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Regular Press Conference of Ministry of Commerce on June 17, 2014

Visits: 1/3664 | Date: 06/19/2014 | Source: MOFCOM | Print Print | Font size: A A A

Dear friends from the media, good morning! Welcome to today's press conference. First I will brief you about China’s commercial performance in January-May of 2014, and take the questions of your concern.

I. Commercial Performance in Domestic Market

In May, domestic consumer market remained steady development with some acceleration. According to the National Bureau of Statistics, between January and May, the retail sales of consumer goods reached 10.3032 trillion yuan, up 12.1% year on year. In May, the retail sales of consumer goods went up 12.5% year on year, 0.6 percentage points higher than that of the previous month, and an actual growth of 10.7% in real terms. Following are the main features of the consumer market in May.

1. New type of business grew rapidly. New type of business represented by online retail maintained a rapid growth. According to the National Bureau of Statistics, online retail sales of enterprises above designated size in January-may increased 53.2%. Among 5,000 major retail enterprises monitored by Ministry of Commerce, online shopping in May went up 32.5% year on year, 27.1, 25.9 and 24.5 percentage points higher respectively than that of department stores, supermarkets and special stores.

2. Consuming demands for information products increased. Among 5,000 major retail enterprises monitored by Ministry of Commerce, the sales of telecom equipment rose 10.%, 5.6 percentage points higher than that of the same period of last year, among which, the sales of 3G mobile phones increased 22.4%. In January-May, the sales of tablet PC grew 53.6% year on year.

3. Mass catering consumption continued to pick up. With the change of market demands, structural readjustment of catering industry accelerated and mass catering which is economical and convenient was more accepted and welcomed. According to the National Bureau of Statistics, catering revenue in May increased 11%, 1.8 percentage points higher than that of the same period of last year, among which, catering revenue of enterprises above designated size increased 6.2%, 8 percentage points higher than that of the same period of last year.

4. Green consumption steadily improved. With the readjustment of consumer structure, residents’ concept of green and low-carbon consumption was enhanced and the sales of energy conservation and environmental protection products speeded up. Among 5,000 major retail enterprises monitored by Ministry of Commerce, the sales of air conditioners accelerated with warming weather, increasing 14.9% in May. Among that, the sales of inverter air conditioners which are energy saving and environmentally friendly increased 29.8%. According to statistics of China Association of Automobile Manufacturers, the sales of new energy automobiles in the first quarter went up 120% year on year.

5. The sales of medium and large circulation enterprises were steadily picking up. According to the National Bureau of Statistics, the retail sales of consumer goods of enterprises above designated size went up 9.9%, 0.5 percentage points higher than that of the previous month. The sales of 5,000 major enterprises monitored by Ministry of Commerce increased 7% year on year, 0.1 percentage point higher than that of previous month, picking up slightly for three consecutive months.

6. Consumer price remained steady. In January-May, CPI was up 2.3%, and that of May was 2.5%, 0.7 percentage points higher than that of April. According to MOFCOM, in 36 medium and large cities, the price of agro-foodstuff went up 2.2% year on year in May, 1.7 percentage points higher than that of April. Among that, the prices of milk, beef, mutton and egg went up respectively by 9.6%, 7.3%, 5.5% and 5.1%. The wholesale price of pork was up 10.8% than that of March, but down 3.3% year on year.

II. Foreign Trade

According to Customs figures, China’s total import and export in January-May reached 10.3 trillion yuan, down 2.2% year on year (the same below). Export was 5.4 trillion yuan, a decrease of 2.7%, and import 4.9 trillion yuan, down 1.6%. Trade surplus was 436.6 billion yuan, a decrease of 13.6%. In terms of U.S. dollar, total import and export stood at US$1,679.1 billion in January-May, up 0.2%. Export was US$875.2 billion, down 0.4%, and import US$803.9 billion, up 0.8%. Trade surplus was US$71.3 billion, a decrease of 12.2%. The main features of foreign trade in May are as follows:

1. Export continued to improve and import went down. In terms of U.S. dollar, China’s total import and export in May was US$355.02 billion, up 3% year on year, and 2.2 percentage points higher than that of April. Among that, export reached US$195.47 billion, up 7%, and 6.1 percentage points higher than that of April; import stood at US$159.55 billion, down 1.6%, 2.4 percentage points lower than that of April; trade surplus was US$35.92 billion, an increase of 74.9%.

