Dear friends from the media, good morning! Welcome to today's press conference. First I will brief you about China’s commercial performance in the first quarter of 2014, and take the questions of your concern.

I. Commercial Performance in Domestic Market

In the first quarter, the domestic consumer market enjoyed stable growth and price, realizing a good and steady start. According to the National Bureau of Statistics, in January-March, the retail sales of consumer goods were 6.2081 trillion yuan, up 12% year on year, 0.4 percentage points slower than that of the same period of last year, and an actual growth of 10.9% in real terms, 0.1 percentage points higher than that of the same period of last year. The main features of the consumer market are as follows:

1. Information and online consumption grew rapidly. The online retail sales of enterprises above designated size went up 51.7% year-on-year; the sales of telecommunications equipment of enterprises above designated size rose 14.7%, and 2.6 percentage points higher than that of the same period of last year. Among the key retail enterprises monitored by MOFCOM, the sales of telecommunications equipment accelerated, with growth rate 0.8 percentage points higher than that of the same period last year, among which, the sales of 3G mobile phones grew 27%.

2. Catering consumption picked up. In the first quarter, the revenue of catering was up 9.8% year on year, 1.3 percentage points higher than that of the same period of last year. Among which, catering enterprises above designated size stepped up their transformation to a popular style, and gained a positive revenue growth of 1%, 3.6 percentage points higher than that of the same period of last year. In March, the revenue of catering enterprises above designated size increased 4.2%, 4.7 percentage points higher than that of January-February.

3. Consumption of automobile and entertainment grew. According to the National Bureau of Statistics, automobile sales of enterprises above designated size was up 12.3% year-on-year, 5.9 percentage points higher than that of the same period of last year. Related statistics showed that the film box office earnings nationwide in the first quarter reached 6.79 billion yuan, up 29.3% year-on-year.

4. Consumption of living and commodities as a store of value slowed down. Affected by factors including slackened housing sales and a high base last year, the consumption of living and value-storing goods slowed down. Among items above designated size, the sales of household appliances and furniture slowed by 7.5 and 8.2 percentage points respectively, while the sales of gold, silver and jewelry went up 4.7%, a sharp decrease of 13 percentage points. Among the 5000 major retail enterprises monitored by MOFCOM, the sales of household appliances and gold, silver and jewelry was up 3.4% and 7.6% respectively, 9.3 and 7 percentage points slower than that of the same period of last year respectively.

5. Sales of medium and large circulation enterprises were slow and steady. The sales of 5000 major retail enterprises monitored by MOFCOM went up 5.7%, 2.3 percentage points slower than that of the same period of last year. It witnessed a pick-up in March, up 6.6% year on year, and 1.2 percentage points higher than that of January-February.

6. Consumer prices remained stable. In the first quarter, CPI was up 2.3%, 0.1 percentage point lower than that of the same period of last year. According to MOFCOM, in 36 medium and large cities, the prices of agro-foodstuff went up 1.3% year on year in March. Among that, the prices of pork and soy-bean oil went down respectively by 13.9% and 5.1%; The prices of vegetable, milk, beef and mutton rose the most by 14.5%, 9.8%, 7.7% and 8% respectively.

II. Foreign Trade

According to Customs figures, China’s total import and export in the first quarter of 2014 reached 5.9 trillion yuan, down 3.7% year on year (the same below). Export was 3 trillion yuan, a decrease of 6.1%, and import 2.9 trillion yuan, down 1.2%. Trade surplus was 102.8 billion yuan, a sharp decrease of 60.9%.

In terms U.S. dollar, total import and export stood at US$ 965.88 billion in the first quarter, down 1%.
Export was US$ 491.31 billion, down 3.4%, and import US$ 474.57 billion, up 1.6%. Trade surplus was US$ 16.74 billion, a decrease of 59.7%. The main features of foreign trade in the first quarter are as follows:

1. Trade with EU, the U.S., Japan and ASEAN maintained good momentum. China’s trade with major trade partners in the first quarter, such as EU, the U.S., Japan and ASEAN rose 6.3%, 0.9%, 2.6% and 2% year on year respectively. In the same period, trade between the Chinese mainland and Hong Kong decreased 33.3%.

