Dear Friends from the Media, Happy New Year. I’m glad to see you here at the first regular press conference of 2015. I would like to brief you on some information and answer your questions. The conference today is about the review of the whole year of 2014.

I. Performance of Domestic Market

In 2014, the domestic consumer market remained steady, and the retail sales of consumer goods in the whole 2014 reached 26.2 trillion yuan, up 12.0% year on year, and 10.9% with price factors excluded, 1.1 and 0.6 percentage points slower than that of 2013 respectively. According to the monitoring of the Ministry of Commerce, the sales of 5,000 major retail enterprises in January-December were up 6.3%, 2.6 percentage points slower than that of 2013. The final consumption of the whole year contributed 51.2% to GDP growth, 3 percentage points higher than that of 2013, becoming the main engine driving economic growth. Following are the main characteristics of the consumer market.

1. Online retail kept a rapid growth. According to the statistics of the National Bureau of Statistics, the online retail sales of 2014 were up 48.7% year on year, reaching 2.8 trillion yuan. According to the calculation of the Department of Electronic Commerce and Information of the Ministry of Commerce, the volume of business transaction in 2014 (including B2B and online retail) would reach about 13 trillion yuan, up 25% year on year. (Detailed data in the White Paper of Electronic Commerce which will be issued in May,2015). Among the 5000 major retail enterprises monitored by the Ministry of Commerce, online retail was up 33.2%, 1.3 percentage points higher than that of 2013, and that of special stores, supermarkets and department stores were up 5.8%, 5.5% and 4.1% respectively, 1.7, 2.8 and 6.2 percentage points slower than that of 2013; that of shopping malls were up 7.7%, but 4.5 percentage points slower than that of 2013.

2. Growth of communication and culture and sports products sped up. The rapid popularization of 4G communication stimulated the demands for upgrading of cell phones. In 2014, sales of communication equipment of units above the designated size were up 32.7% year on year, 12.3 percentage points higher than that of 2013. Among the 5,000 major retail enterprises monitored by the Ministry of Commerce, sales of cultural and office products and sports and recreation products were up 5% and 4.7% respectively, 6.3 and 5.6 percentage points higher than that of 2013.

3. Automobile consumption maintained a steady growth. According to the China Automotive Industry Association, sales of passenger vehicles in 2014 reached 19.7 million, up 9.9% year on year, 5.8 percentage points slower than that of 2013. The market of new energy cars enjoyed a good trend, with the sales of 75,000 in the whole year, up 3.2 times. Sales of passenger cars of Chinese brands were up 4.1%, 7.3 percentage points slower than that of 2013, and 2.1 percentage points slower in terms of market share. According to the statistics of the China Automobile Dealers Association, transaction of second-hand cars in the first 11 months of 2014 reached 5.45 million, up 16.7%.

4. Mass consumption and service consumption heated up. Mass catering continuously heated up. The revenues of catering in the whole 2014 were up 9,7%, among which, that of enterprises under the designated size up 13.2%, 11 percentage points higher than that of enterprises above the designated size. Cultural tourism was in great demand, and the film box office of the whole year reached 29.64 billion yuan, up about 36.2%; the whole revenues of tourism were about 3.25 trillion yuan, up 11%, and the number of outbound travelers surpassed 100 million for the first time.

5. Consumer prices remained steady. CPI in 2014 was up 2%, 0.6 percentage points slower than that of the same period of 2013, and that of December was up 1.5%. According to the monitoring by the Ministry of Commerce, in 36 large and medium-sized cities, prices of agro-foodstuff went up 0.7% in the whole year, among which, that of December was down 0.1%, witnessing negative growth for four consecutive months, and 1.8 percentage points slower than that of November. Prices of pork, mutton and rapeseed oil were down 10%, 4.2% and 2.9% respectively, and those of egg, salt and fruit were up 11.4%, 8.7% and 8.1% respectively.

6. Market order was further standardized and the consumption environment was gradually optimized. In 2014, through the special campaign to rectify TV shopping, the Ministry of Commerce investigated and dealt with 691 cases and 265 websites that violated laws and rules, and closed 16 illegal shopping channels. The number of TV shopping advertisements violating laws and rules was down 83.9%. The Ministry of Commerce constructed the circulation traceability system of meat, vegetable and traditional Chinese medicinal materials, realizing the information traceability management of 30,000 tons of products in 300 varieties and benefiting more than 400 million people, which strengthened market management and boosted consumption confidence.

II. Foreign Trade

According to Customs figures, China’s total import and export in 2014 reached 26.43 trillion yuan, up 2.3% year on year. Export was 14.39 trillion yuan, up 4.9%, and import 12.04 trillion yuan, down 0.6%. Trade surplus was 2.35 trillion yuan, up 45.9%. In terms of the U.S. dollar, the total import and export of 2014 reached US$ 4.30 trillion, up 3.4% year on year, among which, export was US$ 2.34 trillion, up 6.1%, and import US$ 1.96 trillion, up 0.4%. Trade surplus was US$ 382.46 billion , up 47.3% year on year. Excluding the factor that the cardinal number was bolstered by interest arbitrage in 2013, import and export enjoyed a real growth of 6.1%, among which, export up 8.7% and import up 3.3%. The main characteristics of import and export in 2014 are as follows:

1. China’s status as the largest goods trader was consolidated. Internationally, the global trade in 2014 increased only about 2%. In January-November, the EU and Japan decreased 0.5% and 2.5%, respectively. The growth of China’s foreign trade was obviously higher than the average growth of the world, further consolidating the status as the largest goods trader. It is estimated that China’s export accounted for 12.2% of the whole world in 2014, 0.5 percentage points higher than that of 2013.

