The Regular Press Conference of the Ministry of Commerce (MOFCOM) was held on 15 December 2010. Yao Jian, the Spokesman of MOFCOM released news and took questions from the press. Here is a transcript of the press conference:

Dear friends from the Press,
Welcome to the regular press conference of the Ministry of Commerce. First I would like to brief you on the commercial development of China from January to November, and then take your questions.

I. Domestic market operation
Since the beginning of this year, China’s consumer market has maintained a steady and rapid growth. According to statistics by MOFCOM, in November, the sales volume of 3,000 major retail enterprises increased by 18.6% compared to that of the same period of last year, 0.5 percentage point lower than the growth rate of October. From January to November, the sales volume of the 3,000 major retail enterprises increased by 18.0% year on year, 11.3 percentage points higher than the growth rate of the same period of last year.

According to the statistics by the National Bureau of Statistics of China, the total retail sales of consumer goods reached 1.39 trillion, up by 18.7 % year on year, 2.9 percentage points higher than the growth rate of the same period of last year. From January to November, the total retail sales of consumer goods reached 13.9 trillion, up by 18.4 % year on year, 3.1 percentage points higher than the growth rate of the same period of last year.

The sales of popular products are booming. The sales of gold, silver, jewelry and other value-keeping and value-gaining products remain vibrant. In November, the sales volume of gold, silver, and jewelry of the 3,000 major retail enterprises soared by 52% year on year, 16.4 percentage points higher than the growth rate of October, hitting the record high since 2008. The demand of automobiles is vigorous. In November, the auto sales volume of the 3,000 major retail enterprises increased by 29.1% year on year, basically the same growth rate of October. According to the statistics by the China Association of Automobile Manufacturers, the auto sales amounted to 1.697 million, up by 26.9% year on year.

The policies of “Home Appliances to the Countryside” and Trading in Old Home Appliances for the New Ones " have reaped positive results. From January to November, 67.30 million home appliances were sold in the “Home Appliances to the Countryside” program,, with a sales volume of 150.41 billion yuan, which increased by 1.4 times and 1.8 times respectively. By December 9, the sales of new home appliances in the Home appliances “old-for-new” scheme and the recycled ones both exceeded 30 million, reaching 30.026 million and 31.109million respectively, with sales volume over 112.69 billion yuan, which further released domestic demand.

During the period of the 11th Five-Year Plan, the consumption of urban and rural residents has expanded, and the consumption structure has been upgraded, which has promoted the fast growth of domestic market, and the new leap of domestic consumption. The total retail sales of consumer goods in 2008 exceeded 10 trillion yuan for the first time. Despite the sweeping impact of the global financial crisis in 2009, the retail sales of China’s consumer goods kept a robust growth momentum, reaching 12.5 trillion, and the figure of 2010 is expected to reach 15 trillion. The average annual growth rate during the 11th Five-Year Plan period exceeds 17%. The percentage of the retail sales of consumer goods in GDP increases year by year, from 34.4% in 2006 to 37.4% in 2009. In order to weather the financial crisis, China timely launched 20 measures to invigorate circulation and stimulate consumption, which played a positive role in expanding domestic consumption. The final consumption of 2009 drived national economy up by 4.6 percentage points, and consumption contributed 53.1% to economic growth. The contribution of domestic consumption to economic and social development has further increased.

II. Guaranteeing the supply of the vegetable markets

In order to implement a series of policy measures of price stabilization by the State of Council, the Ministry of Commerce is focusing on ensuring a smooth connection between production and marketing of vegetables of this winter and next spring. It is collaborating with related departments to intensify the release of national reserve commodities, and speed up the construction of modern circulation system of agricultural products. As a result, market supply of vegetables has become more stable. Especially with the good weather since the beginning of this winter, a great number of winter vegetables have come into the market, and the prices of vegetables have dropped for five successive weeks. The average wholesale price of vegetables of last week (December 6-12) declined by 4.5% year on year, and was down by 3.6% from the previous week, 8.4% lower compared with that of the beginning of this year, and 19.7% lower compared to the peak price of this year in the week of February 12-19.

The average wholesale price of fresh pork dropped by 0.6% from last week; and the price of soybean oil, canola oil, eggs, small-package flour, small-package rice respectively increased by 0.4 %, 0.2%, 0.2%, 0.4% and 0.4 % over the previous week. According to the statistics of the National Bureau of Statistics of China, in November, the Consumer Price Index (CPI) increased by 5.1% year on year, 0.7 percentage points higher than that of October.

Recently, the Ministry of Commerce further has intensified the construction of modern circulation system of agricultural products, guided commerce authorities at all levels to take proactive measures to improve circulation environment, ensure the supply of vegetable market, and lower circulation cost.

Firstly, to improve circulation infrastructure. Beijing Municipal government has formulated local standard for community vegetable market, and speeded up the construction of standard community vegetable markets. Sichuan Province focuses on the infrastructure construction of refrigerating equipment and low-temperature distribution centers for agricultural product wholesale markets. Chongqing City plans to build community vegetable markets with a service radius of 500-1,000 meters, at least one standard agricultural market in every town, and has invested 100 million yuan to refurnish and standardize vegetable markets in counties. Shaanxi Province has supported the construction and reform of 60 standard vegetable markets in the form of awards instead of subsidies in the whole province.

