might keep out the wind and the rain but also block out the sunshine.

He went on to outline China’s proposals for collaborative projects, from its much vaunted One-Belt-One-Road initiative to foster trade links between Asia and the West, to long overdue structural reforms to “Western- centred” international institutions.

Mr Xi made history by being the first president of China to address the WEF, which rolled out the red carpet for him. He was given top billing for a keynote address on Day One of the week-long conference. He later also witnessed the signing of a “strategic partnership” between China’s National Development and Reform Commission and the WEF to deepen their collaboration over the next 10 years.

Responding to Mr Xi, WEF founder and executive chairman Klaus Schwab hailed his address as a “very important speech at a historic time”. He welcomed China’s efforts to support, as well as reform, the present institutional system and be a “driving force in the world for globalisation”.

Mr Schwab’s sentiments seemed to be shared by delegates, many of whom appeared delighted at the Chinese leader’s robust defence of globalisation at a time when some of its usual champions in Washington and the West seem to have lost faith in the project.

There have been, after all, many calls from these quarters for China to pitch in to uphold the rules-based system that has enabled it to make such rapid progress through international trade and economic co-operation.

The irony, however, of the liberal capitalist order being given a much-needed booster shot by the leader of a nominally Communist state, once itself deeply suspicious about signing up to it, was not lost on delegates.

In discussions afterwards, there were some sceptical voices raised about what a “globalisation with Chinese characteristics” might entail for the world.

Which explains why Mr Biden’s farewell speech was such a hit with the crowd yesterday.

With a new US leader waiting to be sworn in tomorrow, just as proceedings here will be winding down, many remain deeply unsure if the clock was not also winding down on the globalisation project they have long supported, and benefited from.

A version of this article appeared in the print edition of The Straits Times on January 19, 2017, with the headline ‘A clarion call to defend the liberal global order’.

XI JINPING’S DAVOS SPEECH SHOWED THE WORLD HAS TURNED UPSIDE DOWN

China is looking to position itself as the guarantor of global trade after Donald Trump’s election.

What a difference a decade can make. China went from being lambasted for being an irresponsible stakeholder in the mid-2000s, to now being seen as the linchpin of global economic stability. This reality set in for many on Tuesday as China’s President Xi Jinping took the stage to deliver a staunch defense of economic globalization, and international cooperation on issues that threaten global prosperity and growth.

Contrast these remarks to the outbursts from President-elect of the United States Donald Trump about the unfair advantages built into the global economy’s rules of the game—rules that have paved the way for the U.S.’s rise to the top—and we are all left scratching our heads.

If Xi’s opening address to Davos’s exclusive club of the economic and political elite is any indication of what is to come in 2017, China could be the most powerful voice heralding the social and economic benefits of globalization, inviting countries to join free trade pacts that it hosts and organizes, and investing into developing countries to gain market access.

That’s right; China, a developing country with swathes of rudimentary territory and hundreds of millions of people still living in poverty, is championing economic globalization. Clearly, we are living in an upside-down world.

In his Davos keynote, President Xi rejected the notion that “outside forces” or economic globalization were to blame for the world’s socioeconomic ills. Likely responding to Trump and the European populist rhetoric that has monopolized headlines for the past several months, Xi took aim at ongoing conflict, geopolitical instability, the rise of terrorism and refugee crises as the root causes of “what has gone wrong with our world.”

Unsaid was a point Chinese officials have made before; that it was sustained American intervention in the Middle East’s political history, most notably in Iraq in 2003, that brought on this regional instability and spillover to chaos we see today.

Xi also hinted at previous U.S. follies of “chasing reckless profits” and poor financial market regulations that ushered in the onset of the 2008 global financial crisis. Xi praised G20 initiatives that improve global economic governance of financial flows and banking regulations, but he and other world leaders ought to be rightly worried about Trump’s likelihood of tearing down the Dodd-Frank financial regulations that had put stronger oversight on American banks and investment firms.

It was New York that was the epicenter of the international financial crisis, but its fallout was far more felt in Athens, Madrid and Dublin.

