Dear Friends from the Media, good morning. The Spring Festival is approaching and this is the last press conference before the Spring Festival. I would like to brief you on some information and answer your questions about the data of the previous month.

I. Performance of Domestic Market

In January, the domestic consumer market remained stable. As this Spring Festival is in February and the consumption summit is delayed, the sales of 5,000 major retail enterprises monitored by the Ministry of Commerce in January were down 4.7% month on month. The main characteristics are as follows:

1. Online retail maintained a rapid growth. Among the 5,000 major retail enterprises monitored by the Ministry of Commerce, the online retail in January was up 37.4% year on year, 6.3 percentage points higher than that of the previous month. Among the traditional retail format, sales of supermarkets remained the same as that of the previous month, but that of department stores, special stores and shopping malls all declined.

2. Sales of communication products and automobiles sped up. The development of new technologies, new products and new modes of information has promoted the increase of demands for upgrading and consumption of communication products. Among the 5,000 major retail enterprises monitored by the Ministry of Commerce , sales of communication equipment in January were up 16.2% year on year, 5.8 percentage points higher than that of the previous month. According to the data of China Association of Automobile Manufacturers, sales of automobiles in January were up 7.6% year on year, 1.6 percentage points higher than that of the same period of 2014.

3. Consumption of housing and inflation-proof goods picked up. Among the 5,000 major retail enterprises monitored by the Ministry of Commerce, sales of furniture and building materials in January were up 11.5% and 11.3% respectively, 2.9 and 1.0 percentage points higher than that of last month respectively, and sales of household appliances were up 7.8% month on month. Driven by the demands of the festival, sales of gold, silver and jewelry picked up, with the sales in January up 12.1% month on month.

4. Growth of consumer prices slowed down. CPI in January was up 0.8% year on year, 0.7 percentage points slower than that of the previous month. According to the monitoring by the Ministry of Commerce, in 36 large and medium-sized cities, prices of agro-foodstuff in January went down 2.3% year on year. Among that, prices of pork, vegetables and mutton were down 7.9%, 6.4% and 5.4% respectively, and that of egg and milk went up 9% and 4.7% respectively.

Minister Gao Hucheng mentioned a data yesterday when giving a joint interview, but the reports of some media were not accurate. I would like to clarify it. What Minister Gao mentioned was that the growth rate of the total volume of retail sales in 2015 is expected to be the same as that of 2014, not the total volume would be the same.

II. Foreign Trade

According to Customs figures, China’s total import and export in January 2015 reached 2.09 trillion yuan, down 10.8% year on year (the same below). Export was 1.23 trillion yuan, and import 0.86 trillion yuan, down 3.2% and 19.7% respectively. Trade surplus was 369.9 billion yuan, 87.5%. After seasonal adjustment, the reduction of foreign trade, export and import slowed down to 7.1%, 1.3% and 14.4% respectively. In terms of the U.S. dollar, the total import and export in January reached US$ 340.48 billion, down 10.9%, among which, export was US$ 200.26 billion, down 3.3%, and import US$ 140.23 billion, down 19.9%; trade surplus was US$ 60.03 billion , up 87.6%. The main characteristics of foreign trade in January are as follows.

1. Export to ASEAN, the U.S. and India remained growth, but import from some of resource-oriented countries declined a lot. In January, China’s export to ASEAN, India and the U.S. increased 15.6%, 5.1% and 4.9% respectively. While export to Japan, Hong Kong and the EU decreased 20.4%, 10.9% and 4.4% respectively. Due to the downturn of the prices of major international commodities, China’s import from South Africa, Brazil, India, Australia and Russia was down 42%, 39.8%, 36.2%, 35.2% and 28.7% respectively, making the import growth down 4.8 percentage points.

2. Decline of general trade was higher than the whole, and export of other trade enjoyed a rapid growth. In January, import and export of general trade reached 1,189.3 billion yuan, down 11.9%, 1.1 percentage points higher than the whole. Among that, import of general trade was down 23.4%, 16.6 percentage points higher than that of the previous month. Import and export of other trade reached 270.9 billion yuan, down 7%, among that, export was up 16.5%. Import and export of processing trade reached 625.7 billion yuan , down 10.3%.

3. Export of mechanical and electrical products was better than the whole, and the import prices of bulk commodities declined. In January, export of mechanical and electrical products reached 681.0 billion, down 1.3%, 1.9 percentage points slower than that of the whole. Among that, export of integrated circuits, mobile phones and lamps and lanterns up 14.6%, 10.5% and 6.3% respectively. Export of seven kinds of labor intensive products reached 270.1 billion yuan, down 8.5%. Import commodity prices maintained the decrease, with the average price down 16.7%, the largest since 2010. Among that, the import prices of iron ore, crude oil, refined oil, soybean and copper products went down 45.2%, 41.1%, 34.6%, 14.6% and 10.9% respectively, 4.1, 14, 2.9, 0.9 and 4.5 percentage points higher than that of the previous month, making the growth of overall import slow down 8.8 percentage points.

4. Eastern areas witnessed a large decrease, and export of central and western areas increased. In January, import and export of eastern areas reached 1.7439 trillion yuan, down 12%. Among that, export and import was down 4.9% and 19.8% respectively. Import and export of central areas reached 163.0 billion yuan and that of western areas reached 178.9 billion yuan, down 1.3% and 6.3% respectively. Among that, export of central and western areas was up 4.7% and 5.6% respectively, accounting for 19.1% of the national total export volume, 1.5 percentage points higher.