Secondly, to speed up the construction of urban vegetable retailing network. Taiyuan City continues to promote the construction of modern circulation chain of southern vegetables entering Shanxi, stabilizing the source and channels of vegetables. Anhui Province supports the set up of temporary vegetable trade areas, thus farmers can come into town and sell vegetables more conveniently. Guangdong Province plans to construct a batch of provincial-level major wholesale markets for agricultural products and wholesale markets of producing areas, and reasonably lay out the trade markets and set up additional retail stalls according to the scale of population and consuming power. Yunnan Province will increase vegetable direct-sale stands. and will add at least 300 such places in Kunming City. It has also designated sale areas for vegetable farmers in certain period of the day. Xi’an City has set up early morning vegetable markets and temporary retail areas, for the convenience of farmers to sell vegetable in the town and citizens to buy in the neighborhood.

Thirdly, to reinforce the connection between production and marketing of vegetables. Beijing has strengthened cooperation with Hebei, Shandong, Inner Mongolia, Hainan and other vegetable producing regions, forming the stable production source. Shanghai has actively explored the mode of “production and direct sale”, strengthening the matchup and cooperation with professional vegetable production cooperatives. There are 13 chain enterprises and 23 farmer cooperatives taking part in “farm-supermarket chain”, among which, ten enterprises have established distribution centers in the base counties, and three enterprises have set up cold-chain system. Eight provinces (districts or cities) in western China including Sichuan, Chongqing, Guizhou, Yunnan, Hubei, Hunan, Guangxi and Shaanxi have signed the framework agreement on emergency supply , which has strengthened regional cooperation and guaranteed market supply.

Fourthly, to establish and perfect the temporary reserve mechanism of vegetables. Beijing has made 10,000 tons of vegetable reserve, including 8 kinds of storable vegetables such as Chinese cabbages, white gourds, potatoes, onions, etc. Dalian City of Liaoning Province decides to establish temporary and staged reserve mechanism for storable vegetables with the amount of 4,900 tons, and Yingkou City decides to make a reserve of 1,800 tons of potatoes, onions, Chinese cabbages, etc. Anhui Province has established the vegetable reserve mechanism mainly in the form of vegetable growing in the farmland, which can satisfy 5-7 days consumption of local citizens. Sichuan Province guides and encourages medium and large agricultural product wholesale markets to increase commercial reserves, and set up bulk vegetable reserve warehouses where conditions are ripe.

III. Foreign trade

According to the statistics by the Customs, China’s imports and exports in November registered $283.76 billion, up by 36.2% year on year. Among that exports stood at $153.33 billion, up by 34.9%; and imports, $130.44 billion, up by 37.7%. The trade surplus was $22.89 billion, up by 20.7%. China’s total foreign trade, exports, and imports in November all hit a record high.

From January to November, China’s imports and exports reached $2,677.28 billion, up by 36.3% year on year. Among that exports stood at $1,423.84 billion, up by 33%; and imports, $1,253.43 billion, up by 40.3%. The trade surplus was $170.41 billion, 3.9%.or $6.89 billion lower than that of the same period of last year. The main characteristics of China’s foreign trade since the beginning of this year are as follows:

Firstly, the volume of imports and exports continues to grow at an accelerated pace. The total imports and exports of November exceeded $280 billion for the first time, hitting a record high for the fourth time since this year. Specifically, the growth rate of exports and imports respectively increased by 12 and 12.4 percentage points from the previous month, and the volume of trade surplus exceeded $20 billion for two successive months. Among that the exports of mechanical and electronic products grew by 31.2%, up by 9.9 percentage points compared with that of the previous month. The export growth of some light industrial products was relatively fast, with clothes, textile, shoes, furniture, plastics, cases and bags, and toys all reporting over 30% increase.

Secondly, total imports continue to expand. November witnessed the highest import rate in the second half of this year, up by 37.7% year on year;. The volume and price of the imported commodities both increased. The volume of imported crude oil, iron ore, automobiles and automobile chassis, soybeans, and refined oil respectively increased by 22.5%, 12.6%, 52.3%, 90.7% and 47.5%,with the prices respectively up by 120.6%, 83.4%, 33.1%, 27.8% and 22.5%. China’s imports from major trading partners picked up significantly, making it the most important and fastest-growing export market of these countries. Specifically, imports from Japan surged by 36.9%, EU 32.6%, ASEAN 47.5%, South Korea 37.3%, Taiwan 37.9%, USA 32.2%, and Australia 55.4%.

Thirdly, trade surplus has further narrowed. From January to November this year, trade surplus decreased by 3.9% year on year, and dropped by 34.2% compared with that of the same period of 2008. Trade imbalance was improved. As the breakdown by enterprises shows, state-owned enterprises suffered $136.7 billion of deficit, up by 59.3%; foreign-invested enterprises ran a surplus of $112.5 billion, down by 1.6%; and other enterprises saw a surplus of $194.61 billion, up by 31.1%. In view of trade mode, general trade suffered a deficit of $37.83 billion, up by 13.3 times; processing trade enjoyed a surplus of $291.1 billion, up by 22.8%; and other forms of trade witnessed a deficit of $82.86 billion, up by 44.7%. China’s trade deficit with South Korea, Japan, Australia, ASEAN and Taiwan reached $235.32 billion on an accumulative basis, up by 59.8% year on year.

