Good morning, welcome to the regular press conference this month. I will brief you the business performance of January-July as usual, and answer your questions.
I. Market performance in July
In July, the domestic consumer market remained stable. In July, the retail sales of consumer goods reached RMB 2.43 trillion, up 10.5% year on year, 0.1 percentage points lower than that of last month, and up 10.4% with the price factor excluded. In July, the consumer market witnessed a slight decrease but had no lack of highlights. Rural consumption, catering and consumption of some new business types improved continuously.
1. Growth of rural consumption speeded up. In July, the retail sales of consumer goods in rural areas reached RMB 334.2 billion, up 11.9% year on year, 0.1 percentage points quicker than that of June, and 1.6 percentage points higher than that of the urban consumption in July. It contributed 15.4% to the growth of the total retail sales of consumer goods, 0.9 percentage points higher than that of the same period of 2014.
2. Catering consumption picked up. In July, the catering revenue was up 12.2%, 0.6 and 2.8 percentage points quicker than that of June and that of the same period in 2014 respectively. The catering revenue of enterprises above the designated size was up 8.1%, 5.6 percentage points higher than that of the same period in 2014. The growth of catering revenue of enterprises above designated size has been picking up for 9 consecutive months at the growth rate of 6.6% year on year in January-July.
3. Consumption for basic living goods was steady and quickened. In July, among the commodity retailing of enterprises above the designated size, sales of food was up 16.5%, 6.3 percentage points quicker than that of the same period in 2014. The sales of living goods and clothes were up 11.8% and 10.2% respectively, 2.9 and 0.8 percentage points quicker than that of June respectively.
4. Goods for consumption upgrading were in great demand. In July, sales of communication equipments of enterprises above the designated size were up 29.8%, 5.6 percentage points higher than that of the same period in 2014; sales of gold, silver and jewelry were up 14.2% year on year, 13.2 and 25.9 percentage points quicker than in June and the same period of 2014. With the picking up of the sales of commercial housing, and the increasing of demands for upgrading of home furnishing, the sales of building materials of enterprises above the designated size was up 17.9% year on year, 3 percentage points higher than that of the same period of 2014.
5. The new business and industries maintained a rapid development. In July, the sales of online retail enterprises monitored by the Ministry of Commerce was up 39.3%, 1.1 percentage points quicker than that of June. In January-July, the retail sales online of physical commodities was up 37%, accounting for 9.7% of the total retail sales of social consumer goods, and contributing 27.9% to the growth of total retail sales of social consumer goods. The sales of shopping malls monitored by the Ministry of Commerce was up 13.9%, 1.6 percentage points quicker than that of June.
II. Foreign Trade
According to the Customs statistics, China’s total import and export in July 2015 reached RMB 2.12trillion, down 8.8% year on year (the same as below). Among them, the export was RMB 1.19 trillion, down 8.9%, and import RMB 0.93 trillion, down 8.6%. The trade surplus was RMB 263.0 billion, down 10%. In terms of the U.S. dollar, the total import and export reached US$ 347.2 billion, down 8.2%, among which, the export was US$ 195.1 billion, down 8.3%, and the import US$ 152.1 billion, down 8.1%. The trade surplus was US$ 43.0 billion, down 9.1%.
In January-July 2015, China’s total import and export reached US$ 2.22445 trillion, down 7.2% year on year. Among them, the export was US$ 1.26482 trillion, down 0.8% slightly; the import was US$ 959.62 billion, down 14.6%. The main characteristics of the foreign trade in January-July were as follows:
1. In terms of the trade patterns, the export of general trade enjoyed a rapid growth, and the proportion was enhanced. In January-July, the export of general trade was US$ 688.18 billion, up 4.0%, accounting for 54.4% of the foreign trade export, and 2.5 percentage points higher than that of the same period of last year; the export of processing trade was US$ 437.67 billion, down 8.5%, accounting for 34.6% of the foreign trade export, and 3.5 percentage points slower than that of the same period of last year.
2. In terms of the main products, the export of mechanical and electrical products remained a positive growth, and the export of labor-intensive products witnessed a rapid decrease. In January-July, the export of mechanical and electrical products was US$ 723.8 billion, up 1.3% year on year, accounting for 57.3% of the foreign trade export. Among them, the export of mobile phones, lamps and ships enjoyed a rapid growth, up 14.5%, 20.1% and 6.6% respectively. The export of seven kinds of labor-intensive products was US$ 241.29 billion, down 1.1% year on year. Among them, the export of textile, clothing and shoes decreased 1.5%, 6.2% and 1.8% respectively.
3. In terms of the business entities, the export of private enterprises enjoyed a rapid growth. In January-July, the export of private enterprises was US$ 564.32 billion, up 4.6% year on year, accounting for 44.7% of foreign trade export, and 2.3 percentage points higher than that of the same period of last year (42.4); the export of foreign-invested enterprises was US$ 562.13 billion, down 4.8% year on year. The export of state-owned enterprises was US$ 139.37 billion, down 4.3% year on year.
