Dear friends from the press,

Welcome to the regular press conference of the Ministry of Commerce. I am Yao Jian, Spokesperson of the Ministry, and very glad to see you here. Now I would like to brief you on the commercial development of China from January to May, 2011, and then I will take your questions.

I. China’s consumption market operation

According to the statistics of National Bureau of Statistics (NBS), the total retail sales value of consumer goods in May reached 1.4697 trillion yuan with a year-on-year increase of 16.9%, 0.2 percentage points lower than that in April and 1.8 percentage points lower than that of the same period of last year. From January to May, the total retail sales of consumer goods increased by 16.6% year on year, 1.6 percentage points lower than that of the same period of last year. Here are the main features of market operation in May:

Firstly, demand for daily necessities has kept a steady growth and that for medium and high-end commodities slowed down. In May, as to 3,000 key retail enterprises under MOFCOM’s surveillance, sales value of foodstuff rose by 19.2%, 4.0 percentage points higher than that of the same period of last year; sales value of household products rose by 16.7%, 0.5 percentage points higher than that of the same period of last year; and that of garment rose by 15.9%, 2.0 percentage points lower than that of the same period of last year. Sales value of home appliances, autos and inhabitancy products in the above-mentioned 3,000 enterprises increased but still the growth rate was behind that of the same period of last year: that of home appliances and audio equipments rose by 12.9%, of communication equipments rose by 12.1%, of building and decoration materials rose by 13.4%, with 6.9, 10.7 and 3.3 percentage points lower than those of the same period of last year respectively. Impacted by the adjustment of the international gold market, the growth rate of demand for gold, silver and jewelry edged down. Sales value of gold, silver and jewelry of the 3,000 key retail enterprises rose by 37.2%, 5.8 percentage points higher than that of the same period of last year but 13.7 percentage points lower than that of last month. In addition, statistics of China Association of Auto Manufacturers showed that sales volume of autos nationwide totaled 1.3828 million in May, down by 10.9% month-on-month, but the decrease rate was 4.2 percentage points lower than that of last month.

Secondly, sales of large circulation enterprises maintained steady growth. In May, the growth rate of sales of large circulation enterprises edged down because of the slowdown of demand for medium and high-end commodities. Sales value of 3,000 major retailers rose by 15.7% year on year, with the growth rate decreasing by 3.5 percentage points than that in April and by 2.3 percentage points than that of the same period of last year. In addition, NBS reported that retail sales of enterprises or units above designated size in May grew by 22.7% year on year, 5.8 percentage points higher than the average national growth level.

Thirdly, prices of major edible agricultural products have maintained steady overall. In May, the consumer price index (CPI) rose by 5.5% year on year, 2.4 percentage points higher than that of the same period of last year, and 0.2 percentage points more than that in April. According to MOFCOM’s surveillance, due to seasonal effect and supply increase of vegetables and other agricultural products in May, prices of major edible agricultural products in 36 large and medium cities kept steady. Prices of vegetables, soybean oil and rapeseed oil dropped by 16.1%, 0.6% and 0.6% over those of last month respectively, with decreasing rate being 2.9, 0.8 and 0.4 percentage points more than the previous month. Retail prices of rice in small packs, flour in small packs, and eggs rose by 0.9%, 0.8%, and 0.6% over those of last month respectively, with the growth rate being 0.4, 0.2, and 1.2 percentage points lower than the previous month. The wholesale price of pork grew by 3.1%, 2.0% percentage points higher than the previous month. The retail price of sugar grew by 2.0%, 0.1 percentage points higher than the previous month.

II. China’s Foreign Trade

According to the statistics by the Customs, China’s imports and exports from January to May registered US$1.40179 trillion with a year-on-year increase of 27.4%, 16.6 percentage points lower than that of the same period of last year. Among that, exports stood at US$712.38 billion，up 25.5%, 7.7 percentage points lower than that of the same period of last year，imports reached US$689.41 billion, up 29.4%, 28.1 percentage points lower than that of the same period of last year，trade surplus stood at US$22.97 billion, down by 35.1%.

In May, China’s imports and exports totaled US$301.27 billion, up by 23.5% year on year. Among that, exports amounted to US$157.16 billion and imports stood at US$144.11billion, up by 19.4% and 28.4% respectively; trade surplus dropped by 33.2% year on year to US$13.05 billion. Exports in May hit a record high with US$1.47 billion more than the historical US$155.69 billion in April.

Here are the main features of China’s foreign trade in the January-May period:

1) Growth rate of exports fell back for two consecutive months, prices of both imports and exports increased. In May, China’s exports hit a record high in a single month, but the growth rate fell back for two consecutive months due to great expert amount of previous months and slowdown of processing trade. Driven by the price hike of bulk commodities, growth rate of imports rebounded, with 6.6 percentage points higher than that of last month. The average price of exports in May increased by 9.1% year on year and by 0.4% from a month earlier; that of imports increased by 15.9% year on year and by 1.9% from a month earlier.

2) Growth rate of imports from the EU, the U.S., ASEAN and Russia accelerated; exports to the U.S. appeared weak while maintained relatively fast growth to some emerging markets. In May, China’s imports from the EU, the U.S., ASEAN and Russia rose by 35.7%, 35.3%, 26% and 38.9% respectively. China’s exports to the U.S. only increased by 7.2%, 12.2 percentage points lower than the overall growth rate of exports. China’s exports to and imports from with Japan rose by 15.7% and 7.7% respectively. Trade deficit with Japan totaled US$22.3 billion in the first five months of 2011.

When it comes to the emerging markets, China’s exports to Brazil and Russia rose by 67.6% and 44.8% in May, 48.2 and 25.4 percentage points higher than the overall growth rate respectively. China’s exports to ASEAN grew by 21.5%.

3) Growth rate of general trade was higher than that of overall trade, proportion of processing trade in total trade decreased. In May, exports of general trade amounted to US$77.32 billion with a growth rate of 26.2%, 6.8 percentage points higher than that of total exports; imports amounted to US$81.77 billion with a growth of 36.4%, 8 percentage points higher than that of total imports. Exports and imports of processing trade amounted to US$67.69 billion and US$40.03 billion, up by 11% and 12.7% respectively. The proportion of processing trade export in total export was down by 3.3 percentage points over that of last year while the proportion in total import was down by 3.9 percentage points over that of last yaer.

