Dear friends from the Press:

Welcome to the Ministry of Commerce’s first regular press conference in 2011. The press conference will be broadcast live to the website of MOFCOM, China Economic Net and Sina.com from this session on, and your further attention is welcomed. First I would like to brief you on the commercial development of China in 2010, and then I will take your questions.

China’s economic and social development has gone through the most complex situation in the year of 2010 since the new century. MOFCOM implemented a series of initiatives in addressing the global financial crisis, and intensified restructuring under the leadership of the CPC Central Committee and the State Council. Domestic and foreign trade, and international economic cooperation maintained a steady and rapid development on the whole, contributing to the stabilizing and improving of the national economy.

I. China’s domestic market operation

China’s consumer market has maintained a steady and rapid growth in 2010. According to MOFCOM statistics, in December, sales volume of 3,000 major retailers rose by 19% year-on-year, 0.4 percentage points higher than the growth rate of November. From January to December, sales volume of 3,000 major retailers increased by 18.1% year-on-year, 10.6 percentage points higher than the growth rate of the same period of 2009.

In December 2010, sales volume of foodstuff, beverage, and tobacco and liquor for 1,000 major retailers rose by 15.1%, 14.4%, and 14.8% respectively year-on-year, 3.9, 2.9 and 3 percentage points lower respectively than the growth rates of November. Sales volume of clothing and garment increased by 19%, and shoes and hats jumped 19.8%, 0.8 and 5.4 percentage points higher respectively than the growth rates of November. Sales volume of gold, silver and jewelry soared by 39.1%, having increased more than 30% each month for eight consecutive months. Sales volume of home appliances increased by 19.2%, 5.5 percentage points higher than the growth rate of November. Auto sales rose by 32%, 2.9 percentage points higher than the growth rate of November, hitting a record high since the beginning of 2010.

MOFCOM looks on expanding consumption as an important part of the transformation of the economic growth mode. Commercial departments at all levels implemented the Opinions of the General Office of the State Council on Invigorating circulation and Expanding Consumption (the General Office of the State Council, No. 134), and 20 specific policies in seven aspects gave detailed instructions to implementation, Significant results have been achieved and are demonstrated in four aspects.

First, consumption by urban and rural residents has kept expanding. In 2010, total volume of retail sales maintained rapid growth, and was expected to exceed 15 trillion Yuan, with a growth rate of over 18%. The Home Appliances “Old-for-New” scheme, and Home Appliance and Motor Vehicle Subsidy Program for Rural Areas have benefited the residents, and upgraded the consumptions. By the end of 2010, total sales of new home appliances in the Home Appliances “Old-for-New” scheme reached 33.22 million units, with sales value of 121.1 billion Yuan. Sales of home appliances in the “Home Appliances to Rural Areas” program amounted to 114 million units, with sales value of 241.8 billion Yuan. 474,000 “yellow sticker vehicles” and old vehicles were eliminated in the implementation of Replacement Policy on Automobiles, boosting consumer spending of 51.8 billion Yuan on new cars. A total of 17.92 million cars and motorcycles were subsidized in the Sales of Autos and Motorcycles in Rural China, stimulating consumer spending of over 260 billion Yuan.

Second, a modern circulation system in rural areas was initially formed. By the end of 2010, 520,000 supermarkets were constructed or transformed in rural areas, covering 80% of towns and townships and 65% of administrative villages; 2,667 distribution centers were constructed or transformed, facilitating 740 agricultural product wholesale and retail markets, covering 56% of prefecture-level cities, and supporting the “Direct Farm Purchase Program” between over 2,000 retailers and 11,000 specialized farmers cooperatives.

Third, market supervision was further enhanced. MOFCOM is organizing a special campaign nationwide to crack down on IPR infringement and the manufacture and distribution of fake and shoddy products according to the requirements of the State Council. 80 priority cases were sorted out, law enforcement was strengthened, and the special campaign has seen initial results. MOFCOM also launched the construction of a traceability system on vegetables and meat, and formulated regulations and standards for the system. Dalian, Shanghai and Nanjing are among the ten qualified to be chosen as pilot cities, under the framework where the mayors are responsible for the “shopping baskets”.

Fourth, market regulation has been further enhanced. The urban-rural market information system basically covered the information that reflects the changes of market supply and demand. There were over 1,600 key enterprises with 58 types of commodities in the emergency commodities database. The reserve system for major commodities such as meet and sugar kept improving, and vegetables temporary reserve system was initially established. Regional transportation mechanism further improved, and import and export were more timely regulated. Market monitoring and regulation were further strengthened, playing a positive role in disaster relief, curbing inflation, and ensuring smooth market operation. (2011-01-18 10:17:42.0)


II. China’s Foreign Trade

In 2010, remarkable results were achieved in foreign trade, with the efforts of commercial departments at all levels according to the requirements of “expanding market, adjusting structure and promoting balanced development”. Import and export have maintained a steady and rapid development, the structure was further optimized, and the achievements in tackling the financial crisis were cemented and expanded. Foreign trade achieved a relatively rapid recovery growth, consolidating China’s position as a large trading power.