4. In terms of the main markets, exports to the countries alongside “One Belt and One Road” grew rapidly, and export to EU, Japan and Hong Kong witnessed a negative growth. In January-July, China’s export to the countries alongside “One Belt and One Road” like India, Thailand and Vietnam was up 9.8%, 16.3% and 12.5% respectively. The export to the U.S. and ASEAN was up 7.3% and 8.0%. The export to the traditional markets like EU, Japan and Hong Kong was down 4.3%, 11.0% and 10.1% respectively. Export to emerging markets like Russia and Brazil was down 36.1% and 9.6% respectively.
5. In terms of the regional conditions, the export of the Middle and Western China maintained the growth, and the proportion was further promoted. In January-July, the export of 10 provinces in Eastern China (Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong and Guangdong) reached US$ 1.05489 trillion, down 1.2%. The export of the Middle and Western China was US$ 212.13 billion, up 1.1%, accounting for 16.8% of the total export, and 0.4 percentage points higher than that of the same period last year (16.4%).
6. Affected by the price dropping of bulk commodities and weak domestic demand, the import amount was still running low. In January-July, the import volume of eight kinds of bulk commodities including crude oil, plastics, soybean, refined oil, natural gas, paper pulp, grain and copper ore concentrates increased, but the prices decreased. The total foreign currency paid out was down US$ 91.25 billion (RMB 560 billion), with the production cost of the domestic enterprises being largely reduced and the benefit being improved.
III. Foreign Investment in China
In January-July, 2015, a total of 14,409 newly-established foreign-invested enterprises were approved, going up 8.8% year on year. The actually utilized foreign investment reached RMB 471.07 billion (equivalent to US$76.63 billion), going up 7.9% year on year (excluding the data of banking, security and insurance). In July, a total of 2,495 newly-established foreign-invested enterprises were approved, going up 9.6% year on year; the actually utilized foreign capital was RMB 50.55 billion (equivalent to US$8.22 billion), up 5.2% year on year.
1. The actually utilized FDI in service sector sustained its growth. In January-July, the utilized FDI in service sector stood at US$47.5 billion, up 19.6% year on year, taking up 62% among the national total, of which the financial service sector, scientific research sector and comprehensive technology service sector stood out, going up 381.1%, 93.1% and 57.1% respectively. The actually utilized FDI in agriculture, forestry, animal husbandry and fishery registered US$890 million, down 8.4% year on year, taking up 1.2% of the national total. The utilized FDI in manufacturing reached US$23.84 billion, down 5.4% year on year, taking up 31.1% of the national total, of which communication equipment manufacturing, automatic control systems equipment manufacturing, electronic computer components manufacturing and chemical materials and chemical products manufacturing stood out, up 366.4%, 405.4%, 149.9% and 62.1% respectively.
2. Investment from major countries and regions maintained a steady growth. In January-July, the actual input of FDI from the top 10 countries and regions (Hong Kong, Singapore, the ROK, Taiwan Province, Japan, the U.S., Germany, France, the UK and Macao) totaled US$72.18 billion, taking up 94.2% of the actually utilized national FDI, up 8.1% year on year. Among others, investment from Hong Kong, Macao, and France registered US$56.52 billion, US$650 million and US$810 million respectively, up 14.5%, 73.4% and 78.6% respectively; investment from 28 EU countries registered US$4.53 billion, up 18.4% year on year and investment from Japan and the U.S. reached US$2.14 billion and US$1.28 billion, down 24.2% and 29.2% respectively year on year; and investment from the ASEAN countries registered US$4.09 billion, down 2.1% year on year.
In July, a total of 112 newly-established ASEAN-invested enterprises were approved, up 4.7% year on year, and the actual in-put of foreign capital was US$750 million, down 0.5% year on year. A total of 169 newly-established enterprises invested by 28 EU countries were approved, up 11.9% year on year, and the actual input of foreign capital was US$450 million, up 87.4% year on year.
3. The actually utilized foreign capital in eastern China saw a rapid growth. In January-July, the actually utilized foreign capital in eastern China registered US$65.44 billion, going up 10.8% year on year; that in central China stood at US$6.66 billion, going down 7.0% year on year and that in western China was US$4.54 billion, going down 7.8% year on year.
4. The value and percentage of foreign M&A increased greatly. In January-July, a total of 764 foreign-funded enterprises were established by M&A with contract value of US$ 15.43 billion and actually utilized foreign capital US$13.96 billion, going up 18.1%, 161.6% and 322.7% respectively year on year. The percentage M&A takes up among the national utilization of foreign capital has risen to 18.2% from 4.6%.