Fourthly, bilateral trade with emerging markets has maintained a fast growth. From January to November this year, exports to three major traditional markets of Europe, USA and Japan respectively soared by 33.3%, 29.5% and 24.9%, accounting for 45.5% of China’s total exports. During the same period, exports to the emerging markets, such as India, Russia, South Africa, and Brazil, respectively surged by 39.9%, 72.7%, 48% and 78.1%; and the exports to ASEAN increased by 33.6%. China has become the biggest trading partner and the biggest export destination of Japan, South Korea, ASEAN, Australia, Brazil, South Africa, etc. It is the EU’s biggest trading partner and second biggest export destination, and USA’s second biggest trading partner and third biggest export destination.


IV. Attracting foreign direct investment

The actualized FDI nationwide registered $9.704 billion in November, up by 38.17% year on year, achieving the 16th monthly year-on-year growth since August 2009. From January to November, 24,302 new foreign-invested enterprises were established in China, up by 17.97% year on year; the actualized FDI reached $91.707 billion, up by 17.73% year on year.

Firstly, the foreign invested industrial structure continues to optimize. From January to November, the actualized FDI in service sector was $41.14 billion, up by 29.3% year on year, 11.57 percentage points higher than the overall growth, accounting for 44.86% of the total, up by 4.01 percentage points year on year; the actualized foreign capital in manufacturing sector was $43.99 billion, up by 6.2% year on year, accounting for 47.96% of China’s total FDI inflow, down by 5.19 percentage points year on year; the actualized foreign capital in agriculture, forestry, husbandry, and fishery sectors was $1.69 billion, up by 37.1％ year on year, up to 1.8% of the total. In addition, the actualized foreign capital in science and research sector and in finance and service sector rose respectively by 125.65% and 72.57%.

Secondly, the actualized FDI in western regions has been growing faster than the national average. From January to November, the number of newly established foreign-invested enterprises in western region was 1,201, an increase of 25.76% year on year, 7.79 percentage points higher than the national average, accounting for 4.94% of the total newly established nationwide; the actualized FDI was $6.717 billion, up by 38.98% year on year, 21.25 percentage points higher than the national average, accounting for 7.32% of the total FDI inflow. In the same period, the actualized FDI of the eastern and central region increased respectively by 16.2% and 18.4%.

Thirdly, the materialized investment in China from most of the top ten countries and regions keeps growing. From January to November, the top ten countries and regions investing in China were (in order of the amount of materialized FDI): Hong Kong, Taiwan, Singapore, Japan, USA, South Korea, Britain, France, Holland, and Germany. Specifically speaking, the materialized investment of Hong Kong increased by 24.48% amounting to $56.815 billion, accounting for 61.95% of the total FDI inflow; USA’s materialized investment in China was $3.559 billion, up by 14.1% year on year; the materialized investment of the 27 member states of the EU reached $5.964 billion, up by 13% year on year.

Since the beginning of this year, China’s overall environment for foreign investment has been more open, fair, convenient and friendly, which is demonstrated as follows:

In terms of the opening-up of industries, we are actively implementing the Opinions on Further Improving the Work of Foreign Capital Utilization by the State Council, speeding up to revise Catalogue of Industries for Guiding Foreign Investment, encouraging foreign investment to go to high-end manufacturing industries, modern services industry, new energy and energy-conserving & environment-friendly industries, and setting up all kinds of functional agencies. Recently, the Fifth Plenum of 17th CPC Central Committee approved several proposals on development in the 12th Five-Year Plan, putting forward the idea to expand the opening up of finance, logistics and other services industries, steadily opening up fields such as education, medical service, sports, etc. The Ministry of Health and the Ministry of Commerce promulgated the Opinions on Further Encouraging and Guiding Private Investment to Develop Medical and Health Undertakings, stipulating specific regulations on the establishment of medical agencies by foreign capital.

In view of regional policies, we reinforced the implementation of the strategies regarding industry relocation and the opening-up in the coastal areas, and promulgated a series of policies to that end. In addition, progress was made in revising the Catalogue of Advantaged Industries for Foreign Investment in the Central-Western Region, and the development of Industry Cluster Zone.

In terms of the reform of foreign investment management mechanism, the delegation of approval power prescribed in the Opinions on Further Improving the Work of Foreign Capital Utilization by the State Council and the Circular on Delegating the Examination and Approval Power for Foreign Investment by MOFCOM has been implemented, and new investment-friendly measures are being researched actively.

V. On outward foreign investment and economic cooperation
Outward direct investment. From January to November this year, China’s domestic investors had directly invested in 2,786 overseas companies in 122 countries and regions, realizing non-financial foreign direct investment worth of $47.56 billion on a cumulative basis. By the end of November 2010, China’s cumulative non-financial outward foreign direct investment reached $247.3 billion. From January to November, the direct outward investment through acquisition was valued at $17.5 billion, accounting for 36.8% of the total outward investment in the same period. The foreign direct investment mainly flowed to Hong Kong, Cayman Islands, Australia, British Virgin Islands, Sweden, USA, Canada, Russia, Brazil, etc. The fields of foreign investment have been expanded, and nearly nine tenths of the investment flowed into commercial service, mining, manufacturing, transportation, and retail and wholesale industries.

