Dear friends from the Press,

Welcome to the regular press conference of the Ministry of Commerce. I am Shen Danyang, spokesman of the Ministry. I am very glad to meet you all again. First I would like to brief you on the commercial performance of China from January to August, and then I will take your questions.

I. China’s domestic market operation

According to the statistics of National Bureau of Statistics (NBS), in August, the total retail sales value of consumer goods amounted to 1.4705 trillion yuan, up by 17.0% year on year. The real growth was 10.4% after adjusting for price factor, 0.1 percentage point higher than that of the last month. From January to August, the total retail sales of consumer goods amounted to 11.4946 trillion yuan, up by 16.9% year on year.

Here are the main features of consumption market in August:

Sales business of large circulation enterprises has been increasing steadily. Sales value of 3,000 major retailers monitored by MOFCOM rose by 14.7% year on year, a little bit lower than that of the same period of last year. Sales value of major wholesale enterprises monitored by MOFCOM rose by 11.8% year on year, 1.6 percentage points higher than that of the same period of last year. According to the statistics of NBS, sales value of limited enterprises rose by 22.1%, 5.1 percentages points higher than the national average growth.

The growth sales of foodstuffs, garments gold, silver and jewelry, communication equipments as well as home appliances fell slightly. In August from the statistics of 3,000 major retailers, the sales value of the foodstuffs grew by 17.4% year on year, clothing and garments up by 17.2%, shoes and caps grew by 12.3% and home appliances up by 9.1%. The growth fell slightly. Sales value of gold, silver and jewelry increased by 39.5%, sales value of communication equipments grew by 15.0. The two growth rates were 8.1 and 4.1 percentage points increase respectively over the same period of last year. But demands fell slightly than that of July.

Demand for housing and automobiles is still robust. In August from the statistics of 3,000 major retailers, the sales value of furniture grew by 10.8%, building and decoration materials up by 13.8%, hardware and electrical materials up by 6.8%, with 4.3, 4.1 and 1.1 percentage points higher respectively than July. In addition, statistics of China Association of Auto Manufacturers showed that sales volume of autos nationwide grew by 4.2%, which was the second monthly growth and 2 percentage points higher than July.

Growth of prices of major edible agricultural products slowed down. According to MOFCOM’s monitoring, in 36 large and medium sized cities, growth of prices of major edible agricultural products fell slightly. The wholesale prices of pork, small-packed rice and flour increase by 0.2%, 1.4% and 0.8% respectively compared with that of the previous month. The growth rate dropped by 11.5, 0.2 and 0.4 percentage points compared with that of previous month. The average wholesale prices of 18 varieties of vegetables fell by 4.6%. Which was 0.9 percentage points more than the decrease rate of the previous month the retail price of sugar increased by 2.2%. The rise maintains the same with previous month. Seasonal factors drive the demand for edible oil and egg. The wholesale prices of soybean oil and rapeseed oil and the retail price of egg increased by 1.2%, 2.6% and 3.3% respectively over the previous month, higher than those growth rates in the previous month. These growth rates were 1.5, 2.1 and 0.8 percentage points.

II.Foreign Trade

According to the statistics by the Customs, in August, China’s imports and exports totaled US$328.87billion, up by 27.1% year on year. Among that, exports amounted to US$173.32 billion, up by 24.5% year on year; and imports was US$155.56 billion, up by 30.2%.

China’s imports and exports from January to August reached US$2.35253 trillion with a year-on-year increase of 25.4%. The growth rate was 14.6 percentage points lower than the same period of last year. Among that, exports US$1.22263trillion, the growth rate was 11.8 percentage points lower than the same period of last year. Imports reached US$1.1299 trillion, up by 27.5%. The growth rate was 18 percentage points lower than the same period of last year.

