Dear friends from the media:

Welcome to today's press conference. I’m very glad to brief you on China’s commercial performance in January-August of 2014, and take the questions of your concern.

I. Performance of Domestic Market

The domestic consumer market has remained steady since the beginning of the year. According to the statistics of the National Bureau of Statistics, the retail sales of consumer goods in August reached RMB 2,113.4 billion, up 11.9% year on year, 0.3 percentage points slower than that of the previous month, and up 10.6 with price factors excluded, 0.1 percentage points higher than that of the previous month; total retail sales of consumer goods in January-August went up 12.1% year on year, the same as that of the first seven months. The sales of 5,000 major retail enterprises monitored by the Ministry of Commerce in August were up 6.3% year on year, 0.3 percentage points slower than that of the previous month. Following are the main characteristics of the consumer market in August.

1. Online retail kept thriving. According to the statistics of the National Bureau of Statistics, the online sales of units above designated size in August were up 53% year on year, 3.4 percentage points higher than that of the previous month. According to the monitoring of the Ministry of Commerce on 5,000 major retail enterprises, the online shopping in August witnessed a year-on-year growth of 31.9%, while the sales of special stores, department stores and supermarkets were up 3.6%, 4.4% and 7% respectively, 4.9, 6.5, and 2.6 percentage points slower than that of the same period of the previous year.

2. Sales of communication equipment accelerated. Driven by the construction of the 4G network and new products upgrading, the sales of communication equipment accelerated. According to the statistics of the National Bureau of Statistics, the sales of communication equipment of enterprises above designated size in August enjoyed a year-on-year growth of 31.8%, 7.6 percentage points higher than that of July, and 15.8 percentage points higher than that of the same period of the previous year.

3. Green consumption grew obviously. Under the anticipated function of the exemption of vehicle purchase tax, the output of new energy automobiles in August witnessed a growth of nearly 11 times. According to statistics of related survey organizations, the sales of air cleaners in the first half year were up 65.7% year on year. In the market for the Mid-Autumn Festival, over package of mooncakes was reduced, and mooncakes plainly box-packed or in bulk became the main stream in the market.

4. Consumption of housing, transportation and inflation-proof goods slowed down. Consumption of housing and transportation slowed down obviously because of various factors. In August, the sales of automobiles were up 5.3%, 1.7 percentage points slower than that of the previous year, and sales of household appliances, furniture and building materials were up 9.7%, 13% and 12.5% respectively, 3.1, 8.3 and 11.7 percentage points slower than that of the same period of the previous year. The sales of gold, silver and jewelry were up 7.3% year on year in August, 14.5 percentage points slower than that of the same period of the previous year.

5. Catering consumption was steady but slowed down. Driven by the mass consumption and enterprise transformation, catering consumption kept steady, but a little slowed down in August. The national catering revenue in August was up 8.4% year on year, 1.3 percentage points slower than that of the same period of last year; among which, the revenue of catering enterprises above designated size was down 0.9%, 0.4 percentage points higher than that of the same period of last year.

6. Consumer prices remained steady. According to the National Bureau of Statistics, CPI was up 2% year on year, 0.3 percentage points slower than that of July; and that of January-August was up 2.2%, 0.3 percentage points slower than that of the same period of last year. According to the Ministry of Commerce, in 36 large and medium-sized cities, prices of agro-foodstuff went up 1.5% year on year in August, among that, the prices of eggs, milk and fruit was up 9.3%, 9.5% and 19% year on year respectively; the price of pork continued to pick up, but still 5.4 percentage points slower than that of the same period of last year.

II. Foreign Trade

According to Customs figures, China’s total import and export in January-August reached 17 trillion yuan, up 0.6% year on year (the same below). Export was 9.1 trillion yuan, up 2.1%, and import 7.9 trillion yuan, down 1.1%. Trade surplus was 1.2 trillion yuan, up 28.7%. In terms of the U.S. dollar, the total import and export in January-August reached US$ 2766.39 billion, up 2.3%, among which, export was US$ 1483.46 billion, up 3.8%, and import US$ 1282.93 billion, up 0.6%; trade surplus was US$ 200.53 billion , up 30.3%. The main characteristics of foreign trade in August are as follows:

1. Export kept a rapid growth. In terms of the U.S. dollar in August, national import and export reached US$ 367.09 billion, up 4%. Among which, export reached US$ 208.46 billion, up 9.4%, and import US$ 158.63 billion, down 2.4%; trade surplus was US$ 49.83 billion, up 77.8%.

2. Export to the U.S., the EU and ASEAN grew rapidly, and import from Japan, ROK and the U.S. slowed down. Export to the U.S., the EU and ASEAN was up 11.3%, 12.8% and 12.7% respectively, accounting for 45.3% of the total export, driving the export up 5.4 percentage points. Export to BRICS had a clear differentiation, among which, export to Russia and India was up 27.6% and 23.7% respectively, while export to South Africa and Brazil was down 0.7% and 0.1% respectively. Import from Japan, ROK and the U.S. was down 5.2%, 4.6% and 2.8% respectively, 5.5, 3.3 and 9 percentage points slower than that of July, dragging the import growth down 1.1 percentage points. Import from the EU, Russia, ASEAN, Australia and Taiwan kept growing, up 4%, 3.1%, 3%, 1.5% and 1% respectively.

