On May 30, spokesman of the Ministry of Commerce Shen Danyang gave a joint interview to media on several hot issues concerning economy and trade, the contents of which are as follows:

Q: As President Xi Jinping is about to visit Trinidad and Tobago, Costa Rica and Mexico, how are the current economic and trade relations between China and Latin American countries as well as the three countries?

A: In recent years, China and Latin American countries embraced a stage of all-round and rapid development of the economic and trade relations, which have formed a new pattern of economic and trade relations of mutual reliance and common development by dint of continuous expansion of cooperation scale and areas and increase of converging and cohering interests. It has not only driven the development of their respective economies, but has also played an important role in promoting comprehensive and friendly cooperation between China and Latin American countries, truly realizing mutual benefits and win-win results. It is particularly delightful that this new pattern of economic and trade relations has stood the test of the financial crisis, and that its importance has also been verified in the crisis.

In the 1990s, the trade between China and Latin America only accounted for less than 3% of China’s total foreign trade volume, and the figure increased to 6.76% in 2012. According to the statistics of the United Nations Economic Commission for Latin America, the trade between China and Latin America accounted for 11.27% of the foreign trade volume in this region in 2012. Currently, China is the third largest trade partner of Latin America, next only to the United States and the Europe Union. According to the statistics of China Customs, the trade volume between China and Latin America in 2012 was USD 261.2 billion, going up by 8.2% year on year, China export volume and import volume of which were USD 135.2 billion and USD 126 billion, growing by 11.1% and 5.2% year on year respectively.

In the meantime, the economic cooperation between China and Latin America and the Caribbean has also seen great development. By the end of 2011, China’s non-financial direct investment stock in Latin America reached USD 54 billion; the amount of contracts signed for contracting projects in Latin America added up to USD 76.3 billion, realizing a turnover of USD 41.1 billion. The direct investment in 2012 amounted to USD 10.6 billion, accounting for 13.7% of China’s total foreign investment in the same category during the corresponding period.

Trinidad and Tobago is one of China’s most important economic and trade partners in the Caribbean, as well as the country in the Caribbean with the rapidest trade development with China in recent years. According to Chinese statistics, during the ten years from 2002 to 2011, the average annual growth of the bilateral trade volume was up to 33%. Both the investment cooperation and the economic and technical cooperation between enterprises of China and Trinidad and Tobago have achieved satisfactory results.

On April 8, 2010, China and Costa Rica signed the China-Costa Rica Free Trade Agreement which was the first package free trade agreement signed by China with a Central American country. The execution and implementation of the Free Trade Agreement provided all-round legal framework support for the economic and trade cooperation between the two countries, and laid a foundation for high-level cooperation and rapid development of the two countries. 90% of the two countries’ trade products will enjoy zero tariff in stages. At present, China is the second largest trade partner of Costa Rica, and Costa Rica is the ninth largest trade partner of China in Latin America. In 2012, the bilateral trade volume reached USD 6.17 billion, climbing by 30.5% year on year.

As a major economy in Latin America, Mexico is the second largest trade partner of China in Latin America, as well as the third largest contracting project market of China in Latin America. According to the statistics of Mexico, China is the second largest trade partner, the fourth largest export market and the second largest source of import of Mexico in the world. In recent years, the breadth, depth and speed of the economic and trade cooperation between China and Mexico have all surpassed those in any former period. According to Chinese statistics, the bilateral trade volume between China and Mexico in 2012 amounted to USD 36.7 billion. Except in 2012, the growth rate of Mexico’s export to China in recent years was generally higher than that of its import from China, and the amount of its exports to China in 2011 even exceeded its total exports to Japan, India and South Korea. Crude oil of Mexico export to China saw steady growth thereafter since the first export in 2010; the export of automobiles to China soared to almost 42,000 in 2012. By the end of 2012, the amount of contracts signed by China with Mexico with respect to contracting projects, labor service cooperation and design consultation added up to USD 3.48 billion, realizing a turnover of USD 3.65 billion.