The main characteristics of China’s foreign trade from January to August are as follows:

Imports surpassed US$ 1 trillion, and trade surplus fell sharply. In August, import growth rate was 7.3 percentage points higher than last month. Import continued to rise. Improving the situation of the trade balance. The trade surplus of August was$ 17.76 billion, down 10.1% over last year, dropped by$ 13.72 billion. From January to August, total imports exceeded US$ 1 trillion; cumulative surplus US$ 92.73 billion, down by 10.2%. This decrease rate was 1.5 percentage points more than the previous month.

General trade exports accounted for over half of total trade, and the proportion of processing trade reduced further. In August, exports of general trade increased by 35.5%, 11 percentage points higher than the overall proportion. Export value of general trade accounted for 50.1% of total exports .Import value of general trade rose by 39.6%, 9.4 percentage points higher than the overall import growth rate. Processing trade exports and imports went up 13.5% and 15.2% respectively, accounting for 44% and 27.3%, with 2.8 and 2.9 percentage points lower than the same period of the last year.

Exports of right industrial products and textile maintained rapid growth. Imported commodity bulk prices were still high. From January to August, textiles, clothing, plastic products, and bags maintained rapid growth. The growth rate was 27.2%, 24.8%, 23.1% and 37.9% respectively. Imported bulk commodity prices rose sharply, leading to rapid growth in the amount of imports. The average import prices rose by 14.5%. The average imports price of natural rubber, edible vegetable oil, iron ore, crude oil, refined oil, and soybean were up 62.6%, 39.6%, 37.5%, 37.0%, 33.9% and 31.2% respectively year on year.

Trade with emerging markets was in a rapid development; exports to the U.S. and Europe were relatively weak. From January to August, exports to EU and US increased by 22.8% and 12.3%, 1.7 and 12.2 percentage points lower than the overall growth rate; exports to Japan increased by 30.2%, 5.7 percentage points higher than the overall. These three traditional markets of exports accounted for more than 44.7% of our share in total, down 1.8 percentage points than that of the same period. Our trade with emerging markets was in a rapid growth, including bilateral trade with the BRIC countries, with an increase of 40.0%. Exports, imports from BRICs countries were up 32.4% and 47.9% respectively. Share of trade with BRICs countries increased from 6.8 percent last year to 7.7percent.

III. Pattern transformation and structure adjustment of foreign trade

Since the beginning of this year, facing complicated and volatile domestic and international environments, MOFCOM, according to the requirements of central government, has adopted a series of measures to accelerate structure adjustment and pattern transformation of foreign trade, vigorously cultivate brands for exports as well as improve quality and profitability of products for export. As a result, China’s foreign trade enjoyed a steady and relatively fast growth, and its development represented a positive change.

Increase of export prices has made significant contribution to the growth of trade value. From January to August, export prices rose by 10.3% on the average, 9.1 percentage points higher over the same period of last year; while for export volume, it grew by 12.1%, 21.8 percentage points lower than that in the same period of last year. That feature is more outstanding for labor-intensive products. Specifically in July, average prices and volumes of textile and garments increased by 24.7% and 0.9% respectively; and those of shoes and caps grew by 18.5% and 1.3% respectively. Hence A new pattern appeared that prices and volumes increased coordinately in foreign trade growth.

Export markets were further diversified. While China's exports to major traditional trading partners maintained overall steady growth, the exports to emerging markets realized relatively rapid growth, taking up higher proportions. From January to August, growth rate of exports to ASEAN, India, Russia, Brazil, South Africa and other countries or regions was higher than the average growth rate of total exports. Besides, as China's third largest trading partner, ASEAN further enhanced its status with bilateral trade value increasing by 26.6% year on year to US$234.61 billion Export to and Import from Asan increased up by 24.3% and 28.6% respectively.

Geographical distribution of foreign trade has become more coordination. Since the beginning of this year, central and western regions have quickened the receiving of industrial relocation from the ten eastern provinces and cities, and export growth rate is generally higher than that in eastern region and average national growth rate. In August, exports of central and western regions increased by 45.7% and 71.6% respectively, 21.2 and 47.1 percentage points higher than national growth rate. During the January-August period, export growth rate in Chongqing, Gansu, Qinghai and Jiangxi reached 128.3%, 71.1%, 68.1% and 67.2% respectively. Exports of central and western regions took up 11.2% of the total exports.