2. Import and export for eastern China decreased, and export from central and western China grew rapidly. In the first quarter, the export and import of 11 provinces and municipalities in eastern China was 5,049.5 billion yuan, a decrease of 6.3%, accounting for 85.6% of the national total, and 2.3 percentage points lower than the figure in the same period of last year. Import and export for central and western China went up 0.6% and 30.8% respectively, accounting for 6.6% and 7.8% of the national total respectively. In the same period, in terms of U.S. dollar, 14 provincial regions saw their import and export grew at double-digit rates, including Tianjin (10%), Inner Mongolia (10.6%), Jiangxi (17.7), Shandong (10.8%), Hubei (11.1%), Guangxi (28.3%), Hainan (12.3%), Sichuan (14.7%), Chongqing (87.5%), Yunnan (30.4%), Shaanxi (92.4%), Gansu (36.4%), Qinghai(26.4%) and Ningxia (104.5%). In terms of export, the growth rates of Sichuan, Chongqing, Yunnan, Jiangxi and Guangxi maintained high levels, up 14.8%, 61.4%, 37.6%, 13.8% and 35.9% respectively.

3. Proportion of general trade increased and processing trade went down. In the first quarter, the import and export of general trade was 3.26 trillion yuan, up 6.4%, accounting for 55.2% of the national total in the same period, 5.3 percentage points higher the figure in the same period of last year. In the same period, the import and export of processing trade was 1.87 trillion yuan, a decrease of 8%, accounting for 31.6% of the national total, and 1.5 percentage points slower than the comparable figure of last year.

4. Decrease of export for traditional labor-intensive products was lower than that for the total export, and some competitive products with traditional advantages remained a good momentum. In the first quarter, the export of mechanical and electronic products was 1.71 trillion yuan, down 8.8% , accounting for 56.9% of the total export. In the same period, the export of textiles, clothing, bags & suitcases, footwear, toys, furniture and plastic products was 593.18 trillion yuan, down 2.7%. Major export products saw double-digit growth rates, including color television sets (29.4%), electro motors and electric generators (10.8%), lamps and lanterns (25.5%), steel (17.7%), toys (11.1%), ceramic products (10%) and chemical fertilizer (102.2%).

5. Import of major bulk commodities increased while their prices decreased. At the end of the first quarter, the import of copper not forged, soybean, copper ore, iron ore, crude oil and coal went up 37.8%, 33.5%, 23.5%, 19.4%, 8.3% and 5.1% respectively, while their prices went down 11.2%, 10.1%, 8.9%, 8.0%, 4.8% and 14.2% respectively. Besides, the import of mechanical and electrical products was 1,149.03 billion yuan, down 8.2%.

III. Foreign Investment in China

In the first quarter of 2014, a total of 4,787 foreign-funded enterprises were approved, down 0.73% year on year; and actually utilized FDI reached US$ 31.549 billion (equivalent to RMB 194.31 billion), up 5.5% year on year (excluding data of banking, securities and insurance). Utilized foreign capital in March was US$ 12.239 billion (equivalent to RMB 75.253 billion), down 1.47% year on year. The main features of foreign investment in the first quarter are as follows:

1. Utilized FDI in service sector maintained a growth, and that in agriculture, forestry, animal husbandry and fishery saw a fast growth. In the first quarter of 2014, utilized FDI in service sector registered US$ 17.392 billion, up 20.55% year on year, accounting for 55.13% of the national total; of which utilized FDI in technical service industry and IT application rose 41.02% and 40.48% respectively. Utilized FDI in agriculture, forestry, animal husbandry and fishery amounted to US$ 432 million, up 32.19% year on year, accounting for 1.37% of the national total. Utilized FDI in manufacturing was US$ 11.635 billion, down 11.69% year on year, accounting for 36.88% of the national total, of which utilized FDI in electronic equipment manufacturing including telecommunications equipment, computers and general equipment manufacturing rose by 16.55% and 0.4% respectively.

2. Investment from major Asian countries and regions maintained a steady growth. In the first quarter of 2014, utilized FDI from ASEAN amounted to US$ 1.966 billion, up 7.84% year on year. Utilized FDI from Hong Kong reached US$ 21.605 billion, up 11.29% year on year; and that from ROK, US$ 1.625 billion, up 162.13% year on year. Utilized FDI from Japan, the U.S. and 28 EU countries amounted to US$ 1.209 billion, US$ 1.039 billion and US$ 1.550 billion respectively, down 47.18%, 1.91% and 24.52% year on year respectively.

3. Utilized FDI in central and western China enjoyed a rapid growth, accounting for a higher proportion of the national total. In the first quarter of 2014, utilized FDI in eastern China was US$ 25.07 billion, up 0.11% year on year; utilized FDI in central China was US$ 3.61 billion, up 44.51% year on year, and utilized FDI in western China was US$ 2.87 billion, up 21.42% year on year. Utilized FDI in central China and western China accounted for 20.5% of the national total.