From January to May, imports and exports of general trade amounted to US$735.94 billion, up by 33.6%. Meanwhile, imports and exports of processing trade totaled US$507.67 billion, up by 18.2%, taking a share of 36.2% of China’s foreign trade, but its proportion to China’s total export and import was 2.8 percentage points lower than that of the same period of last year.

4) Growth rate of exports of foreign-funded enterprises fell back and imports of state-owned enterprises increased significantly.

In May, exports of foreign-funded enterprises rose by 13.8%, 8.4 percentage points lower than the previous month, and imports rose by 17.5%, 1.6 percentage points higher than the pervious month. Exports and imports of private enterprises increased by 29.3% and 48.9% respectively, 9.9 and 20.5 percentage points higher than the overall growth rate. Exports of state-owned enterprises rose by 18.2%, lower than that of the previous month 6.4 percentage points while imports rose by 36.4%, 17 percentage points higher than that of the previous month.

In the first five months of 2011, imports and exports of foreign-funded enterprises amounted to US$719.52 billion with an increase of 21.6%, accounting for 51.3% of China’s total experts and imports; Exports and imports of state-owned enterprises and other enterprises took a share of 21.6% and 27.1% of China’s total exports and imports respectively.

III. Utilizing foreign direct investment

According to the statistics by MOFCOM, in May, 2,391 new foreign-invested enterprises were approved in China, up by 12.15% year on year. The actualized FDI reached US$9.225 billion, up by 13.43% year on year. From January to May, 10,543 new foreign-invested enterprises were approved in China, up by 9.39% year on year. The actualized FDI amounted to US$48.028 billion, up by 23.4% year on year.

In terms of sources of foreign investment, investment from Asia and the EU increased while investment from the U.S. decreased. From January to May, the total number of newly established enterprises with investment from the ten Asian countries and regions (Hong Kong, Macao, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea) was 8,409, up by 9.92% year on year; actualized FDI amounted to US$41.236 billion, with a year-on-year increase of 29.28%. 700 enterprises were newly established by 27 European Union countries, up by 17.45% year on year; actualized FDI stood at US$2.929 billion, up by 9.02%. 598 new enterprises were set up by the U.S., down by 3.7% year on year; actualized FDI reached US$1.285 billion, down by 24.12% year on year.

In terms of industrial structure, the growth rate of actualized FDI in agriculture, forestry, husbandry, and fishery was higher than that in manufacturing and service sectors. From January to May, 274 new enterprises were set up by foreign investors in agriculture, forestry, husbandry, and fishery sector, down by 7.43% year on year, with actualized FDI standing at US$814 million, up by 28.16% year on year, accounting for 2.6% and 1.69% respectively of the country’s total. The number of new foreign-invested enterprises in manufacturing sector reached 4,446, up by 14.91% year on year, accounting for 42.17% of the country’s total in the same period; actualized FDI reached US$22.217 billion, up by 20.63% year on year, and accounting for 46.26% of the countries total in the same period and was 1.06 percentage points lower than that of last year in the same period. 5,218 enterprises were newly established by foreign investors in service sector, up by 6.84% year on year; actualized FDI amounted to US$22.29 billion, up by 27.68% year on year, accounting for 49.49% and 46.41% respectively of the country’s total in the same period.

With regards to geographic location, the actualized FDI in central and western regions still grew faster than that in eastern region. In the first five month of 2011, the number of newly established foreign-invested enterprises in eastern region was 8,978, with a year-on-year increase of 10.11%, accounting for 85.16% of the total number nationwide; the actualized FDI reached US$40.808 billion, up by 19.65% year on year, accounting for 84.97% of the total actualized FDI nationwide. The number of newly established enterprises by foreign investors in central region was 1,069, up by 8.75% year on year, accounting for 10.14% of the country’s total; the actualized FDI stood at US$3.534 billion, an increase of 43.75% year on year, accounting for 7.36% of the total actualized FDI. 496 new foreign-invested enterprises were set up in western region, down by 1% year on year, accounting for 4.7% of the country’s total; the actualized FDI was US$3.687 billion, up by 56.44% year on year, accounting for 7.68% of the total actualized FDI nationwide.

In addition, I would like to give a brief introduction on China’s National Economic and Technological Development Zones (ETDZs). Through years of development, ETDZs have become China’s important base and cluster of new and high-tech industry, advanced manufacturing industry and modern service industry, as well as important growth engine for regional economic development and platform for opening up to the outside. ETDZs have also vigorously promoted China’s industrial optimization and upgrade and coordinated development of regional economic elevating China’s international competitiveness. Since the launch of the upgrading of Provincial Economic and Technological Development Zones in 2009, the State Council has successively approved to upgrade 68 Provincial Economic and Technological Development Zones to ETDZs. Up to now, there are totally 122 ETDZs nationwide, 60 in eastern coastal region, 35 in central region, and 27 in western region, forming a comparatively reasonable geographic layout.

In 2010, 90 ETDZs (newly upgraded 32 ETDZs since the second half of 2010 were not included, same as below) newly approved 2,205 foreign-invested enterprises, up by 6.27% year on year, accounting for 8% of China’s total newly approved foreign-invested enterprises; actualized FDI reached US$30.6 billion, up by 19.6% year on year, 2.2 percentage points higher than the national average (17.44%), accounting for 28.9% of national actualized FDI.

In 2010, 90 ETDZs realized total regional output value of US$2.6849 trillion, up by 25.7% year on year; gross industrial output value of US$7.7542 trillion, up by 25.8% year on year; fiscal revenue of US$562.7 billion, an year-on-year increase of 37.6%; tax revenue of US$465 billion, increased by 29.4% year on year; total export value of US$253.6 billion, up by 28.1% year on year; total import value of US$243 billion, up by 37.7% year on year. Among that, the growth rate of total regional output value, fiscal revenue and tax revenue were 15.4, 16.3 and 6.8 percentage points higher than the national average level respectively.