General trade increased faster than processing trade. From January to August, imports and exports of general trade increased by 32.1%, 16.3 percentage points higher than that of processing trade. The proportion of general trade in the total trade was 2.7 percentage points higher than that of the same period of last year. In August, general trade export took up half of the total export for the second time since 2000 (first time appeared in January, 2009).

IV. Attracting foreign investment

From January to August, 18,006 new foreign-invested enterprises were approved in China, up by 7.68% year on year. Actualized FDI reached US$77.634 billion, up by 17.71% year on year. In August, actualized FDI nationwide amounted to US$8.446 billion, up by 11.11% year on year. The main features are as follows:

The growth rate of actualized FDI in service sector continued to take the lead. From January to August, actualized FDI in service sector nationwide stood at US$35.663 billion, up by 19.91% year on year, 2.2 percentage points higher than the national average. Distribution service sector increased by 41.25% year on year, including retail sector up 70.47% and real estate sector up 14.02%, 5.89 percentage points lower than the total growth rate in service sector. In the same period, actualized FDI in agriculture, forestry, husbandry and fishery sectors and in manufacturing sector reached US$1.28 billion and US$36.147 billion respectively, up by 16.9% and 14.79% respectively.

Foreign investment from major countries in Asia and Europe kept growing. From January to August, total actualized FDI from ten Asian countries and regions (Hong Kong, Macao, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and South Korea) reached US$66.972 billion, up by 23.12% year on year. Actualized FDI from 27 European Union countries registered US$4.562 billion, up by 3.28% year on year; while that from the U. S. amounted to US$2.178 billion, down by 14.42% year on year.

Actualized FDI in central and western regions continued to grow faster than that in eastern region. From January to August, actualized FDI in central and western regions reached US$5.572 billion and US$5.74 billion respectively, up by 31.81% and 24.21% year on year respectively, with respective 14.1 and 6.5 percentage points higher than the national average growth rate. In eastern region, actualized FDI stood at US$66.322 billion, up by 16.14% year on year, 1.57 percentage points lower than the national average growth rate.

V. Outward investment and economic cooperation

Outward direct investment continued to grow. From January to August, domestic Chinese investors have directly invested in 2,418 overseas companies in 127 countries and regions, with outward direct investment in non-financial sectors (the same below) reaching US$34.2 billion, up by 6.9% year on year. Among that, direct outward investment through merger and acquisition valued at US$11.2 billion, accounting for 32.8% of China’s total outward investment in the same period. In regard to the outward investment to major economies, from January to August, China’s investment to Hong Kong and ASEAN enjoyed a rapid growth, while that to Russia, Australia, the E.U. and the U.S. declined. Specifically, China's direct investment to Hong Kong increased by 42.2% year on year and to ASEAN grew by 17.2% year on year up to US$1.73 billion. As to the composition of domestic investors, outward direct investment by provincial regions reached US$11.45 billion, accounting for 33.5% of the total outward investment in the same period, up by 10% year on year, among which Zhejiang, Shandong, Jiangsu, Shanghai, and Guangdong were in the lead.

Foreign contracted projects enjoyed a steady growth. From January to August, the accomplished turnover of China’s foreign contracted projects reached US$58.9 billion, up by 11.3% year on year; and the value of newly signed contracts reached US$84.17 billion, up by 12.3% year on year. With respect to geographic locations of newly signed contracts, the top ten countries and regions were: India, Saudi Arabia, Hong Kong, Vietnam, Malaysia, Angola, Algeria, Nigeria, Pakistan and Indonesia, with a total contract value of US$35.11 billion, accounting for 41.7% of the total value of newly signed contracts. In terms of industrial distribution of newly signed contracts, foreign contracted projects mainly centered in the industries of electric power, housing construction, transportation construction, electronic communication, petrochemical, manufacturing and processing. By the end of this August, the accumulated value of signed contracts in China’s foreign contracted projects stood at US$783.5 billion, and the accomplished turnover amounted to US$494.5 billion.