In 2010, China’s import and export totaled US$ 2972.76 billion, up by 34.7% year-on-year, of which export was US$ 1577.93 billion, up by 31.3%, and import was US$ 1394.83 billion, up by 38.7%, with trade surplus of US$ 183.1 billion, down by 6.4%. In December, total import and export was US$ 295.22 billion, up by 21.4%, of which export was US$154.15 billion, up by 17.9%, and import was US$141.07 billion, up by 25.6%, with trade surplus of US$13.08 billion, down by 28.9%.

1. Import and Export achieved rapid recovery growth, and trade balance further improved. In 2010, import and export rebounded fast, with monthly trade hitting a record high. Total import and export, export and import was up by 16%、10.3% and 23.2% respectively compared with that of 2008. Trade surplus fell for second consecutive year, down by 38.6% as compared with that of 2008, as a result of a faster growth of import than export.

2. Export of mechanical and electronic products remained stable, and import price of large quantity commodities soared. In 2010, export of mechanical and electronic products was US$933.43 billion, up by 30.9%, and export of hi-tech products was US$492.41 billion, up by 30.7%. Export of clothing and garment, textiles, footwear, furniture, luggage and toys totaled US$303.24 billion, up by 25.9%. Import price of large quantity commodities soared, with total import value of crude oil, iron ore, primary plastics, unwrought copper, soybean, refined oil and steel rose by 42.1%, of which 38.1 percentage points were driven by price increase.

3. General trade accounted for more than half of the total, and private enterprises performed better than average. In 2010, import and export volume of general trade was US$1,488.71 billion, up by 39.9%, exceeding half of the total once again since 1990, of which export and import rose by 36% and 43.7% respectively. Export of private enterprises was US$481.27 billion, up by 42.2%, 10.9 percentage points higher than the growth rate of the total export, and import was US$269.28 billion, up by 56.6%, 17.9 percentage points higher than the growth rate of the total import.

4. Bilateral trade with emerging markets saw a strong growth momentum, and China has become a major export market for its trading partners. In 2010, the EU, the US and Japan remained the top three trading partners of China, and trade volume with China rose by 31.8%、29.2% and 30.2% respectively. China’s export to the ASEAN, Brazil, Russia, South Africa and India rose by 37.5%、47.5%、43.1%、59.5% and 42.4%. China has become the largest trading partner and the largest export destination of Japan, South Korea, the ASEAN, Australia, South Africa, also the largest trading partner and the 2nd largest export destination of the EU, and the 2nd largest trading partner and the 3rd largest export destination of the US.

In 2011, there are many favorable conditions for China’s foreign trade development, but it also faces such pressures as slow recovery of world economy, trade frictions heating up, rising cost of production factors, and increasing market competition. MOFCOM will strengthen restructuring, transformation and upgrading of foreign trade, create new competitiveness of foreign trade, at the same time cement traditional advantages, and make efforts in maintaining the steady growth and balanced development of foreign trade to improve the quality and level of foreign trade development. (2011-01-18 10:25:29.0)


III. China’s Absorption of FDI

In 2010, China’s absorption of Foreign Direct Investment (FDI) saw a steady and comparatively fast recovery. In December, paid-in foreign capital was US$14.03 billion, up by 15.6% year-on-year, achieving month-on-month growth for 17 consecutive months since August 2009. In non-financial sector, the number of newly approved foreign-funded enterprises in China totaled 27,406 in 2010, up by 16.9% year-on-year; the actual utilization of foreign investment was US$105.74 billion, up by 17.4%, reversing a 2.6% decline in 2009, and hitting a historical record of US$100 billion. The fast growth of China’s actual utilization of foreign capital was mainly due to the substantial increase of FDI in service sector and in central and western regions, increasing 28.6% and 27.6% respectively.

The main features of China’s absorption of foreign investment in 2010:

1.Industrial structure of foreign investment has been further optimized. In 2010, in service sector, the number of newly established foreign enterprises was 13, 905, up by 21.3% year-on-year, and the actual utilization of foreign capital was US$48.71 billion, up by 28.6% year-on-year, accounting for 50.7% of China’s newly established FIEs in non-financial sector and 46.1% of the total paid-in foreign capital. In manufacturing sector respectively, the number of newly established foreign enterprises was 11, 047, up by 13.1%, and the actual utilization of foreign capital was US$49.59 billion, up by 6% year-on-year, accounting for 40.3% of China’s newly established FIEs in non-financial sector and 46.9% of the total paid-in foreign capital respectively; the number of newly established foreign enterprises in agriculture, forestry, animal husbandry and fishery industry was 929, up by 3.7% year-on-year, and the actual utilization of foreign capital was US$1.91 billion, up by 33.8% year-on-year, accounting for 3.4% of the newly established FIEs, and 1.8% of total paid-in foreign capital respectively.