2. Export of mechanical and electrical products and high-tech products enjoyed a positive growth. With global trade and industrial chain driven by economic recovery in European and north American countries, the export of China’s mechanical and electrical products and high-tech products in May increased 6.6% and 4.8% respectively, 9.0 and 15.7 percentage points higher than that of April, witnessing the first positive growth in the recent four months. Besides, the export of seven kinds of labor-intensive products saw an increase of 7.9%, the same as that of April. Among that, the export of clothing was up 9.5%, furniture down 4.4%, 5 and 0.7 percentage points higher than that of April respectively; the export of textile, footwear and toys went up respectively 7.7%, 15.7% and 12.4%, 1.7, 5.6 and 11.6 percentage points lower than that of April.

3. Growth of importing resources products went down. In May, the import of mechanical and electrical products and high-tech products decreased 36.4% and 37.0% respectively year on year. The import of soybean, iron ore and crude oil increased 20.6%, -6.4% and 11.9% respectively year on year, 41.7, 8.6 and 7.8 percentage points lower than that of April. In January-may, the import volume of soybean, iron ore and crude oil went up 35.3%, 19% and 11.1% year on year respectively, and the import prices went down 5.9%, 12.5% and 3.3%. The import of major bulk commodities increased while their prices decreased.

4. Export of general trade remained rapid growth. In May, China’s import and export of general trade reached US$194.31 billion, and processing trade US$112.77 billion. Specifically, the export of general trade increased 10.3%, and processing trade up 1.6%; the import of general trade decreased 5.5%, and processing trade down 1.2%.

5. Growth of export to U.S., Japan and EU went down, while export to ASEAN speeded up. In May, China’s export to U.S., EU and Japan increased 6.3%, 13.4% and 2.2% respectively year on year, down slightly compared with that of April. Export to ASEAN was up 9.1%, 5.4 percentage points higher than that of April. Export to other BRICS members (Brazil, Russia, India and South Africa) witnessed an increase of 0.5%, 1.5 percentage points lower than that of April. Export to Hong Kong went down 0.8% year on year, 30.6 percentage points lower than that of April.

6. Export from central and western China grew rapidly. In May, the growth rates in Yunnan, Guizhou, Tibet, Shaanxi, Guangxi, Hunan, Anhui and Inner Mongolia were respectively 117.5%, 115.0%, 80.0%, 70.5%, 63.8%, 59.0%, 56.1% and 50.0%.

III. Foreign Investment in China

In January-May of 2014, a total of 8,744 foreign-funded enterprises were approved, up 1.6% year on year; and actually utilized FDI reached 301.09 billion yuan (equivalent to US$48.91 billion), up 2.8% year on year (excluding data of banking, securities and insurance). In May, utilized foreign capital was US$8.6 billion, down 6.7% year on year. The main features of foreign investment in January-May are as follows:

1. Utilized FDI in service sector maintained fast growth. In January-May of 2014, utilized FDI in service sector registered US$27.5 billion, up 19.5% year on year, accounting for 56.2% of the national total; of which utilized FDI in distribution service industry and transportation reached US$3.39 billion and US$1.9 billion respectively. Utilized FDI in agriculture, forestry, animal husbandry and fishery amounted to US$500 million, up 2.7% year on year, accounting for 1.2% of the national total. Utilized FDI in manufacturing was US$17.4 billion, down 16.5% year on year, accounting for 35.6% of the national total; of which utilized FDI in electronic equipment manufacturing including telecommunications equipment and computers reached US$2.88 billion, up 0.6% year on year, transportation equipment manufacturing reached US$1.67 billion, down 23.9%, and chemical raw materials and chemical products manufacturing reached US$1.36 billion, down 39.7%.

2. Investment from major countries and regions maintained steady growth. In January-May of 2014, actual FDI in the Chinese mainland from top 10 investors (Hong Kong, Taiwan, Singapore, ROK, Japan, U.S., Germany, UK, France and Bermuda) amounted to US$46.08 billion, accounting for 94.2% of the total, up 5% year on year, and 2.2 percentage points higher than the average of the whole. Investment from ROK and UK increased by 87.9% and 62.2% year on year respectively, that from Japan and U.S. fell down 42.2% and 9.3% on a year on year basis respectively. Meanwhile, actual FDI from 28 EU countries in January-May reached US$2.58 billion, down 22.1% year on year and that from ASEAN totaled US$2.54 billion, down 22.3% year on year.

3. Utilized FDI in central China enjoyed rapid growth. In January-May of 2014, utilized FDI in eastern China was US$40.6 billion, up 2.2% year on year; utilized FDI in central China was US$4.9 billion, up 16.7% year on year, and utilized FDI in western China was US$3.5 billion, down 7.3% year on year. In January-May, paid-in FDI in China’s eastern, central and western regions accounted for 82.9%, 10% and 7.1% respectively of the total. Utilized FDI in central China and western China took up a higher share of the total than that of the same period last year.