Foreign labor service cooperation maintained steady development. From January to August, the number of all kinds of labor sent abroad by labor cooperation projects reached 276 thousand, 24 thousand more than that of the same period of last year. Among that, labor sent abroad in foreign contracted projects was 158 thousand, and in labor cooperation projects was 118 thousand. At the end of this August, the number of all kinds of labor abroad was 789 thousand, 24 thousand less than that of the same period of last year. All kinds of labor were sent to the following countries and regions: Japan, Singapore, Macau, South Korea, Angola, Algeria, Saudi Arabia, Hong Kong, Burma and Russian Federation. By the end of this August, the number of all kinds of labor sent abroad by labor cooperation projects totaled 5.71 million on a cumulative basis.

VI. Development of Service Outsourcing

According to China’s 12th Five-Year Plan, in addition to stabilizing and expanding export of traditional services such as tourism, transportation and labor services, it is necessary to expand export of emerging services including culture, Chinese pharmaceuticals, software and information services, commercial circulation as well as finance and insurance, and make great efforts to develop service outsourcing. Since 2011, China’s service trade, especially service outsourcing, has been developing rapidly.

According to statistics by MOFCOM, 63,473 service outsourcing contracts were signed in first eight months of 2011, with total contract value of US$ 23.88 billion, and realized value of US$ 17.38 billion, up by 62.6% and 65.6% year on year respectively. The contract value of international service outsourcing was US$ 17.47 billion, and realized value was US$ 12.61 billion, with a respective year-on-year increase of 63.2% and 63.3%.

In first eight months, 27,477 software export contracts were signed. The contract value was US$ 9.78 billion, and the realized value was US$ 7.66 billion, up by 45.0% and 49.4% year on year respectively. The number of contracts registered for technology imports in China was 8,804 from January to August, with contract value of US$ 21.27 billion, up by 21.2%. Among them technology fee amounted to US$ 17.7 billion, accounting for 83.2% of the total contract value.

That's all for the brief introduction of commercial work in the first eight months. And now I will take your questions.

China Business News: First, according to the statistics released today, growth rates of total trade value, import value and export value from January to August dropped by 10 percentage points compared with that of the same period last year, what is the specific reason for this? Under this circumstance, how do you look at the foreign trade situation of this year? Second, since this year, media has reported for several times that a wave of bankruptcy hit export-oriented enterprises in Zhejiang and Guangdong provinces, is it true? If it is true, what do you think is the reason? And what will MOFCOM do in the next step to further stabilize export? Thank you.

Shen Danyang: Thanks for the questions of CBN reporter. The two objectives set in the beginning of the year of export of this year have been realized: First, to stabilize export when developing foreign trade, making export growth rate higher than the growth rate of GDP. The export growth rate from January to August reached 23.6%, obviously higher than that of GDP. Second, we put forward the objective of “transforming mode, adjusting structure and promoting balance”, and positive results have been achieved. You have just mentioned export growth from January to August dropped by 10 percentage points compared with that of last year, which is true. However, it is incomparable from certain perspective, as this year’s export growth is based on the rapid growth of last year, while that of last year was a recovery from the bottom. The export value of last year increased by 35.5% compared with that of the year before last, but export of 2009 maintained negative growth compared with that of 2008. The export from January to August of 2009 decreased by 25.5% over that of the same period of 2008. Foreign trade in the beginning of this year faced grave international economic uncertainties, and it turned out to be rather unpleasant situation. Domestic economy faced many challenges as well. Under this background, I think it is not easy this year to realize such an export growth rate.

I just talked about adjusting structure and promoting balance development of export from January to August, and I want to make a specific point. Remarkable results have been achieved in this aspect, I believe the fundamental situation will not change in the following months, and we can achieve the objective of “adjusting structure and promoting balance”.