IV. Outbound investment and economic cooperation

Outbound direct investment. From January to May, domestic Chinese investors had directly invested in 1,613 overseas companies in 110 countries and regions, with aggregate outward direct investment in non-financial sectors reaching US$20.35 billion, up by 42.3% year on year. By the end of this May, China’s cumulative non-financial outward direct investment reached US$279.2 billion.

During the first five months, direct outward investment through merger and acquisition valued at US$8.5 billion, accounting for 41.8% of China’s total direct outward investment in the same period. Among that, major merger and acquisition projects in May were: Sinochem Group purchased through a subsidiary company in Hong Kong 40% of Peregrino field offshore Brazil from Statoil ASA for US$3.07 billion, which is also China’s largest overseas merger and acquisition project since this year.

Foreign contracted projects. From January to May, the accomplished turnover of China’s foreign contracted projects reached US$32.3 billion, up by 11.7% year on year. Among that, the turnover accomplished in May was US$7.42 billion, up by 27.1% year on year; the value of newly signed contracts reached US$55.98 billion, up by 23.2% year on year. New contracts signed in May valued at US$12.34 billion, up by 40.1% year on year.

The new projects each with a contract value above US$50 million numbered 163 (157 projects in the same period of last year), amounting to US$45.26 billion, accounting for 80.8% of the total value of new contracts. Top ten countries and regions in terms of value of newly signed contracts with China were: India, Hong Kong, Laos, Pakistan, Kazakhstan, Bahamas, Malaysia, Angola, Nigeria, and Algeria, with a total contract value of US$29.13 billion, accounting for 52.1% of the overall value of newly signed contracts.

By the end of this May, the accumulated value of signed contracts for China’s foreign contracted projects reached US$755.3 billion, and the accomplished turnover amounted to US$467.9 billion.

Foreign labor service cooperation. From January to May, all kinds of labor sent abroad by labor cooperation projects reached 169 thousand, 17 thousand more than that of the same period of last year. Among them, labor sent abroad in foreign contracted projects was 103 thousand, and in labor cooperation projects was 66 thousand. At the end of May, the number of all kinds of labor abroad was 783 thousand, 17 thousand less than that of the same period of last year. By the end of May, the number of all kinds of labor sent abroad by labor cooperation projects reached US$5.6 million on a cumulative basis.

V. MOFCOM Online Fair for Agricultural Products in Summer 2011

Currently, as summer agricultural products are going onto the markets in large quantity, and in order to expand circulation channels and avoid “hard sell” problem due to lack of market information, the Ministry of Commerce has decided to hold Online Fair for Agricultural Products in Summer 2011 (hereinafter briefed as the Fair) from June 15 to July 15.

Since 2006, during summer and autumn when agricultural products go onto the market in large quantity and also during periods before the Spring Festival when purchase takes place, the Ministry of Commerce holds national online fair for agricultural products annually on the New Rural Commercial Net. Through posting supply and demand information of agricultural products on the New Rural Commercial Net, and by adopting the mode of automatic matching online and manual matching by customer service offline, the Fair provides matching service of the purchasing and selling information of agricultural products, and helps farmers to sell agricultural products. The supply and demand information at the Fair are all collected by local commerce authorities, and checked one by one before posting. In addition, all participating providers of agricultural products have to establish complete credit record on the New Rural Commercial Net. The customer service specialists of the New Rural Commercial Net, by means of phone, text message, email and online instant communication tools, help the buyers and sellers to communicate information and realize transactions. The services of the New Rural Commercial Net are all free of charge, and the Fair does not charge farmers any fees. By now, totally 15 online fairs have been held, and helped bring about transactions with a total value of over 50 billion RMB, playing a positive role in promoting circulation of agricultural products and increasing farmers’ income.

The Fair will also organize certain counties, especially pilot counties with rural commercial information service, to report buying and selling information of local characteristic agricultural products, and establish characteristic agricultural product booths and carry out online promotion campaigns for the counties on the New Rural Commercial Net, so as to raise the brand value and popularity of their characteristic agricultural products, and facilitate more transactions to happen.

In order to further expand the service coverage of the matching fair, this Fair will invite several outstanding websites involving agriculture as sub-fairs to carry out online purchasing-selling matching service, so as to influence and stimulate more farmers to use the internet, foster rural e-commerce grand market, and boost the economic development of the rural areas.

VI. Efforts on Strengthening Food Safety

This week is Food Safety Week. The State Council attaches great importance to food safety, and MOFCOM has always makes food safety as an important task of administrative management, taking positive measures, implementing work plans of the State Council, and strengthening administration of food circulation industry. The main works are as follows:

Firstly, improve regulations and standards, and promote standardized operations. Since 2005, MOFCOM has promoted and revised the Regulations on Administration of Hog Slaughtering, formulated and revised four specific regulations including Measures for the Administration of Food Safety in the Circulation Sector, formulated 137 national standards including Standard of the Design of Hog Slaughtering and Dismembering Plant and Standard of Green Wholesale Market of Agriculture Product, as well as 139 industrial standards including the Supermarket Food Safety Practice and Regulations for Catering Business. MOFCOM has also guided the provincial departments to formulate a series of local regulations and standards, giving full play to the role of local departments.

Secondly, launch a traceability system on the circulation of vegetables and meat, and establish a chain of responsibility. MOFCOM and the Ministry of Finance launched the traceability system on vegetables and meat in ten pilot cities including Shanghai and Dalian in 2010, in order to address the difficulty in tracing meat and vegetables, improve sense of responsibility of the operators, and enhance their capacity of ensuring quality safety in circulation. At present, a traceability platform at central and municipal level have been initially established, and traceability pilot project have been launched in over 170 slaughtering enterprises, 100 large-scale wholesale markets, 3000 standardized markets, 1400 large- and medium- sized supermarket chains and 4400 organizational consumers in the pilot cities according to the requirements of unified collection index, unified coding rules, unified transmission format, unified regulations for interface as well as unified traceability process, and traceability for meat has been achieved in some pilot cities. In 2011, 10 more cities including Tianjin and Jinan have been chosen as pilot cities on the basis of previous experience, and it is expected that by the end of the 12th Five-Year Plan a traceability system is set up to cover all million-population cities.