IV. China’s Investment and Economic Cooperation Overseas

Direct investment overseas. In January-May of 2014, Chinese investors made direct investment in 2,766 businesses overseas in 146 countries and regions. Total direct investment in non-financial sectors (similarly hereinafter) reached US$30.81 billion (equivalent to RMB 189.02 billion), down 10.2% year on year. As of the end of May 2014, China’s non-financial direct investment overseas totaled US$556.5 billion (equivalent to RMB 3,414.2 billion). In May, China’s non-financial direct investment overseas was US$5.12 billion, up 6.9% year on year.

In January-May of 2014, Chinese mainland’s investment in seven economies, namely Hong Kong, ASEAN, EU, Australia, U.S., Russia and Japan, reached US$21.16 billion, taking up 68.7% of total direct investment overseas during the same period, with the proportion decreasing by 9.6 percentage points. Investment in Hong Kong, EU and Australia fell by 32.6%, 9.2% and 3.2% respectively. investment in the U.S. reached US$2.03 billion, up 144%. Investment in ASEAN was US$1.9 billion, up 4.2% year on year. Investment in Russia and Japan soared 105.7% and 141.9% respectively due to the relatively low base in the same period of 2013.

Contracted projects overseas. In January-May of 2014, the turnover of China’s contracted projects overseas amounted to US$46.9 billion (equivalent to RMB 287.74 billion), up 7.3% year on year. The value of newly-signed contracts was US$53.36 billion (RMB327.37 billion), down 5.6% year on year. The projects each with a contract value of over US$50 million were 223 (13 less than last year’s 236), with a total contract value of US$41.3 billion, taking up 77.4% of the total value of newly-signed contracts. The projects each with a contract value of US$100 million or more were 126, 7 less than that in the same period of last year.

In May, the turnover of China’s contracted projects overseas was US$10.51 billion, up 12.4% year on year. The value of newly-signed contracts was US$9.58 billion, up 1.9% year on year.

By the end of May, the accumulated value of China’s contracted projects overseas reached US$1. 2 trillion, and the turnover was US$839.7 billion.

Labor service cooperation overseas. In January-May of 2014, labor service personnel dispatched overseas reached 200,000, an increase of 15,000 over the same period of 2013. Labor service personnel sent abroad for contracted projects were 94,000, and those for labor cooperation projects were 106,000. By the end of May 2014, all labor service personnel dispatched overseas were 917,000, 58,000 more than that at the end of May 2013.

In May, labor service personnel dispatched overseas was 45,000, an increase of 4,000 over the same period of 2013.

By the end of May 2014, accumulated labor service personnel dispatched overseas for labor service cooperation totaled 7.12 million.

V. Service Outsourcing

According to statistics from the Department of Service Trade and Commercial Services of MOFCOM, in January-May of 2014, the contracts on service outsourcing totaled 65,248, with combined contract value of US$40 billion, an increase of 43.5% year on year; the value of contracts executed amounted to US$27.27 billion, up 37.1% year on year. The total value of contracts with clients overseas reached US$27.06 billion, up 37.1% year on year; the value of contracts realized amounted to US$18.54 billion, up 33.7% year on year.

Major markets of service outsourcing were the U.S., EU, China’s Hong Kong, and Japan. In January-May of 2014, the executed contract value in service outsourcing from the U.S., EU, Hong Kong and Japan was US$4.32 billion, US$2.72 billion, US$2.72 billion and US$1.90 billion respectively, accounting for 23.3%, 14.7%, 14.7% and 10.2% respectively among the total value of contracts.

Pilot cities played a remarkable role in terms of industrial clustering. In January-May of 2014, the contract value of offshore service outsourcing in 21 service outsourcing pilot cities totaled US$24.87 billion, an increase of 38.9% year on year; the executed contract value reached US$16.82 billion, up 36% year on year. Offshore contract value and executed contract value of the 21 cities accounted for 91.9% and 90.7% of the national total respectively. The pilot cities had a leading role in industrial clustering.

Jobs in service outsourcing increased steadily. In January-May of 2014, newly increased employees in the service outsourcing sector reached 258,000. As of the end of May, the number of enterprises in the service outsourcing sector totaled 25,969 with 5,619,000 employees, including 3,746,000 with college education or above, accounting for 66.7% of the total.

ITO service took the lead. In January-May of 2014, information technology outsourcing (ITO), knowledge process outsourcing (KPO) and business process outsourcing (BPO) accounted for 53.3%, 32.5% and 14.2% of China’s total service outsourcing respectively, of which ITO took the lead. KPO such as pharmaceutical and biotechnology R&D and testing, product R&D, and industrial design grew rapidly.