2. Foreign trade contributed a lot to the economic growth. With the increasing pressure of downward domestic economy, foreign trade played an important supporting role to the economic growth. Calculating according to the expenditure approach, in the first three quarters of 2014, net export of goods and services contributed 10.2% to the growth of GDP, and the contribution of the whole year was estimated to reach 10.5%, the highest since 2008.

3. The proportion of general trade continued to increase. The import and export of general trade of the whole year reached US$ 2.31 trillion, up 5.3%, accounting for 53.8% of the national total, 1 percentage point higher than that of 2013, increasing for two consecutive years. Import and export of processing trade reached US$ 1.41 trillion, up 3.8%, 2.7 percentage points higher than that of 2013.

4. Trade partners were more diversified. We have gained new achievements in exploiting emerging markets. The proportion of import and export with developing countries in 2014 increased 0.4 percentage points, among which the growth of import and export with ASEAN, India, Russia, Africa and central and eastern European countries were all above the overall growth. The FTA strategy gained obvious effect, the proportion of 17 FTA partners excluding Hong Kong, Macao and Taiwan in China’s total import and export increased 0.6 percentage points than that of 2013. Trade with developed countries maintained a steady growth, and the import and export with the EU and the U.S. increased 9.9% and 6.6% respectively.

5. The commodity structure continued to be optimized. Export of manufactured goods accounted for 95.2% of the total export, 0.1 percentage points higher than that of 2013, increasing for three consecutive years. The equipment manufacturing industry has become an important growth point of export, and the export of both railway locomotives and communication devices increased over 10%. The export of seven kinds of labor intensive products reached US$ 485.1 billion, up 5%. Exports of high-tech products including biotechnology products, aerospace engineering products and computer integrated manufacturing goods were all above 15%. The import of consumer goods was US$ 152.4 billion, up 15.3%, accounting for 7.8% of the national total, 1 percentage point higher than that of 2013.

6. Contributions of central and western China to the growth were above 50% for the first time. The import and export of central and western regions maintained a rapid growth, among which, the import and export of the central region reached US$ 312.7 billion, and the western region US$ 334.4 billion, up 10% and 20.5% respectively, all contributing 60.3% to the total export growth, and exceeding the eastern region for the first time. The import and export of the eastern region reached US$ 3.66 trillion, up 1.6%, accounting for 85% of the national total, 1.5 percentage points slower than that of 2013.

7. Trade conditions obviously improved. Under the situation that prices of domestic industrial products and international staple commodities all slumped, the import commodity price index of the whole year was down 3.3%, while the export commodity price index only decreased 0.7%. Trade conditions were optimized for three consecutive years. Import prices of important energy resources products declined, which saved a great amount of foreign exchange expenditures. Expenses on crude oil, iron ore, copper ore, copper products, rubber, chemical fertilizers, soybean and grain were reduced US$ 48.5 billion.

8. Private enterprises have become the main force of stabilizing growth. In 2014, private enterprises that have actual performance on import and export accounted for 70% of the total number of foreign trade enterprises, 1.6 percentage points higher than that of 2013. The import and export of private enterprises reached US$ 1.57 trillion, up 5.3%, accounting for 36.5% of the total import and import, 0.6 percentage points higher than that of 2013 and contributing 55.9% to the total growth of import and export. The import and export of state-owned enterprises reached US$ 747.5 billion, down 0.2%, seeing a negative growth for three consecutive years. The import and export of foreign-invested enterprises reached US$ 1.98 trillion, up 3.4%.

III. Foreign Investment in China

In 2014, a total of 23,778 foreign-funded enterprises were approved, up 4.4% year on year, with actually utilized FDI of 736.37 billion yuan. In terms of US dollar, the actually utilized FDI reached US$119.56 billion, up 1.7% year on year (excluding data of banking, securities and insurance). In December, a total of 2,482 foreign-funded enterprises were approved, up 6.1% year on year with actually utilized FDI of 81.87 billion yuan. In terms of US dollar, the actually utilized FDI reached US$13.32 billion, up 10.3% year on year. The main characteristics of foreign investment in 2014 are as follows:

1. The scale of the utilization of FDI was steadily improved. In 2014, the actually utilized FDI reached US$119.56 billion, up 1.7% year on year, higher than that of major economies like the U.S., the EU, Russia and Brazil, taking the lead among the developing countries for 23 consecutive years.

2.Investment from major countries and regions maintained steady growth. In 2014, the actual FDI in the Chinese mainland from the top 10 investors (Hong Kong, Singapore, Taiwan, Japan, the ROK, the U.S., Germany, the UK, France and the Netherlands) amounted to US$ 112.59 billion, accounting for 94.2% of the total, up 2.7% year on year. Among others, the investment from the ROK and the the UK was US$ 3.97 billion and US$ 1.35 billion respectively, up 29.8% and 28% year on year respectively. The mainland has sustained closer economic relations with Hong Kong. Investment from Hong Kong took up 68% of the Mainland’s total absorption of FDI, 18.7 percentage points higher than that of the combined investment over the years.

3.The structure was further optimized. Utilized FDI in the service sector took a higher percentage of 55.4% with US$66.23 billion, 22 percentage points higher than that of the manufacturing industry, being a new growth point of attracting FDI. The capital density was further improved. In 2014, the average contract value of foreign capital of the newly-established enterprises amounted to US$8.12 million, 13.9% higher than that of 2013 (US$7.13 million). The regional layout of foreign capital grew to be reasonable. Driven by export-oriented industries, the absorption of FDI in central China increased by 7.5% and actually utilized FDI in central China rose to 9.1% . The actually utilized FDI in central and western China accounted for 18.1%, 0.5 percentage points higher than that of 2013.