Foreign Contracted Projects. From January to November this year, the turnover of China’s foreign contracted projects reached $74.25 billion, up by 14.6% year on year; the value of the newly signed contracts amounted to $110.3 billion, up by 3.6% year on year, registering a turnaround following successive negative growth in nine months. In breakdown, the value of newly signed contracts in November was $14.95 billion, up by 90.6% year on year. In the first 11 months, China’s foreign contracted projects had created 617 thousand jobs in these countries.

Foreign labor service cooperation. From January to November, the turnover of China’s foreign labor cooperation was $4.42 billion, down by 1.8% year on year; the value of the newly signed contracts reached $7.72 billion, up by 17.5% year on year. All kinds of labor sent abroad from January to November on a cumulative basis reached 357 thousand, 3,860 more than that in the same period of last year, and by the end of November, the number of all kinds of labor abroad was 839 thousand, 56 thousand more than that in the same period of last year.

In order to further promote Chinese enterprises to “go global”, MOFCOM took in 2010 the following measures:

First, strengthening policy-making and improving system design. MOFCOM launched Measures for the Administration of Investment in Taiwan by Mainland Enterprises and Opinions on Encouraging and Supporting Overseas Merger & Acquisition by Service Outsourcing Enterprises, made special probes into the implementation of Regulations on Administration of Foreign Contracted Projects, promoted the launch of such matching policies as Administration Measures on Bidding Permission (Negotiation) of Foreign Contracted Projects and Procedures on Violations of Laws and Regulations on Foreign Contracted Projects. Besides, MOFCOM comprehensively carried forward the reform of administration system of foreign cooperation in labor service, completed the revision of the Administrative Regulations on Foreign Cooperation in Labor Service and established 10 measures matching relevant policies, including the Trial Procedures for Public Service Platform Construction of Foreign Cooperation in Labor Service and the Trial Procedures for Poor Credit Record System of Foreign Cooperation in Labor Service.

Second, strengthening overall planning and advancing key projects. MOFCOM formulated the Development Program of Foreign Investment and Cooperation in the “12th Five-Year Plan”, brought the inter-ministerial and bilateral working mechanisms into full play, and vigorously promoted the construction of key regional and cluster projects and infrastructure cooperation with surrounding countries.

Third, improving information and financial services. MOFCOM formulated and released the Report on the Development of China’s Foreign Investment and Cooperation (2010) and Catalogue for the Guidance of Outward Investment Industries in Other Countries (2010), updated and released Guide for Outward Investment in Other Countries and Regions (2010), and strived to perfect public information services. Additionally, MOFCOM held a lot of comprehensive training activities about “going global” so as to strengthen the training of talents, and conferences on policy clarification and presentations of how Hong Kong Financial Services help Mainland companies explore international market, and established the cooperation platform between banks and companies.

Fourth, strengthening the integration with local situations to prevent risks. MOFCOM drafted the Management Guidelines on Staff of Overseas Chinese-funded Enterprises, promoted the development of Injury Medical Insurance and Additional Medical Assistance Insurance of Overseas Chinese-funded Enterprises and Organizations and their Staff, printed and distributed the Administrative Regulations on Safety of Chinese-funded Enterprises and Organizations and their Staff, and established the overseas risk-prevention system.

VI. Brief Statistics of China’s Technology Introduction

During the period of 11th Five-Year Plan, China’s technology import kept a rapid growth. According to MOFCOM statistics, from 2006 to November of 2010, China imported more than 50,000 items of technologies in total, with a contractual value of US$119.49 billion, up by 63.9% than that in 10th Five-Year Plan period. It is estimated that the total contractual value of technology import is over US$120 billion throughout the 11th Five-Year Plan period.

During the 11th Five-Year Plan period, the contractual value of technology import increased rapidly with an average annual growth of 35.6%. The quality of imported technologies improved remarkably. The technology fee of import contracts increased from US$14.76 billion in 2006 to US$21.7 billion in 2010 with an average annual growth of 10.11%, accounting for 85% of the total contract value in 2010, as compared with 67% in 2006.

During the 11th Five-Year Plan period, the import, digestion and re-innovation of advanced technologies strengthened China’s innovation capacity in technology, promoted the optimization of China’s industrial structure and improved the overall level of industrial technologies. By means of technology introduction, frog-leap development has been realized in China’s electronics- and communications-based hi-tech industry, great achievements have been made in technological renovation for traditional industries represented by metallurgy, chemicals and textile, whilst key technical equipment industry with certain independent designing and production capacities has basically taken shape.

In the process of implementing major national projects in recent years, domestic enterprises have elevated the starting point for independent innovation through importing key technologies, improved their capacity of independent innovation by digesting the imported technologies and re-innovation, and accelerated the technological leap in key industries.

VII． National Commerce Work Conference and On-site Meeting on the Direct Farm Purchase Program

The year 2011 is the first year of the “12th Five-Year Plan”. During the period of “11th Five-Year Plan”, China’s domestic consumption increased rapidly, and has become an important driving force of China’s economic growth; China’s foreign trade doubled in the five years, ranking second worldwide while China’s export came top worldwide. The utilization of foreign capital totaled over US$420 billion in the period, 1.5 times as that in the “10th Five-Year Plan” and ranking first for 18 consecutive years among developing countries. Breakthroughs have been made in China’s outward investment, which is expected to reach US$220 billion in total by the end of the “11th Five-Year Plan” period with an average annual growth around 30%, ranking 5th worldwide from 18th at the end of the “10th Five-Year Plan” period. China is gradually stepping into the line of big outward investment countries.