Thirdly, push forward the construction of credit system, promote self-discipline in industries. In recent years, MOFCOM carried out such campaigns as “Fake Free Campaign”, “Month on Integrity for Prosperity" and “Creating Credit Management Model”, enhancing sense of integrity of enterprises, and setting examples for law-awaring and law-abiding as well as integrity and self-discipline enterprises. Guide over 20 commercial associations including China National Food Industry Association and China Vegetable Marketing Association to formulate industrial regulations, promote integrity management, and carry out credit training and credit evaluation, enhancing credit management for food enterprises. Issue “Administrative Measures for the Credit Information in the Commercial Field”, and establish special credit information system in order to address the problem of information asymmetric in food consumption. Guide import and export enterprises to improve product testing and Quality Safety System so as to control import and export of food.

Fourthly, establish a modern food circulation system, promoting sound development of food industry. In recent years, MOFCOM implemented key projects such as “Ten Thousands of Villages and Thousands of Townships”, "Standardized Market of Vegetables”, “Breakfast Demonstration Projects”, “Farm-Supermarket Chain” and “Meat Safety Project” in order to establish an efficient and safe modern food circulation system. Since 2010, comprehensive pilot programs of modern circulation for agricultural products have been launched in nine provinces and municipalities including Shandong and Hainan, improving the organization and modernization of food circulation, and promoting the sound development of the industry. Meanwhile, guide food distributers and catering enterprises to adopt advanced technologies for food safety, and to strictly implement purchasing inspection, compulsory certification, purchase and sale machine account, inventory management and recall system for problematic products, carrying forward management of attached documents for alcohol circulation, and enhancing food safety management of the circulation industry.

In order to implement “the Circular of the General Office of the State Council on Printing and Distributing the Schedule for Key Workings on Food Safety”, MOFCOM will further strengthen management on such key industries as hog slaughtering and catering service, continue to promote establishment of quality safety system of agricultural product so as to improve the capability in ensuring food safety in circulation.

VII．The Conference on Improving Export Quality of Agricultural Products and Briefings on Agricultural Products Exports

On June 17, the National Conference on Improving Quality of Export Agricultural Products will be held in Weihai, Shandong Province in order to promote exchanges and quality management experience on export of agricultural products, and enhance the quality of export agricultural product. In the second half of the year, MOFCOM will carry out the work in an orderly manner as planned.

Export of agricultural products has been growing steadily. According to Statistics by Chinese Customs, China’s agricultural exports increased from US$ 18.03 billion in 2002 to US$ 48.88 billion in 2010 after China's accession into the WTO, with an annual growth rate of 13.4%. In the first four months of 2011, China’s agricultural exports totaled US$ 18.68 billion, up by 34.4% year-on-year.

Labor-intensive products with comparative advantage have gradually occupied the dominant position in export. In 2010, exports of seafood, gardening products and livestock products valued at US$ 13.3 billion, US$ 16 billion and US$ 4.6 billion respectively, up by 29.1%、30.7% and 19.1% year-on-year. The total value was US$ 33.9 billion, accounting for 69% of the total agricultural exports.

The varieties of agricultural exports have been increasing rapidly, with processing of agricultural product keeps improving, and some products have had a mature and complete industrial chain covering planting, processing, packaging, transportation, marketing and new product development.

Private and foreign-funded enterprises have become the principal forces of agriculture product export. At present, about 20,000 enterprises are actively participating in the international competition using their comparative advantages. Enterprises which reach agriculture industrialization and integration with trade, industry and agriculture have become the leading force of China’s export. According to survey, most enterprises engaged in export of agricultural products have their own production bases and realized standardized production. Awareness of quality and product security of export enterprises is improved.

Market diversification is gradually formed. Over the years, our traditional export markets of agricultural products are Japan, the EU, the U.S., ASEAN, Hong Kong, and ROK. However, the growth rate of China’s export of agricultural products to emerging markets is much higher than to the traditional markets in recent years. At present, China’s agricultural products are exported to more than 200 countries and regions all over the world.

Agricultural development is promoted; technologies and qualities of China’s agricultural products are improved. According to experts’ estimation, the export of agricultural products worth of every US$10,000 could create about 20 job opportunities. In other words, China’s export of agricultural products could create millions of job opportunities for rural labor forces.

In order to meet the high standards and strict requirements in the international market, standards of China’s export agricultural products are constantly optimized in base construction, varieties, qualities, packages, storage, transportation and brands. In the process of China’s agriculture opening-up, China brought in lots of varieties, capital, technologies and advanced management experiences from foreign countries. The development of agriculture for export promoted the upgrading of China’s industrial structure of agriculture and fostered a batch of modern agricultural enterprises with strong and leading influences, and some production and export bases of advantaged agricultural products, like vegetable export base in Shandong, aquatic product export base in Zhejiang, potato export base in Xinjiang, flower export base in Yunnan, roasted eel processing base in Fujian, apple and juice base export in Shaanxi, etc.

CCTV: I have two questions. National Bureau of Statistics released the CPI yesterday and mentioned that price of live pig increased dramatically, with the growth rate of over 40%. I want to know what measures MOFCOM will take for stabilizing price of pork. My second question, could you please tell me about the latest progress of Yum Brands’ acquisition of Little Sheep Co.? Thank you.

Yao Jian: I also noticed the price hike of pork. Firstly, I’ll supplement information about pork price for you. Compared with that of the same period of last year, pork price edged up. According to MOFCOM’s surveillance, from June 6 to 12, the wholesale price of fresh pork in 36 large and medium cities of the country reached RMB 22.52yuan/kg, up by 19.2% compared with that in the beginning of 2011 and by 1.6% over the previous week. What’s the reason for price hike? According to our preliminary analysis, pork price had kept decreasing from 2007 and touched the bottom in the same period of last year. The lower price of pork resulted in the reduction of cultivation of live pigs and supply shortage of pork. To stabilize the pork price depends on market conditions. With the slow pickup of pork price, cultivation of live pigs and the supply of pork will increase.

Another reason for price hike of pork is the increasing cost of feed and labor force. As we all know, corn price rose by 9.8% year on year, then cultivation enterprises’ cost of corn rose by 9.8% on average. Still, there are other costs. We also see that as pork price has increased gradually since last June, the number of cultivated pig is on the increase, which ensues the increasing quantity of live pigs in stock, and the profit of pig farming enterprises at present, China’s pork-grain price ratio is 7.55:1; which is in the reasonable range. Of course, we will pay close attention to the pork market to strengthen the early warning and release the information timely for the public. Overall, pork production and consumption will be determined by market.