3. Export of mechanical and electrical products and high-tech products slowed down, and import prices of certain large quantity commodities fell. Export of mechanical and electrical products realized US$ 112 billion, up 5.2%, and export of high-tech products realized US$ 53.8 billion, down 1%, 7.5 and 11.5 percentage points slower than that of July, among which exports of mobile phones, integrated circuits and liquid crystal display boards were down 13.9%, 13.1% and 0.7% respectively, dragging the export of high-tech products down by 4.5 percentage points. Export of textiles, clothing, bags, shoes, toys, furniture and plastic products reached US$ 48.4 billion, up 12.1%, the same as that of the previous month. Import prices of copper ore, coal, grain, soybean, refined oil and iron ore were down 25.9%, 19.5%, 9.3%, 5.1%, 4.5% and 1.7% respectively, dragging the import growth down by 1.9 percentage points. Import of part of large quantity products kept increasing, among which import of copper ore, grain, crude oil and iron ore went up 27.5%, 18.8%, 17.2% and 8.8% respectively.

4. Export of processing trade glided again and import of general trade showed a deepening decline. Export of processing trade reached US$ 72.6 billion, down 0.4%, showing a negative growth after three months of positive growth, and 11.3 percentage points slower than that of July. Import of processing trade reached US$ 42.8 billion, up 3.6%, 1 percentage points higher than that of last month. Export of general trade reached US$ 111.4 billion, up 14.3%; and import US$ 88.2 billion, down 7.3%, 4.1 percentage points higher than that of July, dragging the overall import growth down by 4.3 percentage points. Import and export of other trade reached US$ 52.1 billion, up 12.6%.

5. Central and Western China kept a rapid growth while East China slowed down. The import and export of Central China reached US$ 27 billion and Western China US$ 29.4 billion, up 13.9% and 28.3% respectively. The import and export of East China reached US$ 310.7 billion, up 1.2%, 4.1 percentage points slower than that of last month, the proportion of which in the total national import and export decreased by 2.1 percentage points.

III. Foreign Investment in China

In January-August, a total of 15,200 foreign-funded enterprises were approved, up 5% year on year. Actually utilized FDI reached US$78.34 billion (equivalent to 482.52 billion yuan), down 1.8% year on year (excluding data of banking, securities and insurance). In August, 1,951 foreign-funded enterprises were approved, up 5.2% year on year; and actually utilized foreign capital was US$7.2 billion, down 14% year on year, with the decreasing amplitude a little reduced compared with that of July. The main characteristics of foreign investment in January-August are as follows:

1. Utilized FDI in the service sector maintained fast growth. In January-August, utilized FDI in the service sector registered US$43.27 billion, up 8.9% year on year, accounting for 55% of the national total, of which, utilized FDI in the distribution service industry and transportation service industry took a larger percentage and reached US$5.64 billion and US$2.76 billion respectively. Those service industries that grew rapidly in utilizing FDI mainly included other financial services and building and its related engineering services, up respectively 37.5% and 61.5%. Utilized FDI in agriculture, forestry, animal husbandry and fishery amounted to US$1.035 million, down 6.9% year on year, accounting for 1% of the national total. Utilized FDI in manufacturing was US$27.5 billion, down 15.7% year on year, accounting for 35% of the national total, of which, utilized FDI in electronic equipment manufacturing including telecommunications equipment and computers, transportation equipment manufacturing, chemical raw materials and chemical products manufacturing took a larger percentage and reached US$4.42 billion, US$2.85 billion and US$1.98 billion.

2. Investment from major countries and regions maintained steady growth. In January-August, actual FDI in the Chinese mainland from top 10 investors (Hong Kong, Taiwan, Singapore, the ROK, Japan, the U.S., Germany, the UK, France and the Netherlands) amounted to US$73.54 billion, accounting for 93.9% of the total, down 0.5% year on year, 1.3 percentage points lower than the national total. Actual investment from Hong Kong, Singapore, the ROK and the UK all witnessed some increase, among which, investment from the ROK and the UK reached US$ 3.02 billion and US$ 850 million respectively, up 31.3 and 18.9% year on year; investment from Japan, the U.S. and the EU reached US$ 3.16 billion, US$ 2.08 billion and US$ 4.2 billion, down 43.3%, 16.9% and 17.9% respectively. Investment from ASEAN reached US$ 4.59 billion, down 9.72%.

3. Utilized FDI in Central China enjoyed a good momentum. In January-August, utilized FDI in East China was US$64.98 billion, down 2.8% year on year, utilized FDI in Central China was US$7.96 billion, up 14.8% year on year, and utilized FDI in Western China was US$5.4 billion, down 10.1% year on year.