4. Remarkable achievements made in reforms. Reforms on the registration of registered capital system have promoted a remarkable increase of the number of market players including foreign-funded enterprises. In 2014, 23,800 newly-established foreign-funded enterprises were approved, up 4.4% year on year, reversing the situation of two consecutive year’s decline since 2012. Major phased fruits have been made in FTA pilots. Great efforts have been made to enhance the construction of the China (Shanghai) Pilot Free Trade Zone and establish a model of “pre-access national treatment together with a negative list”, improving the trade facilitation level and greatly motivating investment enthusiasm in the market. In 2014, the contract value of foreign capital in the China (Shanghai) Pilot Free Trade Zone took up one third of Shanghai’s total contract value of foreign capital. The measures to extend opening up in financial and cultural areas have led Shanghai’s attraction of FDI to grow rapidly, with utilized FDI in the service sector exceeding 90% of the total.

5. Foreign-funded enterprises appeared to be stable with profits and paid taxes higher than the average level. In 2014, the import and export value of foreign-funded enterprises went up 3.4% year on year, taking up 46.1% of the national total. According to the data of the National Bureau of Statistics and the State Administration of Taxation, in January-November 2014, the profits of designated size foreign-funded industrial enterprises reached 1.37 trillion yuan, up 10.3% year on year, five percentage points higher than the national average. In January-September, the taxation of foreign-funded enterprises amounted to 1.9 trillion yuan, up 8.6%, one percentage point higher than the national average, taking up 19.4% of the national taxation, with 0.2 percentage points higher than that over the same period in 2013.

6. National economic development zones enjoyed good momentum. In January-September 2014, 215 national economic development zones saw a double-digit growth in the gross regional domestic product, the value-added of the primary industry, the value-added of the secondary industry, the value-added of the tertiary industry, the fiscal revenue, the taxation revenue and the fixed-asset investment (12.7%,13.5%, 14.7%, 15%, 13.3% and 15.5% respectively)

IV. China’s Investment and Economic Cooperation Overseas

In 2014, Chinese investors made direct investment in 6,128 enterprises in 156 countries and regions around the world, with a combined non-financial investment of US$ 102.89 billion (equivalent to 632.05 billion yuan), up 14.1% year on year. In December, non-financial direct investment overseas amounted to US$ 13.09 billion (equivalent to 80.41 billion yuan), up 31.8% year on year. As of the end of December, China’s total non-financial direct investment overseas amounted to 3.97 trillion yuan (equivalent to US$ 646.3 billion). The main characteristics of China’s investment overseas are as follows:

China’s two-way investment was close to be even for the first time. According to the statistics by the Ministry of Commerce and the State Administration of Foreign Exchange, in 2014, Chinese enterprises made a direct investment overseas of US$116 billion, up 15.5% year on year. US$13.11 billion went to financial areas, up 27.5% year on year while US$102.89 billion went to non-financial areas, up 14.1% year on year. China’s direct investment overseas and attraction of FDI only got a balance of US$3.56 billion, which is for the first time that China’s two-way investment being close to be even in line with present statistics standards.

2. Breakthrough made in M&A overseas. In 2014, China’s major M&A projects overseas took on a trend of diversification. The energy area continued to be an investment hot spot. China Minmetals Corporation acquired LasBambas with US$5.85 billion; the State Grid acquired 35% equities of CDP RETL with Euro 2.101 billion (equivalent to US$2.54 billion). The M&A in manufacturing was active. The Lenovo Group acquired Motorola’s mobile cellphone business with US$2.91 billion; The Dongfeng Motor Company Limited acquired 14.1% equities of PSA Peugeot Citroen with US$1.09 billion. The M&A in the agricultural industry also made breakthroughs. The COFCO acquired the Noble Group and Nidera with US$1.5 billion and US$1.29 billion respectively, being the two largest investment projects overseas so far in the agricultural area.

3. The industrial structure of China’s FDI overseas continued to be optimized. In 2014, China’s FDI overseas covered wide and extensive areas, including the leasing and business service, mining, wholesale and retail, architecture, manufacturing, real estate, transportation, warehousing and postal service. Among others, US$37.25 billion was made in the leasing and business service, US$19.33 billion was made in mining industry, and US$17.27 billion was made in the wholesale and retail industry. The three industries are the main areas of China’s investment overseas.

4. Direct investment overseas by local enterprises maintained a rapid growth. In 2014, the direct investment overseas by local enterprises reached US$ 45.11 billion, up 36.8% year on year, accounting for 43.8% of the total, with an increase of 7.2 percentage points. Guangdong province, Beijing and Shandong province ranked the top three among the list, with a direct investment of US$9.601 billion, US$5.547 billion and US$4.411 billion respectively.

5. Enterprises paid more attention to integration with local benefits and positively fulfilled social responsibilities. For example, the China State Construction Engineering Corporation employed almost 300 local subcontract teams in Algeria, the localization procurement rate of housing projects being 85%, with an annual procurement value of US$400 million. Its Bahamas island resort project has granted a combined contract value of US$350 million to local contractors and suppliers, taking up 20% of the total contracting value. The CSR established the ASEAN manufacturing center and maintenance center in Malaysia, the manufacturing, sales and services chains being localized. The Aluminum Corporation of China invested in building a sewage treatment plant before starting its copper mine project in Peru to solve the water pollution problems worrying local people for 70 years, and also built a series of modern urban facilities with over US$200 million for the mine lot.

Contracted projects overseas. In 2014, the turnover of China’s contracted projects overseas amounted to US$ 142.41 billion (equivalent to 874.82 billion yuan), up 3.8% year on year. The value of newly-signed contracts was US$ 191.76 billion (equivalent to 1.18 trillion yuan), up 11.7% year on year. The projects each with a contract value of over US$ 50 million were 662, with a combined value of US$ 157.82 billion, taking up 82.3% of the total value of newly-signed contracts. Projects each with a contract value of US$ 100 million or more were 365, a decrease of 27 from that of last year. As of the end of December, the total contract value of China’s contracted projects overseas amounted to US$ 1.4 trillion, with a turnover of US$ 935.16 billion.