5. Export of private enterprises increased and import and export of state-owned enterprises and foreign invested enterprises decreased. In January, import and export of private enterprises reached 768.1 billion, down 10.8%. Among that, export was up 1.3% and import down 32.8%, declining for three consecutive months and 26.5 percentage points more than that of the previous month. Import and export of state-owned enterprises reached 368.8 billion, and that of foreign invested enterprises reached 948.9 billion, down 17.9% and 7.6% respectively.

III. Foreign Investment in China

In January 2015, the absorption of FDI in the country maintained a sound momentum of development. A total of 2,266 foreign-funded enterprises were approved in January, up 31.8% year on year with a contract value of US$33.21 billion, going up 126.2% year on year and actually utilized FDI of US$13.92 billion, going up 29.4% year on year. The main characteristics are as follows:

Utilized FDI in the financial service sector saw a large margin of growth. In January, the actually utilized FDI in the service sector reached US$9.18 billion, taking up 66% of the national total, going up 45.1% year on year. A total of 313 newly-established foreign-funded enterprises were approved in the financial service sector excluding banking, securities and insurance, going up 317.3% year on year with a contract value of US$9.49 billion and actually utilized FDI of US$4.62 billion, going up 476.5% and 1261.7% respectively.

Foreign investment in high-end manufacturing saw a vigorous growth. In January, actually utilized FDI in manufacturing registered US$3.95 billion, taking up 28.4% of the national total, going up 13.9% year on year. Among others, the number of newly-established enterprises in transportation equipment manufacturing grew by 34.8% year on year with the actually utilized FDI going up 103.3% year on year; the contract value and actually utilized FDI in communication equipment, computer and other electronic equipment manufacturing grew by 19.5% and 48.8% respectively.

Investment from major countries and regions maintained steady growth. In January, the actual FDI in the Chinese mainland from the top 10 investors (Hong Kong, the ROK, Singapore, Taiwan, Japan, Germany, the U.S., the UK, Sweden and Saudi Arabia ) amounted to US$ 13.44 billion, accounting for 96.5% of the total, up 34.3% year on year. The investment from Singapore, Taiwan and the U.S. saw a decline while that from Hong Kong, the ROK, Germany, the UK, Sweden and Saudi Arabia maintained rapid growth. The number of newly-established Japan-funded enterprises, contract value and actually in-put capital grew by 3.5%, 46.9% and 3.2% respectively in January.

The scale of foreign investors’ M&A increased. In January, 107 newly-established enterprises by the way of foreign investors’ M&A were approved, down 3.6% year on year, with the contract value (US$8.25 billion) and actual in-put (US$850 million) going up 1083.7% and 1268.6% respectively year on year and the contract foreign capital taking up 24.8% of the national total.

IV. China’s Investment and Economic Cooperation Overseas

Direct investment overseas. In January, Chinese investors made direct investment in 1,105 enterprises in 131 countries and regions around the world, with a combined investment of US$ 10.17 billion (equivalent to 62.28 billion yuan), up 40.6% year on year. Among others, equity and other investment amounted to 53.7 billion yuan (equivalent to US$8.77 billion), accounting for 86.2%, and earnings that were reinvested reached 8.58 billion yuan (equivalent to US$1.4 billion), taking up 13.8%. As of the end of January, China’s total non-financial direct investment overseas amounted to 4.0223 trillion yuan (equivalent to US$ 656.6 billion).

In January, Chinese investors made a direct investment of 100 million or more U.S. dollars in each of the eight countries and regions of Hong Kong, the Netherlands, the Cayman Islands, the U.S., the British Virgin Islands, Indonesia, Germany and Singapore.

The Chinese mainland’s investment in seven major economies (Hong Kong, the ASEAN, the EU, Australia, the U.S., Russia and Japan) in January totaled US$8.12 billion, taking up 79.8% of the national total over the same period of time. The investment in the EU ( mainly the CNPC made an investment of US$2.885 billion in the Netherlands) registered US$3.17 billion, 18.6 times the previous year’s US$170 million over the same period of time. The investment in Hong Kong and the ASEAN grew by 11.5% and 65.6% respectively; the investment in Russia remained unchanged, and investment in Australia and Japan decreased by 69% and 50% respectively.

Contracted projects overseas. In January, the turnover of China’s contracted projects overseas amounted to US$ 11.69 billion (equivalent to 71.63 billion yuan), up 54.8% year on year. The value of newly-signed contracts was US$ 17.02 billion (equivalent to 104.28 billion yuan), up 22.2% year on year. The projects each with a contract value of over US$ 50 million were 67 (26 more than the previous year’s 41 over the same period ) with a combined value of US$ 13.75 billion, taking up 80.8% of the total value of newly-signed contracts. Projects each with a contract value of US$ 100 million or more were 42, an increase of 18 from that of last year.

The newly-signed projects with large contract value in January included the electric transmission and distribution circuit project (US$1.62 billion) in the Democratic Republic of the Congo undertaken by the Shanghai Electric Power Transmission and Distribution Engineering Co., Ltd. , the Chimkent oil refinery modernization phrase II project (US$1.25 billion) in Kazakhstan undertaken by China Petroleum Engineering & Construction Corporation, and the reconstruction project of Bata port (US$650 million contract value) in Equatorial Guinea undertaken by CCCC First Harbor Engineering Company Ltd.

