Dear friends from the media, Good morning! Welcome to the Press conference today. The Press Conference today is not only about the month, but also about the year of 2013. I’ m happy to introduce you related situations and answer the questions of your concern.

I. Commercial Performance in Domestic Market

In 2013, China’s consumer market has maintained a steady and rapid growth. According to the monitoring by MOFCOM, in January-December, the sales volume of 3,000 major retail enterprises increased by 8.9%, 0.6 percentage points higher than that of 2012.The main features of consumer market in the whole year are as follows:

1. Online shopping grew rapidly. Among the 3000 major retail enterprises monitored by MOFCOM, the sales by Online shopping grew by 31.9%, 21.6 23.6 and 24.4 percentage points higher than that of Department Store, Supermarket and Specialty Store respectively.

2. Consumption of Central Region saw a rapid growth. According to the monitoring of MOFCOM, sales of Central Region grew by 11.6%, 0.9 percentage points higher than that of 2012, and 2.8, 3.3, and 3.9 percentage points higher than that of Western Region, Eastern Region and Northeast Region respectively.

3. Consumption of household articles was steadily up. Among the 3000 major retail enterprises monitored by MOFCOM, sales of household appliances, furniture, materials for construction and decoration grew up respectively by 11.1%, 8.7% and 6.2%, 12.2, 5.3 and 1.2 percentage points higher than that of 2012.

4. Consumption of automobiles and for purpose of hedging grew rapidly. In the 3000 major enterprises monitored by MOFCOM, sales of gold, silver and jewelry was up by 22.3%, 10.9 percentage points higher than that of 2012. According to the statistics of China Automobile Industry Association, sales of passenger vehicles in 2013 grew by 15.7% year-on-year, 8.9 percentage points higher than that of the same period of 2012.

5. Consumer prices remained stable. Consumer price in 2013 was up by 2.6%, the same as that of 2012. Among that, consumer price in December was up by 2.5%, 0.5 percentage points lower than that of the last month. According to monitoring by MOFCOM, in 36 medium and large sized cities, price of agro-foodstuff remained stable. Among that, prices of beef, mutton and vegetablewere up by 25.4%, 15.7% and 9.9% respectively; prices of pork and soy-bean oil was down by 1.3% and 0.7% respectively.

II. Foreign Trade

According to Customs statistics, our total import and export in 2013 was 25.83 trillion Yuan (US$4.16 trillion), up by 7.6% year-on-year, exchange rate fluctuation excluded, and the annual total import and export surpassed US$ 4 trillion for the first time. Among that, exports amounted to13.72 trillion Yuan (US$2.21 trillion), up by 7.9%; and imports amounted to 12.11 trillion Yuan (US$1.95 trillion), up by 7.3%. Trade surplus wasUS$259.75 billion with an increase of 12.8%. In the month of December, the export was up by 4.3% and import up by 8.3%. The main features of foreign trade are as follows:

1. Trade with EU, U.S. and ASEAN was up. Among that, trade volume with EU and US was USD 559.06 billion and USD 521 billion, up by 2.1% and 7.5% respectively; Trade volume with Japan was USD 312.55 billion, down by 5.1%; trade with EU, US and Japan accounts for 33.5% of our total trade volume, 1.7 percentage points lower than that of 2012. In the same period, the import and export with emerging markets like ASEAN and South Africa was USD 443.61 billion and USD 65.15 billion, up by 10.9 and 8.6% respectively.

2. Foreign trade in Central and Western China grew rapidly. Foreign trade in Central Region was up by 13.6 and that in Western Region was up by 17.7%. Among that, the growth rates of Chongqing, Henan, Anhui, Yunnan, Shaanxi, Gansu and Guizhou were all above 15%, accounting for 5.7% of the total volume of import, 0.6 percentage points higher than 2012. The foreign trade in Eastern Region was up by 6.6%, and the total export and import of Guangdong, Jiangsu, Shanghai, Beijing, Zhejiang, Shandong and Fujian amounted to USD 3.29 trillion, accounting for 79% of the total volume of import and export, 0.9 percentage points lower than that of 2012.

3. Growth of conventional trade was steady and processing trade saw a slower growth. In 2013, import and export by general trade was US$2.2 trillion, up by 9.3%, accounting for 52.8% of the total volume of import and export, 0.8 percentage points higher than that of 2012; import and export by processing trade was US$1.36trillion, up by 1%, accounting for 32.6%, 2.2 percentage points lower than that of 2012.