IV. China’s Investment and Economic Cooperation Overseas

Direct investment abroad. In January-August, Chinese investors made direct investment in 4,067 businesses in 150 countries and regions. Total non-financial direct investment reached US$65.17 billion (equivalent to RMB400.4 billion), up 15.3% year on year. In August alone, the non-financial direct investment reached US$12.62 billion (equivalent to RMB77.54 billion), up 112.1% year on year. By the end of August, China’s non-financial direct investment overseas totaled US$590.8 billion (equivalent to RMB3.6301 trillion).

In January-August, the Chinese mainland’s investment in seven major economies, namely Hong Kong, ASEAN, the EU, Australia, the U.S., Russia and Japan, reached US$47.98 billion, taking up 73.6% of the total foreign direct investment during the same period. Investment in Hong Kong was up 5% year on year. Investment in the EU, Russia and Japan increased by 257.1%, 73.3% and 116.7% respectively. Investment in ASEAN was US$3.26 billion, up 7.9% year on year. Investment in the U.S. reached US$3.26 billion, up16% year on year. Investment in Australia totaled US$1.97 billion, up 5.3% year on year.

Contracted projects overseas. In January-August, the turnover of China’s contracted projects overseas amounted to US$81.13 billion (equivalent to RMB498.46 billion), up 6.2% year on year. The value of newly-signed contracts was US$98.02 billion (RMB602.23 billion), down 7% year on year. The projects each with a contract value of over US$50 million were 376 (33 less than last year’s 409), with a total contract value of US$78.06 billion, taking up 79.6% of the total value of newly-signed contracts. The projects each with a contract value of US$100 million or more were 203, 42 less than that in the same period of last year.

In August, the turnover of China’s contracted projects overseas was US$8.73 billion, down 15% year on year. The value of newly-signed contracts was US$9.07 billion, down 31.4% year on year.

Labor service cooperation overseas. In January-August, labor service personnel dispatched overseas reached 354,000, an increase of 38,000 over the same period of 2013 and up 17.6% year on year. Labor service personnel sent abroad for contracted projects were 169,000, and those for labor cooperation projects were 185,000. In August, all labor service personnel dispatched overseas reached 47,000, an increase of 15,000 over the same period of 2013. By the end of August, all labor service personnel dispatched overseas were 970,000, 75,000 more than that at the end of August 2013.

By the end of August, labor service personnel dispatched overseas amounted to 7.27 million.

V. Service Trade

In January-July, China’s service trade maintained a rapid development trend. The total service import and export volume reached US$335.7 billion, with an increase of 14.3% year on year, among which service export totaled US$131.02 billion, up 16.7% year on year and service import reached US$204.67 billion, up 12.7% year on year. Major characteristics are listed below.

1. High value-added service import and export increased rapidly. In January-July, film, audio and video, financial service, computer information service, patent royalty and license fee, consultation service and advertising import and export increased by 55%, 42.4%, 26.8%, 24.4%, 16.6% and 15.6% year on year respectively. Other commercial service export was US$30.85 billion, up 65.5% year on year, and became the biggest category of service export in China. Consultation service export reached US$24.6 billion, up 12.1% compared with the same period last year, and became the third biggest category of service export surpassing transportation.

2. The proportion of traditional service trade was on a declining curve. In January-July, traditional service (tourism, transportation service and building service) accounted for 59% of the total service import and export volume, down 3.4 percentage points compared with the same period last year. Tourism import totaled US$83.8 billion, up 16% year on year, accounting for 40.9% of the service import and ranking the first in China’s service import. Affected by the declining growth of trade in goods, the increase in transportation import and export fell obviously, only up 0.5% year on year. The recovery of building service was distinct and the import and export increased by 15.2% year on year, among which export increased by 16.8% year on year.

3. The increase in service trade deficit showed a narrowing trend. In January-July, the deficit of service trade added up to US$73.65 billion, up 6.3% year on year. But since the growth of service export in the previous seven months firstly exceeded the growth of service import, the amplification of deficit sharply showed a narrowing trend. Service trade deficit mainly focused on tourism, transportation service, patent royalty and license fee and insurance service with an amount of US$111.37 billion.

VI. Service Outsourcing

In January-August, the contracts on service outsourcing totaled 116,860, with contract value of US$67.24 billion and executed contract value of US$47.83 billion, an increase of 31.8% and 31.5% year on year respectively. The contract value and executed contract value of offshore service outsourcing reached US$44.55 billion and US$32.35 billion, up 24.6% and 26.8% year on year respectively. The contract value and executed contract value of onshore service outsourcing reached US$22.69 billion and US$15.48 billion, up 48.6% and 42.5% year on year respectively. The reason why the growth of onshore service outsourcing was higher than offshore service outsourcing was that the domestic industrial structure was adjusted and upgraded to promote the improvement of professionalization and informatization level of service and free a large amount of service outsourcing business. Major characteristics are listed below:

1. Major markets of service outsourcing were the U.S., the EU, China’s Hong Kong, and Japan. In January-August of 2014, the executed contract value in offshore service outsourcing from the U.S., the EU, Hong Kong and Japan was US$7.44 billion, US$4.54 billion, US$4.52 billion and US$3.36 billion respectively, adding up to US$19.86 billion and accounting for 61.3% among the total execution value. The executed contract value in service outsourcing from Japan increased by 9.8% year on year, obviously lowering than the overall level of China’s offshore service outsourcing, down 1.6 percentage points compared with the same period last year.