Labor service cooperation overseas. In January, labor service personnel dispatched overseas reached 46,000, an increase of 15,000 over the same period of last year, up 48.4% year on year. Labor service personnel sent overseas for contracted projects were 22,000 and those for labor service cooperation were 24,000. By the end of January, the labor service personnel dispatched overseas amounted to 983,000, an increase of 100,000 over the same period of last year.

V. Service Outsourcing

In January 2015, Chinese enterprises signed 14,440 service outsourcing contracts, with the contract value and executed contract value of US$9.26 billion and 6.84 billion, an increase of 3.3% and 10.6% respectively year on year. Major characteristics are listed below.

Service outsourcing turned from rapid growth to normal development. In January, the contract value of offshore service outsourcing reached US$4.84 billion, down 5% year on year and the executed contract value totaled US$4.75 billion, up 14.8% year on year. The contract value and executed contract value of onshore service outsourcing were US$4.42 billion and US$2.09 billion respectively, with an increase of 14% and 2.1% year on year respectively.

The U.S., the EU, Hong Kong and Japan were major contract markets. In January, the executed contract value of offshore service outsourcing from the U.S., the EU, Hong Kong and Japan were US$1.32 billion, US$0.81 billion, US$0.62 billion and US$0.34 billion respectively, accounting for 64.9% of the total.

The cooperation in service outsourcing with countries along “the Belt and Road Initiatives” maintained rapid development. In January, the contract value and the executed contract value of service outsourcing from those countries reached US$0.9 billion and US$0.73 billion respectively, an increase of 21.8% and 32.3% respectively year on year. The executed contract value of service outsourcing from 11 countries in Southeast Asia totaled US$0.38 billion, an increase of 19.4%. The trade and economic cooperation with the countries of the Belt and Road Initiatives was deepened by carrying out service outsourcing business and promoting service export.

The employment scale of service outsourcing continued expanding. In January, newly increased employees in the service outsourcing sector reached 24,000, among whom 19,000 had college (including junior college) education or above, accounting for 79.2% of the total. By the end of January 2015, the number of employees in service outsourcing enterprises reached 6.096 million, among whom 4.066 million had college (including junior college) education, accounting for 66.7% of the total.

The proportion of knowledge process outsourcing was further improved. In January, the executed contract value of offshore information technology outsourcing (ITO), knowledge process outsourcing (KPO) and business process outsourcing (BPO) reached US$2.82 billion, US$1.38 billion and US$0.54 billion, an increase of 13.4%, 29.7% and -6/6% year on year respectively. The proportion of offshore KPO business featured on knowledge and research and development was further improved.

VI. The Ministry of Commerce Guarantees Market Supply during the Spring Festival

The 2015 Spring Festival is coming and the Ministry of Commerce has taken strong measures to guarantee market supply during the festival. Firstly, the working deployment was strengthened. The comprehensive deployment for market guarantee and supply was conducted, specific requirements for commercial departments nationwide to guarantee market supply were issued and site investigations for market supply situations in such areas as Beijing, Fujian, Jiangxi, Hubei and Hunan by working groups were conducted. Secondly, reserves were released timely. At least 10,100 tons of reserve meat of the central government was directionally delivered to such areas as Inner Mongolia, Tibet, Gansu, Qinghai, Ningxia and Xinjiang together with the Ministry of Finance, including 6,500 tons of mutton, 1,200 tons of beef and 2,400 tons of pork, among which pork was directionally delivered to Tibet. Such 17 northern areas as Beijing and Heilongjiang were organized to deliver the winter and spring reserve vegetables together with the State Development and Reform Commission. All commercial departments organized the delivery of such reserves as meet and vegetables. Thirdly, the monitoring was enhanced. The daily monitoring mechanism for the market of necessities of life was launched, close attention was paid to the situations of the market supply and demand of necessities of life and price changes. Publicity was strengthened and the expectations of the society were stabilized by releasing market information by the media timely. Since winter, nearly 110,000 pieces of information have been released to the society through the internet, television and newspapers.

In general, the market supply of necessities of life across the country is sufficient with stable prices and sound operation. Firstly, the market supply is sufficient. All commercial departments have guided trade circulation enterprises to actively organize supply of goods and increase the volume of stock of holiday goods. The volume of stock has increased by 10%-20% than usual. For example, Beijing has made joint efforts to guarantee the supply of vegetables, with an increase of about 10% in the market supply of goods and almost 30% in the scale of winter reserve vegetables than last year. Jilin has organized 25,000 reserve live animals and 6,000 tons of reserve sugar to deliver to the market. Secondly, the varieties are abundant. All commercial enterprises have actively adapted to the change of consumption structure, increased the supply of high-quality brand goods, and strived to enrich the varieties of goods and meet the multi-layered holiday consumer demands of urban and rural residents. For example, the inventory of Hubei trade circulation enterprises includes more than 700 sorts and more than 22,000 varieties with a total value of more than 110 billion yuan. Shaanxi has prepared 450,000 tons of vegetables of more than 100 kinds such as green beans and cabbage and 160,000 tons of fruits of more than 40 kinds such as apples and dragon fruit. Thirdly, prices are basically stable. The price of grain is generally stable, that of edible oil decreases steadily and the prices of pork, beef, mutton and eggs fall after rise. Only the prices of vegetables rise seasonally, but lower than the level of the corresponding period in the last Spring Festival.