2.The proportion of foreign capital into the central and western regions increased. In 2010, the number of newly established foreign enterprises in the eastern region was 22, 992, and the actual utilization of foreign capital was US$89.85 billion, up by 16.7% and 15.8% respectively year-on-year; the number of newly established foreign enterprises in the central region was 3, 056, and the actual utilization of foreign capital was US$6.86 billion, up by 16.4% and 28.6% respectively year-on-year; the number of newly established foreign enterprises in the western region was 1, 358, and the actual utilization of foreign capital was US$ 9.02 billion, up by 22.3% and 26.9% respectively year-on-year. The actual utilization of foreign capital in the eastern region accounted for 85% of the total in the country, 1.2 percentage points lower than that of 2009, while the actual utilization of foreign capital in the central and western regions accounted for 6.5% and 8.5% of the total in the country respectively, both up by 0.6% year on year. (2011-01-18 10:44:02.0)

3. The actual investment by the top ten countries/regions kept increasing: In 2010, the top ten countries/regions (calculated by the actually utilized value of foreign capital) investing in China were: Hong Kong (US$ 67.474 billion), Taiwan (US$ 6.701 billion), Singapore (US$ 5.657 billion), Japan (US$ 4.242 billion), USA (US$ 4.052 billion), ROK (US$ 2.693 billion), UK (US$1.642 billion), France (US$1.239 billion), Netherlands (US$ 952 million) and Germany (US$ 933 million). The actual investment made by the said ten countries/regions accounted for 90.1% of the country’s total. The actual investment by the US was US$ 4.052 billion, up by 13.31% year-on-year, and the amount invested by the EU was US$6.589 billion, up by 10.71% year-on-year.

Also, I would like to make a brief review of several measures taken by the Chinese government for improving investment environment since 2010. In April 2010, The State Council distributed the “Several Opinions of the State Council on Further Improving Foreign Capital Utilization” which put forward a series of important measures on active utilization of foreign investment, especially emphasizing the importance of creating a favorable investment environment. Afterwards, the state organs and the local governments at all levels promulgated corresponding documents successively, and formulated a number of policies and measures on encouraging FDI absorption. In 2010, MOFCOM released the documents on further delegating the examination and approval power for foreign investment and deducting examination and approval procedures which increased the efficiency and investment facilitation. Besides, MOFCOM worked with relevant departments in further opening-up of travel agencies, medical institutions, and online sales, and encouraged active, efficient and proper utilization of foreign investment. In October 2010, the State Council made a decision to launch a nationwide special campaign to crack down on manufacture and distribution of fake and shoddy products, and 26 departments engaged in the campaign. Protecting the intellectual property rights of foreign-funded enterprises is an important component of that campaign. On January 14, the leading group of the campaign held a special symposium on IPR protection of foreign enterprises, at which enterprises made questions and suggestions on IPR. About 50 foreign-invested enterprises, 10 foreign institutions in China and 120 representatives attended the symposium.

In addition, with the aim of implementing the “Scientific Outlook on Development” and the “Several Opinions of the State Council on Further Improving Foreign Capital Utilization”, as well as to adapt to the requirements put forward by the new situation and tasks in foreign-funded partnerships, equity investment, and Foreign Capital M&A, MOFCOM issued the Statistical Regime of Foreign Direct Investment (FDI) in China (2011) ,which was approved by the National Bureau of Statistics, on December 30, 2010. The Statistical Regime of Foreign Direct Investment (FDI) in China (2011) was a revision of the 2008 edition, adding the content that meets the requirement of the “Scientific Outlook on Development”, and specific rules were promulgated, so as to reflect the quality and level of China’s foreign capital utilization more objectively and comprehensively. (2011-01-18 10:44:12.0)


IV. On outward economic cooperation

(I) Outward direct investment
China’s domestic investors in 2010 had directly invested in 3,125 overseas companies in 129 countries and regions. Several characteristics are presented as follows:

1. Outward investment flows hit a record high again. China realized in 2010 non-financial foreign direct investment worth of US$59 billion on a cumulative basis, up by 36.3% year on year. By the end of 2010, China’s cumulative non-financial outward foreign direct investment reached US$258.8 billion.

2. The proportion of outward investment through overseas acquisition increased year by year. The direct outward investment through acquisition in 2010 was valued at US$23.8 billion, accounting for 40.3% of 2010’s total investment while in 2009, US$19.2 billion through acquisition, 34% of 2009’s total investment. Industries for acquisition mainly include mining, manufacturing, production and supply of electrical power, professional and technical services etc. The major projects include Sinopec Group (HK)’s purchase of 40% stocks of Repsol Brasil for US$7.139 billion; Petrol China and Shell Energy Holdings’ joint acquisition of Australia's Arrow Energy for US$2.371 billion; Zhejiang Geely Holding Group’s takeover of 100% stocks of Swedish Volvo Car Corp. for US$1.788 billion; State Grid Corp.’s US$989 million acquisition of seven power transmission companies in Brazil as well as the franchise rights of their power transmission assets for 30 years. China’s foreign direct investment in 2010 mainly flowed to Hong Kong, Cayman Islands, British Virgin Islands, Australia, USA, Sweden, Canada, Singapore, Russia, Brazil, etc.

3. Investment in major economies maintains fast growth. Specifically, in 2010 China’s direst investment in Hong Kong reached US$33.77 billion, up by 20.1% year on year; Australia, US$2.93 billion, up 20.5%; ASEAN, US$2.57 billion, up by 12%; EU member states except Luxembourg, US$2.13 billion, up by 297%; USA, US$1.393 billion, up by 81.4%; Japan, US$207 million, up by 120%.