Labor service cooperation overseas. In 2014, labor service personnel dispatched overseas reached 562,000, an increase of 35,000 over the same period of last year, up 6.6% year on year. Labor service personnel sent overseas for contracted projects were 229,000 and those for labor service cooperation were 293,000. In December, labor service personnel dispatched overseas were 63,000, a decrease of 29,000 from the same period of last year. By the end of December, all labor service personnel sent abroad were 1.006 million, an increase of 153,000 compared with that of the end of December 2013. By the end of December, the labor service personnel dispatched overseas amounted to 7.48 million.

V. Service Outsourcing

In 2014, China’s economic development entered a new normal, new technology, new commercial activities and new application models were constantly emerging and the service outsourcing industry changed from focusing on expanding scales to boosting quality and quantity simultaneously. Major characteristics are listed below.

The contract value of service outsourcing surpassed US$100 billion for the first time. In 2014, the number of contracts on service outsourcing signed by Chinese enterprises totaled 204,000, with the contract value and executed contract value of US$107.21 billion and US$81.34 billion respectively, going up 12.2% and 27.4% year on year respectively. The contract value and executed value of offshore service outsourcing reached US$71.83 billion and US$55.92 billion, with an increase of 15.1% and 23.1%.

More than 4 million university graduates were employed. In 2014, newly increased employees in the service outsourcing sector reached 711,000, among which 488,000 with college (including junior college) education or above, accounting for 68.7% of the total employees. As of the end of 2014, the number of enterprises in the service outsourcing sector totaled 28,100 with 6.072 million employees, including 4.047 million with college (including junior college) education or above, accounting for 66.7% of the total.

The knowledge process outsourcing was improved steadily. In 2014, the executed contract value of offshore information technology outsourcing (ITO), knowledge process outsourcing (KPO) and business process outsourcing (BPO) reached US$29.35 billion, US$18.67 billion and US$7.9 billion, accounting for 52.5%, 33.4% and 14.1%, respectively, and with an increase of 18.3%, 30.9% and 24.5% respectively year on year. The proportion of offshore KPO business featured on knowledge and development and research was improved steadily.

The U.S., the EU, Hong Kong and Japan were major markets of service outsourcing. In 2014, the executed contract value in offshore service outsourcing from the U.S., the EU, Hong Kong and Japan was US$12.82 billion, US$8.34 billion, US$7.42 billion and US$6.07 billion, respectively, adding up to US$34.65 billion and accounting for 62% of the total execution value. Besides, the offshore business also expanded to such regions as Southeast Asia, Oceania, the Middle East, Latin America and Africa.

The cooperation in service outsourcing with the countries of the Belt and Road Initiatives was deepened. Trade and economic cooperation is the basis and guidance to promote the construction of “the Belt and Road”. In 2014, the contract value and the executed contract value of service outsourcing from those countries reached US$12.5 billion and US$9.84 billion, respectively, with an increase of 25.2% and 36.3% year on year, respectively. The executed contract value of service outsourcing in Southeast Asia totaled US$5.38 billion, with an increase of 58.3% year on year. The trade and economic cooperation with the countries of the Belt and Road Initiatives was deepened by carrying out service outsourcing business cooperation.

VI. Progress in Implementation of Assistance to African Countries Resisting Ebola

Since the beginning of 2014, the Ebola epidemic has broken out in some Western African countries one after another. The Chinese government has provided four rounds of humanitarian assistance with a total value of 750 million yuan, including providing prevention and control materials, emergency assistance in cash and food aid, sending medical corps and public health experts, assisting in building biology laboratories and therapeutic centers. Up to now, the four rounds of assistance have all been put in place.

In terms of materials and food assistance, the fourth batch of materials arrived in Guinea, Sierra Leone and Liberia by air last week. The materials to be shipped by sea are scheduled for departure on January 19 and 25 and are estimated to arrive in March in batches. So far, the Chinese government has provided more than 1,800 tons of prevention and control and remedy materials for such relevant African countries as Guinea, Sierra Leone, Liberia, Mali, Ghana, Benin, Guinea-Bissau, Cote d’Ivoire, the Democratic Republic of the Congo, the Republic of the Congo, Togo, Senegal and Nigeria. In the meantime, Chinese government provided more than 5,500 tons of food assistance to the Republic of Guinea, Sierra Leone and Liberia through the United Nations World Food Program.

With regard to assisting in building biology laboratories and therapeutic centers, by last week, the Chinese laboratory detection group in Sierra Leone had tested samples with an accumulative number of 4,000 and treated and cured more than 600 patients. The therapy center in Liberia built by the Chinese government was put into operation on November 25 and has ever since received more than 100 people and treated more than 60 patients, among whom five are confirmed and five are recovered and three were cured and discharged.

As to sending medical corps and public health experts, the third batch of mobile laboratory detection groups to Sierra Leone and the second batch of medical corps to Liberia left off on January 13 and 19, respectively. Up to now, the number of medical staffs and public health experts sent to the three African countries by China has accumulated to almost 800. Chinese medical teams have summarized scientific and efficient protection and treatment methods and realized the “zero infection” of the medical staffs and the “zero cross infection” of inpatients, which are highly thought of by international community.

For training, at present, the Chinese government has trained almost 6,000 medical staffs and community backbones in such countries as Sierra Leone, Guinea, Liberia, Benin and Guinea-Bissau. While unremittingly insisting on prevention and control and treatment, the Chinese government will send more public health training teams to relevant countries and pass on Chinese experience in infectious disease prevention and control. It is estimated that by the end of February, the total number of people participating in training will reach 10,000.