4. Exports of mechanic and electronic products as well as the labor-intensive products maintained a steady growth. In 2013, our exports of mechanic and electronic products registered US$1.265538 trillion, up by 7.3% year on year, accounting for 57.3% of the total export. Export of high-tech products was US$660.34 billion, up by 9.8% year on year. Over the same period, total exports of textiles, clothing, bags & suitcase, footwear, toys, furniture and plastic products amounted to US$461.84 billion, up by 10.3%, accounting for 20.9% of the total export.

5. Imports of consumer goods and some energy and resource products enjoyed a rapid growth. In 2013, our import of consumer goods amounted to US$232.29 billion, up by 24.6%; import volume of crude oil, iron ore and coal reached 280 million tons, 820 million tons and 330 million tons, up by 4%, 10.2% and 13.4% respectively. Besides, the import of mechanic and electronic products and hi-tech products was US$840.08 billion and US$558.19 billion, up by 7.3% and 10.1% year on year respectively.

III. Foreign Investment

In 2013, our absorption of foreign investment picked up steadily. It has maintained a positive growth for 11 consecutive months since February and enjoyed a steady momentum. In the whole year, 22,773 foreign-invested enterprises were newly approved, down by 8.63% year on year; realized FDI reached US$117.586 billion, up by 5.25% year on year. In December, realized FDI amounted to US$12.08 billion, up by 3.3% year on year (excluding data of bank, securities and insurance). The main features of foreign investment in 2013 are as follows:

1. Utilized FDI in service sector accounted for more than half of the total for the first time. Utilized FDI in service sector registered US$61.451 billion, up by 14.15%, accounting for 52.3% of the national total and exceeding half of the total for the first time. Among that, social security and welfare, electrical machinery repair and culture and arts industry saw a relatively fast growth, up by 368.63%, 308.8% and 117.42% respectively. Utilized FDI in manufacturing sector was US$ 45.555 billion, down by 6.78% year-on-year, accounting for 38.7%, of which utilized FDI in crude oil processing, coking and nuclear fuel processing and aquatic product processing grew rapidly, up by 81.97% and 46.76% year on year respectively. Utilized FDI in agriculture, forestry, animal husbandry, and fishery amounted to US$1.8 billion, down by 12.71% year-on-year, accounting for 1.53% of the national total.

2. Investment by EU and US picked up rapidly. Utilized FDI from US was US$3.354 billion, up by 7.13% year on year; that from 28 EU countries reached US$7.214 billion, up by 18.07% year on year. Utilized FDI from ten countries/regions in Asia (Hong Kong, Macao, Taiwan, Japan, the Philippines, Thailand, Malaysia, Singapore, Indonesia and ROK) amounted to US$ 102.523 billion, up by 7.09% year on year; among that, utilized FDI from Hong Kong maintained a steady growth, up by 9.86% year on year; that from Singapore, US$7.327 billion, up by 12.06%; that from Thailand, US$483 million, up by 389.31%; that from Japan, US$ 7.064 billion, down by 4.28% year-on-year; and that from ROK, US$3.059 billion, down by 0.23% year on year, basically the same with that in 2012.

3. Utilized FDI in central and western China is above of the national average. Utilized FDI in central China was US$10.1 billion, up by 8.79% year on year; utilized FDI in western China was US$10.61 billion, up by 6.96% year on year and utilized FDI in eastern China was US$96.878 billion, up by 4.72% year on year. Utilized FDI in eastern China and the central and western China accounted for 82.4% and 17.6% of the national total respectively.

IV. China’s Investment and Economic Cooperation Overseas

Direct Investment Overseas. In 2013, Chinese investors made direct investment in 5,090 enterprises overseas in 156 countries and regions, and total direct investment in non-financial sectors (similarly hereinafter) reached US$90.17 billion, up by 16.8% year on year.

In 2013, Chinese investment in seven economies of Hong Kong, ASEAN, EU, Australia, US, Russia and Japan reached US$ 65.45 billion, taking up 72.6% of China’s total overseas direct investments over the same period of time, up by 9.1% year-on-year. Investment in Hong Kong, EU and Japan fell by 6%, 13.6% and 23.5% respectively; while investments in Russia,US,Australia and ASEAN reached US$ 4.08 billion, US$ 4.23 billion, US$ 3.94 billion and US$ 5.74 billion respectively, soared by 518.2%, 125%, 82.4% and 29.9% respectively.