IV. China’s Investment and Economic Cooperation Overseas

Direct investment overseas. In the first quarter of 2014, Chinese investors made direct investment in 1,875 businesses overseas in 137 countries and regions. Total direct investment in non-financial sectors (similarly hereinafter) reached US$ 19.9 billion (equivalent to RMB 121.7 billion), down 16.5% year on year. As of the end of March 2014, China’s non-financial direct investment overseas totaled US$ 545.6 billion (equivalent to RMB 3,338 billion).

In the first quarter of 2014, Chinese mainland’s investment in seven economies, namely Hong Kong, ASEAN, EU, Australia, the U.S., Russia and Japan, reached US$ 12.63 billion, taking up 63.5% of total direct investment overseas during the same period. Investment in Hong Kong, ASEAN and EU fell by 46.9%, 8.1% and 7% respectively. investment in the U.S. reached US$ 1.07 billion, up 105.2%, with the proportion increasing 3.2 percentage points. Investment in Australia was US$ 980 million, maintaining a rapid growth of 24.7%. Investment in Russia and Japan soared 268.8% and 204% respectively due to the relatively low base from the same period of 2013.

In the first quarter of 2014, direct investment overseas by China’s local enterprises reached US$ 9.78 billion, up 73.5% year on year, taking up 49.2% of the national total, with the proportion increasing 25.5 percentage points compared with that of 2013. Beijing, Guangdong, Shandong, Jiangsu and Zhejiang were among the leading regions in terms of investment overseas.

Contracted projects overseas. In the first quarter of 2014, the turnover of China’s contracted projects overseas amounted to US$ 27.01 billion (equivalent to RMB 165.2 billion), up 7.2% year on year. The value of newly-signed contracts was US$ 35.15 billion (equivalent to RMB 215 billion), down 12.4% year on year. The projects each with a contract value of over US$ 50 million were 142 (171 in the same period of 2013), with a total contract value of US$ 27.62 billion, taking up 78.6% of the total value of newly-signed contracts. The projects each with a contract value of US$ 100 million or more were 77, 20 less than that in the same period of last year.

At the end of March, the accumulated value of China’s contracted projects overseas reached US$ 1. 2 trillion, and the turnover was US$ 819.8 billion.

Labor service cooperation overseas. In the first quarter of 2014, labor service personnel dispatched overseas reached 113,000, an increase of 18,000 over the same period of 2013. Labor service personnel sent abroad for contracted projects were 52,000, and those for labor cooperation projects were 61,000. By the end of March 2014, all labor service personnel dispatched overseas were 892,000, 69,000 more than that at the end of March 2013. By the end of March 2014, accumulated labor service personnel dispatched overseas for labor service cooperation totaled 7.03 million.

Trade and economic cooperation zones overseas. In the first quarter of 2014, new investment made by 16 businesses in trade and economic cooperation zones overseas totaled US$ 210 million. Their combined output value was US$ 1.13 billion, and the taxes paid to the host countries reached US$ 58.12 million.

V. Service Outsourcing

According to statistics from the Department of Service Trade and Commercial Services of MOFCOM, in the first quarter of 2014, the contracts on service outsourcing totaled 36,421, with combined contract value of USD24.57 billion, an increase of 55.9% year on year; the value of contracts executed amounted to USD16.47 billion, up 40.6% year on year. The total value of contracts with clients overseas reached USD16.14 billion, up 43.1% year on year; the value of contracts realized amounted to USD11.21 billion, up 37.7% year on year.

Major markets of service outsourcing were the U.S., EU, China’s Hong Kong, and Japan. In the first quarter of 2014, the executed contract value in service outsourcing from the U.S., EU, Hong Kong and Japan was USD2.79 billion, USD1.62 billion, USD1.51 billion and USD1.15 billion respectively, accounting for 24.9%, 14.4%, 13.4% and 10.3% respectively among the total value of contracts.

Service demonstration cities’ cluster role stood out. In the first quarter of 2014, the contract value of offshore service outsourcing in 21 service outsourcing demonstration cities totaled USD14.9 billion, an increase of 45.3% year on year; the executed contract value reached USD10.24 billion, up 39.8% year on year. Offshore contract value and executed contract value of the 21 cities accounted for 92.3% and 91.4% of the national total respectively. The demonstration cities’ cluster and leading role stood out.

Jobs in service outsourcing steadily increased. In the first quarter of 2014, newly increased employees in the service outsourcing sector reached 142,000. As of the end of March, the number of enterprises in the service outsourcing sector totaled 25,398 with 5,503,000 employees, including 3,671,000 with college education or above, accounting for 66.7% of the total.