Next, the Ministry of Commerce will closely follow the changes of market supply and demand of necessities of life, do a good job in market operation monitoring, further improve emergency response plans and practically guarantee the market supply work in this Spring Festival, especially in the period of the “two sessions”.

That’s all about the briefing. Now, you are welcome to ask any questions.

CCTV: The State Council recently issued The Opinions on Accelerating the Development of Trade in Services, according to which MOFCOM will launch a project aimed at invigorating trade in services this year. What are the specific objectives of this project? And what are the specific levers in implementing it?

Shen Danyang: You may have learnt from the media over the last couple of days that the State Council had issued a document by the name of The Opinions on Accelerating the Development of Trade in Services. The document sets out the overall requirement, main tasks, policy measures and protection system of accelerating the development of trade in services, especially the export of services, and requires all regions and departments to enhance organization and leadership. According to the State Council’s requirement, MOFCOM is currently formulating implementation measures along with other relevant departments, and will soon take the lead in convening two meetings on implementation with a view to implementing what is required in the State Council document and translating the policies into a reality. The first meeting to be held is a coordinating meeting amongst relevant line ministries under the State Council. This meeting will set out to determine the lead department for each of the key tasks mentioned in the State Council document. The second meeting will be a meeting on implementing the work tasks of the nation’s commerce system. The two meetings will be held immediately after the Spring Festival.

Shen Danyang: At the same time, MOFCOM has begun implementing the project on invigorating trade in services. Already at the National Conference on Commerce Work Minister Gao Hucheng talked about this project. We plan to further expand the overall size of trade in services and optimize trade structure through implementing this project, and strive to grow the total size of services import and export to USD 650 billion in 2015, USD 785 billion in 2017 and over USD 1 trillion in 2020. In implementing the project on invigorating trade in services, MOFOM will work together with relevant departments on the following five aspects of work: First, strengthening planning and guidance. This year we will initiate the preliminary study into the “Thirteenth Five Year” plan for trade in services, with a view of publishing the plan in the first half of 2016. Prior to that we will formulate a guiding catalogue for key services export sectors, which is scheduled to be published this year. Second, improving fiscal and taxation policies. We will make full use of policies such as the special fund for foreign trade and economic development and intensify the support for trade in services. Meanwhile, we will also direct more private funding into trade in services. For instance, we will work together with the Ministry of Finance and the State Administration of Taxation to formulate tax free or tax exemption policies for services exporters. Third, making innovation in financial services. We will encourage financial institutions to make innovations with regard to financial products and services so long as risk is under control, and encourage policy financial institutions to intensify their support for services trade enterprises in their efforts to explore the international market and conduct international business such as overseas mergers and acquisitions, and to support the development of key services trade projects. Fourth, planning and building function zones for trade in services. Beginning from this year we will choose some cities and regions as pilot zones for innovation in trade in services, and plan to set up a batch of pilot cities for services trade innovation and development or some pilot regions and special service export bases. Fifth, building platforms to promote trade in services. We will support trade associations and chambers of commerce as well as promotion agencies to conduct all forms of services trade promotion activities, support enterprises to participate in major trade in services conventions and exhibitions abroad, and to sign cooperation agreements with major trade in services partners and countries along the “One Belt, One Road” so as to conduct pragmatic cooperation under bilateral frameworks.

That’s what we plan to do on the trade in services front, particularly with regard to the project on invigorating trade in services. Thank you for your question.

Phoenix TV: I have two questions. First, on domestic consumption, we have seen that consumption figures with the 5,000 major enterprises under monitoring dropped in January by 4.7% from the previous month. What is the year-on-year growth rate? The CPI data released earlier was less than satisfactory, leading many to worry about a possible deflation at home. I wonder what MOFCOM’s position is on such a view. Second, you have also talked about consumption during the Spring Festival, which is also our concern. During the festival, consumption in Hong Kong and Macau will be quite active. What measures will you take to ensure the supply of agricultural products to Hong Kong and Macau? Given the impact of the avian influenza, how are you going to ensure the quality of live chicken and live poultry supply, which are rather popular amongst the residents in Hong Kong and Macau?

Shen Danyang: Indeed there are some people who are concerned now. Some market observers, economists and media professionals fear there might be deflation. Based on the information we have, including the consumption data I just shared with you for January, we believe the concern is justified. Yet for the moment what we fear is unlikely to come true. The National Bureau of Statistics has not released the data for January’s total retail sales of consumer goods. Based on MOFCOM’s monitoring data, the overall monthly growth rate is a bit lower than that of the same period last year. Although specific statistics are not yet available, the overall growth is positive. We therefore believe that it merits our continued attention. There are also quite a few incomparable factors for the month of January. For example, this year’s Spring Festival and last year’s Spring Festival fall in different months. In roughly one to two months’ time or a quarter’s time, the overall economic growth trend, and particularly the consumption trend, will gradually come into focus. It will not be too late to draw our conclusion by then.