Currently, some enterprises are facing difficulties in the following two aspects: First is the international economic situation, for instance, European debt crisis, and US tough economic condition. Some uncertainties still exist due to inflation in developing countries. Trade protectionism and trade disputes in foreign trade also have adverse impact on China’s export enterprises. Second is the domestic situation. Enterprises reported that prices of factors of production shot up, and domestic competition became fiercer. But we do not have accurate figures or typical cases to reflect the surge of bankruptcy of export-oriented enterprises. Last month, I answered a guestion from a reporter regarding related issues in Guangdong. And before this press conference, we specially requested by letters Department of Foreign Trade and Economic Cooperation of Guangdong Province and Department of Commerce of Zhejiang Province to investigate whether such issues existed, and the reply is negative. I will list two figures: the export value of Guangdong Province from January to August increased by 24%, a little higher than that of the national average level of 23.6%; and export value of Zhejiang was 22%, a little lower than the national average level. Export growth of both Guangdong province and Zhejiang province was almost the same as the national level. From January to August, there are 1,135 new enterprises participating in export business in Zhejiang, and in the first half of this year, the number of newly registered enterprises in Zhejiang province has reached 64 thousand, which also shows that though the enterprises in Guangdong and Zhejiang provinces are facing difficulties, they are developing healthily in general.

Facing these problems, MOFCOM will continue to adopt some necessary measures in the next stage: First, further coordinate and stabilize foreign trade policies. It is the urge from enterprises, who hope foreign trade policies remain stable. Second, create sound environment for export development, including trade facilitation, burden reduction of enterprises, as well as countering foreign trade protectionism, so as to create better environment for enterprises for international trade development. Third, guide local commercial departments to strengthen coordination and service for export enterprises. It is believed that through theses measures satisfactory results could be achieved in foreign trade. Thank you.

Dow Jones Newswires: It is reported that China Securities Regulatory Commission (CSRC) has submitted a report to the State Council, the title of which is Report on Tudou.com and other Internet Companies Listed abroad. Some suggestions therein are aiming at some Chinese internet firms listed abroad by way of VIE structure. One of the suggestions in the report is that these companies should firstly be approved by MOFCOM before being listed overseas through VIE structure. I would like to ask if MOFCOM has an knowledge about the report. And did MOFCOM help CSRC to draft the report? No matter MOFCOM know the report or not, do you think the reform is necessary?

Shen Danyang: Thank you for your questions. First, the report you mentioned is not submitted by MOFCOM, and up to now I have no idea about the report. I think you should consult with the related departments for more information.
Second, VIE is known as Variable Interest Entity, for which we do not have any laws to control, or any regulations and policies to regulate. MOFCOM and other departments will study how to regulate the investment by way of VIE.
Thank you.

International Business Daily: Recently, we noticed the vegetable price is likely to rebound, especially the pork price remains high, and I would like to ask what MOFCOM will do in the next step to further stabilize commodity prices. Thank you.

Shen Danyang: MOFCOM stabilizes prices mainly by way of guaranteeing market supply and lowering circulation cost. In terms of guiding market supply, we provide supply and demand information for enterprises, consumers and operators, through market monitoring. We organized production-sale matching activities such as Transporting Fresh Vegetable from South to North and Farmers-Supermarkets Meeting to solve the problem of supply. For sensitive bulk commodities, such as sugar and meat, we also release reserve and imports to the market to realize balance of supply and demand and price stability. On the other hand, we have done our best to coordinate with relevant departments to help enterprises to lower logistics cost. For instance, we organized Weekend Vegetable Market on Trucks in Beijing and other cities, about which I have briefed you last month. We have also coordinated with related departments to lower the cost of logistics, booths fee and tax of the operators. Lowering cost can help lower prices and prevent prices going up.

In the next step, MOFCOM will continue to do work in the above two aspects, and to stabilize market price together with relevant departments. The National Day is coming, we will launch daily market monitoring report of everyday necessities during the National Day holiday, pay close attention to the price change of everyday necessities, such as grain, oil, meat, chickens, eggs and vegetables, strengthen market monitoring and early warning work, and timely disseminate price information of important commodities. Thank you.

