Category Archives: 未分类

CICA at 25: Review and Outlook

Composed by the Shanghai Institutes for International Studies

Entrusted by the Second Conference of the CICA Non-governmental Forum

June 2017

Contents

Executive Summary

I. Asian Security Challenges

II. CICA Evolution and Asian Security Architecture Building 

III. Outlook and Ways Forward 

Executive Summary

The Asian security landscape has recently become increasingly complicated and multifaceted. While traditional security challenges have yet to be effectively contained, security issues of a nontraditional nature are multiplying and escalating, posing a common threat to all Asian countries. Due to the significant differences among Asian countries in terms of ethnic composition, religious belief, political system, cultural tradition, and geographical location, various competing sub-regional security arrangements advocated by major powers inside and outside of the region have fallen short in settling regional security issues. Therefore, for Asian countries, it has become an urgent requirement to build a new security institution which should be more representative and inclusive in nature so as to accommodate and coordinate various sub-regional security mechanisms.

The idea of convening CICA was first proposed in 1992 and after seven years of hard work, the first meeting of foreign ministers of CICA member states was held in 1999. The Declaration on the Principles Guiding Relations between the CICA Member States adopted at the meeting, and later the Almaty Act adopted at CICA’s first summit meeting held in Almaty in 2002 became the stepping stone toward future evolution of CICA. The establishment of the CICA Secretariat in Almaty of Kazakhstan in 2006 and the first chairmanship handover from Kazakhstan to Turkey in 2010 marked a new stage in CICA’s institutionalization.

The Fourth CICA Summit held in Shanghai in 2014 represented another milestone, where Chinese President Xi Jinping proposed a new concept of “common, comprehensive, cooperative and sustainable security” for Asia, winning broad-based approval. With its further enlargement and growing international influence to unprecedented levels, CICA has become a comprehensive forum for official security dialogues and people-to-people exchanges.

As the most representative multilateral security institution in Asia with 26 member states and 14 observers, CICA plays a significant role in the Asia-Pacific landscape.

To begin with, CICA has developed into an open and inclusive multilateral security institution as well as a venue for substantive consultations and dialogues on regional security challenges, capable of building a broad-based consensus among regional countries.

Moreover, bearing in mind diverse security concerns of the countries in the region, CICA is well-positioned to meet the shared security demands and advance a common security agenda for all stakeholders in the region.

Last but not least, CICA is capable of providing a solid institutional foundation for and charting the shortest path toward an Asian security architecture.

Looking ahead, greater efforts should be made in the following aspects in order to fulfill CICA’s set-goals:

First, fostering a pan-Asian sense of shared destiny through substantive inter-civilzational dialogues and closer economic cooperation.

Second, strengthening capacity- and institution-building to increase CICA’s relevance and influence in Asian security dynamics with a view to laying a solid foundation for a viable Asian security architecture.

Third, building a common vision out of divergent views and creating synergy within the CICA framework by making full use of the comparative advantages of all stakeholders especially those of small and medium-sized countries.

Fourth, improving the Track II dialogue mechanism within the CICA framework to build consensus and provide recommendations on CICA’s future development.

First conceived in 1992 and after 25 years of evolution, CICA has become a major forum for dialogues and consultations on regional security issues. In an increasingly complicated security environment, CICA has a unique role to play in maintaining peace, security, and stability through multilateral confidence building and concerted cooperation. To cope with the changing socioeconomic foundations and multiple security hot-spots, CICA needs to calibrate its long-term objectives and make detailed plans for institution building.

I. Asian Security Challenges 

Since the end of the Cold War, Asia’s security environment has become increasingly complicated. In traditional security field, military tensions in some parts of Asia such as Afghanistan, Syria, Iraq, Yemen, and Korean Peninsula continue unabated. Meanwhile, multiple non-traditional security challenges, such as terrorism, extremism, pandemic diseases, massive flows of refugees, drug trafficking, and water/food security have kept escalating. In the wake of the U.S. rebalancing strategy, the Asia-Pacific region has entered a period of power realignment involving major players, such as the United States, China, Japan, India, and Russia. Local conflicts and tensions flare up time and again: the ongoing civil war in Syria; the persistent anti-terror war in the Middle East; territorial disputes in the South China Sea; and tensions over THAAD development in South Korea. The intense situation not only presents a common threat to all Asian countries but also sends shock waves across the globe.