Besides, the Chinese government takes a proactive and open attitude toward international cooperation in resisting the Ebola and conducts effective cooperation with international community in assisting the African countries. One is donating to international organizations. The Chinese government has donated US$2 million to the World Health Organization and the African Union respectively and US$6 million to the multi-partner trust fund of the United Nations against the Ebola. The donations have been to the account. The general coordinator of the multi-party trust fund of the United Nations against the Ebola said that China sets a good example for various countries and encouraged by China’s example, many developing countries have given money generously one after another, reflecting unity and mutual assistance of international community and ensuring that the mission of the United Nations orderly pushes forward the work in such aspects as medical aid, safe burial and logistics support. Another one is strengthening communication and coordination. China actively participates in the regular meetings of the mission of the United Nations against the Ebola, sends people to take up the post of executive of the mission of the United Nations against the Ebola and realizes the complementary advantages of all parties under the coordination of the United Nations and the WHO to avoid repeated assistance. The third one is enhancing cooperation with relevant countries in resisting the epidemic. China actively explores and carries out cooperation with such countries as the United States, Britain and France in such fields as communication and coordination, information sharing, epidemic analysis, personnel training and materials transporting.

Next, we will consider the post-Ebola period in a certain aspect, fully study and launch the long-term plan of China-African public health cooperation, actively promote all-round cooperation in the health care field between China and Africa, share Chinese achievements and experience in preventing and controlling the “SARS”, help Africa improve the health conditions of local people, build and improve the prevention and control system of public health, promote the development of economy society and improve the ability of independent development.

VII. Humanitarian Emergency Aid to Malaysia and Sri Lanka

Recently, Malaysia and Sri Lanka have suffered serious floods, causing heavy casualties and property loss. In order to express the sympathy and support of the Chinese government and people to the governments and peoples of Malaysia and Sri Lanka, the Chinese government decided to provide humanitarian emergency aid with a value of 20 million yuan for the two countries respectively to help them rescue and resettle the affected people on January 10.

The first batch of materials, 2,500 tents, was delivered by two chartered airplanes on January 15 and 16 after the Chinese government had confirmed the material list with the governments of the two African countries. China will continue providing emergency materials such as portable houses to help resettle more affected people according to their requirements.

Now, you are welcome to ask any questions.

Phoenix TV: My question relates to two-way investment. We have just seen that last year China’s outbound investment exceeded USD 100 billion for the first time, scoring a balance with FDI. What is your take on that? Could you share with us your projections of outbound investment and FDI in 2015? (2015-01-21 10:45:09)

Shen Danyang: China’s outbound investment in 2014 across the board stood at USD 116 billion. With reinvestment via third-party financing included, China’s outbound investment in 2014 was approximately USD 140 billion, which is USD 20 billion more than China’s FDI. In other words, China’s ODI beat FDI in 2014. China has become a net exporter of capital.

Nowadays, Chinese investors are wooed by countries across the world. Advanced economies like the US, the EU and Japan and emerging markets including Russia, Brazil and South Africa all welcome Chinese investment. Meanwhile, Chinese companies are keen to invest with market impetus. With the policy incentives of the Chinese government’s going global initiative, the fundamentals of Chinese ODI are sound. High-speed growth has been anticipated.

As compared to FDI, we estimate that ODI will continue to grow faster in coming years. That said, we need to recognize that China’s ODI didn’t take off until recently and is still in its early days. The total size or stock of China’s ODI remains small when compared to developed countries, such as the US, the EU and Japan. This indicates that much remains to be done to guide and push Chinese business to better engage in outbound investment cooperation.

Moving forward, MOFCOM will deepen the reform of the outbound investment cooperation management system, step up pre-event guidance and public service, strengthen post-event regulation assurances and risk management, so as to continue to enhance facilitation and create an easier external environment for business. In the meantime, we will further consolidate companies as major players in outbound investment and unleash their vitality in outbound investment activities.

As for projections, we estimate that ODI will continue to grow steadily. Thank you for your questions. (2015-01-21 10:45:38)

Economic Daily: Question One, Chinese business’ outbound investment is hyped as China’s new Marshall Plan. What is your take on that? Question Two, China’s backward services sector is largely due to a liberalization deficit in, among others, finance, healthcare and education. What are MOFCOM’s considerations in 2015 for widening market access and furthering services liberalization? Thank you. (2015-01-21 11:02:05)

Shen Danyang: Speaking of the so-called new Marshall Plan, I don’t think it’s pertinent. China’s ODI is driven by three forces. The first is the market-based business motivation to invest overseas. The second is the pull of developed and developing countries and emerging markets, which all embrace Chinese investment. The Chinese government only adds an extra push, whereas the Marshall Plan was vehemently pursued by the government. So in our case, there’re three forces at work.

Regarding the services sector, the statistics just revealed show that China’s FDI has shifted its focus from manufacturing to services, which have been taking in an ever-growing size of FDI. That said, we do observe urgent issues with services such as undersupply, competition deficit, restricted access in practice despite macro-liberalization, and high market threshold. Efforts are needed for further liberalization in an active and sure manner. Judging from past experience, to moderately widen opening up and introduce market competition and advanced service philosophy can help boost the supply of services and stimulate the dynamic of domestic services.