From finance to trade, it appears Trump’s America will no longer play the role of enforcing the liberal rules and norms the country once coveted and benefited from. Instead, it is Xi’s China that is promising to expand the One Belt One Road (OBOR) initiative to link Asia to Europe and Africa using land, air, and sea. The OBOR is reminiscent of the U.S.’s own Marshall Plan for Europe : Xi heralded it as an ambitious foreign aid program that will bring investment, economic growth, and open trade routes for developing markets. Xi declared that China is open to trade and welcomes the world to take advantage of its market, the largest developing economy in the world, just at a time when the US is expected to raise protectionist barriers and breakdown free trade agreements.

Where the United States once claimed itself to be the center of research and development, technological innovation and intellectual property, Xi noted how China is encouraging domestic consumption and savings, growing its service sector to diversify from manufacturing, and is investing in and promoting green technologies.

Xi rejected the idea that economic globalization brought all ills, pointing to advances made in productivity, technology, and scientific advancements. He did not deny that there will be inequality, since the “ world cake ” cannot be made bigger, but that countries need to cushion against the negative impact. But, Xi reminded us that the world may be on the cusp of new technological changes from artificial intelligence to 3D printing and green technologies. Unlike Trump’s doom and gloom rhetoric about the world, Xi shared some much needed optimism and hope that was well-received by the forum in the Swiss ski resort town.

To ward against another 1930s-like depression of beggar-thy-neighbor policies, U.S. presidents have used monetary policy to shore up global trade. To prevent an exodus of capital from already hurting emerging market economies to the United States, Federal Reserve Chair Janet Yellen has been cautious about increasing interest rates; a monetary policy decision that Trump has railed against. Where the U.S. dollar had been the currency used to shore up world trade, the greenback clearly does not have the domestic political backing it once had. Yet it was Xi who promised not to devalue the Chinese renminbi so as to not cause a currency war.

Trump’s America seems more like the irresponsible and bystander state and China appears more like the guarantor and bulwark of global economic stability through a shared vision of increased economic cooperation and commitment to inclusive growth. Perhaps next year the annual World Economic Forum ought to be held at China’s Yabuli Ski Resort instead, confirming that the world is truly upside-down.

Bessma Momani is professor at the Balsillie School of International Affairs and the University of Waterloo and senior fellow at the Centre for International Governance and Innovation and the Brookings Institution.

President Xi’s speech to Davos in full

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

I’m delighted to come to beautiful Davos. Though just a small town in the Alps, Davos is an important window for taking the pulse of the global economy. People from around the world come here to exchange ideas and insights, which broaden their vision. This makes the WEF annual meeting a cost-effective brainstorming event, which I would call “Schwab economics”.

“It was the best of times, it was the worst of times.” These are the words used by the English writer Charles Dickens to describe the world after the Industrial Revolution. Today, we also live in a world of contradictions. On the one hand, with growing material wealth and advances in science and technology, human civilization has developed as never before. On the other hand, frequent regional conflicts, global challenges like terrorism and refugees, as well as poverty, unemployment and widening income gap have all added to the uncertainties of the world.

Many people feel bewildered and wonder: What has gone wrong with the world?

To answer this question, one must first track the source of the problem. Some blame economic globalization for the chaos in the world. Economic globalization was once viewed as the treasure cave found by Ali Baba in The Arabian Nights, but it has now become the Pandora’s box in the eyes of many. The international community finds itself in a heated debate on economic globalization.

Today, I wish to address the global economy in the context of economic globalization.

The point I want to make is that many of the problems troubling the world are not caused by economic globalization. For instance, the refugee waves from the Middle East and North Africa in recent years have become a global concern. Several million people have been displaced, and some small children lost their lives while crossing the rough sea. This is indeed heartbreaking. It is war, conflict and regional turbulence that have created this problem, and its solution lies in making peace, promoting reconciliation and restoring stability. The international financial crisis is another example. It is not an inevitable outcome of economic globalization; rather, it is the consequence of excessive chase of profit by financial capital and grave failure of financial regulation. Just blaming economic globalization for the world’s problems is inconsistent with reality, and it will not help solve the problems.

From the historical perspective, economic globalization resulted from growing social productivity, and is a natural outcome of scientific and technological progress, not something created by any individuals or any countries. Economic globalization has powered global growth and facilitated movement of goods and capital, advances in science, technology and civilization, and interactions among peoples.