Although faced with the same common security threats, Asian countries have not developed a common Asian identity due to their significant differences in ethnic composition, religious belief, political system, cultural tradition, and geographical location. It is therefore, natural for the Asian countries to perceive and plan about various regional security issues differently. Lack of consensus among major Asian countries has resulted in divergent, inconsistent, and even conflicting strategies and approaches to address regional and sub-regional security issues. Such an environment will not only lead to waste of resources in building overlapping functions but also create new grounds for competition among regional countries.

Therefore, for Asian countries, it has become an urgent requirement to build a new security institution which should be more representative and inclusive in nature so as to accommodate and coordinate various sub-regional security mechanisms. This new security institution must be flexible and broad-based to provide sufficient strategic space for every stakeholder on the one hand, and capable of managing major security issues, bridging divides and settling disputes, and making long-term plans for Asian security on the other.

II. CICA Evolution and Asian Security Architecture Building

The idea of convening CICA was first proposed by Kazakh President Nursultan Nazarbayev, at the 47th Session of the United Nations General Assembly in October 1992. In March 1993, the first meeting of experts and government officials were convened in Almaty under Kazakh sponsorship, beginning the discussion on CICA’s guiding principles and operational mechanisms and setting in motion its evolution. After seven years of dialogues and communications from 1992 to 1999, the first meeting of CICA foreign ministers was held in 1999, adopting CICA’s first founding document—Declaration on Principles Guiding Relations between CICA Member States. CICA’s first summit meeting held in Almaty in 2002 adopted two important guidelines documents: Almaty Act and Declaration on Eliminating Terrorism and Promoting Dialogue among Civilizations. The second CICA meeting of foreign ministers in 2004 produced a CICA Catalogue of Confidence Building Measures and the first CICA Rules of Procedure, laying out a detailed list of confidence building measures for the member states. The establishment of the CICA Secretariat in Almaty in 2006 and the chairmanship handover from Kazakhstan to Turkey in 2010 ushered in a new period of CICA’s institutionalization.

The year 2014 witnessed another milestone in CICA’s evolution: the Shanghai Summit, at which China assumed CICA Chairmanship. Since then, China has fulfilled its commitment by putting the CICA process on a fast track.

China has expanded CICA’s international influence by proposing a new security concept and enlarging CICA’s membership. The new concept of “common, comprehensive, cooperative and sustainable security” put forward by Chinese President Xi Jinping at the Shanghai Summit has won wide approval among Asian nations. Identifying themselves with the new security concept, Bangladesh and Qatar joined CICA as member states and Belarus was welcomed as an observer. With an expanded membership and a popular security concept, CICA’s global relevance and impact has been expanded. Meanwhile, China has also strengthened CICA solidarity by expanding areas of cooperation within the CICA framework. For example, China helped to establish the CICA Youth Council and CICA Business Council and organized a series of events marking the CICA Day which was set on October 5. China has built a comprehensive platform for security dialogues and nongovernmental exchanges for the countries of the region by hosting the first annual meeting of the CICA Nongovernmental Forum in Beijing and five international roundtable meetings of CICA think tanks, and sponsoring multiple training programs and experts’ workshops among CICA members states.

As a result of accumulative efforts of successive chairmanships, CICA has developed into the most inclusive multilateral forum for regional security dialogues with 26 member states and 14 observers (including international organizations). As the only pan-Asian security forum, CICA is unique in terms of its core ideas and institution-building capacity, and therefore well-positioned to play a larger role in the Asia-Pacific security landscape.

To begin with, CICA is an open and inclusive multilateral security institution with no threshold for members’ accession. It has spared no efforts to invite as many Asian countries to be member states as possible, and has also invited countries outside the region yet deeply involved in regional affairs to participate as observers. As such, the high level of inclusiveness and representativeness has enabled CICA to not only reflect the variety of security demands of regional players, but also build broad-based security consensus through substantive consultations and dialogues.