On your question concerning the supply of agricultural products to Hong Kong and Macau, which is also a question drawing the attention of the compatriots in regions, the Central Government attaches great attention to the supply of agricultural products to Hong Kong and Macau. For long the supply from the Mainland to Hong Kong and Macau has been stable, good-quality and safe. MOFCOM has made arrangements in advance for supplying agricultural products to Hong Kong and Macau during the Spring Festival period in 2015. The supply will be like before stable, good-quality and safe. Recently we issued to the commerce authorities in relevant provinces and municipalities and some agents supplying agricultural products to Hong Kong and Macau The Circular on Ensuring the Stable Supply of Agricultural Products to Hong Kong and Macau During the Spring Festival in 2015, which requires relevant units to do their best to guarantee the supply of agricultural products to Hong Kong and Macau during the Spring Festival period, and ensure the quality and safety of the supplied products.

Not long ago, an assistant minister of commerce especially led a team to the Hong Kong and Macau regions to communicate with relevant local departments and industry on this matter. Based on the information we have gathered so far, during the Spring Festival there will be enough agricultural products to be supplied to Hong Kong and Macau, and their quality and safety will be guaranteed. For instance, in order to ensure there is sufficient supply, MOFCOM when arranging the export quotas for live poultry, grain and grain flour supplied to Hong Kong and Macau for 2015 have already joined relevant ministries in consulting sufficiently with relevant departments in the SAR Governments, arranged the quotas in full and distributed them in advance.

In terms of ensuring product quality and safety, although the Mainland has for long developed a business team with time-honored experience in providing stable supplies to Hong Kong and Macau, MOFCOM’s still playing a very active role in supervising the businesses, ensuring strict implementation of the inspection and quarantine system, and cooperating with the inspection and quarantine department to ensure quality and safety, with a view to providing safe and reliable food for the residents of Hong Kong and Macau. Even if the current stock of live poultry and agricultural products is sufficient enough to satisfy the entire demand in the regions’ market, in order to prepare for emergencies such as snow disasters or other situations resulting from a sudden change of the weather, MOFCOM has designated Guangdong and Shenzhen as the “reservoirs” of agricultural products for Hong Kong and Macau. They can serve as a special guarantee in case the aforesaid emergencies take place.

Besides, on the issue of resuming live chicken supply to Hong Kong, the region suspended live chicken imports from the Mainland a while ago due to the avian influenza in Hong Kong. Since the situation has changed now, the Mainland following coordination between the quarantine agencies on both sides has begun to gradually resume the supply of live chicken to Hong Kong from 10 February this year. Thank you for your questions.

Economic Information Daily: We have noted that recently Japanese enterprises including Panasonic, Hitachi and Citizen had closed their factories in China, rendering their employees jobless. This has caught public attention. Does it mean that Japanese businesses are beginning a full withdrawal from China?

Shen Danyang: In recent years, the cost of labor and land, among others, has risen in China. Coupled with a slowdown in economic growth and the poor management of some foreign investment enterprises, a small number of multinational corporations are making adjustment to their China operations, including closing down some individual factories. Japanese enterprises, for example, have indeed closed down some factories. But overall, the number of the factories is limited. In executing their global strategies multinational corporations often conduct mergers and acquisitions to adjust and arrange their global business layout. We believe these are normal operating activities of the enterprises.

As for the situation you talked about concerning Japanese-funded enterprises, I would like to share with you a set of data. In 2014, the number of termination and investment reduction cases concerning Japanese enterprises in China was in fact rather stable. The number of enterprises terminated was basically the same as that of 2013. The number of enterprises with investment reductions dropped by 3.2%. It is fair to say that Japanese investment to China goes in both ways. There is no such a thing as a full exit of Japanese enterprises from China.

As far as January’s statistics are concerned, the number of newly-established Japanese-funded enterprises in China rose by 3.5%, the contractual value of Japanese investment soared by 46.9%, and paid-in capital increased by 3.2%. Judging from these statistics, Japanese investment to China has overall maintained a growing momentum, not the contrary.

CRI: We know that last year China’s actualized foreign investment overtook that of the United States for the first time, and came top in the world. Judging from the statistics you have just released, both the value of actualized foreign investment and the number of newly-established foreign investment enterprises showed an encouraging momentum. Do you think such a momentum will continue? What is your take on the overall prospect this year? Thank you.

Shen Danyang: According to the World Investment Report published by the UNCTAD, global foreign direct investment inflows in 2014 reached USD 1.26 trillion, down by 8% from the level in 2013. However, the inbound foreign investment, excluding the banking, securities and insurance sectors, i.e. non-financial direct foreign investment, China attracted in 2014 reached USD 119.6 billion, rising by 1.7% year on year. Therefore China for the first time became the no.1 recipient of FDI in the world.

This on the one hand shows that China’s development potential is enormous, that China’s has complete infrastructure, a strong industrial supporting capacity and a sound investment climate, and that China still enjoys comprehensive competitive advantages and maintains a relatively strong appeal to multinational corporations. On the other hand, it also proves that the unremitting efforts of the Chinese governments at all level over the last few years have paid off. Since the 18th National Congress of the CPC Central Committee, the Chinese government has sped up the establishment of a new open economic system, further opened up to the outside world and reinforced the protection of the lawful rights and interests of foreign investment enterprises. All these are important reasons why China has always managed to maintain a relatively high level of inward foreign direct investment.

At the same time, it is fair to say that objectively there was an element of coincidence in China’s occupying the world’s no.1 spot in attracting foreign direct investment in 2014. In 2014, the American company Verizon repurchased USD 130 billion of equity from the British company Vodafone, resulting in a sharp decline in the value of inward foreign direct investment to the US and a decrease of USD 86 billion in America’s inward FDI value. The US thus dropped from the no.1 spot in 2013 to the third when it comes to global FDI attraction rankings. Had there been no such a factor, the US would have still been the world’s largest FDI recipient in 2014.