VI. Renewable Energy Industrial Development Report 2013 Released

Recently, entrusted by Ministry of Commerce, China National Resources Recycling Association (CRRA) complied and issued Renewable Energy Industrial Development Report 2013 (hereinafter referred to as “the report”). The report focused on some major types of renewable resources to display the overall development and the latest conditions of renewable resources industry through the comparisons between home and abroad as well as in different regions, and made predictions and forecasts on the development trend of recycling industry in 2014.

The report showed that in recent years, boosted by the country’s policies on developing circular economy, renewable resources recycling developed steadily. In 2013, there were more than 100,000 renewable resources recycling businesses in China, which employed 18 million people. The recycled volume of eight major renewable resources including waste steel, waste nonferrous metals, waste plastics, waste tires, waste paper, discarded electronic products, scraped automobiles, and scraped ships amounted to 160 million tons with a combined value of 481.71 billion yuan. Affected by macro-economic situation, recycling industry is still at an adjustment period and market confidence has not fully recovered, with the recycled volume of some types dropping. For example, the recycled volumes of waste plastics and waste paper were about 13.66 million tons and 43.77 million tons respectively, down 14.6% and 2% year on year.

The report also showed that recycled renewable resources had a better effect on energy conservation and emission reduction compared with raw materials. All the renewable resources recycled in 2013 would help save 172.725 million tons of standard coal, accounting for 4.6% of the country’s total consumption of 3.75 billion tons. In addition, they could reduce the discharge of 11.2 billion tons of waste water, 3.77 million tons of sulfur dioxide, and 3.58 billion tons of solid waste.

The report also made predictions on the development of recycling industry in 2014. On the whole, with favorable policies on building new countryside and on urbanization, renewable resources recycling boasts a good trend of development in the long run and is hopeful of going out of the present adjustment. Community concentration will be the industry’s orientation of development, and low-value varieties such as waste glass will be given more attention.

That concludes the briefing on commerce performance from January to May. Now I’ll take your questions.

CCTV: Total import and export for this May rebounded from the month before, with export rallying from -4.8% to 5.4% in particular. Does this signal a turnaround in foreign trade performance? Furthermore, what are the main reasons for the decline in import for the month of May? How does MOFCOM view the growth prospect of foreign trade in the coming months? Thank you.

Shen Danyang: In US dollar terms, total import and export of China this May grew by 3%, in which export grew by 7%, 6.1 percentage points higher than the growth rate of the previous month. The export rally in May was due to the promulgation of the central government’s policy measures aimed at stabilizing foreign trade, which helped shore up confidence among exporters. It was also due to the rebound in international market demand, and to the diminishing influence of the unusual trade factors that were present in the beginning of last year.

As far as trend is concerned, positive signs for export growth have indeed emerged. In fact, this could be told from the statistics for April and May. In May, despite some fluctuations, the US, EU and Japanese economies basically remained stable. The JP Morgan Global Manufacturing Purchasing Managers Index (PMI), along with the new order index, rose to a yearly high of 54.3, higher than that of the same period last year. This reveals that the pace of global recovery is picking up. Having absorbed gradually the negative impact of the QE tapering in the US, emerging economies are also seeing signs of improvement. The HSBC Emerging Markets PMI rose to 50.6 in May, registering the third consecutive month of rallying. In the first five months of this year, China’s export to the US, Japan and EU grew by 6.3%; while its export to the ASEAN rose by 6.6%. In terms of trade types, despite the continued lackluster performance of processing trade, export under general trade has for the past three consecutive months been growing at above 8%, with exports of clothing, footwear, digital TV, smartphone, automobile and other bulk commodities expanding continuously. The above analysis on export situations shows that export was already gradually improving.

As for import, China’s import last May declined by 1.6% in dollar terms, which was the third consecutive month of negative growth. In breakdown, general trade declined by 5.5% while processing trade was down by 1.1%. So what are the reasons for the decline? Our analysis pointed to three causes: 1. the relative weak demand in domestic market; 2. the decline in prices of iron ore, non-ferrous metals, processed oil, semi-processed oil and other energy and resource products in the international market. In fact, the volume of some bulk commodity imports did grow. So, a decline in total import value due to the decrease in international market price was not necessarily a bad thing. 3. Other factors such as foreign exchange volatilities.