4. Outward investment by regions is prosperous. In view of the proportion of domestic investors, outward investment by regions hit a record high, amounting to US$16.32 billion, up by 72.7% year on year. Zhejiang, Liaoning, Shandong, Shanghai, Jiangsu, Guangdong, Anhui and Beijing are in the front rank of the investment.

In terms of the investment in industries, business service reached US$27.9 billion, accounting for 47.3%; mining, US$11.91 billion, 20.2%; manufacturing, US$6.03 billion, 10.2%; wholesale and retail, US$5.5 billion, 9.3%; transportation, US$2.47 billion, 4.2%; real assets, US$1.25 billion, 2.1%; construction, US$970 million, 1.6%; electrical power, gas and water production, US$890 million, 1.5%; scientific research/technical service and geological exploration, US$550 million, 0.9%; agriculture, forestry, animal husbandry and fishery, US$510 million, 0.9%; information transmission/computer services and software, US$420 million, 0.7%; residential and other services, US$260 million, 0.4%; culture/sport and entertainment, US$180 million, 0.3%; accommodation and catering, US$100 million, 0.2%; other industries, US$60 million; 0.2%. (2011-01-18 10:44:22.0)

II. Foreign Contracted Projects

Foreign contracted projects in 2010 enjoyed a steady development and began to enter into a critical period of transformation of development mode. In the whole year, the turnover of China’s foreign contracted projects reached US$92.2 billion, up by 18.7% year on year, among which the turnover in December stood at US$18.35 billion, up by 41.9% year on year. The value of newly signed contracts reached US$134.4 billion, up by 6.5% year on year, among which the value of new contracts in December registered US$31.42 billion, up by 59.5% year on year. An increased number of enterprises had attempted to utilize high-end models such as BOT and PPP, thus a substantial increase appeared in the value of newly signed contracts in design and consultation service. By the end of 2010, the turnover and contracts’ value of China’s foreign contracted projects respectively amounted to US$435.6 billion and US$699.4 billion on a cumulative basis.

In 2010, there were 488 newly signed projects with more than US$50 million for each project (440 projects in the same period of the last year), reaching US$106.9 billion, accounting for 79.5% of the total newly signed contracts. Besides, there were 261 new projects whose unit value exceeded US$ 100 million, 21 more than that of the same period of the last year.

In view of the distributions of countries or regions for turnover, Asia, Africa, Latin American, Europe reached respectively US$42.66 billion, US$35.83 billion, US$6.3 billion and US$4.99 billion, up respectively by 7.2%, 27.5%, 72.2% and 57.1% year on year, accounting respectively for 46.3%, 38.9%, 6.8% and 5.4%. Oceania and North America account respectively for 1.6% and1%.

In view of the country distribution, the top ten countries or regions in terms of new contract value are India, Indonesia, Saudi Arabia, Venezuela, Algeria, Vietnam, Nigeria, Turkmenistan, Sudan and Angola, from which the value of contracts totaled US$54.87 billion, accounting for 40.8% of the total newly signed contracts.

In terms of the distribution of industries, the new contracts of foreign contracted projects focused mainly on transportation, reaching US$29.08 billion, accounting for 21.6%; housing construction, US$28.08 billion, 20.9%; electrical power, US$27.98 billion, 20.8%, petrochemical, US$16.04 billion, 11.9%, telecommunications, US$11.26 billion, 8.4%, Manufacturing and processing industry, 5.7%, water supply and drainage, 4.0%, mining construction, 1.0%, environmental protection 0.2% and other industries, 5.5%. (2011-01-18 10:44:38.0)

III. Foreign labor service cooperation
Foreign labor service cooperation in 2010 achieved steady growth. In breakdown, the turnover of the whole year stood at US$8.9 billion, almost the same as that of the previous year; the value of newly signed contracts reached US$8.72 billion, up by 16.8% year on year. Since the reform of administration system for overseas labors has steadily been carried forward and the market order has further been standardized, overseas disputes and accidents of labor service had lowered by 72% than that of the same period of the last year. The number of all kinds of labor sent abroad in the whole year on a cumulative basis reached 411 thousand, up by 4% year on year. At the end of the same year, the number of all kinds of overseas labor was 847 thousand, 69 thousand more than that of the same period of last year. By the end of 2010, the turnover and contracts’ value of China’s foreign labor cooperation respectively accumulated to US$73.6 billion and US$76 billion, and all kinds of labor sent abroad added up to 5.43 million on an accumulative basis.