2. Service outsourcing cooperation with the countries along the line of “one belt and one road” accelerated. In January-August of 2014, the contract value and executed contract value of service outsourcing from the countries along the line of “one belt and one road” reached US$7.27 billion and US$5.86 billion, an increase of 24.2% and 39.5% year on year respectively. The contract value and executed contract value of service outsourcing from central and eastern European countries increased by 67.8% and 47.8% year on year. The development of service outsourcing business and the promotion of service export were conducive to further deepening the economic and trade cooperation with countries along the line of “one belt and one road.”

3. Pilot cities played a remarkable role in terms of industrial clustering and guiding function. In January-August of 2014, the contract value and executed contract value of service outsourcing in 21 service outsourcing pilot cities totaled US$60.06 billion and US$43.69 billion, an increase of 30.8% and 30.5% year on year. Offshore contract value and executed contract value reached US$31.94 billion and US$22.98 billion, up 28.8% and 32.2% year on year respectively. The offshore contract value and executed contract value in pilot cities accounted for 90.9% and 90.2% in the whole China and played a remarkable role in terms of industrial clustering and guiding function.

4. Jobs in service outsourcing increased steadily. In January-August of 2014, newly increased employees in the service outsourcing sector reached 509,000, among which 353,000 with college (including junior college) education or above, accounting for 69.4% of the total employees. As of the end of August, the number of enterprises in the service outsourcing sector totaled 26,872 with 5,870,000 employees, including 3,912,000 with college education or above, accounting for 66.7% of the total.

5. Knowledge process outsourcing (KPO) increased rapidly. In January-August of 2014, information technology outsourcing (ITO), knowledge process outsourcing (KPO) and business process outsourcing (BPO) reached US$16.93 billion, US$10.87 billion and US$4.56 billion, accounting for 52.3%, 33.6% and 14.1% respectively and up 23%, 32.4% and 28.5% year on year respectively. ITO still took the lead and IPO businesses such as intellectual property research, analysis and data mining, research and development of animation a仓储行业nd game design increased rapidly.

VII. Development Report on Chinese Warehousing Industry (2014)

In order to understand the development status and trend of the Chinese warehousing industry, the Ministry of Commerce entrusted China Association of Warehousing and Storage to draft out Development Report on Chinese Warehousing Industry in 2013. The Development Report analyzes the development status of the warehousing industry in 2013 and makes prediction and expectation about the development trend of the warehousing industry in 2014 and a period in the future. The Development Report shows that under the guidance of the national plan of logistics and relevant policies and measures of the Ministry of Commerce, the warehousing industry has enjoyed a stable development. According to estimates, by the end of 2013, there were 24,400 warehousing enterprises in China with more than 700,000 employees and 1.7 trillion yuan in industry assets. The general commercial storage area reached 0.86 billion square meters and the total volume of refrigeration houses was more than 83 million cubic meters. In 2013, the fixed assets investment of the warehousing industry was about 420 billion yuan, with an increase of 34.6% year on year. The main business revenue was about 480 billion yuan, with an increase of 9.1% year on year. The return on equity was 4.5%, up 0.65 percentage points compared with last year. The research of the Development Report shows that the transformation and upgrading of the warehousing industry achieved initial results, professional warehousing such as low temperature warehousing, e-commerce warehousing and medical warehousing attained creation and development, the construction and the lease of warehousing maintained rapid growth, the self-help warehousing entered a rapid-growth period and the guarantee inventory management gradually entered into a standard stage from rapid development.

The Development Report shows that with the introduction of relevant policies and measures of China for supporting the development of logistics, warehousing enterprises will face new development opportunities and present the following six development trends. Firstly, service function will be constantly improved to realize warehousing integration. Secondly, the resources integration will be accelerated to realize networked management for warehousing. Thirdly, the market will be further subdivided to realize warehousing professionalization. Fourthly, emerging business formats will be gradually mature to realize large-scale development. Fifthly, industrial standards will be widely implemented to realize standardized warehousing management. Sixthly, technical transformation will be accelerated and environment protection will become a new trend. Warehousing enterprises will gradually play a basic and supporting role in the construction of the commercial logistics system and carry on the role of inventory management and processing and delivery in the supply chain management of industrial and commercial enterprises.

The above is the information I would like to provide to you. Now, you are welcome to ask any questions.

International Business Daily: Both of my two questions concern foreign trade: First, people are very concerned about the Opinions issued by the State Council four months ago regarding the support for steady foreign trade growth. We want to know how these Opinions are being implemented? Second, you have just said that export in August reached 208.46 billion US dollars, up by 9.4%. Do you think that such a growth can be sustained? Thank you.