MOFCOM held a National Commerce Work Conference in Beijing on December 22nd and 23rd. The theme and mission of the conference is to earnestly analyze the economic situations from home and abroad, comprehensively review the commerce work in the “11th Five-Year Plan” period, thoroughly apply the Scientific Outlook on Development, lay out the overall arrangements for the ideas and tasks of the commerce work in 2011 and the “12th Five-Year Plan” period, strengthen the proactivity, predictability and pertinence at work, take effective measures to keep the steady and rapid development of China’s domestic trade and international economic cooperation, and make contributions to attaining macroeconomic objectives and to social and economic development.

Commerce Minister Chen Deming made a report in the conference. Delegates from some of commerce departments of provinces and municipalities and large enterprises spoke at the conference, introducing the performance and experiences of key commerce work in 2010 and the propositions for the work going forward. Attending the conference were officials from the commerce departments of provinces, autonomous regions, municipalities directly under the central government, municipalities specifically designated in the State plan, Xinjiang Production and Construction Corps, MOFCOM subsidiaries, chambers and associations of commerce and some Economic and Commercial Counselor’s Offices in foreign countries and regions, representatives from relevant departments of the Central Committee of the CPC and the State Council and large enterprises, officials from national Economic and Technical Development Zones and border economic cooperation zones.

MOFCOM and the Ministry of Agriculture will hold the On-site Meeting on Direct Farm Purchase Program on December 29 for the purpose of comprehensively carrying forward farm-to-supermarket direct supply. In order to thoroughly implement the spirit of the Central Economic Work Conference, MOFCOM decided to take joints efforts with the Ministry of Agriculture to hold the nationwide On-site Meeting on Direct Farm Purchase Program in Beijing on 29 December, lay out overall arrangements for promoting direct farm purchase, develop direct supply and selling of agricultural products, and improve the circulation system of agricultural products. It is an important meeting co-hosted by the two ministries in accordance with the central spirits and current situation of production and sales of agricultural products. At that moment, ministers of the two ministries will deliver speeches in the fair. We hope boost the overall development of farmer-supermarket direct linkage, improve the link between production and sales of agricultural products and reduce intermediary sectors so as to keep the price of agricultural products basically stable.

That's all for the brief introduction of the seven aspects for your reference.

Phoenix TV: The first question, two U.S. senators recently proposed to take the Currency Reform for Fair Trade Act as revenue measure. On the occasion of 21st Session of Sino-U.S. Joint Commission on Commerce & Trade and before Chinese President Hu Jintao’s visit to the U.S., their proposal actually is targeted at trade with China, what do you think of it? The second question, you have made comments on the WTO’s ruling against China’s claim and the it’s siding with the U.S. government as far as the special safeguard measures on Chinese tires is concerned, we hope you could say it again. Thank you.

Yao Jian: The bill as proposed by members of the U.S. Congress is actually an extension of relevant previous acts and bills. I would like to reiterate that some U.S. politicians have proposed to revalue the Chinese Yuan and slash import duties on Chinese goods on many occasions in the name of keeping a balanced trade. Such is a serious misalignment in analyzing trade status and is not an objective assessment on Sino-U.S. trade and economic relations. I have stated time after time that Sino-U.S. trade and economic relationship is a complementary and comprehensive cooperative relationship, which is not limited to trade. Sino-U.S. trade and economic relationship covers various fields and China’s trade surplus with the U.S. is merely one tip of this iceberg. The two countries also have bilateral cooperation in finance, investment, services, etc. In fact, the two countries have common benefits in overall cooperation. At present, China’s industrial structure mainly features manufacturing while the America’s services; their industrial structures are complementary. Therefore, bilateral cooperation is well based. Our per-capita income is US$4,000. With the further deepening of China’s opening-up and reform and the increase of per-capita income, China’s industries will transform from manufacturing to services, and then, the U.S. may have no cheap products to buy. China provides broad market for the development of the U.S. services industry, which accounts for 85% and 90% in the finance and technical cooperation respectively.

In fact, the imbalance of Sino-U.S. trade in goods is mainly caused by the U.S. export control regime towards China, which poses restrictions on 10 categories covering more than 2,000 items. How can balance of trade be possible in this case? Yet even so, China’s import from the U.S. increased by 32% in 2010, a growth rate much higher than that in its export to the United States. In October, U.S. trade deficit with China in trade in goods decreased by 8.3%. We should have a panoramic view to Sino-U.S. trade so as to realize further development, which can only be based on cooperation.

Sino-U.S. Joint Committee on Commerce & Trade is an opportunity to promote Sino-U.S. cooperation jointly. China will put forward its concerns as follows: firstly, further enhance Sino-U.S. overall cooperation covering not only trade in goods but also trade in services like finance, commerce and investment. Many Chinese enterprises met barriers in their investment in U.S. projects. There are factors that restrict bilateral cooperation. Secondly, ask the U.S. to recognize China's market economy status at an early date as to create greater environment for Sino-U.S. further cooperation. China has great legal and market environment for opening-up and reform in past 30 years. Failure to recognize the market economy status of China in trade remedy investigations seriously hinders bilateral cooperation. Thirdly, ask the U.S. to practically relax its export control measures towards China, especially, on hi-tech exports. Fourthly, treat fairly China’s investment in the United States. During the period of 11th Five-Year Plan, the average annual growth of China’s outward investment is 30%. Besides, the growth rate is accelerating in foreign countries (excluding developed countries like the U.S. and EU). Under this background, the U.S. should fairly treat China’s investment in the U.S. market and clearly define its standards of review on Chinese enterprises’ investment in its market. Additionally, the U.S. should clearly define its standards of inspection and quarantine on Chinese agricultural products including poultry products so as to lay a solid foundation for Chinese agricultural export to the U.S. market and for Sino-U.S. agricultural cooperation.