One of the priorities for China’s foreign economy is to accelerate the implementation of “go-global” strategy. MOFCOM took the following measures in 2010:

Firstly, strengthening policy-making and improving system design. MOFCOM had studied significant issues on outward investment for further improving the administration system. Specifically, MOFCOM made special probes into the implementation of Regulations on Administration of Foreign Contracted Projects and promoted the launch of relevant matching policies, 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 supporting measures and policies. Besides, MOFCOM promulgated several policies including Measures for the Administration of Investment in Taiwan by Mainland Enterprises and Opinions on Encouraging and Supporting Overseas Merger & Acquisition by Service Outsourcing Enterprises. Secondly, improving information service and protection. MOFCOM strived to perfect public information services, 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 the Guide for Outward Investment in Other Countries and Regions (2010). Furthermore, MOFCOM actively participated in the negotiations on regulations of international investment and cooperation in order to build favorable multilateral and bilateral environment, and held many comprehensive training activities about “going global” so as to strengthen the training of talents. Thirdly, strengthening the integration with local societies to prevent risks. MOFCOM drafted the Management Guidelines on Staff of Overseas Chinese-funded Enterprises for the purpose of leading the enterprises to fulfill their social responsibilities as well as to integrate themselves in local areas, printed and distributed the Administrative Regulations on Safety of Chinese-funded Enterprises and Organizations and their Staff which guided and supervised the enterprises to properly handle various overseas safety accidents and establish the overseas risk-prevention system with great efforts.

In consideration of the trend and conditions of future development, China is now in a strategic period of opportunites to make outward investment. As the world economic recovery accelerates and the reform on the administration system of outward investment deepens, companies are gaining stronger enthusiasm and confidence in making international investment, and hence China’s outward investment will maintain a rapid growth.

V. Chinese Trade Promotion Missions to the U.S. and the 10th Anniversary of China’s Accession to the WTO

The Ministry of Commerce of China organized large trade and investment promotion delegations to the United States with the view of developing the bilateral trade and economic relations. Headed by Vice Minister Jiang Yaoping and Vice Minister Wang Chao the delegations held promotion activities in several states of the U.S.. The delegation headed by Vice Minister Jiang Yaoping comprised of about 100 businesspeople from nearly 40 enterprises and attended the International Consumer Electronics Show and the China-U.S. Technology Innovation and Cooperation Development Forum in Las Vegas and has successfully finished the visit. Vice Minister Wang Chao, whose delegation had 7 groups with 400-plus businesspeople, will visit 12 states including Illinois and Texas, and Washington DC to hold promotion activities including the Investment Environment Briefings in Houston of Texas and Raleigh of North Carolina. On the morning of January 21, MOFCOM will, in conjunction with the China Council for the Promotion of International Trade, organize the China-U.S. Trade and Economic Cooperation Forum & Projects Signing Ceremony. About 500 people from political and business circules are invited to the event at which a number of agreements on import and export trade and mutual investment will be signed.

In addition, December 11, 2011 marks the 10th anniversary of China’s accession to the WTO. We are planning celebrations to learn from the past, look to the future, and continue China’s opening-up drive. At the end of December, 2010, Ambassador Sun Zhenyu, the former Permanent Representative of China to the WTO, accepted a joint interview by media from home and abroad when he arrived at Beijing Capital International Airport after leaving his post, which kicked off the publicity of the 10th Anniversary of China’s entry into the WTO. Chinese Commerce Minister Chen Deming will attend the World Economic Forum at Davos at the end of January of 2011, during which, a sideline forum on the 10th Anniversary of China’s entry into the WTO will be held. Your interest in covering this event is appreciated.. Thank you.

International Business Daily: First question. According to the 12th Five-Year Plan of the Central Economic Work Conference, “going global” is as important as “bringing in” in 2011. China’s investment in the U.S. was US$1.393 billion while the U.S. investment in China was nearly 3 times more than the former, hitting US$4.052 billion. Do you think China and the US match each other in terms of openness to foreign investment? As Chinese enterprises found difficulties in investing in fields of telecommunication, electronics, communications and oil in the U.S., how do we ensure that the two countries are equally open to investment from the other party? Second question. There is only a half month left before the Spring Festival. What measures will MOFCOM take to ensure the supply of daily necessities when freezing rain hit South China? Is there a contingency mechanism?

Yao Jian: As I mentioned earlier, China’s outward investment increased rapidly in 2010 and reached US$59 billion. Outward investments largely went to Hong Kong, Asia and Latin America while those to Europe, U.S. and Japan were smaller. There are various reasons. First of all, China’s outward investment grew with China’s overseas contracted projects and foreign aid. In the process, the market with which Chinese enterprises, especially Chinese investment enterprises, are familiar is in Asia, Latin America, and Africa.

The second reason is the degree of market openness. China and developed markets are not equally open to foreign investment because to some extent their degrees of market openness are different. Chinese steel, manufacturing and telecommunication companies all encountered barriers to their investment in the US. At the recent Joint Commission on Commerce and Trade, MOFCOM made representations to the U.S. side on the investment barriers which could impact China’s investment in and its trade and economic cooperation with the U.S. .

Bilateral trade is only one aspect of the China -U.S. commercial relations. To enable economic cooperation in wider scope and more areas takes concerted endeavour in a broader range of areas such as trade, investment, technical cooperation and IPR protection. Chinese manufacturing technologies, when introduced alongside investment and exports to other countries, benefit local employment and economic development. As it is improving its own investment climate and legal system, China hopes other countries could open their markets for investment, and reduce barriers like intentionally prolonged approval procedures or even rejection of Chinese investments in excuse of the so-called “security screening”. Of course, Chinese companies should follow international practices, and abide by local laws and regulations when they invest in developed markets.