Besides, taking into account the diverse security perceptions and interests of regional countries, CICA is also capable of meeting their security expectations by overcoming the incompatibilities of various regional security mechanisms and creating a common vision of indivisible security.   CICA includes not only major powers such as China, Russia, and India, but also most of the middle powers in the region capable of playing an active role in security issues. In the past 25 years, many CICA member states have experienced rapid economic growth and remarkable capacity buildup, enabling them to shoulder more responsibilities for regional peace and stability. Not only does the CICA framework provide ample space for wide consultation but also flexible arrangements for sharing security burdens and promoting a common security agenda with a view to living up to the reasonable security expectations of all stakeholders.

Last but but least, CICA has laid a solid foundation for a viable Asian security architecture. After 25 years of development, especially the last decade’s fast evolution, CICA has grown into a full-fledged institutional network comprised of summit meeting, foreign ministers meeting, senior officials committee, and other mechanisms for consultation and dialogue. At the same time, CICA has formulated a number of basic documents laying out its mission, vision, operational mechanisms, and institutional structure. It has also signed memoranda of understanding with various regional and international organizations like the Shanghai Cooperation Organization. Fully utilized, the existing mechanisms within the CICA framework will be the shortest path toward a robust Asian security architecture.

CICA’s fast growth implies a bright outlook, yet it has to overcome a number of challenges before it could play a larger role in the Asian security landscape. Chief among the challenges is lack of a common “Asian awareness” or “Asian identity.” Asia’s security environment is very complicated and sensitive in nature. While European countries share similar cultural and religious origins, Asia is more of a geographical concept imposed on the nations of the region by Western narrative. In such a vast land with striking distinctions and immense diversities in terms of geographical condition, ethnic composition, religious belief, and ideology as well as their historical development, the difficulties in evolving a common recognition of Asian entity will be tremendous, let alone the acceptance of a shared community of Asia. In the contemporary Asian landscape characterized by increasing fragmentation, sub-regions remain the premier arena of political interactions among all Asian countries.

III. Outlook and Ways Forward 

Over the past 25 years, CICA has developed into the most representative and inclusive pan-Asian institution in regional security field. To live up to the expectations of the CICA members, China as the rotating chair has stepped up its efforts to revitalize CICA by fulfilling many of its commitments made at the summit, including initiating and sponsoring the CICA nongovernmental forum, international roundtable meetings of CICA think tanks, and CICA Youth Council. All these activities are conducive to the promotion of CICA’s publicity and recognition both within and outside the Asian continent. However, CICA’s overall influence on Asia’s security agenda is still limited. There is yet a long way to go before CICA could fulfill its vision. Asia’s unique security environment demands a more active CICA, and CICA also needs more sound and effective institutions to maximize its role in Asia’s security system. To maintain CICA’s positive evolutionary momentum, greater efforts need to be made in the following aspects.

First, fostering a pan-Asian sense of shared destiny. The absence of a common Asian awareness or identity is what stands in the way of a robust pan-Asian security institution and CICA has a due role to play in helping Asian nations cultivate such an awareness. It takes time to bridge the existing religious, cultural, geographical, and historical differences, but Asian nations share a common aspiration for economic prosperity and regional stability, which could serve as a cohesive agent binding them together. As a pan-Asian institution, CICA should promote an Asian awareness/identity based on the sense of shared destiny through substantive inter-civilizational dialogues and mutually beneficial economic cooperation.

Second, strengthening capacity and institution building. In this regard, CICA still has many deficiencies and shortcomings. CICA’s Secretariat and other existing administrative bodies should be made financially stable and staffed with adequate personnel. The Secretariat should also be given the mandate to monitor the implementation of confidence building measures. CICA should also try to increase the frequency of working and experts meetings, and set up more high-level meetings, such as meetings of defense ministers, ministers of public security/the interior and other senior officials concerning issues related to domestic or international security. To promote member states’ participation and CICA’s capacity in addressing and resolving Asia’s security issues, it also needs to make good use of various institutional arrangements to establish a network at multiple levels and fields. The establishment of regional chapters or pillars is also worth serious consideration. To better address regional risks, CICA may also need to build crisis-management and emergency-response mechanisms as a way of increasing its relevance to Asian security matters and laying a solid foundation for a new security architecture.