Over the years, the bilateral investment activities between China and Mexico tended to be active. More and more Chinese enterprises have invested and developed in Mexico in such fields as manufacturing, mining and communications. Meanwhile, some Mexican enterprises such as the taco manufacturer GRUMA, the large-scale food enterprise BIMBO and the large industrial complex KUO have all recorded favorable results in Chinese market.

Due to steady economic development of China and Latin America, strong economic complementarity between both countries, great market potential and an increasingly high degree of opening currently, there is great potential for the cooperation between China and Latin America in the field of economy and trade in the upcoming period. Tomorrow, President Xi Jinping will commence his state visits to Trinidad and Tobago, Costa Rica and Mexico. We believe that Xi’s friendly visits to the three Latin American countries will strongly promote further development of the economic and trade relations among China and the three countries as well as the whole Latin America.

Q: Zhong Shan, China International Trade Representative of the Ministry of Commerce of PRC consulted with De Gucht, Commissioner for Trade of European Commission, on trade frictions such as PV products between China and Europe a few days ago. How did the consultation go? And what is the opinion of the Ministry of Commerce on the next development situation?

A: China has attached great importance to the trade fiction of PV products between China and Europe. A few days ago, Premier Li Keqiang expressed his grave concerns on such issue during his visit to Switzerland and Germany. Covering exports over USD 20 billion from Chinese enterprises, and employment of over 400,000 employees, this case is a trade friction case that involves China’s material interests. It is the duty of and reasonable for Chinese government to take measures to safeguard the interests of China, Chinese enterprises and the people.

China highly regards the economic and trade relations between China and Europe, and has been working hard with an intention to appropriately settle the dispute between both parties. As important trade partners of each other, it is common that China and Europe have frictions in some industries and products. The key is the way to deal with such frictions.

Therefore, with respect to the trade dispute of PV products between China and Europe, China has attached great importance. China always stands for solving the issue through consultation and negotiation and would like to offer best efforts. Chinese government and industry have both offered sufficient sincerity. On May 27 at local time, Zhong Shan, China International Trade Representative of the Ministry of Commerce of PRC consulted with De Gucht, Commissioner for Trade of European Commission, in Brussels and exchanged opinions on the trade frictions of PV products. Both parties expressed their willingness to settle the dispute through negotiation and consultation.

The current situation is that China has fully expressed the sincerity by saying what needs to be said and doing what needs to be done. Next, it all depends on Europe whether both parties can set for a successful negotiation to avoid the expansion and escalation of trade frictions. We sincerely hope that Europe may show its sincerity to solve issues like China and work with China to formulate a reasonable solution acceptable for both parties and to avoid the expansion and escalation of trade frictions.

Q: The prices of agricultural products have been slightly falling for five consecutive weeks. What are the reasons? May the interests of farmers be damaged due to extremely low prices of some products?

A: According to the monitoring of the Ministry of Commerce, the weighted average price of many commodities such as grains, oil, meat, eggs and vegetables has been falling slightly for five consecutive weeks. The following three major categories driving the prices cut of edible agricultural products recently:

First, vegetables. Prices of vegetables represented seasonal fall. Since middle April, along with the rise of temperature and increase of vegetable supplies, the prices of vegetables represented a seasonal fall. Last week (May 20 to 26, the same as below), the average wholesale prices of 18 vegetables in 36 small and medium sized cities around the country reduced by 5.2% compared with the previous week, and contracted accumulatively by 21.9% in the past five weeks.

Second, meat, poultry and eggs. Prices of meat, poultry and eggs decline to some extent. Due to the comparatively sufficient market supplies and bird flu in some places, the prices of pork, poultry and eggs shrank by different extents in the previous period.

Third, edible oil. Price of edible oil dipped slightly. Affected by price cut of internal soybean and sufficient supplies of domestic oil, price of edible oil tends to fall recently.