In 2013, Chinese direct investment overseas by enterprises of local governments reached US$32.97 billion, up by 16.9% year-on-year, taking up 36.6% of the national total. Top 3 are Guangdong, Shandong and Jiangsu.

In terms of industrial breakdown, investment covers extensive fields,and almost 90% of the investment flew tocommercial service industry, mining industry, wholesale and retail industry, manufacturing industry, construction industry and transportation industry. Investment to commercial service industry, mining industry, wholesale and retail industry, manufacturing industry,construction industryand transportation industry reached US$ 29.45 billion, US$20.16 billion, US$ 13.67 billion, US$8.68 billionand US$6.53 billion respectively, accounting for 32.7%, 22.4%, 15.2%, 9.6%, 7.2% and 2.8% respectively. Investmentinconstruction industry andculture, sports and entertainment enjoyed the fastest growth, soared by 129.1% and 102.2% respectively, and investment in mining industry, wholesale and retail industry, manufacturing industry and real estate industry also saw a fast growth

Contracted projects overseas. In 2013, the turnover of China’scontracted projects overseas amounted to US$ 137.14 billion, up by 17.6% year-on-year, and value of newly-signed contracts was US$ 171.63 billion, up by 9.6% year-on-year. The projects each with a contract value above US$50 million were 685 (586 in the same period of 2012), with a total value of US$ 134.78 billion, accounting for 78.5% of the total value of newly-signed contracts. Among that, the projects each with a contract value above US$100 million were 392, 63 more than that of the same period of 2012.

By the end of 2013, the total contract value of China’s contracted projects overseas reached US$1.1698 trillion with theturnover of US$ 792.7 billion.

Labor service cooperation overseas. In 2013, labor service personneldispatched overseas reached 527 thousand, an increase of 15 thousand over the same period of 2012. Among that, laborservice personnelsent abroad for contracted projects were 271 thousand and that for labor cooperation projects were 256 thousand. By the end of 2013, all laborservice personnel dispatched overseas were 853 thousand, 3 thousand more than that of 2012. By the end of 2013, laborservice personneldispatched overseasfor labor service cooperation totaled 6,920 thousand.

V. Service Outsourcing

According to statistics by Department of Service Trade and Commercial Services of MOFCOM, in 2013, the contracts on service outsourcing totaled 167, 424, with the contract value of US$ 95.49 billion, up by 55.8% year-on-year; value of contract executed reached US$ 63.85 billion, up by 37.1% year-on-year. Of which the total value of contracts with clients overseas reached US$ 62.34 billion, up by 42.2%year-on-year; realized value amounted to US$ 45.41 billion, up by 35.0% year-on-year.

Realized value of contracts in KPO grew rapidly. In 2013, the value of contracts in information technology outsourcing(ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO) were US$ 31.17 billion, US$ 9.72 billion and US$ 21.45 billion respectively, up by36.8%, 25.8% and 60.8% respectively.

Major markets of service outsourcing were US, EU, Hong Kong and Japan. In 2013, the contract value in service outsourcing from US, EU, Hong Kong and Japan were US$ 11.75 billion, US$ 7.14 billion, US$ 5.40 billion and US$ 5.18 billion respectively, accounting for 25.9%, 15.7%, 11.9% and 11.4% respectively in the total contract value.

Jobsin service outsourcing steadily increased. In 2013, newly increased employees in service outsourcing industry reached 1, 065 thousand. By the end of 2013, enterprises in service outsourcing totaled 24,818, with 5,361 thousand employees, including 3,559 thousand undergraduates and graduates from college, accounting for 66.4% of the total.

That's all for the briefing. And now I will take your questions.

CCTV: We have noted the latest statistics on foreign trade. Despite the severe external environment in 2013 and all the uncertainties, we still managed to maintain steady growth. If all goes well, China will likely to overtake the United States and become the world’s largest trading nation. So, whilst trade volume keeps increasing, how do we make sure that trade structure also upgrades and improves simultaneously, and what are the progress and achievements we made in the past year in this regard? Second, the People’s Daily recently criticized the US direct selling giant Nu Skin for alleged involvement in pyramid selling. I am wondering if MOFCOM has noticed this. Do you have any plans or actions to be taken in the future to regulate the models of direct selling?