But we should also recognize that economic globalization is a double-edged sword. When the global economy is under downward pressure, it is hard to make the cake of global economy bigger. It may even shrink, which will strain the relations between growth and distribution, between capital and labor, and between efficiency and equity. Both developed and developing countries have felt the punch. Voices against globalization have laid bare pitfalls in the process of economic globalization that we need to take seriously.

As a line in an old Chinese poem goes, “Honey melons hang on bitter vines; sweet dates grow on thistles and thorns.” In a philosophical sense, nothing is perfect in the world. One would fail to see the full picture if he claims something is perfect because of its merits, or if he views something as useless just because of its defects. It is true that economic globalization has created new problems, but this is no justification to write economic globalization off completely. Rather, we should adapt to and guide economic globalization, cushion its negative impact, and deliver its benefits to all countries and all nations.

There was a time when China also had doubts about economic globalization, and was not sure whether it should join the World Trade Organization. But we came to the conclusion that integration into the global economy is a historical trend. To grow its economy, China must have the courage to swim in the vast ocean of the global market. If one is always afraid of bracing the storm and exploring the new world, he will sooner or later get drowned in the ocean. Therefore, China took a brave step to embrace the global market. We have had our fair share of choking in the water and encountered whirlpools and choppy waves, but we have learned how to swim in this process. It has proved to be a right strategic choice.

Whether you like it or not, the global economy is the big ocean that you cannot escape from. Any attempt to cut off the flow of capital, technologies, products, industries and people between economies, and channel the waters in the ocean back into isolated lakes and creeks is simply not possible. Indeed, it runs counter to the historical trend.

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

Image: Valeriano Di Domenico

The history of mankind tells us that problems are not to be feared. What should concern us is refusing to face up to problems and not knowing what to do about them. In the face of both opportunities and challenges of economic globalization, the right thing to do is to seize every opportunity, jointly meet challenges and chart the right course for economic globalization.

At the APEC Economic Leaders’ Meeting in late 2016, I spoke about the necessity to make the process of economic globalization more invigorated, more inclusive and more sustainable. We should act pro-actively and manage economic globalization as appropriate so as to release its positive impact and rebalance the process of economic globalization. We should follow the general trend, proceed from our respective national conditions and embark on the right pathway of integrating into economic globalization with the right pace. We should strike a balance between efficiency and equity to ensure that different countries, different social strata and different groups of people all share in the benefits of economic globalization. The people of all countries expect nothing less from us, and this is our unshirkable responsibility as leaders of our times.

Ladies and Gentlemen,
Dear Friends,

At present, the most pressing task before us is to steer the global economy out of difficulty. The global economy has remained sluggish for quite some time. The gap between the poor and the rich and between the South and the North is widening. The root cause is that the three critical issues in the economic sphere have not been effectively addressed.

First, lack of robust driving forces for global growth makes it difficult to sustain the steady growth of the global economy. The growth of the global economy is now at its slowest pace in seven years. Growth of global trade has been slower than global GDP growth. Short-term policy stimuli are ineffective. Fundamental structural reform is just unfolding. The global economy is now in a period of moving toward new growth drivers, and the role of traditional engines to drive growth has weakened. Despite the emergence of new technologies such as artificial intelligence and 3-D printing, new sources of growth are yet to emerge. A new path for the global economy remains elusive.

Second, inadequate global economic governance makes it difficult to adapt to new developments in the global economy. Madame Christine Lagarde recently told me that emerging markets and developing countries already contribute to 80 percent of the growth of the global economy. The global economic landscape has changed profoundly in the past few decades. However, the global governance system has not embraced those new changes and is therefore inadequate in terms of representation and inclusiveness. The global industrial landscape is changing and new industrial chains, value chains and supply chains are taking shape. However, trade and investment rules have not kept pace with these developments, resulting in acute problems such as closed mechanisms and fragmentation of rules. The global financial market needs to be more resilient against risks, but the global financial governance mechanism fails to meet the new requirement and is thus unable to effectively resolve problems such as frequent international financial market volatility and the build-up of asset bubbles.