VI. Foreign Market Access Report 2014

To enable Chinese enterprises and organizations to have a better knowledge on the trade and investment environment of China’s main trade partners, gain an objective view of the international market environment, improve the awareness of risk prevention and ability to cope with trade barriers, take an active part in international competition and safeguard industrial and business rights, the Ministry of Commerce issued Foreign Market Access Report 2014 and Automobile Manufacturing Report.

Foreign Market Access Report 2014 aims to introduce the trade and investment management system as well as policy changes in China’s 13 main trade partners including the U.S., EU, Japan, Brazil and Russia, analyze the potential barriers for China’s foreign trade and investment, and evaluate the environment for foreign trade and investment. China’s trade volume with these trade partners accounted for 55% of its total foreign trade in 2013.

In addition, the Ministry of Commerce issued Automobile Manufacturing Report, which systematically collects the market entry systems and industry support policies on automobile manufacturing in emerging economies like Brazil and Russia as well as some developed countries such as the U.S. and EU, list China’s main trade and investment barriers in the export of automobile manufacturing, and aim to provide a reference for governments and enterprises, own-brand enterprises in particular.

The above reports are available on the websites of Trade Remedy Investigation Bureau of the Ministry of Commerce（http://gpj.mofcom.gov.cn） and the chambers of commerce.

That’s all about the briefing, now I’ll take your questions.