Shen Danyang: You mentioned the State Council General Office’s Opinions on the Support for the Steady Growth of Foreign Trade, which was issued last May. Positive progress has been achieved in terms of implementation over the past four months since the issuance. The Ministry of Commerce, the General Administration of Customs, the AQSIQ, the General Administration of Taxation, the People’s Bank of China and the Eximbank, among other departments and institutions, have especially promulgated documents to implement the Opinions. Furthermore, 25 provinces, municipalities and autonomous regions, including Guangdong, Jiangsu, Hubei, Anhui, Sichuan and Chongqing, promulgated supporting measures. Roughly these measures fall into five categories. Results have been shown in each of the categories: First, the level of trade facilitation has been further improved. This I talked about in the past couple of months as well. There are quite a lot of requirements concerning trade facilitation in the documents, as it was a much called for issue by the businesses. In this respect, the AQSIQ has removed the export inspection requirement for over 200 HS coded products. MOFCOM eliminated the automatic import licensing requirement for nearly 100 HS coded products. The General Administration of Customs (GAC) and the AQSIQ launched in an all-round way customs-inspection cooperation featuring “three one-offs”: namely one-off declaration, one-off inspection, and one-off clearance. In contrast to past practices where declaration, inspection and clearance were conducted separately, now they are combining the “three one-offs” together. Actively promoting the reform on regional customs clearance integration can save firms both time and logistic costs, and is in itself a marked result in implementing the Opinions.

Second, for-profit services and charges concerning import and export have been rectified. The NDRC, the Ministry of Finance, MOFCOM, the Ministry of Transport, the GAC, and AQSIQ have together deployed a special nationwide campaign to rectify for-profit services and charges concerning import and export, which is scheduled to be completed by the end of October. MOFCOM has also removed completely charged items for export licensing, and lowered the fees for export booths at the 116th Canton Fair for Import and Export as well as the billing criteria of value-added services for networked processing trade enterprises.

Third, the process of export VAT refund has been further accelerated.

Fourth, the difficulty in financing and the problem of high financing costs have been alleviated. The China Banking Regulatory Commission, the Eximbank and the State Administration of Foreign Exchange have adopted multiple measures. SinoSure has strengthened its support for export. In addition to supporting the export of large complete plant equipment, it has provided services for nearly 25,000 small- and medium-sized enterprises.

Fifth, various new types of trade have been strongly supported. Relevant departments have actively adopted effective measures to support new types of trade such as cross-border electronic commerce, market sourcing trade and foreign trade comprehensive service enterprises.

Meanwhile, the supporting measures promulgated by different regions as I just mentioned have come to join forces with the policies of the central government agencies, and thus played a vital role in further improving the business climate for businesses, alleviating their burdens, bringing about real ease of doing business, and unlocking their export potentials and enthusiasm.

Against such a backdrop, we now come to your second question, which is about the future development of export. In July this year, export grew by 14.5% year on year. Last August, it grew by 9.4%. This is a very good growth speed. We believe that the momentum of a stabilizing and improving foreign trade did not come by easily. Even if some of it was to do with recovering international market demand and the abating of the high-base factor resulting from the previous year, the most important reason is that the government’s policy to support the steady growth of foreign trade has paid off.

Moving into the coming months, of course we hope that such a growth rate in foreign trade could continue. But we cannot be sure that such a high speed will definitely last because there are still many uncertainties in the domestic and foreign markets, and businesses still face many difficulties. We still need to make a hard effort. Thank you for your question.
CCTV English: First question, we have learnt that China Canada Investment Protection Agreement will come into effect in October this year. What does MOFCOM think of the implications of this Agreement? And how will Chinese enterprises benefit from it? Second question, the US Treasury Secretary wrote to Vice Premier Wang Yang last Sunday, criticizing that China’s anti-monopoly reviews would seriously impact foreign companies. What is MOFCOM’s response to this? Third question, on President Xi Jinping’s recent visit to Sri Lanka, Maldives and India, can you update us on China’s bilateral trade and economic relations with these three countries?

Shen Danyang: On China Canada Investment Protection Agreement, China has received the diplomatic note from Canada confirming that Canada has completed the domestic ratification procedures for the Agreement on the Promotion and Mutual Protection of Investment between the Government of the People’s Republic of China and the Government of Canada. China welcomes this and speaks positively of the “efforts of the Canadian government in bringing the Agreement into effect”.
Before that, the Chinese side presented a note to the Canadian side on 7 February 2013, informing that China had completed the domestic ratification procedures for the Agreement, and that per Paragraph 1 of Article 35 of the Agreement, the Agreement would come into effect on 1 October 2014. Sino-Canadian trade and economic cooperation has developed smoothly in recent years. In 2013, bilateral trade reached 54.4 billion US dollars. By the end of 2013, two-way investment exceeded 51 billion US dollars on a cumulative basis. Signed by the two sides on 9 September 2012, the Agreement includes 35 articles and 6 supplementary clauses, and encompasses important elements included in international agreement provisions. It is so far the most extensive bilateral investment treaty China has ever signed. The implementation of the Agreement will be conducive to furthering two-way investment between China and Canada, deepening Sino-Canadian trade and economic cooperation, elevating the strategic partnership to a new stage, and benefiting investors and peoples of the two countries.

Shen Danyang: On the other question, on President Xi Jinping’s visit to Sri Lanka, India and Maldives. He is visiting Maldives as we speak. Next he will visit India and Sri Lanka. Speaking of China’s bilateral commercial ties with India, Sri Lanka and Maldives, due to time constraints I could only give you some basic information, just so that you could have some knowledge and something to write about in your report.