Shen Danyang: Statistics released by the Customs last week suggest that in 2013 China’s total import and export reached 4.16 trillion USD, up by 7.6% year on year. In breakdown, export grew by 7.9%, while import rose by 7.3%. It is fair to say that the 8% growth rate target set at the beginning of the year had been largely reached. Such an achievement did not come by easily. Having said that, what we care more about is whether or not the transformation, upgrading and structural optimization of foreign trade can continue to yield good results. It is heartening to learn that the results of 2013 in this respect were solid. Of course, in judging the effects of the transformation, upgrading and structural optimization of foreign trade, one cannot merely look at the data of 2013 alone. We need to make comparisons. If we compare data in 2013 with those in 2008, we will find very clearly the five areas in foreign trade structure where optimization and visible results had been achieved in the past five years.

First, the further optimization of the structure of international markets. The share of emerging markets in China’s export destinations rose from 53.8% to 61.2%, up by 7.4 percentage points.

Second, the further optimization of regional layout in China. The central and western regions’ share in China’s overall export rose from 10.3% to 15.5%, up by 5.2 percentage points. Take Chongqing for example. Last year, its import and export rose by 29.1% year on year, making it the fastest growing province in the central and western regions in foreign trade terms. Guangdong achieved very rapid transformation of its foreign trade structure, despite a drop in the share of its import and export. By the end of last year, it had owned over 500 province-wide well-known brands for its export products.

Third, the further optimization of the ownership structures of foreign trade. The share of private enterprises in export rose from 26.8% to 41.5%, marking a surge of 14.7 percentage points.

Fourth, the further optimization of the structure of export products. The share of high-tech products in total export increased from 29% to 29.9%, up by 0.9 percentage points. The value of the country’s electro-mechanical product imports and exports reached 2,105.6 billion USD, exceeding for the first time the 2 trillion USD mark.

Fifth, the further optimization of trade modes. The share of general trade rose from 48.2% to 52.8%, up by 4.6 percentage points. The share of processing trade decreased from 41.1% to 32.6%, down by 8.5 percentage points.

You also asked about Nu Skin. We have also noticed related reports. We are currently verifying the information in those reports. MOFCOM supports and protects the lawful operations of direct selling businesses, and supports relevant departments in their investigating and penalizing according to The Regulation on the Prohibition of Pyramid Selling and The Regulation on Direct Selling Administration those organizations, enterprises and individuals who are engaged in pyramid selling or illegal direct selling.

China Daily: Does MOFCOM have any specific plans for the reform on foreign investment administration and foreign investment market access? In addition, is there going to be further relaxation on the maximum amount of foreign equity contribution and foreign equity caps? Do you have a specific timetable for the liberalization of services? How are the China-US BIT negotiations going? When will the China-EU investment treaty negotiations be launched?

Shen Danyang: In 2014, MOFCOM will speed up the various tasks concerning the reform of the foreign investment administration system, which is required by The Decision of the 3rd Plenum of the 18th CPC Central Committee. MOFCOM should aim at improving the comprehensive strength and overall benefits of utilizing foreign investment, adhere to the deployment of The Decision of the 3rd Plenum, conscientiously study and learn from the experience in the China (Shanghai) Pilot Free Trade Zone, explore the adoption of the administrative model based on pre-establishment national treatment and negative listing, and establish a safe, efficient, open, transparent and internationally-compatible foreign investment regime.

The Decision of the 3rd Plenum has demanded greater expansion of market access, and clearly proposed to further open up ten services industries including finance, education and culture, as well as the general manufacturing sector. We will work together with relevant departments and industry associations to take into account the reform targets and areas of opening-up set out in The Decision of the 3rd Plenum and identify bottleneck issues that merit a priority, such as deliberations on relaxing the restrictions on the equity caps, business scope and registered capital concerning foreign investment.

As regards service sectors for which The Decision of the 3rd Plenum has demanded greater foreign investment market access, be it a sector to be “opened up orderly” or “opened up”, we believe it is necessary to study and clearly formulate concrete arrangements of the opening up process. As for sectors that are to be “opened up orderly”, we need to identify the bottlenecks that require a priority on the opening up agenda, and, bearing in mind the industry reform targets, strive to achieve early results in major areas and on major issues. As for sectors that are to be “opened up”, we need not only formulate timetables but also borrow the experience from the pilots and further resolve core issues relating to the opening up of these sectors, so that foreign investment can not only enter into China, but also take root and grow in China.

As for your question concerning the 11th round of the China-US BIT negotiations, they were concluded yesterday afternoon. I am in position to tell you three things about the talks. First, beginning this round the two sides have formally commenced negotiations on the text. Second, the talks have seen positive progress. Third, the two sides agreed to speed up the pace of negotiations and strive to work together to reach a deal at an early date.