Meanwhile, we will effectively intensify the management of central meat reserves so as to ensure the supply when necessary. Generally speaking, increase of pork price and quantity of live pigs in stock will be determined by market. Overall, the quantity of live pigs rose by 9.5%. With the weather becoming hot, the consumption of pork will enter off-peak season and we are confident to stabilize the pork market.

The second question is about the anti-monopoly review on the case of acquisition by Yum Brands, which was also asked by reporters in the last press conference. MOFCOM has received the application files of concentration of business operators on Yum Brands acquisition of Little Sheep. According to the Anti-monopoly Law, MOFCOM is responsible for the review on the concentration of business operators. Now, MOFCOM’s Anti-monopoly Bureau is undertaking completeness review on the related materials from Yum Brands and will place a case on file according to law once materials are complete. Up to now, the completeness review is still going on. As prescribed in Anti-monopoly Law, the Anti-monopoly Bureau will make a decision whether to conduct further review within 30 days upon receipt of the documents and materials submitted by the business operators and could extend 90 to 150 days under special circumstances.

Regarding the background of the case, I’d like to make some extra remarks. The direct acquirer is Wande Global, a subsidiary of Yum! Brands Inc. This company was registered in Hong Kong in 2008. The acquired, Little Sheep, was registered at Cayman Islands in December 2007 and was listed in the main board of Stock Exchange of Hong Kong. By the end of last year, Little Sheep Group had owned self operated 179 branches and other 274 franchised branches in China. Last year, its sales amount was near RMB 1.8 billion yuan. That’s the general situation. Thanks.

Xinhua News Agency: I have two questions. We have found that the growth rate of export has fallen back for 2 consecutive months. Will MOFCOM launch new policies to promote export? And how do you think of China’s foreign trade in 2011, what about the trade surplus? My second question is about consumption. According to statistics of NBS and MOFCOM, the growth rate of consumption has slowed down since 2011, will MOFCOM launch new policies to stimulate consumption? At the beginning of 2011, Minister Chen said that MOFCOM would study how to transfer sales of luxury products from overseas to domestic market; then, will MOFCOM take new measures on this sector? Thank you.

Yao Jian: China’s export enjoyed a high growth rate of 31.3% in 2010 and rose by 25.5% in the first five months of 2011. It should be said that China’s export came out of the trough during the international financial crisis. Growth of China’s export is steady and fast. Throughout 2011, growth rate of import should be faster than that of export, not only because of the great potential of domestic economic growth but also because of fast price hike of import commodities in recent 2 years. The trade surplus in 2011 therefore will continue to decrease. Meanwhile, it is specified in Report on the Work of the Government 2011that we will attach equal importance to import and export and further intensify the import. In other words, China’s import will be further increased in 2011.

As to consumption promotion, we found that growth rate of consumption in 2011 up to now is lower than that of the same period of last year, but total retail sales value of consumer goods increased rapidly overall in past several years. And therefore, consumption should continue to pull the economic growth as China’s economic growth pattern is being transformed toward domestic demand-oriented, especially, final consumption-oriented. MOFCOM will further enhance consumption promotion word in circulation sector.

Lately, MOFCOM reorganized its internal departments and highlighted the mission of expanding consumption. Department of Market Operation is renamed as Department of Market Operation and Consumption Promotion, in which adding consumption promotion is a part of its name and functions. Meanwhile, in order to highlight e-commerce’s role in consumption promotion, Department of Informatization is renamed as Department of Electronic Commerce and Informatization. Furthermore, to enhance the integration of domestic and international market, Department of Trade in Services is renamed as Department of Trade in Services and Commercial Services, combining functions of international service trade with the development of domestic service trade with the purpose of promoting the development of China’s trade in services by taking the advantage of channels, talents and management experiences of international service trade. In my opinion, it not only means renaming some departments, but also means that MOFCOM will play a more important role in promoting domestic consumption to become a driving force of national economic growth.

You mentioned the expansion of domestic sales of foreign luxury goods just now. Currently, per capita GDP in China has exceeded US$4,000 and income of residents is increasing. What’s more, on the occasion of the tenth anniversary of China’s accession into the WTO, it is an irresistible trend for China to further promote the trade facilitation and reduce tariffs of imports including medium and high-end commodities. All departments concerned have reached a consensus about it. Thank you.

Phoenix TV: My first question is also on China’s imports and exports. Many institutions found that the import and export data did not reach the previous expectation according to the statistics by China’s customs. It was commented that China’s domestic demand slowed down and external demand was weak. How do you think of such statistics? Second, the Ministry of Foreign Affairs intensifies the communication with the government of Libya and the opposition party. Then, what will be the following arrangements by MOFCOM on recovering the trade and economic relations with Libya and related investment projects? Thank you.

Yao Jian: After the financial crisis, China’s export in 2010 and 2011 recovered markedly in general. Of course, our export enterprises care still encountered with difficulties including the increasing cost of raw materials and worries about the unsteady market expectation.

As we know, in the process of China’s construction of resource-conserving, environment-friendly society in recent years, the cost of labor and environment have been increasing constantly under the background of the construction of harmonious society and scientific development. We can say that our export has performed very well against such a background.

Besides, enterprises’ appraisal on operation environment will be impacted by many uncertain factors such as market, price and so on. Despite such difficulties, our export performed very well. Compared with the slowdown of the growth of export in last two months, we pay more attention to how to improve the quality of China’s export products, which is also the most important topic for MOFCOM during the 12th Five-Year Plan. Now, China is the largest export country in the world, taking a share of around 10% of total. Under this context, how shall we shoulder more international responsibilities? How shall we make new progress in quality, added value, R&D, design and sales of products in the period of 12th Five-Year Plan? All of these are our primary concerns.

Therefore, both increasing import and export are important for China. Increasing import could further promote the improvement of China’s production technologies and scientific skills and lay a solid foundation for the advancement of China’s manufacturing. Moreover, it could also improve the macro-control environment in China and further reduce trade surplus.