Phoenix TV: Two questions: First, on foreign trade. People have noticed that in the first quarter there was a double decline in terms of the volume of total foreign trade and the export. Of course, people have different readings from this, as some believe this is a sign of a foreign trade recession in China, while others believe that this is merely a result of the overly high base in the first quarter the year before. What is your interpretation on this? There are also people who believe that things may pick up from the second quarter on. Do you think such an analysis is reasonable? Second, on rare earths. We have noticed that the three major economies had taken China's rare earths export, amongst others, to the WTO, whose panel has recently made a preliminary determination, ruling that some of China's export control measures had violated the WTO rules. Is there a need to appeal on the part of China? Is there going to be some impact on the Chinese rare earths industry? Thank you.
　
Shen Danyang: Thank you for your questions. First on foreign trade. As to the developments of foreign trade in the first quarter of this year, both the spokesperson of the General Administration of Customs a few days ago and the spokesperson of the National Bureau of Statistics yesterday talked about the issue. In US dollar terms, China's total foreign trade in March declined by 9%, while export dropped by 6.6%. With export statistics in Q1 in a double decline as the figures I just cited suggest, we have conducted some analysis which pointed to two main reasons: First, the base volume during the same period last year was raised to a high level due to the extraordinarily large export to Hong Kong. Because of this high base level, the mainland's export to Hong Kong dropped by 43.3% in March this year, which had the effect of dragging down total export growth by 5.9 percentage points. If we exclude the factor of the extraordinarily high export to Hong Kong, the export and import in the first quarter this year actually grew by 4.6% and 9.6% in dollar terms. The second reason is the weak growth in emerging economies in the first quarter this year. In March, China's export and import with India and South Africa decreased by 5.2% and 45.8% respectively, which had the effect of pushing down total import and export by around 1.2 percentage points.
　　
As regards our view on the foreign trade growth in the first quarter of this year, Sheng Laiyun, spokesperson of the National Bureau of Statistics, said yesterday that the actual performance of China's import and export should have been better than what the statistics suggested. I agree with his view. One of the important reasons behind such a view is that, in addition to the 4.2% growth in the export delivery value by industrial enterprises above the designated scale, the export manager's index released by the Customs also suggested continued growth from the previous period. Apart from this, there are also some other important supporting data such as the statistics I reported to you just now. In terms of the regional distribution of import and export activities, nearly half of all the provinces managed to achieve a double digit growth in the first quarter, including provinces, municipalities and regions in the central and western parts of the country like Chongqing, Shaanxi, Ningxia and Gansu, as well as coastal provinces and municipalities such as Shandong and Tianjin.
　
In terms of the export market, China's export to the EU, the ASEAN, Japan, Korea and Brazil managed to achieve more than 5% of growth in the first quarter. In terms of export product mix, China's export of color TVs, electric motors, lamps, steel products, toys, ceramic products and bulk commodities such as fertilizers all grew by more than 10%.
　　
As developed economies recover slowly and emerging economies sustain a rather weak growth momentum, we need to be cautious of the prospect of this year's overall foreign trade. However, we have also seen quite a few positive factors that are conducive to the steady development of foreign trade this year. Even if the statistics from the Customs regarding the first three, and perhaps even the first four, months of the year were less than ideal, we are still fully confident about reaching the set targets of foreign trade the whole year.
　　
You have also asked about the foreign trade situation of the second quarter. We believe that the situation in the second quarter should be better than that in the first quarter. Nonetheless it is still possible that in terms of statistics a relatively good performance is unlikely until May.
　　
That we are fully confident that the set targets of foreign trade this year will be met is based on mainly three positive factors: First, an accelerating world economic growth is stabilizing market demand in the international market. In a report published on 14 April the World Trade Organization forecast that world trade would grow this year at a pace of 4.7%, more than doubling the 2.1% of 2013. Second, China has a complete set of supporting policies for the industries, a rising technical proficiency as well as a strong competitiveness in its export industry. We believe that as long as global demand is on track of a steady recovery, given China's export competitiveness, it is absolutely possible that China's import and export would grow at a faster pace than the world average. Thirdly, that the series of policy measures China adopted last year to stabilize foreign trade growth and adjust the structure are being implemented further helps to shore up confidence amongst import and export enterprises. Recently, the Ministry of Commerce and the General Administration of Customs conducted respectively questionnaire-based surveys amongst nearly 1,000 export managers. The surveys revealed that the number of enterprises optimistic about their export prospect is rising each month.
　
In a nutshell, as long as policy measures are pertinent and effective, there is a strong case for China's foreign trade to develop in a steady way as it already has a solid foundation for such development. At present, the Ministry of Commerce is stepping up efforts to coordinate and actively implement relevant policy measures with a view to making positive progress both in terms of stabilizing foreign trade growth and adjusting foreign trade structure.
　　
On the case at the WTO, we have noted that the US on 8 April appealed to the Dispute Settlement Body of the WTO regarding its case over China's restrictions on rare earths, tungsten and molybdenum exports. On 17 April, that is today, China will file an appeal to the WTO DSB against the ruling. The case is currently in the process of review at the appellate body. China will spare no effort in making the appeal. Regardless of the result of the appeal, China's policy objectives to protect resources and the environment will remain unchanged. China will also continue to intensify management of resource products in ways that are WTO compatible, and safeguard fair competition. It is worth noting that it was indicated in the report of the panel that the WTO respects the members' sovereignty over natural resources, and recognizes policy objectives aimed at protecting resources and the environment. Thank you for your questions.
　
CCTV 4: You have talked about the trade statistics report published by the WTO on the 14th. China continues to be the third largest country in terms of services trade in the world, with its share on a continued rise. What is the Ministry's comment on these statistics? Second, we have noted the disturbances created by the anti-service agreement protests in the Taiwan region over the past month. Will they have a substantial impact on the trade in goods and services between the Chinese mainland and the Taiwan region? What is MOFCOM's view on this as the competent authority for trade? Thank you.
　　
Shen Danyang: China's trade in services grew rapidly last year, which further cemented the country's position as a major trading nation in services. According to the WTO, the total value of China's trade in services was 539.6 billion US dollars, rising by 14.7% from 2012 and putting China in a solid third place amongst world services traders. With a growth rate 8.5 percentage points higher than the world average, which stood at 6.1%, China's trade in services accounted for 6% of the world's total. In breakdown, China's services export was valued at 210.5 billion US dollars, ranking the fifth in the world (with the top four being the US, the UK, Germany and France), up by 10.6% year on year; while China's services import reached 329.1 billion US dollars, up by 17.5% year on year, surpassing Germany for the first time to become the second largest importer of services in the world. The rapid growth in China's services trade, especially in the import and export of services in technology and culture, has contributed to scientific and technological progress and innovation, improved the soft power of the Chinese culture, cultivated capital-intensive enterprises, promoted the development of related industries at home, and optimized the structure of foreign trade. When we talked about foreign trade in the past, we referred mainly to merchandise trade. Now, as we adjust and optimize the foreign trade structure, services have also become an important part of foreign trade.
　
From 2010 to 2013, the value of China's import and export of high value-added services such as consulting, computer and information services, financial services, patent royalty fees and licensing fees, has been rising at over 10% per year; while the strong demand for the import of traditional services such as transport and tourism has provided the world with an enormous market while at the same time offering domestic businesses and the public more choices. China's growing services trade has also driven job creation both at home and abroad. For instance, services outsourcing has a played a prominent role in creating jobs especially for university graduates.
　
By the end of 2013, China's services outsourcing sector has employed 5.361 million people at home, 3.559 million, or 66.4%, of whom were university graduates. The development of China's services outsourcing sector has not only created jobs at home, but also provided job opportunities for China's trading partners given the country's relatively large demand for services.
　　
As the aggregate of China's trade in services continues to expand, we are also aware that the structure of the services trade needs to be optimized urgently. Given the enormous development potential China's services trade promises, when it comes to the top objectives of China's services trade, the country needs to strive to expand services export, optimize its structure, and improve the international competitiveness of the services sector in the future.
　　
On the other question, the Cross-Straits Agreement on Trade in Services includes 144 liberalization commitments involving over 100 services subsectors. Of these commitments, 80 are mainland's commitments to Taiwan, 78 of which go beyond the levels of the commitments at the WTO. The agreement is good either in terms of its breadth or depth, and will benefit the people across the Taiwan Straits. Upon signing the agreement, the competent authority in the mainland immediately started to prepare for the ratification of the agreement. We hope that the agreement could come into effect and be implemented as soon as possible so that the people across the Straits could benefit from it. At the same time, I believe that the authority of an agreement reached and signed by the ARATS and SEF should be maintained. Thank you for your question.