For long bilateral trade and economic relations between China and India have been developing steadily. According to Chinese customs, China-India bilateral trade stood at 65.47 billion US dollars in 2013. India is the 18th trading partner and 8th largest export market of China. In the first half of this year, trade between China and India reached 33.823 billion US dollars, up by 6.8% year on year. In breakdown, China’s import from India was valued at 9.169 billion US dollars, up by 13.7%. Despite the relatively low growth of China’s overall import this year, as I said earlier, import from India managed to grow at a fast rate of 13.7%. According to Indian statistics, China is its largest trading partner, the biggest source of imports, and the 3rd largest export market. Its trade with China accounted for 8.5% of its total external trade. India is a major overseas market for Chinese engineering contractors. By the end of June 2014, the cumulative value of engineering contracts signed by Chinese contractors in India reached 63.285 billion US dollars, while 39.866 billion US dollars of business revenue had been actualized. In terms of bilateral investment, Chinese enterprises had directly invested 2.45 billion US dollars in stock terms in India by the end of 2013, mainly involving sectors such as telecommunications, machine manufacturing, metallurgy and home appliance manufacturing.

In the first half of this year, the flow of Chinese non-financial direct investment in India reached 134 million US dollars, up by 11.4% year on year. By the end of the first half of the year, Indian investors had invested directly in 902 projects in China on a cumulative basis, with an actualized investment of 548 million US dollars. In the first six months of this year, Indian investors newly established 36 enterprises in China, with 35.39 million US dollars of actualized investment, registering a 1.3 fold increase year on year. So far, a total of ten Indian banks have set up 4 branches and 9 representative offices in China, with a total investment of RMB 2.75 billion yuan.

China and Sri Lanka share a time-honored history of traditional friendship and friendly commercial cooperation. Last year in May, the two countries announced the elevation of bilateral relationship to a strategic partnership, and decided to launch a feasibility study into a bilateral FTA, and establish a trade cooperation working group and an economic cooperation working group under the bilateral joint commission framework, with a view to furthering the pragmatic cooperation of the two countries in trade and commerce. In 2013, bilateral trade between China and Sri Lanka was valued at 3.62 billion US dollars. China is Sri Lanka’s the second largest trading partner and second largest source of imports. In the first half of this year, China-Sri Lanka trade reached 1.774 billion US dollars, up by 6.3% year on year. In breakdown, China’s import from Sri Lanka rose by 31.4%, which is similar to the situation with India. By the end of last June, the stock of Chinese non-financial direct investment in Sri Lanka was 445 million US dollars. China is one of the major sources of foreign direct investment for Sri Lanka in recent years.

China and Maldives share a small but rapidly growing bilateral trade. In 2013, bilateral trade was close to 100 million US dollars, up by 27.6% year on year. Chinese exports to Maldives include mainly furniture, parts and components, ships, daily necessities, a small quantity of semiconductors, timber and fishery products. By the end of last June, Chinese engineering contractors had signed 418 million US dollars’ worth of contracts cumulatively, and actualized 234 million US dollars of business revenue. In the first half of this year, Chinese contractors signed 40.15 million US dollars’ worth of engineering contracts in Maldives, and actualized 33.26 million US dollars of business revenue, up by 132.5% and 3.3 times year on year respectively. China’s investment in Maldives is rather small, with only 230,000 US dollars of stock investment in the first half of this year. Thank you for your questions.

Phoenix Satellite TV: On foreign investment. We have seen a slide in foreign investment inflows. According to some analysis, funds outstanding for foreign exchange fell while trade surplus saw steep rise in August. All these factors show that foreign capital is exiting China at a faster pace. What’s your take on that? MOFCOM revealed that the three laws governing foreign investment are being revised. What is the latest development on that? Do you have a clear timetable? What do you think are the goals for the revision and what real impact will that have on China’s use of foreign investment? Thank you.

Shen Danyang: On your first question, we have also seen some analysis, particularly by some researchers and financial media. But there is not yet data to substantiate this trend. We are studying the inflow and outflow of FDI and trade and have found no aberrance so far.

On your second question. According to the decision of the 3rd plenum of the 18th party congress, we will “unify laws and regulations governing foreign and domestic investment and ensure the stability, transparency and predictability of foreign investment policies”. The modification of the so-called “three foreign investment laws”, i.e. the Law on Chinese-Foreign Equity Joint Ventures, Law on Foreign Invested Enterprises and Law on Chinese-Foreign Contractual Joint Ventures, have been put on the Legislative Plan of the Standing Committee of the 12th National People’s Congress. For this purpose, MOFCOM is conducting research and evaluation and has posted a notice on its official website to solicit public opinions. We welcome views and suggestions from various quarters of the society, including those from foreign investors.