Third, uneven global development makes it difficult to meet people’s expectations for better lives. Dr. Schwab has observed in his book The Fourth Industrial Revolution that this round of industrial revolution will produce extensive and far-reaching impacts such as growing inequality, particularly the possible widening gap between return on capital and return on labor. The richest one percent of the world’s population own more wealth than the remaining 99 percent. Inequality in income distribution and uneven development space are worrying. Over 700 million people in the world are still living in extreme poverty. For many families, to have warm houses, enough food and secure jobs is still a distant dream. This is the biggest challenge facing the world today. It is also what is behind the social turmoil in some countries.

All this shows that there are indeed problems with world economic growth, governance and development models, and they must be resolved. The founder of the Red Cross Henry Dunant once said, “Our real enemy is not the neighboring country; it is hunger, poverty, ignorance, superstition and prejudice.” We need to have the vision to dissect these problems; more importantly, we need to have the courage to take actions to address them.

First, we should develop a dynamic, innovation-driven growth model. The fundamental issue plaguing the global economy is the lack of driving force for growth.Innovation is the primary force guiding development. Unlike the previous industrial revolutions, the fourth industrial revolution is unfolding at an exponential rather than linear pace. We need to relentlessly pursue innovation. Only with the courage to innovate and reform can we remove bottlenecks blocking global growth and development.

With this in mind, G-20 leaders reached an important consensus at the Hangzhou Summit, which is to take innovation as a key driver and foster new driving force of growth for both individual countries and the global economy. We should develop a new development philosophy and rise above the debate about whether there should be more fiscal stimulus or more monetary easing. We should adopt a multipronged approach to address both the symptoms and the underlying problems. We should adopt new policy instruments and advance structural reform to create more space for growth and sustain its momentum. We should develop new growth models and seize opportunities presented by the new round of industrial revolution and digital economy. We should meet the challenges of climate change and aging population. We should address the negative impact of IT application and automation on jobs. When cultivating new industries and new forms models of business models, we should create new jobs and restore confidence and hope to our peoples.

Second, we should pursue a well-coordinated and inter-connected approach to develop a model of open and win-win cooperation. Today, mankind has become a close-knit community of shared future. Countries have extensive converging interests and are mutually dependent. All countries enjoy the right to development. At the same time, they should view their own interests in a broader context and refrain from pursuing them at the expense of others.

We should commit ourselves to growing an open global economy to share opportunities and interests through opening-up and achieve win-win outcomes. One should not just retreat to the harbor when encountering a storm, for this will never get us to the other shore of the ocean. We must redouble efforts to develop global connectivity to enable all countries to achieve inter-connected growth and share prosperity. We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism. Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.

Third, we should develop a model of fair and equitable governance in keeping with the trend of the times. As the Chinese saying goes, people with petty shrewdness attend to trivial matters, while people with vision attend to governance of institutions. There is a growing call from the international community for reforming the global economic governance system, which is a pressing task for us. Only when it adapts to new dynamics in the international economic architecture can the global governance system sustain global growth.

Countries, big or small, strong or weak, rich or poor, are all equal members of the international community. As such, they are entitled to participate in decision-making, enjoy rights and fulfill obligations on an equal basis. Emerging markets and developing countries deserve greater representation and voice. The 2010 IMF quota reform has entered into force, and its momentum should be sustained. We should adhere to multilateralism to uphold the authority and efficacy of multilateral institutions. We should honor promises and abide by rules. One should not select or bend rules as he sees fit. The Paris Agreement is a hard-won achievement which is in keeping with the underlying trend of global development. All signatories should stick to it instead of walking away from it as this is a responsibility we must assume for future generations.

Fourth, we should develop a balanced, equitable and inclusive development model. As the Chinese saying goes, “A just cause should be pursued for common good.”Development is ultimately for the people. To achieve more balanced development and ensure that the people have equal access to opportunities and share in the benefits of development, it is crucial to have a sound development philosophy and model and make development equitable, effective and balanced.

Opening Plenary with Xi Jinping, President of the People's Republic of China in Davos, January 17, 2017. Copyright by World Economic Forum / Valeriano Di Domenico

Image: Valeriano Di Domenico

We should foster a culture that values diligence, frugality and enterprise and respects the fruits of hard work of all. Priority should be given to addressing poverty, unemployment, the widening income gap and the concerns of the disadvantaged to promote social equity and justice. It is important to protect the environment while pursuing economic and social progress so as to achieve harmony between man and nature and between man and society. The 2030 Agenda for Sustainable Development should be implemented to realize balanced development across the world.