Third, accommodating small and medium-sized nations’ security concerns. In the course of promoting its development and upgrading, CICA should not only pay attention to major countries’ roles and responsibilities, but also make full use of small and medium-sized countries vision and innovation. CICA should be such an international institution that it is conducive to optimizing the comparative advantages of small and medium-sized countries, which are capable of supplementing major countries’ efforts to enhancing CICA’s influence with their unique visions and strengths. It is therefore important to develop divergent views into integrated visions which will create synergy and further strengthen CICA’s framework.

Finally, giving Track II dialogue an institutionalized role in promoting CICA’s evolution. Since CICA members have not reached an agreement on the direction and mission of CICA’s development, it is essential to conduct comprehensive dialogues and communications through all channels available. In this regard, consultations and discussions should first be carried out at the Track II level to build consensus and put forth practical recommendations. CICA members’ think tanks have a deeper understanding of CICA’s missions and responsibilities, and they should try to contribute more valuable ideas and research products aimed at enhancing Asia’s peace and prosperity. It is also necessary to set up a network of think tank cooperation within the CICA framework to tap the expertise of think tanks on the one hand, and strengthen cooperation between think tanks inside and outside CICA on the other with a view to promoting the security cooperation process in Asia. Track II dialogue must be further institutionalized to promote cooperation between the CICA Secretariat and various Track II mechanisms and solicit more intellectual contributions from think tanks for the benefit of CICA evolution.

China’s first AIP submarine reaches 10-year service milestone

(Xinhua/Han Lin)

China has mastered air-independent propulsion (AIP) technology, and the country’s navy submarines can now be equipped with the system to reach the advanced level of similar systems throughout the world.

This information was disclosed in a feature published on the website of the Ministry of National Defense on June 14. According to the article, China’s first AIP submarine has already completed over 50 important tasks and safely voyaged hundreds of thousands of miles since it was put into service 10 years ago.

An industry insider who asked not to be named told the Global Times on June 14 that China’s command of AIP technology is mature, and the system is widely used in the country’s submarine units. This news release emphasizes the confidence of the Chinese navy, the insider noted.

AIP allows non-nuclear submarines to operate without access to atmospheric oxygen, prolonging operation duration and increasing stealth. The new submarine is based on Type 035 and 039 submarines, both diesel-electric vessels. The new units are expected to greatly increase the combat capacity of the Chinese navy.

The insider also disclosed that a batch of AIP professionals have been cultivated to both satisfy the needs of routine training and military preparedness, and to carry out maintenance and fault deletion.

(The article is also published on People’s Daily Online)

Chinese university to offer academic programs in yoga

India-China Yoga College (ICYC) under Yunnan Minzu University (YMU) plans to recruit 30 yoga graduate students starting from the end of 2017, becoming China’s first institution of higher education to offer master’s degrees in yoga. In addition, YMU will also enroll 40 yoga undergraduates to begin classes in September.

Deputy dean of ICYC, Lu Fang, told Beijing Youth Daily that the college carefully considered the program before beginning official recruitment. According to Lu, ICYC has offered 12 non-certificate training courses for the community since last November, and 221 students have acquired corresponding certificates.

The college’s official yoga program will start from this year, recruiting both graduate and undergraduate students, Lu explained, adding that many people have already made inquiries about the major though recruitment hasn’t officially begun.

Lu noted that the graduate yoga program grew from a cooperation project with Vivekananda Yoga Anusandhana Samsthana, a yoga university located in Bangalore, India. The project aims to promote the exchange of both faculty members and students. Graduate students will spend half a year studying in India, while those in the three-year program will spend 12 months abroad.

“It will enhance the experience of undergraduate students, and graduate students will obtain two degrees – from both China and India,” Lu explained.

In addition to yoga courses such as asanas, pranayama, yoga therapy and physiology, the college will also offer courses on Indi and Sanskrit, in a bid to eliminate the language barrier for its students.