CRI Online: First, the program for Caofeidian Free Trade Zone has now reached MOFCOM for clearance, how is it progressing? Second, it was released yesterday that China’s GDP grew by 7.4% in Q1, which fell short of the 7.5% target. Some experts argue that this year the free trade zones will be a drive for economic growth. What is your view on that?

Shen Danyang: Wide attention has been drawn to the proposed pilot free trade zones, parks and port areas by some provinces. I haven’t got any new information to share with you yet. The overall deployment of the State Council will be followed to steadily and gradually move forward the development of other free trade zones based on the experience of the China (Shanghai) Pilot Free Trade Zone.

As for your second question, over the past few years, China has been implementing its FTA strategy and signing FTAs with other countries, scoring positive results in promoting foreign trade, outbound investment and technical cooperation. The China-ASEAN FTA, as you all know, has yielded good results. The FTAs that China concluded with other countries and regions are also playing a positive role in economic growth. Now several FTA negotiations are underway between China and other countries and regional economies. It is believed that as these negotiations advance and the FTAs get implemented, the Chinese economy will feel a more positive impact. Thank you for your questions.

CCTV2: What was consumption like nationwide in Q1? What is MOFCOM’s outlook on consumption of this year?

Shen Danyang: In Q1 the domestic consumption market was stabilizing and looking up, marking a sure head-start. According to the National Bureau of Statistics, in Q1 the total retail sales of consumer goods went up by 12% and 10.9% in inflation-adjusted terms, up by 0.1 percentage point year on year. The seemingly insignificant growth was achieved amidst the economic gear-shift and slight slowdown of the first quarter, and therefore did not come by easily. In the meantime, consumption in Q1 was not lacking in bright spots, such as the surge in on-line shopping, which saw an increase of 51.7% in the online retail of companies above the designated size, active popular catering, rapid growth in rural retailing, booming electronics, cultural and tourism consumption, and basically stable prices. All these are exciting news.

As for the state of consumption of this year, we believe that there are several favorable factors. First, consumption growth enjoys a solid foundation. The comprehensively deepening reforms unlock reform dividends, boost the organic motivation of economic growth, set the macro-economy on a steady track, perfect social safety net and gradually move forward the income distribution reform. According to the National Bureau of Statistics, per capita disposable income grew by 8.6% in real terms in Q1. All these have forged an underpin for consumption growth. Second, new consumption potentials will be gradually unleashed. Industrialization and new urbanization are speeding up as efforts to build benefit housing and renovate shanty towns step up, the broadband China strategy advances in an orderly manner, IT drives innovation in channels of commerce, which gives birth to new business types and new models, and green and environment-friendly consumption sinks in. All these will further free up consumption potentials. Third, policy environment will further improve. A host of pro-consumption policies introduced by the state to boost information consumption, health and elderly-care consumption, and leisure and tourism consumption and to deepen the circulation system reform are taking effect. Fourth, the spillover effect of consumption bright spots is growing. For example, on-line shopping is thriving. Smart phones, tablets and smart appliances have been hot sales for some time. With the launch of 4G this year, I believe many of you will need to upgrade your mobile phones. The market success of these new products and the boom in popular consumption and services consumption such as leisure and tourism, culture and entertainment will become new pillars for consumption. Therefore, we are quite optimistic on the whole.

That said, of course we also face some pressure on the consumption front. For example, a slowdown in exports might affect employment and income. That’s partly why China sets great store by export growth. The diminishing driving effect of upgrading consumption in housing and means of transport and the flawed consumption environment may also bear on the consumption performance.

All in all, this year’s consumption market will maintain the momentum of stable development. As the government further implements its pro-consumption policies, the consumption market is likely to pick up in the coming months. Thank you for your question.