As for your second question, we’ve paid close attention to the weather change. Similar situations took place in the past two years. Now, we have launched contingency mechanisms in joint efforts with some provinces in Southwest China for the supply of daily necessaries like vegetables and diesel. Moreover, we further improved our database to ensure the supply of vegetables and other materials for surrounding provinces in emergency. Thank you for your questions.

New Countryside Commerce: First question, I found some interesting figures: ratio of foreign investment in agriculture, forest, husbandry and fishery only took up a little in total foreign investment; however, the actual use of foreign capital in these fields rose by 33.8% year on year, much higher than the other two industries (secondary and tertiary). As we all know, Chinese people and netizens are very much interested in and concerned about every little move taken by foreign investment in these fields, what do you think of these figures and the trend of foreign investment in these fields in 2011? Second question, how is the development of the Direct Farm Purchase Program? To what extend could the Direct Farm Purchase Program promote the development of logistics and distribution? On the other hand, does the Program squeeze out the share taken by logistics and distribution and farmer markets in trading agricultural products? What is the realtionship among the three factors? What principles do MOFCOM follow when dealing with the triangle relationship, or in other words, contradictions?

Yao Jian: Your question is about the distrubiont of FDI. FDI attraction in China started in manufacturing industry, and currently FDI investment in manufacturing took a silimiar share to that in services industry, accounting for about 46% of total FDI. Such a phenomenon will continue for a long while. In China, FDI in agriculture mainly focuses on technical cooperation and the proportion of foreign investment absorbed by export-oriented agriculture is very small. It is a basic fact that agricultural industry of such a big country as China depends on domestic and indigenous input. The Direct Farm Purchase Program has been promoted by MOFCOM for years, which played an important role in stabilizing vegetable prices when vegetable prices increased markedly last year. In the future, MOFCOM will continue the Direct Farm Purchase Program as a priority job.

Retail and production of agricultural products in China is not well organized. Depending on well-organized retail, the Direct Farm Purchase Program requires both organized production and organized sales. Therefore, there are multiple ways of circulation and sales of agricultural products operating concurrently in China.including the Direct Farm Purchase Program as the next-step model and the wholesales markets in city and countryside. I would like to highlight the common view widely accepted after the agricultural product price fluctuation last year, i.e. infrastructure of agricultural product circulation is of commonweal and has direct bearing on the livelihood of our people. So we should place the same attention to it as to other infrastructure like roads and electricity. MOFCOM will join in efforts with other departments to accelerate the construction of the agricultural product circulation infrastructure by providing public services and building public platform.

CNR Business Radio: The Spring Festival is coming, and people are buying for the festival. We find in our survey that many people think prices in the supermarket are much higher than last year. Given so, what measures will MOFCOM take to tame the price hike? Thank you.

Yao Jian: Commodity price is an issue that has attracted much attention from governments at all levels. Policies and measures have been employed to stabilize the price. Data shows that products see price rise in this round of price hike are food and vegetables. Since measures like the vegetable reserve system and the reserve and distribution system of daily necessities are working together, the price hike has been contained and supply to meet expected demand is guaranteed.

Price fluctuates before and after every Spring Festival in China. As the festive element irons out and vegetable production increases, supply of foods and vegetables in particular, is also increasing. In the past, vegetables were often supplied across region. During price control this year, governments at all levels took effective measures to secure vegetable supply from local sources. I believe that price stability would be guaranteed. Thank you.

Economic Observer: At the beginning of January 2011, MOFCOM released 130 cases of undertaking concentration were filed in 2010, of which 120 cases were established, one was conditionally approved, and two were withdrawn by applicants. I have two questions. First, why did the number of cases soar in 2010? Any new features? Second, what are the two withdrawn cases and why were they withdrawn?

Yao Jian: MOFCOM is responsible for undertaking concentration under the Anti-monopoly Law of China. Most ofthe cases were accepted and processed, and a small number were approved conditionally. Shang Ming, Director of Anti-monopoly Bureau gave a press briefing on this topic. Detailed information will be provided later. Thank you.

Phoenix TV: According to MOFCOM statistics, China’s investment in the U.S. soared by 81.4% year on year. What are the main growth points? Vice Minister Wang Chao headed 7 groups to visit 12 states, and what are the main fields do the agreements to be signed cover? How much is the total value? Above 10 billion yuan or below? Additionally, what are China’s regulations governing rare earth export in 2011and what are the restrictions?
A
In 2010, Chinese enterprises’ outward investment increased rapidly and mainly focused on Asia as 50% of the investment went to Hong Kong. Those going to the U.S. and Europe was smaller in both value and proportion. Manufacturing is the main sector of China’s investment in the U.S.. Vice Minister Wang Chao is now visiting the U.S., and relevant information will be released on January 21. You are advised to keep a close watch.

Some reporters have called us to ask about China’s rare earth export in 2011, particularly after export quotas were allocated by MOFCOM recently. Now, I would like to emphasize on the following facts about rare earth export: firstly, what was released on December 28, 2010 is the first batch of rare earth export quotas, not for the whole year. We will release the whole-year quotas once they are determined. Now MOFCOM is consulting relevant departments. From January to November 2010, China exported 350,000 tons of rare earth, up by 14.5% in volume and 171% in value, and the price per ton increased by over 130%. Destinations of exported rare earth are mainly Japan, the EU and the U.S., which accounted for 86% of total rare earth export. Rare earth export quotas decreased in 2010 by around 30% from those in 2009. We have reiterated on many occasions that China’s rare earth export not only concerns export policy but also involves production and smelting policies. Meanwhile, China will continue to supply rare earth for international market and manages rare earth export quotas in accordance with the WTO rules.

