On 25th June, MOFCOM spokesman Shen Danyang received a media interview on some hot issues relating to the economy and trade. The following is the transcript of the interview.

Q: On 20th June, the US International Trade Commission (ITC) initiated a “337 investigation” on the consumer electronic products of five well-known companies to determine whether these products violate the patents of relevant American companies. ZTE Corporation, a company from the Mainland China, is on the list again. What’s MOFCOM’s comment on this?

A: We have noticed the “337 investigation” initiated by the US ITC on 20th June on the consumer electronic products of five well-known companies including China’s ZTE Corporation as well as Japan’s Panasonic, Toshiba, etc. The relative departments of the Ministry of Commerce have made contacts with ZTE Corporation. ZTE said that they will actively respond to the investigation. We hope that the investigation would not turn out to be an excuse for trade protectionism and that the investigation and its results will be just and fair.

Recent years have seen noticeably increasing international intellectual property disputes and frictions facing China’s exports. To help companies improve the ability to respond accordingly and protect their rights and interests, the Ministry of Commerce has established a working mechanism on the 337 investigation. Under this mechanism, we work together with relevant chambers of commerce and associations to provide companies involved with advice, training and guidance, communicate with the investigating agencies in the US, and have strengthened case researches. All of these have produced positive results. Among the 90 already concluded cases where Chinese companies were listed as defendants between 2002 and the end of 2012, Chinese companies responded to 82 cases, of which 39 cases were settled, 10 were withdrawn by the petitioners and 13 were found of no infringement.

We notice that the protective measures taken by some countries have gone beyond relevant multilateral and bilateral agreements. The consequent trade frictions on intellectual property will become a new means of trade protectionism. It is the growing pains of China’s economy and industries and also the unavoidable and must-crossing barrier in the process of upgrading to “created in China” from “made in China”. The Ministry of Commerce pays high attention to dealing with such kinds of trade barriers and will continue to help and guide the involved companies to make their defenses. Meanwhile, we will also cooperate with relevant chambers of commerce and associations to help and guide companies to improve the risk prevention capability, become stronger and grow out of this difficult stage.

Q: It is reported that Ma Yun established a new company named “Rookie Network Technology” after he resigned as the CEO of Alibaba. This new company will cooperate with some major couriers in China to establish a super-large “China Smart Logistic Network”. This network is said to be able to provide the logistic services for more than RMB 30 billion online retail sales every day, with the assurance of delivery within 24 hours nationwide. What comments does the Ministry of Commerce have on it?

A: With the development of domestic production and distribution, especially the rise of online shopping, it’s become more and more important to have good logistic distribution with lower costs and higher efficiency.

The General Office of the State Council issued the Notice on the Comprehensive Working Plan for Reducing Distribution Costs and Improving Distribution Efficiency (GuoBanFa No. [2013]5) this year, which encourages the development of centralized distribution, joint distribution and night distribution in order to reduce distribution costs. Since last year, the Ministry of Commerce has been organizing urban joint distribution pilot programs to guide large and medium-sized cities to establish their distribution service systems and service platforms to reduce logistic costs, improve distribution efficiency, boost consumption and ensure people’s well-being. However, companies should play the most important part and the role of the market should be given a full play in both addressing the last-mile logistics challenge and improving the overall distribution efficiency.

Rookie Network deserves our recognition for its innovative model of providing integrated services for small and medium-sized enterprises by the use of network platform. We also notice the view held by some experts that the establishment of Rookie Network marks a new stage for the development of the “E-commerce plus Logistics” model, which will bring about deep changes to the industry’s development pattern. We welcome the exploration of new logistics models by enterprises, and hope that this new model will be able to benefit the enterprises, consumers, the e-commerce industry and the logistics industry, as well as the further development of production and consumption.

Q: It is reported that ASUSTek Computer Inc. has declared to halt their supply to 360buy because of the low price the latter offered during its June 18 sales. The price war among the e-commerce companies has further intensified the conflicts between retailers and suppliers. What are the comments of the Ministry of Commerce? The Rules on the Administration of Online Retailing has been in the making for a long time. When will it be issued? Besides, it is reported that State Administration of Taxation and the Ministry of Commerce are conducting researches on the specific measures for taxing the e-commerce industry and that a 5% tax can be expected to be levied on online stores this year. Could you please confirm?