China News Agency: I’d like to ask two questions about the EU. Firstly, Europe’s debt crisis has intensified recently, and what impact will it have on Sino-EU economic relations? Secondly, Premier Wen Jiabao expressed in Davos Forum that he hopes EU to recognize China’s full market economy status, will it be one of the conditions for China to help the European economy?

Shen Danyang: The intensified debt crises in Europe will definitely have an impact on Sino-EU economic and trade cooperation, and a detailed analysis will be needed for specific impact. According to MOFCOM preliminary investigation, first, bilateral trade will be affected if EU’s economic growth slowed down further or if its domestic consumption and investment became weaker. Second, as the debt crisis intensified, EU will face an increasing domestic pressure, and there will be an increasingly fierce industrial competition with China, and trade frictions between the two sides might be increased, which will have an adverse impact on the development of Sino-EU economic relations. We believe that there will be crisis as well as opportunities, and both sides shall join efforts to transform the crisis into opportunities. The two sides should take this opportunity to deepen cooperation in all fields, especially in two-way investment as well as economic and technological cooperation.

As to your question about China’s full market economy status, I would like to brief that China’s transition from a planned economy to a market economy has completed after 30 years of opening up, but the EU has still not recognized China’s full market economy status. China is very disappointed. MES is not a technical issue, but a political decision. China’s full market economy status is not in line with the present situation of China’s market economy construction, and it also fails to serve the long-term interests of China-EU economic and trade relationship. Since the European debt crisis broke out, China has expressed concerns, and has provided assistance to the best of its ability, and there is no correlation between recognizing China’s full market economy status and supporting EU in coping with its debt crisis, and I don’t think there is a necessary connection between the two issues. There is no precondition for the Chinese people to help others, but we expect due respect when we treat others with honesty. Thank you.

China Daily: I have two questions. The first question is about the Doha negotiations. The U.S. Ambassador to WTO recently said that the Doha Round negotiations have failed, blaming China and some emerging economies for its failure, how will you comment on it? In addition, some analysts said it is necessary to overturn the results achieved in Doha Round negotiations, and start negotiations all over again. What is your opinion? The second question is about the U.S. special safeguard measures imposed on Chinese-made tires. WTO made a decision on September 5, allowing the U.S. to levy protective tariffs against imports of tires from China, which is a same practice as that of December 2010, what is your take on this issue? Thank you.

Shen Danyang: The full name of the Doha Round is the Doha Development Agenda. Its aim is to bring down trade barriers among WTO members, and to promote global economic development, especially that of poor and developing countries, by creating a fairer trade environment. The developing countries should not be expected to bear the responsibility beyond their capacity in the negotiations. Most countries in the world will benefit from it if the Doha Round negotiations could reach a successful conclusion, while a failed Doha Round would hamper the progress of global trade and investment liberalization, which will have an adverse impact on global economy. And China has made positive contributions to WTO and the Doha Round. For example, we have given our commitment to eliminate agricultural export subsidies and to maintain a minimum level of subsidies in domestic market. We have also promised to apply zero-tariff on 95% of exports from LDCs, which could not be achieved in some of the developed countries. China’s per capita income is less than 10% of that of the United States, yet some developed countries impose China onto similar responsibilities with the U.S., which does not make any sense. As a developing country, China has always been an active participant and supporter of the Doha Round talks, and has always played an important role in it. China will make one hundred percent effort on Doha Round talks if there were a one percent hope for a successful conclusion. China will work with all WTO members to overcome the difficulties, and we also hopes that all WTO members to strengthen communications and to push forward the negotiations rather than blaming one another.