Speaking of the trend of foreign trade for the whole year, you may be interested in our projection of foreign trade growth in the coming months. We believe that in the next few months positive factors will far outnumber negative factors, and that the rallying of foreign trade is expected to sustain. Of course, current circumstances are still complex and severe. There is still a long way to go if we are to achieve the targets set at the beginning. The main positive factors include the rebound in external market demand, supporting policies adopted by the state, and the shoring-up of confidence among foreign trade enterprises, which is of great importance. According to a survey by MOFCOM of 1,900 key foreign trade enterprises, the export confidence index in May reached 108.9. Considering that a figure above 100 is already rather satisfactory, our survey result, which was 108.9, registered the third consecutive month above the threshold line, indicating that export in the second half of the year may continue to improve. Forecasts by the Chinese Academy of Social Sciences and China Lixin Risk Management Research Institute both suggest that foreign trade may grow more rapidly in the second half of the year.

Of course, negative factors do exist, such as a not-so-solid recovery of external demand, and the diminishing advantages in our traditional export sectors. On the import front, confidence is relative low due to weak domestic demand.

Facing such circumstances, the top priority for foreign trade work in the coming months or perhaps in the remainder of the year is to conscientiously implement the Opinions of the State Council on Supporting Stable Foreign Trade Growth. The Opinions shall be implemented in a way that ensures that each decision of the central government can benefit the businesses and have concrete results. Meanwhile, we will also actively guide the businesses to improve their own creativity and core competitiveness with a view to achieving the set targets.

CBN: I have two questions. First, on 29 May the European Union Chamber of Commerce in China published a report, indicating that 552 EU businesses in China were not confident of China. They say that due to the economic slowdown, rise in competitive pressure and labor cost, the Chinese investment environment is not as favorable as it used to be. What is MOFCOM’s take on this? Second, Premier Li Keqiang’s visit to Europe has caught people’s attention. It is reported that China and the United Kingdom will sign contracts valued at 10 billion US dollars in total, including the possible Chinese investment in UK’s high-speed railway project. Could you brief us on this? Thank you.

Shen Danyang: On the first question. We have noted the report published by the European Union Chamber of Commerce in China. We will take it seriously and study earnestly the issues and proposals it contains. These issues, including the ones EU businesses have encountered in China, are what the Chinese government is currently working on to resolve. Most of these issues are not new. Most of them are the common issues facing the majority of developing countries. Many of these issues are being improved, rather than getting worse. Therefore, I believe some media reports that come to the conclusion that the Chinese market is losing its appeal are unfounded.

With political stability at home, ever-expanding market size, opening industrial sectors, and improving business environment, China still enjoys comprehensive advantages in attracting foreign investment. Many statistics would support such a judgment. We at previous press conferences had talked about such statistics, which I will not repeat here. Nevertheless, our business environment does have room for improvement, which is why the Chinese government top down has been making an unremitting effort to improve it. For instance, MOFCOM on 28 May published an announcement on a three-month long pilot program for regulating and optimizing foreign investment examination and approval work. Aside from direct selling, which is a rather special industry, all items concerning the establishment and alteration of foreign investment enterprises under MOFCOM’s jurisdictions for examination and approval are included in the pilot program. The main content of the pilot includes the shortening of approval duration, streamlining of approval procedure, and simplification of submission documentations, etc. Through this pilot program, MOFCOM will further explore useful practices to shorten approval period, improve approval efficiency and regulate approval behaviors, with a view to providing experience for the further deepening of administrative approval reform. Going forward we will also continue to coordinate and promote with relevant parties to step up reform efforts, expand market access, improve the investment climate, and continue to increase China’s appeal to foreign investment.

On Premier Li Keqiang’s visit to the UK and Greece, this visit is bound to result in very good fruits on the trade and economic front. As the visit has just begun, let us all be patient. I am sure there will be good news for you all soon. Thank you.

AFP: On foreign direct investment in China in the first five months. ASEAN countries are usually an important source of FDI. However, FDI from the ASEAN to China in the first five months of the year declined by 22.3% year on year. Are there any special reasons for this? Because we know that China has some tensions with some ASEAN member states like Vietnam recently. Does it have an impact on ASEAN’s investment in China? Furthermore, does MOFCOM believe this is a temporary decline, a monthly decline, or a long-term trend?

Shen Danyang: Based on what we see now, changes in statistics concerning either Chinese outward investment or ASEAN’s investment in China were mainly due to the changes in the base values. For instance, it could make a difference to the year-on-year statistics if some major investment project took place in the same period last year and no such major investment took place this year. However, such statistics do not reveal what may happen as a trend. All in all, the trade and economic cooperation between China and the ASEAN has not been affected by what is happening in the region. We believe China’s commercial cooperation with the ASEAN, be it in trade or investment, will still maintain a rapidly growing momentum.