The establishment of the major has triggered concern among some Chinese netizens, who believe yoga is merely a method to keep fit and question whether it should be considered an academic subject. In addition, some have expressed worry over grim employment prospects for students after they graduate.

Responding to those worries, Lu explained that students can choose to become college professors or therapists at hospitals and rehabilitation centers if they don’t wish to be yoga instructors. In addition, graduate students can continue their academic studies and research.

(The article is also published on People’s Daily Online)

China to launch 4 important satellites for space science by 2020

China is set to launch four significant satellites for space science during the 13th Five-Year Plan period (2016-2020), after successfully launching the Hard X-ray Modulation Telescope Satellite at Jiuquan Satellite Launch Center on June 15, according to China’s State Administration of Science, Technology and Industry for National Defense.

A China News report included a statement by Zhao Ji’an, an employee of the administration, noting that China will launch the first test satellite for detecting electromagnetic anomalies from space in August 2017. The move is aimed at improving the country’s earthquake monitoring network.

In addition, China will launch the Chinese-French Oceanography Satellite in 2018 to enable ocean wave prediction and disaster prevention and mitigation; the Chinese and French astronomy satellite in 2021 for the research of dark energy and cosmic evolution; as well as a Mars probe in 2020, which is poised to achieve breakthroughs in key technologies like orbiting, landing and inspection.

Zhao noted that the administration is also working on new projects, such as the Einstein Probe and Water Cycle Observation Mission.

(The article is also published on People’s Daily Online)

Xinjiang county establishes database to forecast rainbows

A database for forecasting the emergence of rainbows has been established in Zhaosu County, Xinjiang Uygur Autonomous Region.

Zhaosu, which is surrounded by mountains on three sides, receives a significant amount of precipitation. As a result, the frequency of rainbows in the county is much higher than in other regions. Indeed, according to meteorological statistics, rainbows appear as many as 160 times in Zhaosu from May to August each year.

Precise weather forecasts require sufficient data and reliable analysis, said Zhou Mingwei, head of the local meteorological department. However, preliminary estimates can be made through the collection of meteorological data, offering an approximate forecast of the weather phenomenon.

(Xinhua/Li Wenwu)

The local meteorological department has established observation stations and solicited public information to enlarge its database, improving the precision of its forecasts. Data collected includes at least a dozen indices, such as the location of rainbows, their duration, and the temperature and wind speed at the time of their appearance.

The establishment of the database will not only provide precise forecasts, but will also inform visitors about the best observation times and locations, Zhou noted. Zhaosu is one of the most popular tourism destinations in Xinjiang. It received 1.35 million visitors in 2016, with tourism revenue of 400 million RMB ($58.9 million).

(The article is also published on People’s Daily Online)

Tianjin company to build road in Moscow made from rubber powder of used tires

A materials company in northern China’s Tianjin municipality plans to build a 5-kilometer green demonstration road in Moscow using asphalt modified from the rubber powder of scrapped tires.

The company, Tianjin Hitech Environment Development Co. Ltd., will carry out research on the technology with the National University of Science and Technology, Russia’s top university in steel, metallurgy and materials science. The two sides have jointly established research institutes in both Tianjin and Moscow, forging an integrated and comprehensive innovation platform.

According to Hitech, the demonstration road is a showcase of an entire industrial chain: from tire recycling to waste rubber powder processing, from asphalt modification to scrapped tire processing.

With the development of the Belt and Road Initiative, Tianjin has enhanced its international cooperation on advanced technology. Twenty-three technology enterprises in the municipality have established research centers in 19 countries, including Germany, Russia and Pakistan.

(The article is also published on People’s Daily Online)

Establishing official ties with China brings ‘lots of opportunities’: Panamanian politicians

A number of Panamanian politicians say that China-Panama relations will yield positive outcomes in the future, after the two countries established diplomatic ties on June 13.

Oyden Ortega Duran, chairman of the Panama-China Friendship Association, spoke highly of the diplomatic move. China is not only the second most frequent user of the Panama Canal, but is also the largest commodity supplier to the free trade zone in Colon, the chairman pointed out, adding that the establishment of ties will elevate bilateral relations in commerce and trade, investment, cultural exchange and other sectors.