On this front, MOFCOM did lots of work in line with its remit last year. We worked with relevant departments to formulate and revise access regulations for, among others, healthcare, elderly service and e-commerce. For example, MOFCOM and NHFPC jointly issued the Circular on Piloting the Establishment of Wholly Foreign-owned Hospitals before launching pilot wholly foreign-owned hospitals in seven provinces and municipalities, including Beijing, Tianjin, Shanghai and Jiangsu; in concert with the Ministry of Civil Affairs, MOFCOM released the Announcement on Issues Related to the Establishment of For-profit Elderly Service Institutes by Foreign Investors, which was posted on MOFCOM’s website just a few days ago. Foreign investors are encouraged to set up wholly-owned, joint-venture and contractual joint-venture for-profit elderly service institutes; along with the MIIT, MOFCOM submitted the Request for Instructions concerning Expanding the Shareholding in Online Data Processing and Transaction Business of Taiwanese Investors in Fujian Province and Hong Kong and Macao Investors in Guangdong Province to 55%. An approval has been received and implemented.

We revised, together with the Ministry of Transport, the Rules on Foreign Investment in Road Transport and the Rules on Foreign Investment in International Maritime Shipping, allowing foreign investors’ access to these sectors. We also actively studied to further liberalize international maritime transport. Together with the State Post Bureau, we submitted the Request for Instructions on Further Opening up Domestic Express Delivery Market to the State Council, which has already been implemented upon approval by the State Council. This is what we did to further liberalize and improve foreign investors’ access to service sectors. Of course, we did a number of other things in addition to this.

Shen Danyang: In light of the responsibility of MOFCOM, we will give priority to the following four areas to further open up services this year.

First, we will vigorously implement the decisions made by the Third Plenary Session of the 18th CPC Central Committee. The Plenum decided to open up sectors like financial, education, cultural, and medical services in a well-planned way, and lift restrictions on foreign investment in services such as child and old-age care, building design, accounting, auditing, logistics and e-commerce. As one of the lead agencies responsible for implementation of the decisions, MOFCOM will press forward with the work in line with China’s goals of reform in relevant service sectors and progress in multilateral, regional and bilateral negotiations that China takes part in. We will open up, on the one hand, in a proactive way; and on the other, in a well-planned way in tune with the pace of China’s multilateral, regional and bilateral trade negotiations.

Second, we will continue to coordinate efforts on building domestic free trade zones. To advance the Shanghai Pilot Free Trade Zone and the newly approved zones in Tianjin, Guangdong and Fujian, it is essential to liberalize services in these zones. We have selected financial services, medical services and education as the pilot areas. The positive and negative experience drawn from these areas could provide signpost for services liberalization in larger areas across the country.

Third, we will continue to reform the foreign investment regime. While ensuring national security, we will reduce items of review and approval and streamline the approval procedures in service sectors.

Forth, we will carry out the follow-up work of opening up in major service sectors. As I mentioned, we worked with other ministries to further liberalize a number of service sectors, including medical services, old-age care and e-commerce. Policy documents have been released, but we need to carry out follow-up work. For example, building on the existing inter-ministerial coordination mechanism, we will work together to revise and amend the specific provisions in foreign investment regulations, or issue normative documents to advance the work.

China News Service: I have a question on foreign trade. How does MOFCOM think of the lackluster performance of imports in 2014 as compared with that of exports？ Thank you.

Shen Danyang: China’s total imports and exports reached USD 4.3 trillion-worth in 2014. Barring non-comparable factors, imports and exports rose by 6.1% for the whole year, of which exports grew by 8.7%. This result is better than expected. Why this conclusion? Because exports performance was remarkable in 2014 --- actually the best in the past three years. There are three clear indices to bear this out.

First, against a complex and severe backdrop, global trade is expected to grow less than 2% while China’s actual export growth rate reached 8.7%, which was obviously higher than the global average, and all other major economies and emerging markets. It is the fastest among major traders in the world.

Second, it is estimated that the contribution of foreign trade to economic growth was around 10.5%, the highest since 2008.

Third, we estimate that the share of China’s export in global total would reach 12.2%, 0.5 percentage points higher than the previous year. This is also the biggest rise in global share in recent years.

That is why we concluded that exports performance last year was the best in the past three years.

In the meantime, we continued to make progress on upgrading and transforming foreign trade as the structure of exports further improves. We have achieved this encouraging result mainly for the following three reasons. First, the State Council’s policies to stabilize foreign trade continued to exert a positive impact. Second, with strong support from MOFCOM, other departments of the State Council and local governments, businesses have made tremendous efforts and explored every avenue to expand their market share, especially in new markets. Third, demand in some developed markets, including the EU and the US, rebounded somewhat last year.

Statistics suggest that import looked less than satisfactory. Barring non-comparable factors, import merely registered a growth rate of 3.3% and has dragged down overall import and export growth of the year. Our analysis suggests that there are mainly four factors accounting for the slow growth in import: First, price of imported commodities has dropped. The import quantities of the eight categories of commodities, namely crude oil, iron ore, copper concentrate, copper products, fertilizer, rubber, grain and soybean, which combined accounted for about a quarter of total import value, have increased, resulting in a reduction of import payment by USD 45.8 billion, dragging down import growth rate by 2.4 percentage points.

Second, imports that support domestic production have declined. In the first ten months of the year, on the general trade front, the importation of intermediary products, which accounted for around 53% of total import in value, declined by 9.5 percentage points from the same period in 2013. In breakdown, the import of integrated circuit alone dropped by 5.9%, dragging down the import growth rate by 0.7 percentage points.

Third, import demand under processing trade has decreased. The growth of processing trade, which accounted for roughly a quarter of total import, has slowed down. Having grown by only 0.8% in the entire year, it has dragged down the import growth rate by roughly 0.5 percentage points.

Fourth, domestic investment has slowed down, weakening its drive for import growth. In the first ten months of the year, capital goods, which accounted for around 14% of total import, grew by only 1.2%.

Yet even so, there were still quite some highlights in last year’s import performance. For instance, imports of consumer goods grew by around 15%. Such imports not only enriched domestic market, but also satisfied the diversified consumption needs of the general public while contributing to global economic growth. Another example is that the drop of commodity price in the international market provided us with a good opportunity to import more, in which case it provided us some real benefits. Thank you for your question.