National Business Daily: You have just said that MOFCOM’s top priority now is to specify and implement the new Document No.19 of the State Council. Can you tell us what stage of implementation you are at now? In addition, we have been following quite closely Alibaba’s proposed acquisition of Hundsun Technologies Inc. Is this case going to be dealt with as a simple individual case? Can you brief us on MOFCOM’s recent work relating to anti-monopoly reviews?

Shen Danyang: Document No.19 is a very important document, which will play a critical role for export and import, foreign trade transformation and upgrading, and foreign trade stability going forward. As far as MOFCOM is concerned, we attach great importance to the implementation of these Opinions, and have already identified their implementation as the top priority of our foreign trade work at present.

First thing after the promulgation of the Opinions we made a comprehensive deployment cross the entire commerce system of the country, and dispatched very quickly nine working groups to 13 key provinces, regions and municipalities to primarily conduct research and survey, and carry out policy advocacy. Meanwhile, we organized all chambers of commerce for import and export, relevant research institutes and media to carry out surveys in the textile industry, light industry, minerals and metals industry, foodstuff and native produce industry, and mechanical and electronic industry. Through questionnaire-based surveys they went to the foreign trade enterprises to learn about their claims, opinions and proposals. One of the important tasks for the moment is to have relevant departments formulate implementation measures according to the requirements of the Document. For instance, with regard to trade facilitation, we are working to find ways to further delegate power on administrative approval, adjust and reduce the number of products subject to automatic import licensing, eliminate or reduce the charges in the import and export link by administrative institutions directly under the government, substantially alleviate the burdens on enterprises, and improve the quality of trade facilitation. MOFCOM is the main lead organization for all these tasks. At the same time, we are also urging or coordinating with other departments to carry out relevant work.

The proposed acquisition of all equity of Hundsun Technologies Inc. by Zhejiang Rongxin Network Technology Co., Ltd. was filed on 4 June for a concentration of undertakings review. Currently the case is under review.

Phoenix TV: First question. Very soon, on 21 June, the Cross-Straits Agreement on Trade in Services will have been signed for a year. We have seen the controversies this agreement had led to. There were rumors that the two sides had suspended cross-Straits negotiations under relevant mechanisms, including trade in goods, including dispute settlement mechanism, aviation decrees and so on. We have seen that the relevant department has refuted the rumors. I would like to ask whether the negotiations on relevant agreements are still underway. And if yes, what is the progress? Is it possible that the progress in Taiwan with the Agreement on Trade in Services will affect our attitude towards cross-Straits consultations? Furthermore, if the Taiwanese side conducts a line-by-line review of the Cross-Straits Agreement on Trade in Services, have we decided to go back to where we began? or how are we going to deal with it? The second question. In the first five months, China’s investment in Japan and the US increased by over 144%, whereas investment from these two countries to China declined, especially that from Japan, which was down by over 40%. How do you view such a situation? Thank you.

Shen Danyang: On the negotiations on the Agreement on Trade in Goods and the Agreement on Dispute Settlement Mechanism, the competent authorities and industries across the Taiwan Straits have in fact maintained constantly communication and exchange of ideas. Our position on continuing to promote the institutionalization of cross-Straits economic cooperation and on promoting post-ECFA negotiations remains unchanged. We wish to continue to strengthen cross-Straits economic cooperation to benefit the compatriots across the Taiwan Straits. We would not like to see such a process affected. It is necessary to reiterate hereby that the Cross-Straits Agreement on Trade in Services is a signed agreement, which was signed with the mandates from the ARATS and SEF. The authority of the ARATS and SEF in mandating negotiations and reaching agreements shall be protected.

On the changes in bilateral investment with Japan and the US, which you mentioned, people are all quite concerned. Just now another journalist also raised a similar question. What I would be able to answer now is that such changes in investment statistics were primarily due to the changes in the amount of investment involved in certain projects. A high growth rate this year is more-often-than-not a result of a small base value last year. Therefore, not only did China’s investment in Japan and the US grow faster this year, its investment in Russia also grew faster. Last year, a single acquisition project in the Canadian oil sector involved an investment of over 10 billion US dollars. This year no such large project has emerged. An investment of 1 billion US dollars would be considered large this year. Furthermore, much of the investment to Canada was channeled through Hong Kong, which resulted in an increase in investment to Hong Kong. Of course, we need also analyze if there are other factors involved. At the moment we are doing exactly this. Just now the journalist asked if this is going to be a trend in investment, or a temporary phenomenon caused by certain individual project. I think we won’t be able to answer that question until we track investment for a few more consecutive months to come.

China Securities Journal: According to MOFCOM, how is the consumer market now and how will it develop for the whole year? Thank you.