A Chinese adage reads, “Victory is ensured when people pool their strength; success is secured when people put their heads together.” As long as we keep to the goal of building a community of shared future for mankind and work hand in hand to fulfill our responsibilities and overcome difficulties, we will be able to create a better world and deliver better lives for our peoples.

Ladies and Gentlemen,
Dear Friends,

China has become the world’s second largest economy thanks to 38 years of reform and opening-up. A right path leads to a bright future. China has come this far because the Chinese people have, under the leadership of the Communist Party of China, blazed a development path that suits China’s actual conditions.

This is a path based on China’s realities. China has in the past years succeeded in embarking on a development path that suits itself by drawing on both the wisdom of its civilization and the practices of other countries in both East and West. In exploring this path, China refuses to stay insensitive to the changing times or to blindly follow in others’ footsteps. All roads lead to Rome. No country should view its own development path as the only viable one, still less should it impose its own development path on others.

This is a path that puts people’s interests first. China follows a people-oriented development philosophy and is committed to bettering the lives of its people. Development is of the people, by the people and for the people. China pursues the goal of common prosperity. We have taken major steps to alleviate poverty and lifted over 700 million people out of poverty, and good progress is being made in our efforts to finish building a society of initial prosperity in all respects.

This is a path of pursuing reform and innovation. China has tackled difficulties and met challenges on its way forward through reform. China has demonstrated its courage to take on difficult issues, navigate treacherous rapids and remove institutional hurdles standing in the way of development. These efforts have enabled us to unleash productivity and social vitality. Building on progress of 30-odd years of reform, we have introduced more than 1,200 reform measures over the past four years, injecting powerful impetus into China’s development.

This is a path of pursuing common development through opening-up. China is committed to a fundamental policy of opening-up and pursues a win-win opening-up strategy. China’s development is both domestic and external oriented; while developing itself, China also shares more of its development outcomes with other countries and peoples.

China’s outstanding development achievements and the vastly improved living standards of the Chinese people are a blessing to both China and the world. Such achievements in development over the past decades owe themselves to the hard work and perseverance of the Chinese people, a quality that has defined the Chinese nation for several thousand years. We Chinese know only too well that there is no such thing as a free lunch in the world. For a big country with over 1.3 billion people, development can be achieved only with the dedication and tireless efforts of its own people. We cannot expect others to deliver development to China, and no one is in a position to do so. When assessing China’s development, one should not only see what benefits the Chinese people have gained, but also how much hard effort they have put in, not just what achievements China has made, but also what contribution China has made to the world. Then one will reach a balanced conclusion about China’s development.

Between 1950 and 2016, despite its modest level of development and living standard, China provided more than 400 billion yuan of foreign assistance, undertook over 5,000 foreign assistance projects, including nearly 3,000 complete projects, and held over 11,000 training workshops in China for over 260,000 personnel from other developing countries. Since it launched reform and opening-up, China has attracted over $1.7 trillion of foreign investment and made over $1.2 trillion of direct outbound investment, making huge contribution to global economic development. In the years following the outbreak of the international financial crisis, China contributed to over 30 percent of global growth every year on average. All these figures are among the highest in the world.

The figures speak for themselves. China’s development is an opportunity for the world; China has not only benefited from economic globalization but also contributed to it. Rapid growth in China has been a sustained, powerful engine for global economic stability and expansion. The inter-connected development of China and a large number of other countries has made the world economy more balanced. China’s remarkable achievement in poverty reduction has contributed to more inclusive global growth. And China’s continuous progress in reform and opening-up has lent much momentum to an open world economy.

We Chinese know only too well what it takes to achieve prosperity, so we applaud the achievements made by others and wish them a better future. We are not jealous of others’ success; and we will not complain about others who have benefited so much from the great opportunities presented by China’s development. We will open our arms to the people of other countries and welcome them aboard the express train of China’s development.

Ladies and Gentlemen,
Dear Friends,

I know you are all closely following China’s economic development, and let me give you an update on the state of China’s economy. China’s economy has entered what we call a new normal, in which major changes are taking place in terms of growth rate, development model, economic structure and drivers of growth. But the economic fundamentals sustaining sound development remain unchanged.