An official in charge of the Department of Treaty and Law of MOFCOM has made statements on the U.S. special safeguard measures against China’s tires on our website. China was deeply concerned about the negative effects of the Panel ruling and would carefully study the Panel's report and lodge an appeal at an appropriate time in order to protect the lawful rights and interests of Chinese industries. The U.S. safeguard measures taken against Chinese tires intended to shift domestic political pressure. According to data from some third-party agency in the U.S., the employment rate of the U.S. tire industry did not rise but fell by about 10% after the implementation of these measures. The average wholesale price of tires rose around 15% in the U.S. market. Its total import volume of tires did not rise but the import price increased 30%. It is clear that such measures are a wrong decision for the U.S. itself and others.

Finance Media: The first question, we had made a survey on the export in November before official release and found that the expectation was clearly lower than reality, which may be caused by international hot money coming into China by means of trade. Is it also the reason for the current rapid growth of foreign capital? The second question, how is the Catalogue for the Guidance of Foreign Investment Industries going? Vice Minister Ma Xiuhong mentioned that it would be launched at the end of 2010 in a press conference of the State Council Information Office in April, 2010.Thank you.

Yao Jian: We also studied the data of foreign trade and capital. Of foreign trade, the growth rate of general trade further speeded up. Our trade surplus is mainly caused by the foreign-funded enterprises in China and the processing trade, where it could be found that the export growth rate of our private enterprises was accelerating and that of processing trade and foreign-funded enterprises fell back. China’s absorption of foreign capital rose by 17% in total and by 38% in November, mainly because the improving domestic investment environment has attracted more foreign investors. From a whole year perspective, a single month FDI of US$9.7 billion is not a record high. FDI value reached US$12 billion in June. Our judgment is that such growth is normal. Particularly, the accelerating growth of foreign capital in services is a rather remarkable phenomenon in 2010.

Both the State Administration of Foreign Exchange, which is in charge of foreign exchange policies, and the Ministry of Commerce will further strengthen the supervision and management. MOFCOM has stepped up the examination, supervision and verification of foreign investment in real estate, as I said in the previous press conference. Moreover, we will further improve and verify relevant data to ensure their authenticity and availability. It is also noteworthy that, with the rapid development of the services industry, there is a rigid demand for commercial property, especially in downtown areas in China. This is an undeniable fact. So we can’t simply attribute the growth to hot money.

With regard to the Catalogue for the Guidance of Foreign Investment Industries, as it involves a wide range of industries and regions, it is still in the process of revision.

CBN: When you talked about vegetable supply, you said that the good weather this winter has helped vegetables to go to market almost at the same time, causing price falls for five consecutive weeks. However, a severe cold wave has swept across most of China recently, especially in the past two days. What impact do you foresee it will have on the supply and delivery of vegetables and other agricultural products? And how will it affect the sale of winter merchandise like down jackets? Thank you.

Yao Jian: You raised an important question. Despite declining prices for 5 weeks in a row, we can’t lax the monitoring on the prices of vegetables and other agricultural products, because the market as a whole is seeing price hikes and the expectation for inflation. Against this backdrop, the most important task of MOFCOM is to ensure sound and effective market supply to keep vegetable prices at a stable level. This is also the primary task for commercial authorities at various levels. In the upcoming National Commercial Work Conference, we will make it a priority to expand domestic demand and ensure market supply, particularly that of agricultural products”, for next year and even the entire 12th Five-Year Plan period. We should attach importance to both governmental efforts and market forces. On the one hand, producers and providers of distribution services should align their own business strategies with market changes. On the other hand, the commercial regulators nationwide will focus on the following tasks, some of which I have mentioned earlier: firstly, develop the commercial infrastructure. Many of you mentioned the high prices at vegetable retail stores in many cities, especially in downtown areas. In fact, this is caused by the shortage of such distribution infrastructure as vegetable retail stores.

To improve the distribution infrastructure, especially that for agriculture, is a pressing task during the 12th Five-Year Plan period. As we know, vegetables and agricultural products are different from other commodities in that they need to be kept fresh. In many western countries, preservation and refrigeration facilities are an important part of the commercial infrastructure, in which governments also have a role to play.

Second, enhance the emergency reserve of governments at all levels. MOFCOM successfully stabilized volatile pork and sugar prices this year, and ensured market supply. The market stayed unruffled in face of fluctuations in pork and sugar prices in the past year, and we will continue to release pork and sugar into the market from central reserves, particularly this winter and next spring to meet market demand.

Third, further enhance information service, giving full play to market and trade information in guiding agricultural production and distribution.