At present, world economic recovery is still slow. International competition for investment is getting ever more heated. The downward pressure on the domestic economy remains substantial. These have indeed created some difficulties and challenges for China to attract foreign investment this year. Considering that we have a relatively strong comprehensive competitiveness in attracting foreign investment, the fundamentals still remain unchanged. More important, measures such as further promoting reform and expanding opening up provide a strong impetus to our maintaining the scale of foreign investment and improving the quality of such investment. Therefore we expect that the size of inward FDI in China will remain stable in 2015. As to whether or not China can still be the no.1 or what will the increase be, it is still hard to predict especially considering that it is still February now and that it will be impossible to predict the investment of the entire year so early. At any rate, we are still confident about China’s ranking among the top investment recipients of the world. In the New Year we are deepening the reform on the foreign investment regime, consolidating laws and regulations governing foreign investment and promoting investment environment transparency and investment facilitation. We will revise and publish the Catalogue for the Guidance of Foreign Investment Industries, largely reduce the access restriction for foreign investment and push for greater opening up in different sectors. We will push relevant agencies to improve the level of law-based administration and enforcement, and offer foreign investment enterprises equal protection and fair enforcement; we will also solicit and respond to the concerns of foreign investors regarding the foreign investment environment, and safeguard the legitimate rights and interests of investors and enterprises. These measures will markedly improve the foreign investment environment and attract foreign investors to China. Thank you for your questions.

NHK: What is the reason for the year-on-year increase of Japanese investment in China in January? In addition, just now Japan published the GDP growth rate for the period from October to December, which is an annualized 2.2%. What do you think of this figure? Does it have any impact on the trade and economic relations between the two countries?

Shen Danyang: There are two reasons for the growth in Japanese investment in China: On the one hand, the attractiveness of the Chinese market itself. Just now I talked about the comprehensive competitive advantage of China in attracting foreign investment, and the fact that the advantages in the overall investment environment remain unchanged and that China remains the most eye-catching and attractive investment destination in the world. And this is the most important reason why Japanese enterprises look to China for investment. On the other hand, this has also to do with the fact that governments at all levels in China, including the central and local ones, have adopted proactive measures to attract foreign investment. They have put in place many measures to further improve the foreign investment climate and raise the quality and level of foreign investment. Furthermore, China has also adopted measures to expand opening up, which is also very much related to the increase in Japanese investment in China. I believe that Japanese investment in China will continue to maintain a basically stable momentum of growth.

You talked about the Japanese economy. We haven’t seen statistics concerning this aspect, and we need to make further analysis. Overall, we hope to see that the Chinese-Japanese trade and economic relations continue to develop stably. Thank you for your questions.

International Business Daily: In early February, the Canadian International Trade Tribunal announced that it initiated antidumping and anti-subsidy investigations into crystalline silicon and thin-film PV modules and laminates originating in China and exported from China. What is MOFCOM’s comment on this?

Shen Danyang: Regardless of China’s opposition, the Canadian Border Services Agency launched in December 2014 antidumping and anti-subsidy probes into Chinese PV imports, even though its eligibility as a petitioner was still in question. Presently the Canadian International Trade Tribunal has initiated investigations into possible injury of Chinese imports to the Canadian domestic industry. The Chinese side is deeply concerned about this.

In order to protect the environment and mitigate pollution, countries around the world are vigorously developing clean energy. As a pillar emerging industry relating to global sustainable development, the PV industry is characterized by highly specialized production and sales, as well as cooperation in sales among different countries. Imposing restrictions on relevant products through trade remedies is not only contrary to the interest of the initiating country but also damages the common interest of the global effort to develop new energies. Therefore, finding a proper solution to the trade frictions on PV and promoting dialogue and cooperation between Chinese and foreign industries is the fundamental way to resolving disputes. We hope the country in question could find a way through communication and consultation to achieve mutual benefits and common win for the industries on both sides. Thank you for your questions.

United Daily News of Taiwan: Last year, cross-strait trade exceeded US$ 190 billion, growing by only a little over 0.2%, whereas the growth rate for 2012 was 16.67%. What is behind the stagnation? What is your outlook on cross-strait industrial cooperation and trade relations in 2015? Thank you. (2015-02-16 10:42:22)

Shen Danyang: Last year, the Mainland’s exports to Taiwan grew by nearly 14%, but its imports from Taiwan dropped by 2.8% year on year. The decline in the Mainland’s imports from Taiwan was the immediate cause for the slowdown in cross-strait trade growth. Actually, exports expanded rapidly, whereas imports sagged. We believe that the slump in imports was caused by two factors. One is that with the Mainland’s economic slowdown and excess capacity in certain sectors last year, the demand for semi-finished manufactured goods shrank. The other is that in recent years, Taiwan’s investment in the Mainland has been shifting from manufacturing to services. The falling share of manufacturing, especially export-oriented manufacturing, also affects the import of investment goods and industrial raw materials from Taiwan.