The prices cut of agricultural products is seemingly good for consumers and urban residents, but not for farmers, which may lead to radical changes of prices. Therefore, the Ministry of Commerce believes that it is better to overall balance demand and supply in the agricultural products market to the greatest extent, and keep the agricultural prices basically stable to avoid damaging the interests of farmers arising from violent price fluctuation.

Last week, the wholesale price of pork rose by 1.1% compared with the previous week, ending the trend of falling since middle February. One of the reasons is that the frozen pork stored under the organization of the country played its role and inspired the pork market. Besides, backed by gradually recovering household confidence due to phased achievements in the bird flu control, compared with the previous week, the wholesale price of eggs last week grew by 0.7% and that of stripped chicken climbed by 0.2%. The downturn trend for several consecutive weeks also came to an end.

We also notice the continuous slump of specific agricultural products such as garlic recently. With such situation, we will continue to enhance monitoring, forecasting and pre-warning and release relevant information on a timely basis to guide the production and consumption and ensure market stability.

Q: Foreign-funded retail enterprises have slowed down its expansion in China since last year, and even closed many stores. Analysts point out that this situation is mainly attributable to the rise of rental and labor cost and the impact from e-commerce. How does the Ministry of Commerce see this situation? How is the development of foreign enterprises in China recently?

A: There are three points concerning the development of foreign-funded retail enterprises in China.

The first to point out is that, the development of foreign-funded retail enterprises has played an active and beneficial role in China. Since opening and reform, especially entry in WTO, China’s national economy has maintained a sustainable, healthy and rapid development trend, providing a good environment for the development of retail industry. The scale of business entities retail market has been expanding. The development of foreign-funded retail enterprises has not only made up the insufficiency of investments in China’s retail industry, what is more important, but also improved the level of marketing, drove and promoted the development of domestic retail enterprises and enriched people’s material life by bringing advanced operation ideas, technology and management modes.

Secondly, at present, the overall operation of foreign-funded retail enterprises in China is normalized and under favorable operation conditions. In 2012, the number of newly-established foreign-funded enterprises around the country was 321 with actual utilization of foreign investment of USD 1.911 billion, going up by 5.46% year on year. The actual utilization of foreign investment in comprehensive retail industry was USD 938 million, increasing by 59.62% year on year.

Thirdly, along with the continuous expansion of domestic retail market scale, domestic and foreign invested retail enterprises have faced with the same fierce competitive environment, resulting to wind-up, close-down, merger of some enterprises recently, especially enterprises in such fields as retail industry of electric appliances and building materials. This is normal. After a rapid growth for some period, some foreign-funded retail enterprises move to the step of integration and adjustment and slow down their development. Nevertheless, there are also many successful cases in development of foreign-funded retail enterprises in China recently. Some enterprises increased the number of branch stores while enhanced the construction of logistics system and increased investments in after-sale service. This is also the result from market competition.

The Ministry of Commerce has earnestly fulfilled its commitment on opening of retail industry for foreign investment when entering WTO. Next, the Ministry of Commerce will continue to create a competitive environment for development and maintain a fair and just market order for competition to inspire the competitive vitality of various market entities, which will provide more quality services for consumers.

Q: Sanchez, Under Secretary for International Trade of United States Department of Commerce said during his visit to Japan that if China was able to assume the same high level of liberalization obligation as the members that joined TPP earlier, China was also welcomed to join in TPP. What comments does China have? And does China consider joining in TPP?

A: China advocates that every economy shall stick to the principles of opening, tolerance and transparency in the course of free trade zones construction; especially for economies with different levels of development, they should provide flexible choices for each economy on the way to integration.

China has always attached great importance to and been tracking the development of TPP negotiation, and constantly listened to opinions from all the departments and industries in China on TPP. We will analyze the pros and cons and feasibility to join in TPP based on equality and mutual benefits upon earnest research, and wish for exchange of information and materials of negotiation with TPP members.

Translated by Hu Xiaoying and Hou Zuowei