As to your second questions, I have no comments. Thank you.

China National Radio: I have two questions: first, a couple of days ago, to solicit public opinion MOFCOM released the draft of provisional measures on merger and acquisition without declaration of concentration of business operators by law, so could you give us an update on such work? Recently, Anti-monopoly Bureau is attached with an extra name of Office of the State Council Anti-monopoly Commission. And my second question is whether functions of the department have been extended and what the new functions are. Thank you.

Yao Jian: It is the 3rd anniversary for China to implement Anti-monopoly Law on August 1, 2011. It is an important law to regulate the market economy. MOFCOM, as one of the departments to implement the Anti-monopoly Law and host of Office of the State Council Anti-monopoly Commission, has made great efforts in formulating and implementing the Anti-monopoly Law.

As for the Measure you mentioned, review of concentration of business operators is an important function of the Ministry of Commerce according to the Anti-monopoly Law of PRC. In the process of implementing the function, we want to further increase transparency, and let the public, especially the business community, to understand the needed materials for and the process of review of concentration of business operators. It can improve the operability of the Measure and the public participation in the Measure, which is the core aim of the Measure. We are still soliciting suggestions for the Measure.

I want to add something related to this. Besides measures relative to the implementation of Anti-monopoly Law, MOFCOM has also solicited suggestions on the Catalogue of Industries for Guiding Foreign Investment, together with the National Development and Reform Commission through the website of the Legislative Affairs Office of the State Council. The current Catalogue of Industries for Guiding Foreign Investment was promulgated in 2007. According to the requirement of the State Council to further expand utilization of foreign investment and increase quality of foreign investment, MOFCOM and the National Development and Reform Commission have drafted a new Catalogue of Industries for Guiding Foreign Investment of 2011. When soliciting suggestions, we have received 260 suggestions for revision from chambers, enterprises, industrial organizations, involving 116 columns. The Industries in the Catalogue are divided into three categories: the encouraged, the restricted, the prohibited. Those not specified in the catalogue are the allowed. And the suggestions received were related to these three categories. We will, based on the suggestions brought up by enterprises, industries and chambers, revise and perfect the Catalogue of Industries for Guiding Foreign Investment of 2011 and submit it to the State Council, so as to try to release it as early as possible, and boost the development of China’s absorption of FDI.

In recent years, complying with the requirement is of making government affairs public, national opening up policy and WTO reporting mechanism, MOFCOM has made government affairs public and solicited public suggestions before promulgating policies, further perfected the implementation of government policies, and set up an image of the Chinese government department as an open and people-first one. we can say it has reaped good results.

As to the adjustment of departments, I have introduced a bit earlier. Actually, when the Anti-monopoly Committee of the State Council first established, the office was set up in MOFCOM. Recently, the state commission office for Public Sector Reform has officially approved to establish such an organization, and enlarge its staff, etc. I think, as the Anti-monopoly Law has been implemented for three years, the office being further defined will strengthen the effectiveness of the implementation of the Anti-monopoly Law in China, further promote work coordination among departments of the Anti-monopoly Committee of the State Council, and be conducive to the overall situation of domestic economic development and the co-development of China and the world. That is because the Anti-monopoly Law covers not only Chinese enterprises, but also foreign enterprises. Thank you.

People’s Daily: I have two questions, first, I wonder what is the progress of the preparation of National Import Work Conference to be held this year? Will some substantial policy measures be promulgated at the conference? Second, the statistics you just provided show that, no matter in May or from January to May, the proportion of processing trade in the total trade decreased, would you please analyze the reason of it for us? Thank you.

Yao Jian: Since last year, the Ministry of Commerce has been paying close attention to import. As we all know, import question should be considered within the general framework of macro economic policies. Import issue is related to many aspects, including enterprises, business community and service sector. The formulation of import policy involves many departments under the State Council, and we should deliberate and promulgate the policy together. Currently, MOFCOM has made sound discussion with other departments. What is more important, expanding import is an important task of the State Council in the government work report during the NPC & CPPCC Sessions 2011. The strategy of expanding import and laying equal importance to import and export is the macro policy measure we should adopt to achieve scientific development in this historical period. It is not a temporary policy, but an enduring and long-term one.

From this point, we can say the departments under the State Council have reached high consensus on the above issue, and we will further perfect the policy design. As we all know, to expand import, besides the actual demands of the industrial community, the policy strength is also important. We will deliberate and design the policy of expanding import within the general framework of trade facilitation, fiscal and tax policies, financial policy, free trade area and WTO negotiation, international cooperation and other aspects. Of course, the promulgation of policies depends on the development of national economy. Though many policies have not been promulgated yet, the whole society has, according to the overall deployment of the State Council, reached the consensus of expanding import, and relative policies have been coming out successively. That explains why imports had grown faster than exports during last year and from January to May of this year.

This year is the tenth anniversary of China’s entry into the WTO. During the past decade, China has been expanding opening up, and doubts arose in the beginning have been all settled down. It tells us that China’s further opening up is the important driving force for China’s economic development, and without opening up there will be no development prospect. From this perspective, to implement policy measures of expanding import is the best way of commemoration for the tenth anniversary of China’s accession to the WTO.

As to the processing trade, its export increased by 11%. And we also noticed the proportion of processing trade export in total exports decreased by about 3 percentage points. How do we look at the matter? In a short term, processing trade is connected with foreign-invested enterprises. Foreign-invested enterprises are paying more emphasis on domestic sales and domestic markets, which may be one reason of the change. Secondly, foreign-invested enterprises are more sensitive to cost, and choose appropriate places to invest and set up factories for processing according to cost conditions. Therefore, we are also paying attention to the cost factor for foreign-invested enterprises, which has been prominent for these years.

Recently, the European Union Chamber of Commerce in China released a report named Business Confidence Survey 2011. The report showed European enterprises investing in China have concerns over the following three aspects: firstly, competition has become fiercer in China’s market; secondly, labor cost has risen; thirdly, cost of raw material has also increased. From these aspects, we can see cost is the important factor affecting foreign-invested enterprises and processing trade export. We are also paying attention to the influence of these cost factors to the investment environment for foreign-invested enterprises. However, the report also showed that, in spite of these unfavourable factors, 78% European enterprises still reported that their sales revenue rose compared with that of previous year, which we can say is a relatively high percentage. Therefore, I think foreign investment has sound development prospects in China.