Finally, further improve the direct farm purchase program, i.e. the direct purchase of vegetables from farmers, as intermediate links are important price-adding factors. The program has made substantial progress in direct supply of vegetables to supermarkets, and remains one of the priorities of our work going forward.

So our goal is to improve the long-term mechanism for the development of commercial infrastructure during the 12th Five-Year Plan period through the said efforts, so as to guarantee the supply of vegetables and other agricultural products.


Xinhua: Some attorneys in Beijing claimed that the China International Electronic Commerce Center (CIECC) , an affiliate of MOFCOM, is not legally qualified for integrity certification of group purchasing websites, and in doing so, it violates the regulations on certification and accreditation. They called on CIECC to postpone the second batch of certification. What is your take on this issue? Thank you.

Yao Jian: I’d like to make two points. First, we will continue to foster the important commercial model of online shopping, which is growing rapidly in China. Group purchase is a newly emerged phenomenon. The accreditation and standardization of online group purchase has indeed attracted public attention and support. Second, whether the integrity certification agency is a social organization or an affiliate of MOFCOM responsible for e-commerce, it should operate in accordance with related laws and regulations, and strike a balance between regulations and well-managed industrial development.

BTV: I have two questions. First, we found by survey that many vendors had difficulty in selling vegetables with the falling prices. How do you protect their interests while stabilizing prices? Second, what are the remaining problems in stabilizing vegetable prices according to MOFCOM surveillance? And how shall we respond if vegetable prices rise again?

Yao Jian: The difficulty in selling and buying is mainly reflected in rising prices and inflation expectations. Price hike of agricultural products is an acute problem for now and the near future. It merits continued attention from government agencies including commercial departments. The solution to selling difficulties is two-fold. First, improve the commercial infrastructure in cities. During the 12th Five-Year Plan period and in the future, we will improve such facilities to provide a favorable environment for farmers in selling vegetables. The second aspect is related to social equity and justice. Since most vegetable vendors and suppliers are migrant workers, the protection of their interests deserves special attention. This is also the intrinsic requirement of promoting social equity and justice.

Regarding prices and price stability, l emphasize once again that prices and inflation expectation will be a major challenge and concern to us in the future. Although vegetable prices have dropped for five weeks running, the coming New Year and the Chinese Spring Festival are peak seasons for consumption, and a period of tight market supply. Spending peak fell on February in 2010. So we need to brace ourselves to ensure market supply in the coming quarter. Our local commercial authorities have taken all the necessary measures, including coordinating with the production areas in South China to meet domestic market demand, particularly in large- and medium-sized cities, and ease the pressure on rising prices.

CRI: As you mentioned, the continuous expansion of imports from the beginning of the year is one of the features of foreign trade. We have noticed that the recently concluded Central Economic Work Conference also sent the signal of being more proactive in encouraging imports next year. What measures will MOFCOM take to increase imports? Thank you.

Yao Jian: Balance in trade is a macro-economic requirement. It is also a top priority of MOFCOM. The ministry has given much attention to expanding import and promoting trade balance in 2010. Import is of great importance not only to balanced trade, but also to economic development as a whole. Built on what we have achieved in 2010, we will further strengthen efforts in the following areas to expand imports:

First, unify the thinking on the significant role of imports in technological progress, industrial capacity improvement, manufacturing upgrading, industrial restructuring and services development. We should encourage imports in the way as we promote exports. The Central Economic Work Conference also pointed out that a balance should be achieved between import and export, and between FDI inflow and outflow.

Second, promote trade facilitation on imports. To facilitate import, we need to further reduce import control policies, and narrow the registration scope subject to automatic import licensing. At present, about 20% of imports are registered through automatic licensing.

Third, further open up the domestic market. The year 2011 marks the 10th anniversary of China’s accession to the WTO. We should continue to liberalize manufacturing and services industries, particularly the latter. And we shall work to improve import facilitation policies.

Fourth, increase imports in key industries and areas, including energy-saving and environmental protection, and advanced technologies. We expect to achieve balanced development of imports and exports through the implementation of the 12th Five-Year Plan and relevant policy measures. Balanced trade depends on adjusting China’s economic structure, expanding services industry, increasing household income, and transforming the industrial structure. While expanding import, we should also bear in mind the fact that China is still a developing country facing significant pressure in employment and its per capita GDP ranks behind the 100th in the world. The United States recently put forward the National Export Initiative. This is one of the areas we can find converging interests in our future development.

Dow Jones: Can you elaborate the reasons behind the rapid growth of foreign investment in November? Which projects contributed to the surge in foreign investment? Or are there other factors? And will the high growth rate continue?

Yao Jian: About statistics on foreign investment, as I just mentioned, the major driving force of foreign investment growth in the first eleven months was the services sector, with only about 6% increase contributed by the manufacturing sector. A basic fact is that the services sector is the main source of growth in foreign investment. Among the subsectors, business services, computer services, and real estate services showed particularly strong growth in attracting foreign investment. This trend has been going on for two to three years. We have also noticed that the rapid growth of the services sector is in keeping with the transformation of domestic industrial structure.

The manufacturing sector will see steady development as China's economy further develops. Foreign investment in the manufacturing sector in central and western China will grow continually. .And FDI flow to services will pick up its speed. This is a basic development trend.

Asahi Shimbun：China’s Ministry of Finance said yesterday that export duties on some rare earth products will be raised in 2011. When will MOFCOM release the export quota of rare earth in 2011? And what is China's basic policy position on rare earth next year?