China Business Network: I have two questions. We got wind lately that several ministries were considering measures to stabilize growth, which probably would start with stabilizing exports and might include adjustments to the restricted and prohibited categories of the catalogues of products for processing trade. What is your take on that? Second, it seems that Australia, ROK and Japan are likely to sign FTAs vey soon and that they are also interested in and aiming at concluding an FTA with China. What is MOFCOM’s view on that? Thank you.

Shen Danyang: I will answer your second question first. China has noted that Australia’s new government has expedited its FTA negotiating process with relevant countries. Prime Minister Abbot said last year that Australia would conclude its FTA talks with China, Japan and ROK within twelve months.

Currently, Australia has officially signed the FTA with ROK and its negotiation with Japan was also completed the other day. Australia has repeatedly expressed its wish to conclude China-Australia FTA talks this year. The Chinese side believes that the establishment of China-Australia FTA will be significant for deepening the bilateral commercial relations. During his recent visit to China, Prime Minister Abbot exchanged views with Premier Li Keqiang on China-Australia FTA. Both agreed to speed up the negotiating process and strike a deal as soon as possible.

China and Australia are important economic and trading partners to each other. China has been Australia’s biggest export market and source of import for years, and bilateral trade has maintained the momentum of rapid growth. We look forward to working with Australia to speed up the negotiation, achieve a mutually beneficial and win-win outcome at an early date and renew the impetus for China-Australia trade and economic partnership.

Japan-Australia FTA is a common bilateral free trade agreement under the framework of the WTO. China is inclusive and open to all regional trade arrangements. At present, as China engages Australia in FTA talks, China-Japan-ROK FTA talks are well underway. Besides, China, Japan and Australia are part of the RCEP negotiations. China hopes to work with relevant countries to accelerate the regional economic integration process through various FTA talks.

As for your first question on policies and measures for stabilizing foreign trade, we are doing research. In terms of processing trade, I’d like to brief you on the state of play of processing trade. Processing trade is a major component of China’s foreign trade, playing a big role in boosting employment, raising industrial standards and promoting national economic development. Currently, processing trade is managed with a negative list of classified products. Catalogues of prohibited and restricted products for processing trade are updated regularly. The prohibited category now includes 1803 10-digit product codes, and the restricted category covers 500 10-digit codes. Since 1999, the catalogues have been adjusted for a dozen or so times as the circumstances change. A dynamic adjustment mechanism for the catalogues has been set up.

In line with the requirement of stabilizing growth and restructuring for foreign trade, in order to further improve the classified management of processing trade products, promote the healthy and stable development of processing trade and advance its transformation and upgrading, MOFCOM is widely soliciting opinions from relevant localities, departments and sectors on the adjustment of the catalogues, based on which, experts will carry out in-depth assessment and studies to draw up the adjustment program. As such work is underway, we will listen attentively to the input of relevant parties, steadily move forward the adjustment work and create a favorable development environment for processing trade companies. Thank you for your question.

People’s Daily Online: I have three questions. First, can you explain the reasons why total imports and exports in more than half of the provinces saw double-digit growth, as you just briefed us? Second, China’s trade surplus fell by 59.7%. What will it be like in the second quarter? Third, some Chinese people are complaining against the Malaysian government in its handling of the missing Malaysia Airlines flight. I’d like to know how this incident will affect the trade between the two countries. Thank you.

Shen Danyang: As I just said, 14 provinces saw double-digit growth in import and export, which is a very positive trend. As for the reasons, first and foremost, the three positive factors I just explained played a significant role in these 14 provinces. Second, apart from some coastal provinces, these provinces have a relatively low base figure in development and trade growth. And third, with policy incentives of the Central Government, these 14 provinces have taken effective measures to promote trade, stabilize growth and readjust structure, which have produced good results.

On the falling surplus. There will be no fundamental changes to China’s foreign trade. As things stand now, our export surplus will gradually decrease, because we do not seek continuous increase in surplus, but it will not disappear or turn into deficit overnight. There will be further fluctuations in the coming months, which is a response to the severe and complicated situation in the international market and to the domestic economic landscape. Foreign trade figures saw slight fluctuations from month to month in the first quarter, which will probably continue into April and May. It is difficult to predict how the surplus will be like in the second quarter. But the general trend is that it will persist for some period of time though gradually narrowing.