The Beijing News: There have been some media reports previously suggesting that MOFCOM over the past ten days issued 14 trade alerts. Yet as far as MOFCOM’s statistics are concerned, 19 countries initiated 89 trade remedy investigations against China by 24 December, involving a trade value of less than 4 billion USD, which, compared to previous value, was a decrease. Could you talk about the exact situation of trade remedy investigations launched against China recently? What measures does MOFCOM take to defend the interests of the businesses? Second, MOFCOM published recently on its website the approval for the acquisition by La Dolce Vita Fine Dining of the equity of South Beauty. However, the founder of South Beauty, Zhang Lan, denied such a transaction. Do you have any comment on this?

Shen Danyang: The situation of trade fictions China encountered in 2013 did not ease off. Our website has published related statistics, which suggest that 19 countries and regions launched 92 trade remedy investigations against China last year, up by 17.9% from that of 2012. It was a rather rapid increase in terms of the volume of cases. In breakdown, there were 71 antidumping investigations, 14 countervailing investigations and 7 safeguard investigations. In addition, the US initiated 19 Section 337 investigations, one case more than that in 2012. Aside from the marked increase in the number of investigations launched by developed economies, emerging economies are initiating more cases against China. Of course, the final conclusion will be based on the statistics published by the WTO. Yet given what we already have, China has been the country subject to the largest number of antidumping investigations in the past 18 consecutive years, and the one subject to the largest number of countervailing investigations in the past eight consecutive years. Still China is the biggest victim of trade protectionism.

In recent years and since the beginning of the global financial crisis in particular, some countries, faced with slow economic recovery, have shown a sagging free trade spirit and a rising trend for trade protectionism. At the same time, due to the lack of balance in our export market portfolio and insufficient optimization of our market planning, despite all the progress we had made so far as I talked about earlier, our exports are encountering increasing competition with those from both developed and developing countries. Such an increasing competition may easily lead to trade frictions.

In a nutshell, trade friction is a phenomenon that would accompany China's rising to become the world’s second largest economy and largest exporter. In this lies some element of inevitability, persistence and complexity, meaning that such a phenomenon is unlikely to be overturned in a short run. We have to take this seriously while treating it as a normal occurrence. To defend the interests of the Chinese industries, we have done a lot in the past, and have seen real outcomes. As you all know, our work is mainly twofold: On the one hand, we respond to foreign trade protectionist actions; and on the other hand, we protect our own industries. When confronting trade frictions, we effectively dealt with last year several cases that involved large sums of money and had a major influence, such as the photovoltaic friction between China and the EU, and hence protected the market share of exporting enterprises. We have reinforced the early warning mechanism for trade frictions, and made markedly progress in public information service and the dissemination of trade remedy-related knowledge. We have also defended the interests of Chinese businesses through properly using the dispute settlement mechanism of the WTO. Last year, we won satisfactory results on many dispute cases. In addition, we have not only given play to the inter-governmental trade remedy consultation mechanisms with major trading partners through having dialogue and consultation to manage and control differences, but also endeavored to safeguard a stable and predictable trading environment with developing countries. We have intensified legal guidance for businesses, supported them in using the law to defend their own rights, and supported relevant industry associations to engage in exchanges with foreign peers.

When it comes to unfair competition from foreign imports, we have launched trade remedy investigations and safeguarded industry security as well as the legitimate rights and interests of the businesses. Last year, we initiated 11 antidumping investigations against six kinds of foreign imports, and launched one countervailing investigation against one imported product. At present, China's legal system for trade remedy is already quite complete, while investigative capacity and quality are also on the rise. Through initiating cases and conducting investigations according to law, we have timely stemmed the import of products that compete unfairly in the market, and contributed to industry security and national economic security.

On the other issue you have mentioned, the Department of Anti-monopoly of MOFCOM received in September 2013 submissions from La Dolce Vita Fine Dining Group Holdings Limited for the anti-monopoly review on the concentration of undertakings concerning its acquisition of South Beauty's equity through a Special Purpose Vehicle subsidiary. Given that this transaction concerns the concentration of undertakings provided for in Article 20 of the Anti-monopoly Law, and reaches the threshold for submission prescribed by the State Council, MOFCOM's anti-monopoly department, having received complete submissions from the parties concerned, launched a review on the "concentration of undertakings" according to the law. According to the review, the "concentration" would not result in the exclusion or restriction of competition. MOFCOM therefore approved on 14 November 2013 this transaction on an unconditional basis.