China’s rare earth reserve only accounts for 36% of the global total, but it provides 90% of the global supply, Since China itself is still facing challenges of sustainable development and technology advancement, we will further perfect the rare earth management system including its export and production policy through global cooperation.

Asahi Shimbun：I have two questions. First, about rare earth, did China get the pricing right of rare earth last year? Second, the National Bureau of Statistics of China reported recently that China’s GDP in 2010 will surpass that of Japan. When will China surpass the US in GDP?

Yao Jian: In 2010, the retail price of China’s rare earth export increased by over 130%. Since the resource of rare earth is limited, its price often responds to the changes of demand and supply of the international market, which is normal. Most importantly, last year, the rare earth export effectively guaranteed the need of related industries, including the electronic industry. In addition, when regulating rare earth export, China has further perfected domestic measures, strengthened international cooperation, and improved the function of environmental protection measures in its production, smelting and export. I think all these cannot be measured simply by price. It shows China’s efforts in cooperating with the international community, further advancing the exploiting, production and separating technologies, reducing pollution, and enhancing industrial concentration. In general, it is the process of strengthening environmental protection.

Economic Information Daily: The first question, at the Commercial Work Conference at the end of the year, MOFCOM attached great importance to expanding domestic demand and stimulating consumption. And just now you also mentioned MOFCOM takes expanding consumption as an important method to transform economic growth mode. By the end of last year, the policies of “Automobiles to the Countryside” and “Trading in Old Automobiles for the New Ones” have concluded. And what new measures will MOFCOM launch for expanding domestic demand and stimulating consumption this year ? The second question is about foreign investment in real estate. Could you please share the statistics of foreign investment in real estate in the month of December and in the whole year of 2010? And will MOFCOM continue monitoring FDI in real estate this year?

Yao Jian: When addressing the financial crisis, MOFCOM has been firmly implementing the macro economic policy of driving economic growth by consumption, and has launched policies in response to the financial crisis. As the economy has picked up and been growing steadily, expanding consumption is still our overriding task. Meanwhile, the focus of our work should shift from measures for dealing with the crisis to a long-term consumption-stimulating policy. I have several figures here, which show expanding consumption is still a tough task. The total retail sales of consumer goods in 2010 increased by 18%. That shows domestic consumption has become an important driving force of economic growth, and initial progress has been made in transforming the growth pattern, namely, to stimulate economic development by the troika of investment, export and consumption. However, we should notice that, in the long run, many investment-driven or export-driven means and measures are still existing, and the awareness to stimulate consumption is weak. More efforts are required to make a difference.

According to the statistics, the past five years have witnessed 15% increase in the total retail sales of consumer goods over 20% increase in the total investment in fixed asset and 17.5% increase in exports That is to say, among the three driving forces the growth of consumption is the slowest in the five-year cycle. From a global perspective, the global average consumption rate is 61%, but that of China is lower than 40%. The construction of the mechanism and system of consumption stimulation requires long-term efforts, That is why we think it is a daunting task and need to tilt policies toward expanding domestic consumption.

We will focus on the following four aspects to boost consumption in 2011:
Firstly, to further advance the development of modern circulation system. The focus of rural circulation system construction represented by the project of “Ten Thousands of Villages and Thousands of Townships” will shift from opening stores to building logistics and distribution centers, developing chain business, promoting informatization and constructing networks. We will enhance the centralized distribution rate of rural chain stores, further reinforce the infrastructure construction of agricultural products circulation, imorove the infrastructure of agricultural markets and large-scale wholesale markets, further enlarge the investment in public goods. The central and local fiscal authority should intensify investment in agricultural products circulation and wholesale markets, including the building of cold storages and cold chains. We will further expand the pilot project of linking farms to supermarkets, and endeavor to increase the rate of farm products directly entering supermarkets to 30% by the end of the 12th Five-Year Plan period. We will improve the standard system of agricultural products. Recently, MOFCOM has announced the circulation standards, including package standards, for seven agricultural products such as cucumber, which will further raise the added value of agricultural; products, enhance the circulation efficiency, reduce loss, and facilitate online shopping. In addition, we will further perfect the reserve system.

Secondly, to further create a favorable consumption environment. The focus is to regulate market order, fight IPR infringement and counterfeiting, especially in the food and medicine circulation fields.

Thirdly, to foster new consumption hot spots, including promoting the online market of traditional business, combining brick-and-mortar stores and online stores, and expanding the consumption of medium and high end brands. China’s per capita GDP is close to $4,000 this year, and if the per capita GDP of the coastal areas reaches $20,000 to $40,000, the demand for medium and high end brands will further increase. We will pay attention to this group of consumers by improving the policy of brand marketing, further enriching the marketing channels of imported brands, and effectively lowering prices. In addition, we will attach importance to service consumption and rural consumption, and build networks of domestic service centers in cities in order to facilitate consumption.