Despite a sluggish global economy, China’s economy is expected to grow by 6.7 percent in 2016, still one of the highest in the world. China’s economy is far bigger in size than in the past, and it now generates more output than it did with double-digit growth in the past. Household consumption and the services sector have become the main drivers of growth. In the first three quarters of 2016, added value of the tertiary industry took up 52.8 percent of the GDP and domestic consumption contributed to 71 percent of economic growth. Household income and employment have steadily risen, while per unit GDP energy consumption continues to drop. Our efforts to pursue green development are paying off.

The Chinese economy faces downward pressure and many difficulties, including acute mismatch between excess capacity and an upgrading demand structure, lack of internal driving force for growth, accumulation of financial risks, and growing challenges in certain regions. We see these as temporary hardships that occur on the way forward. And the measures we have taken to address these problems are producing good results. We are firm in our resolve to forge ahead. China is the world’s largest developing country with over 1.3 billion people, and their living standards are not yet high. But this reality also means China has enormous potential and space for development. Guided by the vision of innovative, coordinated, green, open and shared development, we will adapt to the new normal, stay ahead of the curve, and make coordinated efforts to maintain steady growth, accelerate reform, adjust economic structure, improve people’s living standards and fend off risks. With these efforts, we aim to achieve medium-high rate of growth and upgrade the economy to higher end of the value chain.

China will strive to enhance the performance of economic growth. We will pursue supply-side structural reform as the general goal, shift the growth model and upgrade the economic structure. We will continue to cut overcapacity, reduce inventory, deleverage financing, reduce cost and strengthen weak links. We will foster new drivers of growth, develop an advanced manufacturing sector and upgrade the real economy. We will implement the Internet Plus action plan to boost effective demand and better meet the individualized and diverse needs of consumers. And we will do more to protect the ecosystem.

China will boost market vitality to add new impetus to growth. We will intensify reform efforts in priority areas and key links and enable the market to play a decisive role in resources allocation. Innovation will continue to feature prominently on our growth agenda. In pursuing the strategy of innovation-driven development, we will bolster the strategic emerging industries, apply new technologies and foster new business models to upgrade traditional industries; and we will boost new drivers of growth and revitalize traditional ones.

China will foster an enabling and orderly environment for investment. We will expand market access for foreign investors, build high-standard pilot free trade zones, strengthen protection of property rights, and level the playing field to make China’s market more transparent and better regulated. In the coming five years, China is expected to import $8 trillion of goods, attract $600 billion of foreign investment and make $750 billion of outbound investment. Chinese tourists will make 700 million overseas visits. All this will create a bigger market, more capital, more products and more business opportunities for other countries. China’s development will continue to offer opportunities to business communities in other countries. China will keep its door wide open and not close it. An open door allows both other countries to access the Chinese market and China itself to integrate with the world. And we hope that other countries will also keep their door open to Chinese investors and keep the playing field level for us.

China will vigorously foster an external environment of opening-up for common development. We will advance the building of the Free Trade Area of the Asia Pacific and negotiations of the Regional Comprehensive Economic Partnership to form a global network of free trade arrangements. China stands for concluding open, transparent and win-win regional free trade arrangements and opposes forming exclusive groups that are fragmented in nature. China has no intention to boost its trade competitiveness by devaluing the RMB, still less will it launch a currency war.

Over three years ago, I put forward the “Belt and Road” initiative. Since then, over 100 countries and international organizations have given warm responses and support to the initiative. More than 40 countries and international organizations have signed cooperation agreements with China, and our circle of friends along the “Belt and Road” is growing bigger. Chinese companies have made over $50 billion of investment and launched a number of major projects in the countries along the routes, spurring the economic development of these countries and creating many local jobs. The “Belt and Road” initiative originated in China, but it has delivered benefits well beyond its borders.

In May this year, China will host in Beijing the Belt and Road Forum for International Cooperation, which aims to discuss ways to boost cooperation, build cooperation platforms and share cooperation outcomes. The forum will also explore ways to address problems facing global and regional economy, create fresh energy for pursuing inter-connected development and make the “Belt and Road” initiative deliver greater benefits to people of countries involved.