A: The Ministry of Commerce has noticed relevant media reports. We are of the view that all sales activities of a company should be in strict compliance with laws and regulations, and be in line with a fair and justice market order. Promotions aside, companies should make great efforts to improve their management and service level, protect the lawful rights and interests of consumers and suppliers, and fulfill their social responsibilities. If the promotional pricing of a company violates laws or regulations, the competent authority will investigate timely and handle it according to law.

Online retailing is a new type of retailing that has been developing rapidly and its business models are being constantly innovated. Based on the principle of “regulate as it develops and for its development”, the Ministry of Commerce is making active efforts for the promulgation of the Rules on the Administration of Online Retailing. However, we do not yet have a timetable for its promulgation because we need to solicit comments from all parties and do a lot of researches and coordination. Our guiding principle in developing the Rules is to ensure the sound development of the e-commerce market on the one hand, and protect companies’ innovation vigor on the other hand, and to address problems, whenever possible, through market mechanism rather than by means of direct government intervention.

It is obligatory that each citizen and company pay taxes according to law. The tax law applies to both traditional companies and e-commerce ones. As for the details of taxing online stores, you need to ask the tax authorities in charge.

Q: Recently, the China-Japan-ROK FTA Seminar was held. Could you share with us the main issues discussed at the seminar? What was the consensus reached? How will it affect the second round of FTA negotiations among China, Japan and South Korea? Besides the China-Japan-ROK FTA, are there any other ongoing FTA negotiations at present? Where do these negotiations stand?

A: The China-Japan-ROK FTA Seminar was held in Weihai, Shandong Province last week. There were exchanges of views among the representatives from the governments, academias and industries of the above three countries regarding the significance of the cooperation among the three countries and of Asia-Pacific economic partnership, and trade in goods, trade in services and investment within the FTA.

It was agreed in full accord that as the top 3 economies in North-east Asia that are most closely connected in trade and production, China, Japan and ROK should endeavor to establish an FTA, and build it into the third largest economic area in the world. An FTA will lay a solid foundation for regional economic integration and enhanced cooperation among the three countries. The seminar has provided useful advices and references for the ongoing China-Japan-ROK FTA negotiation and offered a platform for the public and companies to know more about the China-Japan-ROK FTA.

The FTAs we are currently negotiating include China-ROK FTA (the sixth round of negotiations will be held in early July), China-Japan-ROK FTA (the second round will be held in late July), the Regional Comprehensive Economic Partnership Agreement (RCEP) (the negotiations will be in September), and China-GCC FTA as well as China-Australia FTA. The above negotiations are in steady progress.

Q: The US and the EU declared to formally launch FTA negotiations. What’s MOFCOM’s comment on this?

A: The EU and the US are two main economies in the world and important participants in the multilateral trading system. We hope that the relevant negotiations will be based on the principle of openness and transparency, and will not only benefit the economic development of both parties, but also help to advance the Doha round of trade negotiations and the trade liberalization process around the world.

Q: It is reported that recently, members of the United States Senate Finance Committee wrote to Henry Jacob, Treasury Secretary of the United States, expressing deep concerns over China’s Shuanghui Group’s acquisition of US’s Smithfield Foods Inc. The letter says that China bans pork imports from the US, and the US should take a full account of national security interests and strictly review the acquisition, especially its potential impacts on US food security. What is the comment of the Chinese side?

A: In China, companies are free to invest and acquire, which we view as normal market practices. The same is true of companies’ investment and acquisition abroad. Chinese government supports and encourages Chinese companies to engage in win-win cooperation on the basis of abiding by the laws of both China and the host country.

The Chinese market is open to pork from the US. To say that China bans pork imports from the US is against the facts. The US is now China’s largest source of pork imports and the total imports have been steadily rising. From 2009 to 2012, our pork imports from the US totaled 80,000 tons, 180,000 tons, 800,000 tons and 590,000 tons respectively. In the first quarter of this year, our pork imports from the US reached 120,000 tons.

What China bans is the use of Beta-adrenergic agonists. We require that imported meat should contain no Beta-adrenergic agonists. Meat imports have to pass relevant exams at the ports of entry before they can enter the Chinese market. Countries, including the US, exporting pork to China must abide by relevant Chinese quality and safety standards and regulations. The claim that China’s regulation on imported pork and Shuanghui’s acquisition of Smithfield Foods will affect American food security is wide of the mark. We hope that the US can handle this M&A in a fair and proper way.