In addition, from a medium and long-term perspective, processing trade is after all a special policy China promulgated at the beginning of the reform and opening up policy, which has lasted for 30 years. With further development of China’s marketization process, compared with general trade, the percentage of processing trade will further decrease. That is because China’s tariff has been considerably lowered, non-tariff barrier has been lifted to a large extent, and legal environment has been further improved. Moreover, foreign-invested enterprises should not only focus on the export market, but also attach more importance to domestic demand. Thank you.

China Economic Net: Last week, the US broker Interactive Brokers banned clients from borrowing money to buy stocks of 132 Chinese listed companies saying that it was to avoid accounting risks. What is the influence of the investigation by the U.S. Securities and Exchange Commission on US-listed Chinese stocks? Will the Chinese government continue to encourage Chinese companies to get listed on the US stock market? Thank you.

Yao Jian: In recent years, overseas investment by Chinese enterprises has been increasing rapidly, with an average annual growth rate of around 40%. First of all, I want to point out that Chinese enterprises investing overseas should abide by local laws and regulations as well as international standards, which is a basic prerequisite. Meanwhile, Chinese overseas business should be treated fairly without discrimination. We will further encourage Chinese foreign investment and development, which is not only beneficial for China's economic growth, but more importantly, for the local people as many Chinese overseas enterprises create large amount of employment opportunities. In addition to developing markets, Chinese foreign investment has also been growing in the developed countries, playing a positive role in local taxation and employment. Especially in some mature markets with insufficient manufacturing capacity, Chinese investors will help improve their manufacturing abilities. I believe that Chinese government will continue to support the overseas investment by Chinese companies, thank you.

Asahi Shimbun of Japan: I have two questions. Firstly, three months passed since the Japanese massive earthquake, I want to know whether the quake will have some impact on China’s economy and Sino-Japan trade and economic cooperation? What is your viewpoint on that matter? Secondly, China-Japan-S.Korea summit pushed ahead FDI agreement, what is the conclusion from your discussion? Thank you.

Yao Jian: According to the statistics of May, trade and investment activities between China and Japan are generally in normal state. Specifically, China’s exports to Japan increased by 15.7%, which is generally in balance compared with the 19% increase of China’s total export. Our focus is China’s imports from Japan, which increased 4% in April and 7.7% in May. In spite of single digit increase, the growth rate has been improved.

Mostly important, Japan has been enjoying trade surplus in Sino-Japan trade in recent years. From January to May, China's surplus with global trade registered US$22.9 billion while China's deficit with Japan alone was US$22.3 billion. In the medium term, it’s trade balance that requires the attention. On May 21, Minister Chen Deming and Premier Wen Jiabao attended China-Japan-ROK summit and met with Banri Kaieda, Minister of Economy, Trade and Industry. The two parties reached a basic consensus on post-quake reconstruction of Japan and signed a cooperation agreement between MOFCOM and Ministry of Economy, Trade and Industry of Japan. Japan's restoration and reconstruction will be supported by various kinds of bilateral trade and investment promotional activities as well as personnel exchanges and project cooperation.

At the same time, Japanese enterprises operating in China, including the electronic and automobile enterprises urgently need Sino-Japan trade and economic cooperation for their recovery. In regard to that matter, we will take two measures: on one hand, we will further expand China's imports from Japan. Specifically, we will set up dedicated exhibition areas for Japan in the International Pavilion of the 110th Canton Fair this October and will invite Japanese enterprises, especially the local governments and enterprises from the three badly-hit regions, in order to promote economic partnership between China and Japan with the help of the biggest platform of China for trade and investment. On the other hand, we are planning to arrange trade promotion groups and launch trade promotional activities. Relevant follow-up work will also be push forward.

Concerning the negotiation on free trade areas, China-ASEAN Free Trade Area was officially established between China and ASEAN on January 1, 2010, significantly reinforcing the process of trade integration of the two sides. However, the construction of free trade areas of China-Japan, China-ROK and China-Japan-ROK fall behind that of China and ASEAN. The ongoing joint feasibility study by the government, industry and academia has made good progress. From the perspective of MOFCOM, as China, Japan and ROK being important trade entities in Asia and even in the global. It bears significant meaning to strengthen and advance the construction of free trade areas between the three countries.

Japan is currently China’s fourth largest trading partner and the largest source of imports, while China is Japan’s largest trading partner. Establishing Free Trade Area will deepen China-Japan-ROK cooperation. MOFCOM will take a positive attitude on the issues in discussion, and will promote to reach agreements on provisions of investment protection agreements with national treatment being the main issue. Thank you.

Economic Observer: You just mentioned that demand for medium- and high-end consumer goods slowed down in May, Could you please analyze the main reason? Is it the rising prices that have curbed demand growth in non-rigid consumption?

Yao Jian: I have noticed the statistics, but I have not done any specific research. In my opinion, there was a relatively rapid growth in consumption of medium- and high-end commodities in the past few years. Home appliances, communication equipments, automobiles and household products have maintained a relatively fast growth. Some of the medium- and high-end commodity sales might be affected by the macro-control policies including automobile and housing policies, but sales of gold, silver and jewelry have maintained over 50% growth in recent years. In this sense, China’s consumer market will continue to maintain a growing trend in the long run.

Although some of the macro-control policies might cause adjustment of some of the medium- and high-end consumer goods market, and if we must make a choice, we believe it is worthwhile for the construction of resource-saving and environment-friendly society, for the scientific development, for a sound macro-economic environment that the public needs, as well as for improving standards of automobiles, housing and household appliances, so as to facilitate building of a harmonious society. In the long run, it will contribute to sustained economic development, rather than short-term economic explosive development. The macroeconomic policies on housing, luxury goods and construction of social credit system shall provide a predictable and stable environment for China’s consumer market and encourage consumption in the long run.

CCTV: In the first five months of 2011 while national FDI maintained fast growth, the U.S. investment to and the newly established U.S. companies in China showed a downward trend. The accumulated total actual investment from the U.S. to China fell by 24.12%, would you please analysis the reason? Thank you.