Shen Danyang: Total retail sales grew by 12.5% in May, 0.6 percentage points higher than that of April and representing the fastest speed since the start of this year. The cumulative growth for the first five month was 12.1%, moderating by 0.5 percentage points from the same period last year. Generally speaking, the consumer market is stable and turning better this year.

As for the whole year, we believe the consumer market is likely to stabilize and rebound as the macro economy continues to turn better. It will maintain the momentum of stable and upward development. Such an assessment is based on the following four reasons:

First, in terms of the overall trend, the cumulative growth of total retail sales in the first five months is speeding up month by month. From January to February, it grew by 11.8%, from January to March and from January to April, by 12%, and from January to May, by 12.1%.

Second, in terms of the driving force, more stimulants for consumption growth will be unleashed later in the year. By deepening reform, further streamlining administrative procedures and delegating power, more market vitality will be energized and released. Employment is rising steadily. From January to May, an additional 6 million people joined the workforce, which will help stabilize confidence and spending power. The internal driving force of consumption growth will continue to be reinforced.

Third, in terms of policy, while information consumption and spending on old-age care continue to expand, the government has paid attention to directional regulation and adopted a host of policy measures, for example, speeding up shanty town renovation, supporting SME financing, investing more in railway construction in Central and Western China and ensuring stable foreign trade growth, all of which have buttressed consumption growth.

Fourth, in terms of consumption structure, online shopping and new types of electronic products have become new growth areas, and general catering is rebounding. All of these are also drivers of consumption growth.

Xinhua News Agency: We have noticed that there was a decline in actualized foreign investment in May, but investment in services has been rising for months. The growth in the first five months is higher than the 19.1% growth rate in the first four month, and the share of services in attracting foreign investment is also rising. I want to ask Director General Shen: will this become the trend moving forward? What are the reasons that statistically, a considerably large amount of foreign investment went to distribution and transport services? What measures will MOFCOM take to further open up the services sector?

Shen Danyang: You have keenly captured this trend. I do think it is developing into a pattern. As a matter of fact, it is not a new phenomenon for these few months, but for the past few years. Services sectors are taking up more shares of FDI inflow and the amount of FDI they receive grow visibly faster than manufacturing, agriculture, forestry and fishery. This is because on the one hand, the Chinese market is increasingly appealing to foreign investors, who are attracted by the opportunities herein to expand their businesses. That is why I said the argument that China is losing its appeal does not hold water. In fact, more and more foreign businesses have detected opportunities or potentials in China’s services market.

On the other hand, as China is vigorously promoting services and trade in services with a view to readjusting its industrial structure, foreign invested companies will find more opportunities in China. Many policies, like further opening up to build an open economy and vigorously developing trade in services, will stimulate foreign investment in the services sector. More services sectors will be open to foreign investment. So it is a trend that I do not think will be reversed. On the other hand, the share of FDI going to manufacturing is shrinking. This is another trend. Of course, we do not want to see a sharp decline. We hope advanced manufacturing sectors and those instrumental to restructuring will continue to attract more foreign investment.

Speaking of MOFCOM’s efforts to boost FDI flow into services sectors, we have been studying this topic. However, as services cover a wide range of areas, we need to study them sector by sector together with other relevant departments. The liberalization should be orderly, in line with the direction of economic restructuring and consistent with our pace of opening up, including some international negotiations that we are part of. Of course, MOFCOM is also in charge of a very important sector --- trade in services. The development of trade in services also needs foreign investment and the further opening up of services. We have been studying policy options to further promote opening up of services and development of trade in services, and we are drawing up a very important document on the theme of building a new open economic system. Thank you for your question.

China Daily: I want to ask a question on China-Japan relations. I have noticed that since this year, the number of Chinese tourists to Japan has seen significant growth. Japan’s export to China grew substantially for the first time since the Diaoyu Island incident and China’s investment in Japan also rose by a large margin. Are these signs of thawing or rebounding in the economic relations between the two countries? Is it a trend? Thank you.

Shen Danyang: There does appear to be a momentum of recovery on China-Japan trade flows. As the Chinese economy stabilizes and Japan’s tax increase policy begins to stimulate consumption, the domestic markets of the two countries are picking up. Thanks to other factors such as the stabilization of the two currencies, the overall climate for economic cooperation is improving. But if we look at the policy factors, the continued worsening in political relations will lead to a worsening of the economic environment and a regression in commercial ties, dampening businesses’ desire for cooperation. Such an impact is particularly telling in investment cooperation and will pass on to trade through investment, thus bringing down trade flows. If this happens, many valuable opportunities for cooperation would be lost. In fact, there are opportunities for cooperation in the market. The impact on trade caused by political factors is not in the interests of the two countries. We do not want to see this happen and the responsibility does not lie with China. Thank you for your question.