Yao Jian: Rare earth has been under the spotlight for several months, and I would like to reiterate that China’s policy on rare earth exports is closely related to its industrial policy on rare earth, aiming to promote sustainable development and protect the environment. For this purpose, China has cut the production, refining and exports of rare earth, as the production and processing cause serious pollution. Industrial authorities are working to enhance international cooperation in introducing advanced technologies to improve the production process and protect the environment.

The implementation of these policies have gained the understanding and cooperation of the international community. On the one hand, China has strengthened its cooperation with the U.S., Japan, and EU on energy conserving & environmental protection technologies so as to improve the technical standards on the exploitation and processing of mineral resources. On the other hand, many countries are collaborating in prospecting new resources. I stressed in previous press conferences that China has been supplying 90% of the global market and trade with around 30% of the world's reserves. And we hope to further exploit new reserves through international cooperation to fuel the development of relevant industries. China will act responsibly in international cooperation on rare earth to ensure basic market supply. In 2010, China’s of exports to major markets including Japan, U.S. and EU accounted for 70% of the total rare earth exports, and Japan alone took up 49%.

MOFCOM is still working with other government departments to determine the export quota of rare earth for 2011. The quota, which is based upon market demand, will be released as soon as possible. We will also act responsibly in international cooperation. And such cooperation should be multidimensional, including technical collaboration, exploiting new resources, and the export and production volume matching China’s resources.

People's Daily: I have three questions. The first is about export. You have just emphasized the importance of export. China’s trade surplus has been declining for some time, and it seems likely to continue. As you also noted, China is still a developing country facing severe employment pressure. Will the continuous downward trend in foreign trade surplus start to be a cause of concern? Second, Premier Wen Jiabao is visiting India now. We know that India is one of the countries launching the most trade remedy cases against China. Will Premier Wen’s visit help address this problem? Third, China’s overseas projects and investment have aroused more public attention after the reported loss of a project invested by China Railway Construction Corporation in Saudi Arabia. It is also reported that central state-owned enterprises may have incurred heavy losses in their overseas ventures. Of course, someone later came out to disclaim the report. What is the profit and loss situation of China’s outward investment and contracted projects in foreign countries according to MOFCOM? Thank you.

Yao Jian: On the whole, export has been growing fairly fast since the beginning of this year. However, there are two perspectives or contexts that provide us with more food for thought. First, the growth is a rebound in the special context of the financial crisis. And second, there are still problems difficult to cope with. According to surveys, there is huge pressure both in domestic and overseas markets. First of all, the rising cost, including that of raw materials and labor . And second, the continued revaluation of RMB exchange rate. Both have caused big problems for Chinese enterprises.

In fact, China has lost some orders to its neighboring markets due to the high cost. According to statistics of Zhejiang province, 10%-20% of its orders have gone to the neighboring markets, which have more abundant and cheaper cost of labor. From an international angle, we are facing increasing trade frictions. In response to intensified competition, many countries have adopted export promoting policies. As for MOFCOM, one of the priorities of next year is to improve the competitiveness of export products and industries. A number of China’s industries, especially equipment manufacturing, automobiles and power stations, have made strides forward. While expanding import, we should optimize the structure of foreign trade, create new advantages for trade competition, and further increase the export of products, including complete plants, with proprietary brands and independent intellectual property rights. These are bigger challenges in the next five years.

In addition, the marketing mechanisms and network of Chinese enterprises need to be further improved. 50% of China’s exports is created by processing trade and foreign-invested enterprises. And the value chains are very short as all the marketing links are in foreign countries, which needs to be solved urgently. So the problem with exports is how to enhance competitiveness, shifting from labor-intensive consumer goods to equipment manufacturing, and moving up the value chain from manufacturing to research and development, branding and marketing.

India is an important trading partner of China. India is the 9th trading partners of China, and China is India's second largest trading partner. The two sides enjoy close trade and economic relations. Although we notice that India has imposed trade remedy measures on some exports and investment from China, we realize that economic cooperation is the mainstream of our relationship. China has imported a great deal of products from India, such as iron ore, cotton, diamond, copper and chromium. In India, two industries, software and electronic information industry, and biochemical industry are very well developed. China seeks to step up cooperation with India in these areas. The Chinese business delegation visiting India consists of over 100 entrepreneurs, who are interested in cooperation with Indian businesses in pharmaceutical and some other industries. For example, Huawei Co. will establish an IT base in India, and Sany Heavy Industry Co.,Ltd. from Hunan province will set up a mechanical engineering park in India. Sino-Indian cooperation is not only in trade, but also in joint ventures of industry, software and technology. China’s imports from India surged by 55% from January to November this year. China and India will further scale up cooperation in software and biomedical industry on the basis of previous trade and economic cooperation. China will take new steps to invest in India, including investment in mechanical engineering and electronic communications, which are expected to yield notable results.

I briefed you on the China Railway Construction Co. project in the previous press conference. Chinese enterprises will see greater development in the next five years. In light of their rapid expansion, we have improved the institutional framework for overseas investment during the 11th Five-Year Plan period and promulgated new rules, including relevant policies and laws, and overseas safety regulations. Chinese enterprises should assess the risks ahead and improve their managerial expertise to continuously make headways in their outward investment .

That concludes the press conference today. Thank you.