An official from the Department of Treaty and Law of MOFCOM, who’s in charge of the case of the U.S. special safeguard measures against China’s tires, has made comments on September 5, and China expressed regret over the case. The U.S. safeguard measures imposed on Chinese-made tires are trade protectionism intended to shift domestic political pressure, which resulted in trade distortion, and are harmful to other countries, while not benefitting the U.S. It has not only damaged the legitimate trade interests of the Chinese side, but also failed to gain support from the U.S. tire industry. Besides, statistics showed that it failed to reduce tire imports of the U.S. and that the U.S. tire imports from the world in 2010 saw a growth of 20.2% compared with that in 2009, and continued to rise by 9% year-on-year in first half of 2011, at the same time U.S. tire imports from China fell by 23.6% in 2010 compared with that in 2009, and continued to decrease by 6% year-on-year in first half of 2011. It is a trade distortion as what I have just mentioned that U.S. tire imports was not reduced, while only imports from China was reduced. Therefore, it is necessary for the U.S. to terminate as soon as possible its “safeguard” measures against Chinese tires, so as to ensure a fair competition environment for the Chinese enterprises. Thank you.
　　
China's Foreign Trade: The export price of labor-intensive products has been increasing recently, and what is the reason, is it a result of the price rise of some raw materials including cotton? And what impact will it have on traditional export enterprises with high volume and low profit sales? Thank you.

Thank you. Actually I have partly answered this question. I recommend you not only to notice the rising prices of cotton and raw materials. The rising prices of raw materials do effect the rise of export prices, but more importantly, after policies and measures on “transform of economic development pattern and economic restructuring” have been taken, the export competitiveness and bargaining power of our enterprises has been promoted. The impression we had on China’s export goods were either cheap and fine or cheap with low quality. But through years of promotion, from export scale to the quality, level and pricing of export goods, we have made significant achievements, which will be further highlighted with further development of foreign trade. We will make a thorough review on that. At present, there is a significant increase of brand name products in China as well as their prices. From trade structure we can see that processing trade was taking a large portion in the past, which was at the two extremes of the smile curve, leaving most profits abroad. However, at present general trade has become number one in trade patterns. In August, its portion has surpassed 50%, which was the first time in many years. In general trade exports, most raw materials and products were processed at home, including research and development and marketing. Among these processing enterprises, there are a large number of SMEs and many private enterprises. From the aspect of structure, the proportion of general trade has increased and most of its products are sold to the emerging and developing countries. From the aspect of exporters, the proportion of private enterprises has increased. From the aspect of product structure, our structure of brand name products has improved. All these proved that we have made notable achievements in transforming economic development pattern and economic restructuring. Thank you.

Market News International: MOFCOM unconditionally released the antimonopoly approval of Nestlé’s acquisition over the Xiamen-based company Yinlu. Will it successfully pass the review on buying Hsu Fu Chi? In addition, how is the anti-monopoly review going on Volkswagon AG’s purchase of MAN SE? Thank you.

Shen Danyang: Nestle’s acquisition over Xiamen Yinlu Group is the acquisition of food and beverage equity stake. According to anti-monopoly law provisioned by the Ministry of Commerce, we have had investigation, including questionnaires, on its impact on industry competition, and based on Anti-monopoly Review Guideline on Operator’s Consentration, we have taken into acount the comments from relevant departments, industry associations and business. Based on the filed document and information from investigation, we have find that the aquisation would not curb competition after assessment and analysis of the impact on China’s food and beverage industry. Meanwhile, we should suggest that both sides come up with sound solution for the company’s future development and the Chinese brand. Therefore, the ministry made a decision of non-prohibition.

In addition, the ministry has also started review of Nestlé’s acquisition over Hsu Fu Chi and Volkswagen’s over MAN, and will investigate based on anti-monopoly law. Thank you.

People’s Daily: You have just introduced some cases of mergers and acquisitions. I would like to know the overall situation of mergers and acquisitions. From September 1, the regulation on M&A of domestic enterprises by foreign investors entered into force. Can you tell us the current status of M&As by foreign investors? In recent years, foreign enterprises’ mergers and acquisitions over Chinese private enterprises has accelerated, including many famous domestic brands. What’s your comment? Thank you.

Shen Danyang: Security review on M&A by foreign investors mainly includes the following areas: The influences of M&A on national security; stable operation of national economy; basic orders of society and key technology development capacity concerning national security. The key to security review is only restricted to M&As that have threatened the national security and a few M&As that have a potential threat to national security. The impomentation of security review does not set up new threshold nor does it change the licensing procedures for foreign investment.