In the meantime, we are exploring an administrative model based on pre-establishment national treatment to foreign investors in the Shanghai Pilot Free Trade Zone. The administrative review and approval, as provided in the three laws, is changed on a temporary basis by replacing review and approval on articles of association with record-filing management. This is a substantial step to reform China’s foreign investment system and a valuable experiment on revising the laws and regulations in this area. We hope through this revision, we will establish a legal framework on foreign investment that befits China’s stage of development and its national conditions and conforms to customary international rules so as to create a more stable, transparent and predictable legal environment for foreign investors in China. Thank you for your question.

CBN TV: I have two questions. First, we noticed that China and ASEAN countries had announced the launch of negotiations on an upgraded version of the China-ASEAN FTA (CAFTA). I want to ask MOFCOM what are the specific plans to move forward? Second, at the Davos Forum last week, Premier Li Keqiang said the experience gained at the Shanghai Free Trade Zone should be reviewed and promoted. Does it mean that the application and approval for other free trade zones have gained momentum? How does MOFCOM comment on the Shanghai Free Trade Zone which has been in operation for nearly a year?

Shen Danyang: Premier Li Keqiang proposed to launch negotiations on upgrading CAFTA when attending the China-ASEAN summit last October, which was positively responded to by leaders of ASEAN countries. The two sides reached agreement after rounds of subsequent consultations. At the China-ASEAN trade ministers’ meeting on August 26, 2014, elements paper on CAFTA upgrading negotiations was adopted and negotiations formally launched. The sixth meeting of the CAFTA Joint Commission, which is also the inaugural round of the upgrading negotiations, will be held in Hanoi, Vietnam on September 22-24. MOFCOM is working with other relevant departments to prepare for the meeting and keep in close communication with ASEAN counties to ensure substantial progress on negotiations at an early date.

On your other question, a number of provinces and municipalities have applied to establish free trade zones and ports since last year. We have made institutional innovation the core task and replicability the basic requirement in setting up new zones and ports. The location, timing, policies and forms of establishment must comply with and serve the need for promoting new rules and mechnisms. In light the directions of the CPC Central Committee and the State Council on the current stage of work, our priority is to review, evaluate and promote the replicable experience of the Shanghai Pilot Free Trade Zone, as you mentioned. After summing up the systems and institutions of the Shanghai Free Trade Zone, we will study the next steps for the establishment of new free trade zones in accordance with the overall arrangement of the Central Committee and the State Council.

China News Service: I have two questions. First, export growth looked reasonably good in July and August, but dollar-denominated import continues to drop over the same period last year. What are the reasons behind that and what specific measures will MOFCOM take to curb the fall? Second, the attraction of foreign investment saw double-digit decline in both July and August. Is it related to the ongoing anti-monopoly enforcement?

Shen Danyang: Briefly on your second question, I want to make it clear that there is no correlation. I will not address the foreign investment question now, because there will be a briefing on this for the China Journalists’ Association this afternoon and I will share with you more information on inward and outward investment then.

On your first question. In the first eight months of this year, China’s imports totaled USD 1.3 trillion, up by 0.6% year on year. However, moderate declines of 1.6% and 2.4% respectively were registered for July and August. Preliminary study suggests there are there reasons behind the slowdown.

First, commodities prices hover at a low level in the international market. Import prices of raw materials such as iron ore and copper have been falling. In the first eight months, China’s import price index dropped by 8.1%, which was the lowest since 2010.

Second, due to ongoing efforts of industrial restructuring and phasing out backward production capacity, domestic market’s demand for energy and resources has come down and the demand for investment and production-driven imports has also declined. We estimate that the import growth rates of capital products and intermediary products dropped by 2 and 3.5 percentage points respectively over the same period last year during the first seven months. Capital products are mainly for investment and intermediary goods for production.

Third, export’s role in boosting import has been weakened and import demand for processing trade is falling. In the first eight month, processing trade imports were worth USD 321.09 billion, 4 percentage points lower than that of the same period last year.

Shen Danyang: As you know, China does not pursue trade surplus but a balanced trade. It hopes to expand both export and import. In May, the General Office of the State Council issued the Opinions on Supporting Steady Growth of Foreign Trade, which sets out new requirements on import expansion. MOFCOM will implement the document and promote import while stabilizing export growth.

At present, MOFCOM will focus on three aspects of work: First, promoting trade facilitation. In June MOFCOM and relevant agencies jointly cancelled automatic import licenses for 81 items of products in five categories, including CD production equipment and auto products. The customs authorities and MOFCOM are piloting the Single Window service for international trade, and advancing paperless customs clearance for imported goods with automatic import licenses.

Second, encouraging the import of advanced technology, equipment, key components and resources that China lacks. This year’s new edition of the Catalogue of Technologies and Products Encouraged to Import added 54 advanced technologies including energy conservation, environmental protection, aviation and aerospace, clean energy and monitoring and testing equipment. It encourages the import of 47 important equipment and key components including advanced computer numerical control machine tools, energy-saving and environmental protection equipment, monitoring and testing equipment and aviation and aerospace equipment, as well as 5 important resource products. Moving forward, we will work with financial institutions to beef up financial support for technologies and products encouraged to import.