Yao Jian: We have noticed the statistics. It is safe to say that the main sources of foreign investment in China are the ten Asian countries, especially the Greater China Economic Area, including Japan and ROK. Besides, the EU and the U.S. are also important resources of foreign investment for China in recent years. The EU, the U.S. and Japan have played a very important role in China’s utilization of foreign investment in the introduction of technology, management and global marketing network.

I also mentioned in the previous press conference that a large number of investments from the ten Asian countries are from European, American and Japanese enterprises. From this perspective we should have a balanced point of view on the decrease of investment from the U.S. Of course we will not ignore the statistics, and in my opinion, it may be relate to the overall economic situation and the financial crisis in the U.S. As the U.S. has been at the core of the financial crisis since it broke out, it has gone through a relatively slow and difficult recovery. In this sense, an important factor might be that large U.S. companies needs such a process of recovery and overall strategic arrangements to make decisions on overseas investment.

Of course, how to further develop service industry to attract more European, American and Japanese investments deserves China’s careful consideration and assessment. As investment in service sector has accounted for the largest proportion of the third industry, how to further open China’s service market and let developed economies such as Europe, the U.S. and Japan to expand investment in China deserves our research and promotion. Thank you.

CBN: This week is Food Safety Week. The problem of plasticizer is very serious recently which were found in some of the imports from Hong Kong and Taiwan, as well as products from Mainland China. How will the Ministry of Commerce function in supervision of the circulation sector? Thank you.

Yao Jian: The issue of plasticizer has caused a widespread concern both in Taiwan and Mainland China. Food safety is a hot topic in China recently which leads to further attention to the issue.

As I mentioned previously, the Ministry of Commerce has been strengthening works on food safety. Besides the establishment of traceability system of meat and vegetables, we are mainly working on two aspects:

Firstly, food quality and safety will be highly emphasized in the construction of urban and rural circulation system. For example, in the process of building large wholesale markets of agriculture products MOFCOM will work with local commercial authorities to not only construct wholesale markets but also build supporting infrastructure such as inspection and quarantine rooms with proper chemical and biological equipments. Further improve cold chain transportation and integrated distribution in the process of establishing logistics distribution centers for retail businesses, so as to avoid small workshops to enter into large-scale circulation system.

Secondly, promote the building of credit system in the circulation sector. Even if we have the most strict standards and the perfect system, there will be problems and risks under an unhealthy credit or moral system.

We will continue to focus on the two aspects. As for the issue of plasticizers you mentioned, the department in charge will be able to provide more information, you may be able to find it on their website. Thank you.

Dow Jones Newswires: Firstly, would you please comment in detail on the actual utilization of foreign investment in May? And what is your comment on the trend of foreign investment in China in the coming future? The second question, the U.S. Trade Representative Ron Kirk recently said that China has ended wind power equipment subsidies challenged by the U.S. in WTO dispute, and was urged to fulfill commitments on transparency; particularly notification of subsidy programs, does the Ministry of Commerce has any comments on this? Thank you.

Yao Jian: I’ll talk more about foreign investment. The overall situation of foreign investment growth is quite good. Since the beginning of 2011. Foreign investment utilization in China amounted to 48 billion in the first five months of 2011, up by 23% year-on-year.

I have mentioned just now about comments from relevant industrial associations on foreign investment. Foe example, European Union Chamber of Commerce in China commented that 78% of EU enterprises in China gained more profits than the previous year. The problems confronting foreign-funded enterprises are more competitive market, increasing cost of raw materials and rising labor cost, etc. Generally speaking, China is an attractive destination for foreign investment. While this year marks the lath anniversary of China’s accession into the WTO, we will also reflect on how to further improve the foreign investment environment for its better development. I believe this year will witness good performance of foreign investment growth. More importantly, we believe that with the implementation of the Twelfth Five Year Plan, foreign investment in the service sector will achieve relatively fast growth in the future.

As to your question about wind power equipment subsidies, the U.S. trade representative Ron Kirk had some comments recently. I'd like to add some more. First of all, China had released a series of industrial revitalization plans after the international financial crisis in 2008. Under such circumstances, those plans and measures were aimed at pulling China's economy out of the slump and back to revitalization as soon as possible. The essential purpose of the implementation of the policy on supporting wind power equipments was to further meet the requirements of the international society on energy saving and green resources utilization. That policy itself is beneficial to energy saving, consumption reduction, environmental protection and the combat of global climate change. It is also an important means to achieve sustainable development. Therefore, the policy is well justified and impeccable both for its effect and purpose.

We have noticed that the US had some misunderstanding to the measures involved and the facts they know are incomplete. Therefore we have made clarification during the consultation process. In fact, the policy adopted at that time was to support research and development of wind power technology rather than replacing imported goods with domestic products. China is weak in wind power technology and urgently need to improve them to meet the international standards because a large number of multinational corporations and Chinese domestic enterprises have established bases for production and application of wind power equipments. That is the reason for the Chinese government is adoption of the policy. However, since 2010, China has ended the policy and clearly listed the measures involved as invalid files in February 2011 in order to clear up doubts of the members concerned.

We also noticed that the US is speeding up the development of wind power industry and might think China's development of the same industry will be a competitor. In fact, in the area of green energy industry, competition from different countries is actually beneficial not only for the industry’s development but also for the whole world. In the future, we will continue to support the development of advanced equipment manufacturing including wind power industry for the purpose of building an energy-saving society together with the world.

Concerning your question on transparency. Transparency is included in the commitments of China's accession into the WTO, meaning to release the purpose and effect of one policy as soon as possible. As I have mentioned, transparency is reflected in the draft discussion process of administrative measures on implementation of Anti-monopoly Law as well as guiding directory for foreign invested industries. China, as a developing country in the WTO, has been exerting all its strength to fulfill notification obligations for subsidies and subsidies information we have submitted to the WTO and its members is sufficient and specific. It is known to all that certain kinds of we have subsidies are allowed under the WTO framework. MOFCOM will work with relevant industrial departments to collect and improve China's most recent subsidies information and submit it to the WTO Committee on Subsidies and Countervailing Measures as the second notification document as quickly as possible.
　　
That concludes the press conference today. Thanks you for attending the press conference and for supporting my work. Thank you.


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