Panama City Mayor Jose Blandon, who maintains extensive contact with the city’s Chinese community, believes people of both nations have been waiting for this moment for a very long time. Statistics show that there are over 150,000 Chinese people in Panama, a country with a total population of over 4 million.

Ortega believes developing Panama’s tourism industry should be a priority. More Chinese tourists will want to travel to Panama, which will benefit the commercial sector, he explained. Blandon hopes more Chinese enterprises will come to Panama in the future as well. He believes Panama can create a stable, favorable investment environment for Chinese investors and enterprises. The integration of Chinese and Panamanian cultures will make it easier for Chinese investors to launch businesses here, or make Panama the headquarters for Chinese enterprises in Latin America, the mayor added.

Blandon has previously traveled to Beijing, Shanghai, Shenzhen and Dalian, and noted that those cities left deep impressions on him. Addressing the Belt and Road Initiative and the Belt and Road Forum for International Cooperation, Ortega said: “Countries across the world are all looking forward to seizing the precious opportunity brought by the ‘Belt and Road’ for development.”

After establishing diplomatic ties with the Chinese mainland, Panama on the same day announced that it would sever ties with Taiwan. Recent media reports noted that, affected by the dissolution of diplomatic relations, some Panamanian students who received scholarships from Taiwan may not know how to proceed.

In response to these concerns, Chinese Foreign Ministry spokesperson Lu Kang said at a regular news briefing on June 15 that “We are aware some Panamanian students who have received scholarships from Taiwan may experience difficulties. We welcome them to study in the Chinese mainland and are willing to offer timely and necessary assistance.”

In the future, China will provide annual scholarships to students from Panama, Lu said. The spokesperson noted that “China will enhance educational and cultural exchange with Panama.”

(The article is also published on People’s Daily Online)

China’s economy will catch up with US economy in 17 years: Economists

A recent survey found that Chinese economists are optimistic about the country’s economic future. They predict China’s economic growth for this year at 6.6 percent, which would mean China’s economic aggregate needs only until 2034 to catch up with that of the U.S.

The survey was published on June 14 in the bi-monthly journal China Economist. The survey collected 131 questionnaires for analysis. It is conducted every quarter, administered to investment banks, research institutes and respected economists.

Economists from China’s central and western regions predicted the country’s economic growth at 6.63 and 6.6 percent, higher than their peers in the east, the survey showed. Most economists predicted that by 2045, China’s manufacturing will be on the same level as that of the U.S.

The survey also reflects Chinese economists’ optimistic attitude toward the country’s future competitiveness, which derives partly from their confidence in the government. A total of 35.2 percent of economists said China’s debt is more sustainable than that of the U.S., as China’s debt-to-GDP ratio is relatively low, while the country’s GDP growth rate is fairly high.

Chinese government debts are largely used to build real assets, while other world governments use debt for consumptive purposes, Wang Guogang, director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences, was cited as saying.

Meanwhile, 91.2 percent of economists are optimistic about the 100-day action plan proposed by U.S. President Donald Trump, believing that the U.S. economy has a strong capacity to recover, and the country’s manufacturing industry can be revitalized.

(The article is also published on People’s Daily)

Tidy Sum, That: ‘Costume’ Diamond Bought in 1980s for £10 Sold for £650K

a large 26.27 karat diamond ring, thought to be ‘Costume jewelry’ diamond really worth hundreds of thousands

© AP Photo/ Sotheby’s

A diamond sold for £10 in a 1980s junk sale (roughly $34 in 2017 money) has been sold at a London auction for £656,750 ($836,000).

The original buyer purchased the so-called “tenner diamond” at a West London flea market and then wore it as a ring for decades. The buyer thought that gem was a next-to-worthless piece of costume jewelry, not a 26.27-carat white diamond.

At some point, the owner visited a jeweler who thought the ring might be valuable. It was taken to London-based auctioning multinational Sotheby’s, which initially valued it at £350,000 ($446,000).