AFP: Thank you Mr. Spokesperson. You mentioned that the price of commodities decreased by a big margin last year, resulting in a 2.4 percentage points decline in import growth rate. I would like to know whether China will take advantage of the opportunity as commodity price falls, and adopt a strategy to stock up key resource products. Furthermore, could you talk about the impact of the price fall of commodities, especially of crude oil, on the overall Chinese economy? Thank you.

Shen Danyang: The fall of the price of import products especially commodities, for which China has a huge demand, is good news for either the businesses or the government. The eight products I talked about include some strategic commodities. Therefore, the state including the central and regional governments will actively consider increasing the importation of commodities. In fact, documents issued by the General Office of the State Council last year also mentioned that we would actively expand the importation of commodities that were in short supply domestically. However, in China import and export decisions are mainly determined by enterprises. Even central SOEs are enterprises. Things like how much to import, whether there are specific considerations behind their decisions, and whether they are strategic considerations, all belong to trade secrets of the enterprises.

As for the impact of commodity prices on China’s economic growth, many economists, people from all walks of life and market participants have all conducted some analysis. I believe it has two sides. Analysis of many economists indicates that at present positive impact outweighs negative impact. However, there are still many issues that need to be studied. The most important thing is to find ways to take advantage of the positive impact and avoid the negative one so as to achieve the best result. Thank you for your question.

CBN: Milk dumping took place in many locations recently. Many in the media say that this might have been the result of impact from imported milk powder. Some experts say that the incentive mechanism of the China-Australia FTA may have some impact on the dairy production in China. What is MOFCOM’s view about this? Thank you.

Shen Danyang: In fact, the domestic supply and demand relationship for dairy is somewhat cyclical. The difficulties experienced in some localities for the selling of milk might not have been the result of impact from imports alone. For example, over the past five years the Chinese dairy imports maintained a growth rate of over 20%, and in 2013 alone the growth rate was as high as 37%. However, during the same period, there was still serious shortage of milk. According to customs statistics, in 2014 dairy imports grew by 17.9%, which was less than that of the previous year. Yet why was it so difficult to sell milk? And why did farmers dump milk and kill their cows? Our analysis suggests the phenomenon has to do with the fact that the price gap between domestic dairy products and foreign ones is large, and that domestic enterprises have increased the use of imported dairy products. It also has much to do with the relatively low level of the overall domestic dairy industry, and the lack of confidence of consumers in domestic dairy products.

Under such circumstances, some people start to worry about the potential impact of the China-Australia FTA upon the domestic dairy industry once the deal is signed. We think such worries are understandable. Yet at the same time, we believe that there is no need to overstate the concern, or to worry too much. This is because during the China-Australia FTA negotiation process we had already thought about it that whilst we phase out tariffs we would also provide reasonable protection for products such as dairy. In order to buy the domestic industry more time for adapting, the tariff staging period for many products including dairy will be normally 8 to 10 years. For some products, we have built in a special safeguard mechanism, which acts like a safety valve. Once import quantity exceeds the pre-determined limit, the FTA tariff rate will no longer apply. Instead, the normal rate, which is the MFN rate, will then apply. Moreover, after the staging period is over, the mechanism will stay for a few more years until it has been confirmed that the tariff reduction has no impact on the domestic industry. On dairy products, the result of the negotiations between China and Australia is that the 10%-20% tariff rates currently applied to major dairy products from Australia, including milk powder, will be phased out to zero in a 9- to 11-year period, with a special safeguard mechanism provided for milk powder in particular. Thank you for your questions.

CCTV: How does MOFCOM view the prospect of foreign trade in 2015? There have been media reports saying that the foreign trade growth target for 2015 was set at about 6%. Is it true? Thank you.

Shen Danyang: On the prospect of foreign trade in 2015, our judgment is that the prospect for foreign trade this year still remains grim and complex. Foreign trade enterprises still face many difficulties, which are mainly in the following aspects:

First, in terms of international demand, world economy is still in the adjustment period following the international financial crisis. Overall, the weak prospect of recovery remains unchanged, while growth in external demand still faces many uncertainties. The IMF forecasts that world economy in 2015 would grow at 3.8%. Yet the IMF has always been the optimist. Its forecasts are usually higher than real growth rates. Therefore, we are less optimistic of the world economic growth prospect in 2015.

Second, on the domestic front, the domestic economy has now embarked on a new normal, where downward pressure still remains. The possible slowdown of domestic investment and economy may suppress import growth.

Third, in terms of business competitiveness, the cost advantage is diminishing, whereas factor price is rising constantly. With weakening traditional advantages, foreign trade enterprises are facing greater business pressure.

Fourth, in terms of trade environment, China has been the country faced with the largest number of trade frictions over the past 19 consecutive years. From January to September 2014, the number of trade remedy investigation cases initiated by foreign countries and the total value involved in these cases had risen by 17% and 159% year on year respectively. This constitutes another kind of pressure.

Fifth, from a geopolitical perspective, some regions are becoming more turbulent, which adds more risks and uncertainties to international trade.

Despite the complex and difficult situation, we are still confident that we will be able to carry out the foreign trade work well, because we also enjoy many positive factors. The CPC Central Committee and the State Council attach great importance to foreign trade work. Policies aiming at expanding export and increasing import are being perfected. We are striving to consolidate the traditional advantages in foreign trade, speed up the cultivation of new advantages in foreign trade competitiveness based on technology, brand, quality and services. The strategic concept of “One Belt, One Road” is being implemented expeditiously, while high quality free trade area networks are being built. Cross-border e-commerce, market sourcing and other emerging trade forms are developing vigorously. The overall outlook for foreign trade is positive. All these are positive factors. As long as we follow the trend, ensure good implementation and optimize the development environment, we are convinced that foreign trade will continue to grow at a moderate rate in 2015. Thank you.