International Business Daily: We have noted that in 2013 on-line retail sales exceeded RMB 1.85 trillion in the Chinese Mainland, ranking the first globally. What has MOFCOM done to promote and regulate on-line shopping this year? What are your priorities moving forward?

Shen Danyang: China’s on-line retail reached RMB 1.85 trillion in 2013. Overtaking the US, China has become the world’s No.1 online retail market. The on-line retail volume of RMB 1.85 trillion accounted for 7.8% of the total retail sales of consumer goods of 2013. In the first five months of this year, on-line retail sales maintained the momentum of strong growth, up by 32.5% year on year. Alongside the rapid growth, problems have also emerged in this new sector, such as on-line fraud, on-line sale of IPR-infringing goods and counterfeits, and abuse of privacy, among other acts that hurt consumer interests, drawing wide attention. Departments across the levels need to work together to effectively address these cross-regional and cross-departmental issues.

In order to address these issues, MOFCOM has been focusing on the following three areas this year. First, it is working with the Financial and Economic Committee of the National People’s Congress in drafting the E-commerce Law, to provide for on-line quality control accountability, burden of proof and compensation for on-line quality disputes, Internet quality information disclosure system and cyber-credit management system development. Second, MOFCOM is working on urgently needed departmental rules, such as the Administrative Measures for On-line Retail Transactions on Third Party Platforms and the Measures for On-line Business Data Protection. Third, the ministry is conducting research on standards for e-commerce internal control system based on mature systems and good practices of companies in business review, information disclosure, customer assessment and complaint handling, which could be elevated to industrial standards for implementation.

CCTV-2: Foreign media have reported recently that the PV battle between Europe and China is escalating. The EU ProSun has brought a charge against dozens of Chinese PV companies to the European Commission, citing China’s massive circumvention of its price undertaking with Brussels. What is MOFCOM’s take on that?

Shen Danyang: A shining example of successfully resolving trade frictions through bilateral consultations, the price undertaking for PV was reached owing to the joint efforts of the governments and industries on both sides. It is valued by the Chinese government and industry.

It is understood that after the price undertaking took effect, the CCCME has maintained close communication and contact with the European Commission and kept updating the investigative authority on its implementation with relevant materials. The CCCME updates the EU side regularly while reporting the implementation and regulation related to the price undertaking to MOFCOM. According to the CCCME, there’s no evidence pointing to business’s breach of the undertaking.

The European Commission will send a team to China next month to inspect the implementation of the undertaking by Chinese companies. Both the CCCME and Chinese industry have expressed their readiness to work with the EU. China will handle any case of breach in accordance with the provisions of the undertaking. That said, China is opposed to any attempt to smear Chinese companies by media.

The price undertaking doesn’t come by easily. China has been conscientious and responsible in its implementation and regulation. China is willing to work with the EU to jointly maintain the smooth implementation of the undertaking for genuine mutual benefit and win-win.

China News Service: My question regards China-US trade frictions. On Jun. 3rd, the USDOC announced its affirmative preliminary ruling on the anti-subsidy case involving Chinese PV products. On the same day, United Steel Workers petitioned with US authorities for an anti-dumping and anti-subsidy investigation into Chinese tire exports to the US for cars and light-trucks. Do you think this move will cause a new wave of trade frictions between China and the US? Thank you.

Shen Danyang: The US trade protection measures against Chinese PV products this year are obviously abuse of trade remedies and bound to escalate China-US trade disputes. China believes that as a representative of clean energy, PV has contributed enormously to sustainable human development. In the past decade, thanks to efficient cooperation based on global division of labor, PV products have become markedly cheaper. PV power is making its way into average households and increasing people’s wellbeing across the world. US moves hurt not only the interests of Chinese PV companies, but also the healthy development of the global PV industry. Such practices, resented and opposed by Chinese industry, are even questioned by the upstream and downstream industries of the US PV sector. Far from helping out the US PV industry, facts prove that the frequent use of trade remedies works to no avail. It is recommended that the US refrain from hurting others without benefiting itself or inviting self-inflicted pains. China will follow the case closely and reserve the right to protect the legitimate rights and interests of Chinese companies.

As for the United Steel Workers’ petition, we’d like to remind the US that the very same organization petitioned for special safeguard against the same Chinese product in 2009 and caused a severe adverse impact on and damage to China-US commercial relations. It is hoped that the US will learn the lessons of 2009 and stop abusing trade remedies to create a good ambience for the trade cooperation between the industries from the two sides.

Shen Danyang: That closes today’s press conference. Thank you.

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