“The majority of us can’t even begin to dream of owning a diamond that large,” Sotheby’s London jewelry department head Jessica Wyndham told a local news outlet. “The owner would wear it out shopping, wear it day-to-day. It’s a good-looking ring. No one had any idea it had any intrinsic value at all. They enjoyed it all this time.”

“It was a thrill to bring the hammer down on an object which has been the subject of so much interest and attention over the last few weeks and to see that attention translate into such strong bidding competition.”

The ring was confirmed as a genuine diamond by the Gemological Institute of America, which believes it to have been cut in the 19th century. The original cutting was done to preserve size rather than emphasize brilliance, leading to a large but dull stone.
The Superman Diamond, being held by discoverer Kalel Langford.

“I’m convinced the £10 ring was once owned by royalty or a person of great wealth, because it originates from the 1800s – before the discovery of modern diamond mines and a time when very few diamonds were available,” Tobias Kormind, managing director of 77Diamonds.com, told The Sun.

“Several diamond dealers have already inspected this diamond to assess how large a modern cut diamond can be made from it. The new owner is likely to re-cut it into a modern diamond that will emit even more sparkle and potentially be worth a multiple of the Sotheby’s estimate.”

The stone was put up for auction on Wednesday, June 7. Bidding started at 240,000 pounds, passed 500,0000, and the rock finally sold for nearly twice the valuation to an international buyer.

Source: Sputniknews

Russian, Chinese Gold Reserves to Cut Global Economy’s Addiction to Dollar

Russia and China continue to stockpile gold in a bid to cut their economies’ dependency on the US dollar in the future. Experts told Sputnik that if the dollar’s role as a global reserve currency is decreased the world will see radical political and economic transformation.

In recent years, Russia and China have actively been purchasing the yellow metal and have significantly enlarged their national gold reserves.

According to Philip Klinkmüller, a financial expert with Hopf-Klinkmüller Capital Management, there is a visible trend in Russia and China to buy more bullion to end their dependency on the US dollar.

The expert suggested that in the years to come global financial markets will see a significant devaluation of the American currency.

“According to our estimates, there will be a downward trend in the dollar exchange rate in the next 15 years. In the long-run, it cannot be guaranteed that the dollar will remain a global reserve currency,” Klinkmüller told Sputnik Germany.

Bullion was traditionally a major part of the Russia’s and China’s gold and foreign exchange reserves. At the same time, nearly 60 percent of global exchange reserves are denominated in dollars.

On the one hand, gold is a national reserve in the event of a crisis. On the other hand, gold reserves help compensate losses from a fluctuating dollar.

By stockpiling bullion, Russia and China want to get more independent in trading gold and cut their reliance on the US dollar, according to Jochen Stanzl, a market analyst at CMC Markets.

He added that gold purchases also help a country to diversify its national financial resources.

“If the country buys only one currency it gets highly dependent on its exchange rate. By purchasing gold, the central bank diversifies its resources and enhances the soundness of nation’s assets,” Stanzl said.

In turn, Klinkmüller noted that buying gold is “absolutely reasonable” for Russia since the yellow metal is helpful to offset the negative effect from sanctions.

“Russia wants to be more independent from the US dollar and act at global financial markets, using gold as a payment instrument. One of the reasons is sanctions imposed by the United States and the European Union over the Ukrainian crisis, including those in trade and investment,” the financial expert explained.

As for China, Beijing is currently the world’s importer of gold, and according to Stanzl’s estimates, will keep this status in the future.

The expert outlined the two most probable reasons behind Beijing’s rush on the global bullion market.

“First, China wants to use gold reserves to boost its national currency [the renminbi] which was added to the International Monetary Fund’s basket of reserve currencies last year. Moreover, China has a large foreign trade deficit with the US. By stockpiling bullion, Beijing wants to decrease its dependency on the US,” Stanzl said.

At the same time, both experts underscored that gold purchases by Russia and China are not contributing to driving up gold prices in the global market.

According to the World Gold Council, China and Russia are ranked sixth and seventh on the list of country with the largest gold reserves, with 1,843 tons and 1,655 tons respectively. The first on the ranking is the US with 8,134 tons. It is followed by Germany (3,380 tons) and the IMF (2,814 tons).

Source: Sputniknews