Ladies and Gentlemen,
Dear Friends,

World history shows that the road of human civilization has never been a smooth one, and that mankind has made progress by surmounting difficulties. No difficulty, however daunting, will stop mankind from advancing. When encountering difficulties, we should not complain about ourselves, blame others, lose confidence or run away from responsibilities. We should join hands and rise to the challenge. History is created by the brave. Let us boost confidence, take actions and march arm-in-arm toward a bright future.

Thank you.

Link: https://www.weforum.org/agenda/2017/01/full-text-of-xi-jinping-keynote-at-the-world-economic-forum

FMPRC Statement on the Jurisdiction Issues in the South China Sea case
http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1310474.shtml

Statement of the Ministry of Foreign Affairs of the People’s Republic of China on the Award on Jurisdiction and Admissibility of the South China Sea Arbitration by the Arbitral Tribunal Established at the Request of the Republic of the Philippines

2015/10/30

The award rendered on 29 October 2015 by the Arbitral Tribunal established at the request of the Republic of the Philippines (hereinafter referred to as the “Arbitral Tribunal”) on jurisdiction and admissibility of the South China Sea arbitration is null and void, and has no binding effect on China.

I. China has indisputable sovereignty over the South China Sea Islands and the adjacent waters. China’s sovereignty and relevant rights in the South China Sea, formed in the long historical course, are upheld by successive Chinese governments, reaffirmed by China’s domestic laws on many occasions, and protected under international law including the United Nations Convention on the Law of the Sea (UNCLOS). With regard to the issues of territorial sovereignty and maritime rights and interests, China will not accept any solution imposed on it or any unilateral resort to a third-party dispute settlement.

II. The Philippines’ unilateral initiation and obstinate pushing forward of the South China Sea arbitration by abusing the compulsory procedures for dispute settlement under the UNCLOS is a political provocation under the cloak of law. It is in essence not an effort to settle disputes but an attempt to negate China’s territorial sovereignty and maritime rights and interests in the South China Sea. In the Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines, which was released by the Chinese Ministry of Foreign Affairs on 7 December 2014 upon authorization, the Chinese government pointed out that the Arbitral Tribunal manifestly has no jurisdiction over the arbitration initiated by the Philippines, and elaborated on the legal grounds for China’s non-acceptance of and non-participation in the arbitration. This position is clear and explicit, and will not change.

III. As a sovereign state and a State Party to the UNCLOS, China is entitled to choose the means and procedures of dispute settlement of its own will. China has all along been committed to resolving disputes with its neighbors over territory and maritime jurisdiction through negotiations and consultations. Since the 1990s, China and the Philippines have repeatedly reaffirmed in bilateral documents that they shall resolve relevant disputes through negotiations and consultations. TheDeclaration on the Conduct of Parties in the South China Sea (DOC) explicitly states that the sovereign states directly concerned undertake to resolve their territorial and jurisdictional disputes by peaceful means through friendly consultations and negotiations. All these documents demonstrate that China and the Philippines have chosen, long time ago, to settle their disputes in the South China Sea through negotiations and consultations. The breach of this consensus by the Philippines damages the basis of mutual trust between states.

IV. Disregarding that the essence of this arbitration case is territorial sovereignty and maritime delimitation and related matters, maliciously evading the declaration on optional exceptions made by China in 2006 under Article 298 of the UNCLOS, and negating the consensus between China and the Philippines on resolving relevant disputes through negotiations and consultations, the Philippines and the Arbitral Tribunal have abused relevant procedures and obstinately forced ahead with the arbitration, and as a result, have severely violated the legitimate rights that China enjoys as a State Party to the UNCLOS, completely deviated from the purposes and objectives of the UNCLOS, and eroded the integrity and authority of the UNCLOS. As a State Party to the UNCLOS, China firmly opposes the acts of abusing the compulsory procedures for dispute settlement under the UNCLOS, and calls upon all parties concerned to work together to safeguard the integrity and authority of the UNCLOS.

V. The Philippines’ attempt to negate China’s territorial sovereignty and maritime rights and interests in the South China Sea through arbitral proceeding will lead to nothing. China urges the Philippines to honor its own commitments, respect China’s rights under international law, change its course and return to the right track of resolving relevant disputes in the South China Sea through negotiations and consultations.