Besides, we can also see that faced with the downward pressure of the world economy, the imports for processing trade with Taiwan have also come under pressure. According to the Customs, in 2014 the Mainland imported goods worth US$ 12.02 billion from Taiwan under ECFA preferential treatment, which was up by 6.3% and impressive growth. We believe that in 2015 cross-strait trade will maintain the momentum of stable growth, and that cross-strait trade and investment cooperation will continue to enjoy great room for growth. Facts aside, it is hoped that this year, cross-strait trade will continue to grow steadily. With the establishment of new pilot free trade zones, cross-strait investment cooperation, especially in the services sector, represents good opportunities for cooperation between Taiwanese industry and Mainland companies. Thank you for your questions. (2015-02-16 10:42:41)

National Business Daily: In January 2015, China’s imports and exports both dropped. Could you analyze the cause for it? Does this indicate a worse-than-expected foreign trade situation? What is MOFCOM’s response? (2015-02-16 11:17:48)

Shen Danyang: According to the statistics of the GAC and I’ve just share with you, imports and exports did slow in January. There has been much analysis on the cause and whether it is good or bad news. Comments also abound. We’ve done some research. Let’s first take a look at the cause for the slowdown. There’re two special reasons:

One is the continuous slump in commodity prices in the international market. Under such circumstances, businesses tend to wait and see when prices are falling and delay import activities. As a result, China’s commodity imports fell in quantity as well as value. We find that in January, the imports of six major commodities, namely, iron ore, copper slag, copper, coal, crude oil and natural rubber, declined by 0.6%-53.2%, which wasn’t entirely due to weak domestic demand, but had something to do with the fall in prices. Many analyses cited sluggish domestic demand, but actually, we believe both factors were at play. Import prices dropped by 45.2% for iron ore, 41.5% for crude oil, 24.1% for natural rubber, 18.5% for coal, and 14.8% for soybean. Many analysts believe that the fall in prices of commodities in demand in China is no bad news. China’s imports of the major six commodities fell by US$ 19 billion year on year, driving down import growth by 11 percentage points. Commodity prices in the international market do not only affect imports, but also exports. The general slump in prices of other commodities in the international market also bears on China’s export prices and volume. This is one special cause according to our analysis.

The other is the working day factor. There were 21 working days in January, one day fewer than that of previous year. It is estimated that this accounted for losses of US$ 9.54 billion and US$6.68 billion in exports and imports respectively, which drove down export and import growth by 4.6 and 3.8 percentage points.

As for the outlook on trade in 2015, considering all domestic and international factors, the situation is complicated and grave in terms of size and growth speed. That said, on the side of trade mix and quality, we can be very optimistic. In recent years, many visionaries believe that China’s trade should not seek size only. We set great store by restructuring and quality improvement. In this sense, there’s a bright side, even to the statistics of January. For example, in terms of import and export structure, imports fell much more sharply than exports and were the main drag on trade growth. In other words, exports fared better than expected. The working day factor excluded, national exports grew slightly on balance, with impressive performance in certain areas and sectors. Under current circumstances, exports from Central and Western China grew by 4.9%. In breakdown, Hunan jumped by 67.3%, Qinghai by 65.3%, Chongqing by 54.5%, Guangxi by 35.8%, and Shanxi by 30.1%. Besides, such rapid growth isn’t only for this year, but also further growth based on the good performance of last year and the year before last year. These figures are very heartening.

In terms of product mix, in January, export of mobile phones grew by 10.4%, and integrated circuit, by 14.5%, which was also remarkable growth. By the structure of export markets, in January, China’s exports to ASEAN stood at US$ 27.44 billion, up by 15.5% and 2.2 percentage points in the share in total exports year on year. This represents a good momentum. The Mainland’s exports to Taiwan were up by 8.5%, to the UK by 6.5%, to New Zealand by 6.1%, to India by 5%, to the US by 4.8%, and to Canada by 1.9%. Growth in exports to these major markets indicates a head start. (2015-02-16 11:20:29)

Shen Danyang: Another gratifying fact is that exports of the private sector maintained a sound momentum of growth. In January, the private sector exported goods worth US$ 91.9 billion, which was up by 12% in actual terms. Its share of nearly 46% in total exports was two percentage points higher year on year. The private sector is expected to account for over 50% of total exports very soon, which represents a good momentum. Therefore, we can’t simply conclude that trade fared worse than expected in January. Rather, it was a mixture of pros and cons, and good news and bad news.

Of course, we should recognize that there are indeed many uncertainties and complexities in a grim situation. Internationally, the world economy is still in a profound adjustment period. Recovery remains weak. This is the single biggest external uncertainty for us. Domestically, factor costs continue to rise. Traditional competitive advantages are fading, whereas new competitive edge is yet to take shape. The growth of electric and mechanic products and labor-intensive goods, which account for 55% and 30% of total exports respectively, still faces many difficulties.

Despite so, extensive market analysis shows that China’s foreign trade still enjoys at least three favorable conditions:

First, China demonstrates comprehensive competitiveness with a high-quality labor force, full-fledged infrastructure and supporting industrial system and increasingly improved business environment. Second, China has moved faster to transform growth pattern and adjust structure of foreign trade. Progress has been made in market diversification, and emerging foreign trade modes including cross-border e-commerce and market procurement trade are thriving and become new growth points of foreign trade. Third, reform and policy factors have injected impetus into foreign trade, leading to better foreign trade environment, higher facilitation level and greater market vitality. The aforementioned fast export growth in the private sector is related to these factors.

In a word, we need to observe for another one or two months before getting a clear picture of foreign trade growth momentum for the whole year. We are confident in maintaining a proper growth rate of foreign trade this year.