International Business Daily: We have noted that people have different views about the outlook of foreign trade in 2014. What does MOFCOM think about the prospect of this year’s foreign trade? Is there going to be a turnaround? What is the projected growth rate target?

Shen Danyang: We believe the foreign trade outlook for 2014 will be rather grim and complex. Overall, world economy has been recovering and external demand improving, making it possible for export to continue with the upbeat momentum. As the domestic macro economy continues to improve, reform and innovation continue to unleash new dynamism, and the internal drive for growth builds up effectively, the demand for import will continue to grow. Therefore, as far as the overall trend is concerned, we are cautiously optimistic about this year's foreign trade outlook.
However, due to high costs, capital shortage and increasing competition, coupled with seasonal factors and a relative large base volume during the same period last year, it is forecast that the import and export data for Q1 may still be fluctuating.

A survey with over 1,900 key foreign trade enterprises that MOFCOM conducted not long ago also revealed that there had been some recovery in the volume of orders placed with exporting enterprises recently, together with a return of export confidence, particular a sizeable rebound in export orders from the United States. In December 2013, 32.1% of the enterprises surveyed reported an increase in the volume of orders they received compared to that of the previous month. It was the first time since last September that the percentage went above 30%, up by 4.4 percentage points from the month before. 24% of the enterprises reported a decrease in the volume of orders, down by 3 percentage points from the month before. The improvement in the volume of orders drove up exporters' confidence to 102.9, up by 2.9 percentage points from the previous month, getting back again over the tipping point. This shows that enterprises are cautiously optimistic about their export outlook.

28.7% of the enterprises saw an increase in the volume of orders from the US, up by 6.7 percentage points from the previous month and 2.3 percentage points higher than the increase in orders on the whole. 24.5% and 17.4% of the enterprises saw their orders from the EU and Japan rise respectively, up by 0.2 and 1.2 percentage points each from the previous month. 19.5% and 15.9% of the enterprises saw their orders from the ASEAN and Russia rise respectively, both down by 0.4 percentage points from the previous month.

These statistics illustrate that despite the grim outlook, the overall judgment is of cautious optimism. Of course, we need to heed more to the problems and difficulties, study to find solutions in a timely fashion, and guide the enterprises to find better and more ways out. Based on what was learned from them, the following three issues need to be tackled if this year's foreign trade were to grow steadily (I often called them "the three mountains" to surmount).

First, despite the rebound in the world economy, the recovery momentum is still not solid. So far as the survey with key enterprises has revealed, in the fourth quarter of 2013, as many as 77.9% of the enterprises surveyed believed that a weak external demand had affected export, which was 0.4 percentage points lower from the third quarter and 4.3 percentage points lower from the same quarter in the year before.

Second, domestic factor costs are rising, making it particularly difficult for small and medium-sized enterprises to export. Even if only 54% of the key enterprises surveyed reported that rising costs had affected their export, which was 0.5 percentage points lower from the third quarter and 1.7 percentage points lower from the same quarter in the year before, it was still more than a half of the total.

Third, competition in the international market is becoming more heated, with industries and orders rapidly shifting abroad. As developed economies encourage industry re-shoring and emphasize more on expanding export, while ASEAN and other emerging markets and developing countries accelerate the development of export-oriented industries based on cost advantages, it becomes increasing clear that orders are shifting abroad. In our survey, 28.6% of the key enterprises believed that increased competition in the international market had affected export.
Under such circumstances, predicting this year's foreign trade outlook is a tough call.
Generally, it is believed that the growth rate of foreign trade this year is unlikely to surpass last year's level.

Phoenix Satellite TV: We found that after the Customs data were released, many in the press said that China had overtaken the United States to become the largest trading nation in the world. What is MOFCOM's comment about this? We have heard a lot of discussions recently about it, that many believe the data were bloated because some local businesses faked the statistics to profit in foreign exchange arbitrage and some local governments did so to make their achievement list look better. What do you think of this?

Shen Danyang: I have already told you the statistics. According to the data from the Chinese Customs, China's total import and export in goods in 2013 was valued at 4.16 trillion USD. That of the US has not yet been published. Based on the statistics released by the US Department of Commerce for the first 11 months of 2013, US import and export in goods totaled at 3.59 trillion USD. Using these data, some experts and media in China deduced that the value of trade in goods of China would exceed that of the US in 2013, and concluded that China would overtake the US to become the top trader in the world. Having done some calculation on its own, MOFCOM also believes that this is possible. However, considering that the US uses different statistical criteria, the final data will still have to be adjusted using a single set of rules, and a conclusion is still too early to be drawn.