In a trend of world economy integration and industrial specialization, cooperation and competition among Chinese and foreign enterprises as well as share participation and M&As are norms of market economy. China's utilization of foreign investment in the past is the “green investment”, which is to set up new factories. The proportion of M&A was relatively low, 3.1% last year. According to world investment report, cross-border merges and acquisitions took up 27% in international investment last year. There is a very large difference between those two numbers. Because of the increasing cost of raw material and labor, foreign investor’s M&A with Chinese enterprises became active just as our overseas M&A. And this trend will be strenthend. M&A will gradually become one of the main forms of utilizing foreign investment in China. From January to August, we acquired the project in the use of foreign capital reached $ 3.4 billion, and it was relatively a large increase compared with previous years.

It need be emphasized that we should not be too concerned about M&As on Chinese enterprices by foreign investors. Foreign-invested enterprises does not equal to foreign capital. In the existing foreign invested enterprises, about 30% investment came from China while more than 60% from Hong Kong, Macao and Taiwan, 40% from hundred of countries and regions, and part of this come from Chinese people living there and capital from private enterprises invested in free island. So, don’t worry too much about it. Thank you.

Phoenix Satellite TV: I have two questions. First is about cross-border direct investment in RMB. You have mentioned at the last press conference that it would be carried out in September. Since solicitation of opinion will end today, would you tell us the feedback from the public and when will it be carried out. My second question is in regard to cross-Strait relations. It is known that Bilateral Investment Agreement (BIA) has been under discussion. Will it be possible to sign that agreement? Thank you.

Shen Danyang: Concerning your first question on cross-border direct investment in RMB, MOFCOM has seeked the views of the public since August 22 and collected more than 20 comments and suggestions until now, mainly focusing on such issues as further definitive scope of legal RMB attained by outbound investment and domestic fields invested by cross-border investment in RMB. MOFCOM will seriously study those comments and suggestions to further perfect and modify the document in positive, steady and normative manner, making our greatest efforts to officially launch and implement such document as soon as possible.

Regarding your second question, after Economic Cooperation Framework Agreement (ECFA) came into force on September 12, 2010, both sides of the Straits launched a discusion on BIA. Through several rounds of negotiation, both sides have reached a consensus on most contents in BIA. At present, we still target on signing BIA at the seventh ARATS- SEF conference and will continue to positively put forward negotiation and discussion on the Agreement in the hope of reaching a consensus as soon as possible. Thank you.

Economic Daily: According to Financial Times of Britain, Italian government has been in contact with China Investment Corp. (CIC), hoping the latter to purchase a large quantity of Italian national debts, but Italian officials denied. I would like to know if the above-mentioned report was true. Will China purchase a large number of Italian national debts? Besides, Brazilian Finance Minister pointed out recently that the BRIC countries will discuss the possibility of assisting the E.U. countries, including collectively adding value of euro bonds. Will it be possible from your point of view? I’ve learnt from the new that South African Finance Minister said they may not increase their holdings of national debts. My second question is on reduction of luxury tax. It is reported that related departments and commissions have reached a common view on luxury tax, and a specific tax reducing plan will be launched at the end of this year at the earliest or at the beginning of next year. Would you elaborate on that issue? If it is true, please brief us on such plan; if not, how will MOFCOM deal with it? Thank you.

Shen Danyang: Thank you. It seems that there are more than two questions. I only can take the questions within the scope of our responsibility, but all of your three questions are not taken charge completely by MOFCOM. The first question is relevant to reduction of luxury tax, which has been explicated by us before. Besides, Customs Tariff Commission of the State Council is in charge of customs duty rate. I suggest you consult the Commission’s office. Thank you.

Besides, concerning the purchase of euro bonds, since MOFCOM is responsible for outward direct investment, we suggest you ask relevant departments for advice on such issues as debts and bonds .

That concludes the press conference today. Thank you.



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