Fourthly, to foster recycling consumption and energy-conserving consumption. We will vigorously develop the recycling system of renewable resources in major cities. China’s recycling system of renewable resources used to be perfect, but it has weakened over time. In the near future, with the development of circular economy, we will intensify the construction of standard community recycling network of renewable resources, and try to increase the recycling rate of waste goods in major cities and the recycling rate of major items of products to 70%. We will put emphasis on the potential challenge of second-hand vehicle recycling and dismantling posed by automobile consumption, foster car-dismantling companies complying with environmental protection standards and with advanced technologies, advocate green and energy-conserving consumption, and pay more efforts to encourage large-scale commercial enterprises to conserve energy.

All in all, the short-term policies dealing with the financial crisis should be transformed to a long-term mechanism to stimulate consumption. Our work will focus on four areas: to develop modern logistics, create a favorable consumption environment, foster new consumption hot spots, and cultivate the system of energy-saving and recycling consumption. That is about enlarging consumption.

About foreign investment in the real estate sector. Foreign investment in services sector accounts for 46%, and FDI in the real estate sector occupied 22.7% last year. We have always been keeping a close eye on this field, and will further step up supervision. We will strengthen cooperation with related authorities of land construction, foreign exchange, and finance in a bid to standardize the review and approval procedures and strictly regulate the scope of approval. Thank you. (2011-01-18 11:51:32.0)

Fujian Straits TV：I learnt from a piece of news today that a promotional video of China’s image illuminates New York's Times Square. Before this, MOFCOM made a similar image-promoting video themed Made in China. I would like to know whether this new video has anything to do with MOFCOM. Since this year marks the tenth anniversary of China's entry into the WTO, will there be any similar promotional campaigns? (2011-01-18 11:55:30.0)

Yaojian: MOFCOM once conducted a promotional campaign with the theme of “Made in China, Made with the World”. Our idea was like this: China has become a manufacturing base, which is closely linked to enterprises established by multi-national corporations. The exports of foreign-invested enterprises account for 55% of China’s total. The promotional video aims at sending the message that made in China is made with the world, and the quality of Chinese products has been improving with the advancement of China’s technologies. China’s foreign trade is taking a larger share and accounts for about 9%.of the world total, However, how to enhance the quality and brand image of Chinese products is the problem of the next step, as well as an important work of MOFCOM in the process of further transforming foreign trade growth mode and enhancing the competitiveness of Chinese products in 2011 and beyond, More efforts need to be made to enhance the image of products and brands, and raise the added value of “Made in China”. I think the in the future we will continue to promote Chinese brands through various ways. As China’s economy develops, It is also necessary to improve the country’s soft power. The advertisement you just mentioned is also a demonstration of China’s image and soft power, as well as an illustration of China’s participation in the mutual-benefit and win-win international economic cooperation.

CBN Weekly: The statistics mentioned by you show, the commodity prices have been on an overall rise, and the price hike has contributed 38.1% to the import volume, which is a big share. What are the main elements behind the price rise in your opinion? Besides, at the end of last year, the MOFCOM annual conference laid special stress on enlarging commodity imports, Will the price hike impact this year’s plan of commodity imports? Thank you.

Yao Jian: China’s imports outgrew exports by 7 percentage points last year. One of the reasons is the price hike. In certain period of last year, the prices of resource products and some agricultural products increased rather fast .For instance, soybean imports increased by 29% in volume and 33% in value last year, which reveals the obvious influence of price,. The imports of agricultural products and the resource products are all necessary for China’s future economic development. On the one hand, China’s manufacturing industry has a big demand; on the other hand, China has a large population, and is relatively short of land and water resources. Moving forward, China will pay special attention to expanding import while boosting export. It is necessitated by our actual needs, and is also the orientation of our future policy measures. Although trade balance improved last year, we still have a trade surplus of $180 billion, to which we will pay constant attention. MOFCOM will continue to take import expansion as the priority of our work in 2011. While further raising the brand added value of exported products, and maintaining market share, we will give priority to boosting imports in the following three aspects:

Firstly, we will perfect the import promotion system, further implement import facilitating measures, establish import exhibitions at some important fairs, build overseas products demonstration centers in major cities, and provide trade facilitation service to promote China’s imports.

Secondly, we will further optimize import structure, focusing on products and technologies related to China’s resources and environment, including raw materials, energy-conserving and environmental technologies. In those areas, trade partners such as Europe, the U.S. and Japan account for about 40% of China’s imports and exports. We will further enlarge imports, so as to reduce trade surplus with these countries caused by different industrial structure and division of labor.

Thirdly, we will mobilize governmental resources to boost imports. For example we will hold the National Import Work Conference in March this year to map out the work of import expansion in 2011 and beyond. While China is expanding imports, it is hoped that related countries will relax export control measures to China Take the U.S. as an example, among its exports to China, high-tech products once took a share of 18%, and now they still account for 7.5%. Expanding imports requires not only the efforts of the Chinese government, but also international cooperation, including the technology transfer of developed countries, and the technical cooperation in the field of energy conservation and environmental protection.

That concludes the press conference today. Thank you.


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