US statistics on the import and export of goods are calculated on the basis three different statistical criteria. First, on the international balance of payment; Second, on import and export data at the US Customs, using the FOB price as the basis for both import and export; Third, on data using FOB price as a basis for export, and CIF price as a basis for import. Of the three, only the third approach shares a basis for comparison with the statistical criterion the WTO adopts with its published data, and is comparable to China's approach to calculating its import and export data.

Early last year, some media believed that China would overtake the US to become the largest trading country in 2012. It turned out that according to WTO statistics China's foreign trade that year was 15 billion USD less than that of the US. In 2013, the rankings for global trade in goods will still be based on WTO statistics. Regardless of the final rankings, it was a already hard-won achievement that China, against all the uncertainties and instability in the global economy, and a lackluster world market, managed to break the 4 trillion USD mark for the first time in history and registered a 7.6% year-on-year trade growth to a record of 4.16 trillion USD. In this way China has taken an increased share in global market.

China's foreign trade has not only provided important support for domestic growth, created jobs and contributed to adjusting the economic structure and to social development, but also created enormous job and investment opportunities for its global trading partners thanks to the import of nearly 2 trillion USD worth of goods in the year. As the Trade Report 2013 recently published by the WTO suggests, China has become a major trading partner for countries across the world. Of the 159 members of the WTO, China is among the Top 3 source of imports for 107 members, and a Top 3 export market for 42 members. In addition, China is also the largest export market for 48 least developed countries.

Of course, we are acutely aware that even if China is already a major trading country in terms of trade volume, it is still facing the problem of being only a large, rather than strong, trading nation. For instance, China's export industries are still at the lower end of the global value chain. Its products have low technology content and value added. The overall quality of China's foreign trade still needs to improve. In addition, China is facing specific difficulties such as rising factor costs, the appreciation of the RMB and the shifting of orders to foreign countries. China still has a long way to go if it were to transform from a large trading nation into a strong trading power. It is going to take China a lot of time and effort to achieve that. Therefore, when it comes to foreign trade, China will continue to transform the growth model, adjust the structure, actively cultivate new competitive edge in foreign trade, promote the balanced and coordinated development of foreign trade, and intensify pragmatic cooperation with trading partners to realize mutual benefits and win-win outcomes. We are fully confident that China's foreign trade will grow larger and stronger.

As for the other question you raised, those coming from the Chinese Customs shall count when it comes to statistics. Any questioning about the accuracy of China's foreign trade data shall be based on facts. Thank you.

Financial News of China.org.cn: According to statistics from the China Foreign Exchange Trade Center, the middle exchange rate of RMB to the US dollar on the 14th of January reached 6.0930, hitting a new high since the currency reform in 2005. This has put new pressure on exporting businesses. What stimulus measures will MOFCOM take to promote import and export in 2014 in response to the new high in exchange rate?

Shen Danyang: We have made repeated statement in general on the impact of the exchange rate on foreign trade. MOFCOM will explore different ways to help businesses cope with the difficulties caused by a more expensive yuan.

Market News International: In the context of increasingly close commercial ties, China and the US reached agreement on a large number of topics at the 24th JCCT meeting. How will the business relations be like in 2014 and what direction will they take going forward?

Shen Danyang: A question on China-US economic relations. Indeed, the two countries have forged increasingly close commercial ties in recent year. Our trade and economic cooperation keeps expanding and entering into new areas and our interests are increasingly intertwined. The commercial relations have become the ballast and propeller of the China-US relations. As you know, bilateral trade in goods reached a record 521 billion US dollars in 2013. By the end of 2013, two-way investment had exceeded 100 billion US dollars in cumulative terms. The mutually beneficial cooperation has brought tangible benefits to our people and injected impetus to our economic development and recovery of the world economy. The 24th JCCT meeting was successfully concluded in Beijing recently, during which the two sides reached agreement on a large number of economic and trade issues of concern to the two sides. Positive progress was also made on some long outstanding issues. This is a concrete action to implement the agreement reached by our presidents to build a new model of major-country relations and to bring our cooperation on trade and investment to a new level.

China and the US are at different levels of development. As our trade and economic cooperation rapidly expands, it is inevitable to have some differences and even frictions. But we maintain the view that both sides should look at these issues objectively and avoid politicizing economic issues. In the new year, I am generally optimistic despite some irritants which are bound to occur. This is primarily because the mutually beneficial nature of our trade ties will not change, that the common interest base will not change and the desire of our business communities for more practical cooperation will not change. In particular, we will celebrate the 35th anniversary of the establishment of diplomatic ties this year, and there will be many more development opportunities in our business relations. There is no reason that we shouldn’t allow ourselves to be a little more optimistic.