Third, accelerating fostering national import promotion and innovation demonstration areas. We will support import innovation demonstration areas in Shanghai, Tianjin, Ningbo and Suzhou to improve port functions, speed up institutional innovation, diversify trading modes, and spread the advanced experience of the demonstration areas in import facilitation and import promoting platform building to drive import growth. In particular, these pilot areas need to demonstrate how to stimulate import of consumer goods needed by the ordinary people.

Recently I visited Waigaoqiao Bonded Area of China (Shanghai) Pilot Free Trade Zone, where very good import promotion platforms have been built. Once the platforms start operation, we could copy their functions to the rest of the country. Now China’s import of end consumer goods only accounts for 5% of its total import, compared to the world average of 20%. Speaking of import expansion, we need to stress that China’s foreign trade is highly market oriented and the role of the Chinese government is to provide policy guidance and service promotion. Import expansion will mainly depend on the market. Since the beginning of this year, domestic market has shown a strong and increasing demand for imported goods, especially consumer goods. Therefore, on the one hand, we encourage domestic businesses to import products with a good market in China; on the other hand, we encourage foreign countries and businesses interested in expanding import to China to engage more in exhibitions and other trade promotion activities in China. Thank you for the question.

China Economy: Five rounds of China-Japan-Korea FTA negotiations have been held. What is the outcome? When will the negotiations be concluded?

Shen Danyang: China-Japan-Korea FTA negotiations were launched in November 2012, and five founds have been held by now. From September 1 to 5, the fifth round of negotiations was held in Beijing. The three parties conducted productive consultations on topics including tariff reduction modes of trade in goods, ways of opening trade in services and investment and the scope and coverage of the FTA.

At this round, the three parties made progress in all areas especially in the scope and coverage and future arrangement of the negotiations. The three parties exchanged views in an in-depth manner and narrowed divergence on trade in goods, trade in services and investment. On scope and coverage, the three parties agreed to include e-commerce, environment and cooperation into the agreement and set up corresponding working groups, in addition to the existing 11 working groups. The three parties also agreed on future negotiation arrangement, which further reflected the strong will of all parties to speed up the negotiations.

The three parties agreed that the six round of negotiations will be held in late November of this year in Tokyo. There is no confirmed timetable for the conclusion of negotiations. Thank you for the question.

Beijing Times: Recently the General Administration of Customs issued the Circular on Relevant Regulatory Issues Concerning the Import and Export of Goods and Items in Cross-border E-commerce. What is MOFCOM’s comment on the measure’s impact on China’s cross-border e-commerce? What policies MOFCOM has adopted to promote cross-border e-commerce?

Shen Danyang: Cross-border e-commerce has emerged as a new trend of international trade in recent years. It is also an effective way to expand overseas marketing channels, enhance competitiveness of Chinese brands and promote the transformation and upgrading of China’s foreign trade. In recent years MOFCOM and other agencies have made joint efforts to support the development of cross-border e-commerce. For example, in August last year, MOFCOM, NDRC and GAC made a joint proposal to the General Office of the State Council to forward the Opinions on Implementing Policies to Support Retail and Export in Cross-Border E-commerce. Following that, the customs, taxation and quality inspection authorities have adopted measures to support the development of cross-border e-commerce. You mentioned the Circular on Relevant Regulatory Issues Concerning the Import and Export of Goods and Items in Cross-border E-commerce, which is the second circular issued by GACC on cross-border e-commerce, following the No. 12 Circular on Adding Customs Regulatory Codes. The two circulars are both supporting measures for cross-border e-commerce. The new circular covers regulatory requirements, business registration administration, e-commerce and entry-exit of goods, clearance administration and logistics, and stipulates specific regulatory measures for businesses engaged in cross-border e-commerce and relevant service. I believe it will play a positive role in promoting cross-border e-commerce.

As far as MOFCOM is concerned, the policy measures we have promulgated to support cross-border e-commerce development focus mainly on the following two aspects: First, we have published the guiding opinions for the sufficient use of e-commerce platforms in foreign trade, which provide guidance for departments of commerce at all levels and require them to reinforce the service functions of e-commerce platforms for foreign trade, raise enterprises’ utilization of e-commerce to conduct foreign trade, and strengthen the support and supervision of foreign trade development using e-commerce platforms. On the other hand, we have formulated policies to support retail and export in cross-border e-commerce. Last year in August, we requested the State Council to forward the Opinions on Implementing Policies to Support Retail and Export in Cross-Border E-commerce, providing support to developing e-commerce through six measures concerning the customs, quality inspection, taxation, foreign exchange, payment and credit. It is going to be a full year by coming October since the Opinions were first implemented on 1 October last year. Overall implementation has been very good. The Opinions have played a very important role in developing cross-border e-commerce.

Great Wisdom Newswire: The actual foreign trade growth rate for the past eight months was 0.6%, whereas the annual target is 7.5%. Are there going to be some new policies or measures to promote foreign trade in the next four months?

Shen Danyang: As for measures supporting foreign trade, I have just talked to you about them. According to the documents of the General Office of the State Council, relevant departments including MOFCOM have been introducing policy measures, some of which were already implemented, while others are still being implemented. It is unlikely that there will be new measures coming out in the next few months. The focus is on implementing the existing documents and policies. Thank you for your question. With that I conclude today’s press conference.