Moving forward, we will work with relevant departments to implement various policy measures on stabilizing foreign trade growth, encourage businesses and localities to try their utmost to stabilize growth. Multiple measures will be taken and four will be focused this year: First, stay committed to transforming growth pattern and adjusting structure. Second, take concrete measures to reduce the burden on enterprises. Third, improve external business environment, including resolving trade frictions. Fourth, encourage companies to enhance competitiveness through innovation and create new advantages in international competition while encouraging businesses while consolidating traditional advantages. (2015-02-16 11:21:20)

Xinhuanet: A question on import and export of services. The figures released several days ago show that China’s services import and export exceeded USD 600 billion in 2014, growing fast at 12.6%. What are the main driving forces and factors behind the growth? Could you predict the trend of China’s services import and export in 2015? (2015-02-16 11:22:30)

Shen Danyang: Calculated on BPM 6 standards, China’s services import and export exceeded USD 600 billion for the first time in 2014, registering USD 604.3 billion, up 12.6% from the previous year. This achievement is very exciting. In analysis, five factors have contributed to the fast growth of services import and export in 2014:

First, stronger industrial foundation. In 2014 China’s services sector accounted for 48.2% of total value-added of three industries, 5.6 percentage points higher than the second industry. Its growth also outpaced the second industry. FDI flows into services sector continued to increase, with actualized FDI up by 7.8% year on year in 2014, laying a solid foundation for services trade development.

Second, unlocked development potential. China’s services sector is young but with great potential. The WTO Secretariat estimated 4.7% net growth of global services import and export in 2014. Above global average, China’s services import and export growth rate even beat the US, the world’s top services import and export power, by 8.8 percentage points.

Third, optimized trade structure. China’s high value-added services import and export grew rapidly in 2014, with import and export of financial service, communications service, computer and information service growing at 59.5%, 24.6% and 25.4% respectively. The rapid growth of high value-added services import and export has optimized trade structure, fostered capital-intensive and technology-intensive companies and facilitated structural adjustment and upgrading of services trade.

Fourth, closer links between trade and industries. The growth of services trade is closely linked with the development of relevant domestic industries. For instance, services trade has thrived thanks to the growth of tourism and household income. In 2014, China reported 23% growth of import and export of tourist service, representing 36.7% in its total services import and export. The fast growth of cultural trade also reflects the great progress in domestic cultural industries.

Fifth, deeper integration into global industrial chain. More and more services trade companies have gone global and integrated themselves into global industrial chain by exporting services. At the same time, import of advanced technology and services is also crucial for meeting people’s spiritual and cultural needs and boosting relevant domestic industries. These important factors are all behind the growth of services trade.

Analysis shows that the five factors driving the fast growth of services trade remain robust this year. As you know, the State Council issued policies to beef up services trade. Therefore, we have every reason to believe that services trade will maintain a growth rate above 10% for the whole year. Thank you for the question. (2015-02-16 11:22:53)

Economic News Department of Beijing News: I have two questions. First, on foreign trade in January. We noticed that China’s trade surplus reached over USD 600 billion, up by 87.6%. Some professionals call it a recessional surplus. What is your comment? Second, on the merger of Didi and Kuaidi. People from the business are concerned about suspected monopoly in the merger. What is MOFCOM’s view? (2015-02-16 11:23:14)

Shen Danyang: For China, trade surplus is not a new thing. China has been running a surplus over the years. As our analysis reveals, China’s trade surplus is an objective reflection of the difference economic structure and division of labor between China and foreign countries against the background of globalization. It is also a common journey traveled by all developing countries. For example, Taiwan, Korea and Japan all went through the similar process.

In January this year, China’s import growth stumbled. Trade surplus growth was caused by special factors, but it did not necessarily reflect the overall trend of trade surplus for the whole year. Some experts also believed that surplus statistics in January were not typical enough to indicate trade surplus surge for the whole year. Therefore, I disagree with the economists as you mentioned.

Let me stress this point. China’s trade surplus is caused by structural difference between China and other countries against the globalization background, and is a stage that China would go through as a developing county moving towards industrialization. It could not be reversed overnight. That said, China places equal emphasis on import and export, and never seeks trade surplus deliberately. You may remember that in November 2014, the State Council issued Several Opinions on Strengthening Import, to identify and implement proactive market-demand-oriented import promotion strategies, enhance import facilitation, encourage larger import of advanced technology, equipment and key components, and stabilize import of resources needed by domestic market. These are new policies never seen before. The document of the State Council in 2014 especially encouraged proper increase of consumer goods import and required faster pace in building import promotion platform. Accordingly, the State Council raised eight specific policy measures. This year, we will collaborate with relevant departments to follow through on the eight policy measures, which will ensure stronger import of this year.

With regard to the case of Didi Dach, we have noticed relevant media reports. However, MOFCOM has not received any reports on concentration of business operators from Didi Dache and Kuaidi Dache. According to the Anti-Monopoly Law and relevant regulations, concentration of business operators above threshold must be reported to MOFCOM in advance. Otherwise, the concentration is not permitted. Thank you for the question. This is the end of the press conference. (2015-02-16 11:23:38)

Shen Danyang: As we are approaching the Spring Festival, on behalf of MOFCOM Information Office, I would like to send festival greetings to all the friends from the press and wish you all the best in the New Year! Thank you. (2015-02-16 11:23:56)