On the implications of the missing Malaysia Airlines flight on the commercial relations between China and Malaysia. We have noticed there have been some strong public sentiments after the missing aircraft incident and the abduction of a Chinese tourist in Malaysia. This is understandable. However, such sentiments do not represent the attitude of the entire Chinese public towards Malaysia. China and Malaysia are friendly neighbors and each other’s important trade partner. In 2013, bilateral trade exceeded USD100 billion for the first time. Malaysia has been China’s largest trading partner in the ASEAN bloc for six consecutive years and China the largest trading partner of Malaysia. The friendly relations between the two countries have a strong basis. We believe we have the capability to ensure the trade and economic cooperation between the two countries will continue to develop in a sound and steady way, deliver win-win results and benefit our people. Thank you for your question.

National Business Daily: According to the data and information you just shared with us, trade between China and the EU grew more than 6%. But investment in both directions declined, though not at the same rate. Can you explain the reasons? Please also give us your analysis on trade and economic relations between China and the EU in the near term, as we just held the second round of negotiations on the bilateral investment treaty at the end of March. Thank you.

Shen Danyang: Commercial relations are a major engine for the comprehensive strategic partnership between China and the EU. The Chinese government has always attached great importance to that. Although two-way investment saw a decline in the first quarter due to sectoral and regional factors as well as changes in some specific projects, we believe this is only a temporary phenomenon rather than a trend. China remains committed to and optimistic about the prospect of economic cooperation between the two sides.

We have conducted two rounds of negotiations since its launch last year. China believes that an early conclusion of the agreement will create a better investment environment for investors from both sides and also inject new vitality into two-way investment growth, which will further boost the integration of the two economies.

Currently, both sides are conducting economic reforms and face new opportunities in their respective economic development and bilateral trade and economic cooperation. China is willing to keep in close communication and coordination with the EU, maintain an open trade and investment environment, advance the investment treaty negotiation, properly resolve our trade disputes and jointly bring our trade and economic cooperation to a new level. Thank you for your question.

Global Times: From the data released today, inward FDI once again saw negative growth. Checking into figures in the past months, this is the second month of negative growth since January 2013. Can you explain the reasons? Please also give us an overview on the recent institutional changes of MOFCOM and the reasons behind that.

Shen Danyang: You are all closely following the development of FDI. The status quo of inward FDI and the view of the Chinese government on foreign investment environment in the near future are consistent with the findings of our collaborative researches with think tanks, foreign investment associations and civil groups. China remains a very important destination for global investment. There is a shared confidence among multinational corporations in investing in China. These basic assessments and perceptions have not changed. It is normal to have a minor decline in inward FDI in March. In the 12 months of a year, it is natural to have slight fluctuations in some months due to changes in the amount of investment in some projects, or adjustments in macroeconomic policies such as the recent fluctuation in the RMB exchange rate. The decline in March will not affect a steady rise for the whole year. We remain confident about steady FDI growth for this year.

With regard to the recent institutional adjustments of MOFCOM, we have published relevant information on our official website. To meet the new circumstances and needs of opening up and implement the guidelines of the Third Plenum of the 18th CPC Central Committee on changing government function, MOFCOM has adjusted the names and main functions of some of its internal departments and bureaus. With the approval of the State Commission Office for Public Sector Reform (SCOPSR), this task has been basically completed.

Main adjustments include: on the basis of the former Department of Foreign Trade, Department of Mechanic, Electronic and Hi-tech Industry, Bureau of Fair Trade for Imports and Exports, Bureau of Industry Injury Investigation and Department of European Affairs, five new departments --- the Department of Foreign Trade, Trade Investigation and Remedy Bureau, Bureau of Industry Security and Import and Export Control, Department of Eurasian Affairs and Department of European Affairs have been established. The adjustment has integrated, to the maximum extent possible, same or similar functions in different departments and bureaus, reinforcing the following four areas: macro-regulation of foreign trade, handling of international trade disputes, trade and economic ties with neighboring countries and industry security, and import and export control.

For instance, why do we set up the Department of Eurasian Affairs? As you know, the Silk Road economic belt and the 21st century maritime Silk Road are major initiatives to implement the new round of opening up. Russia and Central Asian countries in the former Soviet Union region, located at the starting point of the Silk Road economic belt, will play an important role in future construction and development. Considering that this region and the EU have different economic and trade systems, the Department will be responsible for China’s trade and economic activities with 12 countries in the region, including Russia, Ukraine, Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan, Tajikistan, Azerbaijan, Georgia, Armenia, and Moldova. It will formulate development strategies, programs and policies in respect of the trade and economic cooperation with related countries (regions), set up bilateral and regional inter-governmental trade and economic joint or mixed commission meetings, and organize bilateral or regional trade and economic negotiations, among others. In this way, we will be better focused in our work and further strengthen China’s trade and economic ties with the region.

This concludes the press conference today. Thank you.