China Securities Journal: The State Council approved three free trade zones. Judging from media reports on the China (Shanghai) Pilot Free Trade Zone, relevant parties have had quite urgent expectations of the liberalization efforts for finance and culture in the free trade zones. What measures will MOFCOM, the competent department for free trade zones, adopt to promote such liberalization going forward? Thank you.

Shen Danyang: In 2013 the municipal government of Shanghai formulated the Special Administrative Measures for the Access of Foreign Investment in China (Shanghai) Pilot Free Trade Zone, which is actually a “negative list”. According to the classification and coding of the industries in the national economy, the list includes 18 industries and a total of 190 entries. Last year, MOFCOM and the Municipal People’s Government of Shanghai went through the list again based on consultations with relevant departments, and put forward the 31 measures to expand opening up in the China (Shanghai) Pilot Free Trade Zone, and shortened the Special Administrative Measures for the Access of Foreign Investment, i.e. the negative list from 190 entries to 139 entries. By slashing 26.8% off the original list, this was indeed a serious effort of adjustment.

In 2014, the NDRC and MOFCOM revised the Catalogue for the Guidance of Industries for Foreign Investment, largely shortened the list of restricted items, further relaxed the equity caps on foreign investment, and taken into account the results of the experiment with the China (Shanghai) Pilot Free Trade Zone and the responses from all walks of the society including the media. The revised Catalogue puts forward measures to further open up in sectors such as finance, culture, accounting and auditing, trade and logistics, e-commerce, etc. Presently the period for public commentary about the revised Catalogue has concluded. We will further improve the Catalogue based on the related comments and opinions. Going forward MOFCOM will work together with relevant departments to further expand the opening up of sectors based on the Catalogue for the Guidance of Industries for Foreign Investment and Special Administrative Measures for the Access of Foreign Investment in China (Shanghai) Pilot Free Trade Zone 2014, and on the need of further expanding opening up and establishing the three new pilot free trade zones. Please stay tuned.

Bloomberg: What is the impact of the dramatic depreciation of the Ruble on the trade between China and Russia? If the West continues to impose sanctions on Russia, will China offer a helping hand? Thank you.

Shen Danyang: The Chinese side has taken note of the recent depreciation of the Ruble and the series of market control measures the Russian government and Russian central bank have put in place. Inevitably the depreciation of the Ruble will somehow affect the trade and economic cooperation between China and Russia. We are following it very closely and studying and analyzing the situation. Overall, the Chinese and Russian economies are highly complementary. Enterprises from both sides are very willing to cooperate with one another. The fundamentals of the bilateral trade and economic cooperation remain good. In 2014, the trade between China and Russia bucked the trend and registered a 6.8% growth rate, hitting a record high of USD 95.28 billion. This growth margin was higher than the overall foreign trade growth margin of either country. Two-way investment remains active. Region-to-region exchanges are still frequent. The successive launching of major economic and technical cooperation projects between the two countries has injected a new lease of life into the bilateral trade and economic cooperation. Looking into the future, we are still fully confident about the future prospect of Sino-Russian trade and economic cooperation.

At present, the exchange rate of the Ruble has begun to stabilize. The Chinese side believes fully that the Russian side has the capacity to overcome the difficulties and maintain domestic economic and financial stability. Should the Russian side need it, the Chinese side is willing to provide assistance within our ability. Thank you for your questions.

CRI: MOFCOM abolished quotas for rare earth this year. We have noted that Western media said it was because of the pressure from the West and threat to the monopolistic position in the market. What is MOFCOM’s comment about it? Thank you.

Shen Danyang: In recent years, in order to effectively protect and rationally utilize rare earth and other related resources, regulate industry and market order, transform the development pattern and realize the transformation and upgrading of resource-based industries, the Chinese government has made full use of economic and market means and adopted a series of measures to enhance and improve the export management of rare earth and related products with a view to promoting the sustained and healthy development of the rare earth industry. Based on the changes in the domestic and international markets, as approved by the State Council, MOFCOM decided to eliminate the export quota administration on rare earth starting from 1 January 2015, and to retain export tariff until 2 May 2015. This is a specific trade policy choice we have made to coordinate the two markets and two resources, a measure that supports the domestic reform on the administration system of resource products including rare earth, and a policy adjustment that has taken into account the relevant WTO ruling. The Chinese side will continue to intensify the protection of resource products in a WTO-compatible way, promote the protection of resources and the environment, safeguard fair competition and realize sustainable development. Thank you for your question.

Market News International: Recently China signed with Thailand a “railroad network project agreement”, and committed to importing rice and by-products from Thailand. What do you think of this Mr. Spokesperson? Thank you.

Shen Danyang: Thanks to the support of the Chinese and Thai leadership, China and Thailand reached consensus on China’s participation in planning and building the first standard gauge railway in Thailand, and on launching substantive cooperation as soon as possible. That China and Thailand shall cooperate in the field of railway is in line with the respective development need of both countries, and would be truly of mutual benefits and win-win should such cooperation be successful. The early implementation of the China-Thailand railway cooperation project will also play a positive role in promoting infrastructure and connectivity development in the neighboring regions.

Recently, China and Thailand have also reached agreement on furthering the cooperation in trade in agricultural products. The two sides share complementarities in agricultural products, especially rice and natural rubber, on which the two sides are each other’s important trading partners. MOFCOM will continue to support Chinese enterprises to conduct mutually-beneficial and win-win commercial cooperation with their Thai counterparts, and improve the level of bilateral cooperation in agricultural trade. Thank you for your question.

Shen Danyang: With that I conclude today’s press conference. Thank you all.