CCTV Business News: We saw inward FDI grow by a small margin last year. We are very interested in FDI inflow this year. What is your general assessment on FDI use this year? Thank you.

Shen Danyang: According to the Global Investment Trends Monitor released by UNCTAD last October, it is estimated that the global cross border investment for 2013 was only close to level of 2012 and there was even a decline in global M&A, making it the slowest growing year since 2010. In contrast, China’s inward FDI grew by 5.25% in 2013, and outward investment grew by 16.8%. Both are better than the global average.

On outward investment, I agree with the widely held view that fast growth will continue in 2014. We are equally confident about our use of foreign investment and believe that it will continue to see steady growth in 2014 based on the following four analyses.

First, international investment is expected to recover. According to UNCTAD forecasts, global direct investment will remain stable and it is estimated that FDI flow will reach 1.6 trillion US dollars this year.

Second, various reforms initiated by the new government are starting to show effects. This will help attract FDI. These reform measures will give impetus to economic restructuring, boost effective domestic demand, bring the benefits of institutional reform to the real economy, expand opening up and improve the investment environment.

Third, investors’ confidence in China is still pretty strong. According to UNCTAD survey, China remains the top investment destination for 2014. The surveys conducted by the EU Chamber of Commerce and the US Chamber of Commerce in China both indicate that most enterprises believe China’s strategic importance to their businesses has grown and they plan to expand their business in China in the coming years.

Forth, China still has comprehensive advantages in attracting foreign investment. China has the institutional advantage of a stable society, the market advantage of huge domestic demand, growing competitiveness in human resources, well developed supporting industries and sound infrastructure. The accelerating advances of industrialization, IT application and urbanization will also provide broad space for investors.

This being said, we are also aware that amidst the backdrop of a sluggish world economy and many external uncertainties, we still face significant pressure on maintaining steady economic development and attracting more foreign investment. So going forward, we will continue to adopt fine-tuned opening up measures to stabilize FDI use, improve the structure and enhance the quality. In particular, we will coordinate relevant departments to study, formulate and enact specific opening up policies.

AFP: We see that China’s outward FDI was very close to its inward FDI in 2013. Is it possible that in 2014 outward FDI will surpass FDI inflow for the first time? If this becomes true, how does MOFCOM think of its impact on China’s role and position in the international market?

Shen Danyang: In recent years, China’s outward investment has maintained high-speed growth. The growth rate on outward investment I just shared with you is only on non-financial direct investment, which reached 90.17 billion US dollars last year. FDI inflow over the same period was 117.586 US dollars, just 20 billion dollars less than the former. Given this trend, China’s outward investment is likely to surpass inward investment if not this year, then next year or the year after that. China’s balanced growth in outward and inward FDI is good news for the world economy. It is also a boost to China’s international commercial cooperation and economic cooperation. MOFCOM will continue to promote balanced development of “bringing in” and “going global” in line with the Resolution of the Third Plenum of 18th CPC Central Committee.

Nanfang Daily: In 2013, the use of foreign investment in the manufacturing sector fell by 6.78%. What impact will it have on import and export in the future? Another related figure is that the use of foreign investment in the services sector accounted for more than 50% of total inward FDI for the first time. How do you look at these two changes? Second, the total import and export of Guangdong Province exceeded 1 trillion US dollars this year just like the global total. What are the areas on the foreign trade front that the province could work on in the future?

Shen Danyang: MOFCOM will work with other relevant departments to improve the quality and structure of foreign investment. The services sector accounted for over 50% in foreign investment use for the first time in 2013. This is the result of our persistent efforts and is a concrete example of improved quality and structure of foreign investment use. This is positive development.

While the overall growth rate of FDI and the proportion taken up the services sector continue to rise, we should also pay attention to sustained growth in other areas, such as manufacturing and agriculture. There is no contradiction between the two. We will continue to increase the amount and efficiency of FDI use in the services sector and give encouragement and support to FDI use in manufacturing, agriculture and other sectors.

I would like to congratulate Guangdong Province on its crossing the 1 trillion USD mark in import and export. I think you should put the question of how the province will develop its foreign trade to the provincial government and provincial commerce department. I believe they have done their homework and thinking on that.

Shen Danyang: This concludes the press conference today. Thank you.