IV. China’s Investment and Economic Cooperation Overseas
Direct Investment Overseas. In January-July, Chinese investors have made direct investment in 4,482 enterprises overseas in 150 countries and regions around the world, with a combined non-financial investment of RMB 389 billion (equivalent to US$63.5 billion), up 20.8% year on year. Among others, equity and debt instrument investment amounted to RMB329 billion (equivalent to US$53.7 billion), up 27.7% year on year, taking up 84.5% of the national total; reinvestment of earnings accumulated to RMB60 billion, (equivalent to US$9.8 billion), down 6.7% year on year, taking up 15.5% of the national total. By the end of July, China’s accumulative non-financial direct investment overseas registered RMB 4.35 trillion (equivalent to US$709.8 billion).
In July, Chinese investors made direct investment overseas of US$7.5 billion, down 18.6% year on year. Among others, equity and debt instrument investment registered US$6.1 billion, down 20.9% year on year, taking up 81.3% of the total; reinvestment of earnings amounted to US$1.4 billion, down 6.7% year on year, taking up 18.7% of the total.
In January-July, the number of the countries and regions with China’s direct investment above US$1 billion reached 37 , seven of which were above US$1 billion, they are China’s Hong Kong, Cayman Islands, Singapore, the U.S., Netherlands, the British Virgin Islands and Australia. Chinese enterprises have made direct investment in 48 countries along the Belt and Road, with an accumulative value of US$8.59 billion, going up 29.5% year on year, mainly in Singapore, Indonesia, Laos, Russia, Kazakhstan and Thailand.
In January-July, the mainland’s investment in seven major economies which include China’s Hong Kong, ASEAN, EU, Australia, the U.S., Russia and Japan registered US$49.77 billion, taking up 78.4% of China’s direct investment overseas over the same period of time. China’s investment in ASEAN, Hong Kong and the U.S. saw rapid growth, up 57.6%, 118.7% and 35.8% respectively; the investment in EU, Australia, Russia and Japan fell down 36.1%, 35.6%, 19.1% and 8.3% respectively.
Contracted projects overseas. In January-July, the turnover of China’s contracted projects overseas registered RMB483.88 billion (equivalent to US$78.98 billion), going up 9.1% year on year; the newly-signed contract value stood at RMB674.17 billion (equivalent to US$110.04 billion), going up 23.7% year on year. The turnover in July registered US$11.44 billion, up 5.7% year on year, with a newly-signed contract value of US$23.37 billion, up 195.4% year on year.
In January-July, there were 383 newly signed contracts, each with the value over US$ 50 million (an increase of 48 compared with 335 projects over the same period of last year) , totaling US$90.94 billion, accounting for 82.6% of the total newly-signed contract value over the same period of time. There are a total of 237 projects, each with a newly-signed contract value of above US$100 million, an increase of 51 year on year. In July, the projects number with a newly-signed contract value of above US$50 million totaled 70 (an increase of 37 over the same period of last year), totaling US$21.25 billion (an increase of US$15.46 billion over the same period of last year), taking up 90.9% of the total newly-signed contract value. Among them, the number of the projects with a newly-signed contract value of above US$100 million reached 50, an increase of 32 year on year.
By the end of July, accumulated contractual amount of signed export business totaled US$1.47161 trillion and the completed turnover reached US$1.01414 trillion.
Labor service cooperation overseas. In January-July, the labor service personnel dispatched overseas amounted to 303,000, a decrease of 4,000 over the same period of last year, going down 1.3% year on year. Labor service personnel dispatched overseas for contracted projects were 154,000 and for labor service cooperation were 149,000. In July, a total of 40,000 labor service personnel were sent abroad by a decrease of 10,000. At the end of July, the labor service personnel dispatched overseas reached 1,018,000, an increase of 63,000 over the same period of last year.
By the end of July, the labor service personnel dispatched overseas totaled 7,780,000.
Notice 1: The average exchange rate of RMB to US dollars in January-July: 1 American dollar=6.1266 Chinese Yuan RenMinBi
V. Service Outsourcing
In January-July, the contract value of service outsourcing signed by Chinese enterprises registered US$63.82 billion and the executed contract value reached US$47.86 billion, with an increase of 7% and 12.3% year on year respectively. The contract value of offshore service outsourcing was US$40.28 billion and the executed contract value was US$31.79 billion, with an increase of 2.8% and 9.6% year on year respectively. The contract value of onshore service outsourcing reached US$20.46 billion and the executed contract value was US$13.62 billion, with an increase of 15.1% and 18% year on year respectively.
The newly signed contract of offshore service outsourcing appeared a warming trend. In July, the newly signed contract value of offshore service outsourcing by Chinese enterprises reached US$6.01 billion, with an increase of 41.8% year on year, reversing the bleak situation of the newly signed contract value in the first half year. The contract value of service outsourcing undertaken from the United States reached US$1.4 billion, with an increase of 44.9%. The contract value of service outsourcing undertaken from Japan was US$410 million, with an increase of 22.3%.
VI. The Service Trade in the First Half Year
In January-June, the service import and export maintained a stable and rapid development. The total volume of service business import-export added up to US$318.8 billion (not including the government service), with an increase of 13.3% compared with the same period last year. The growth of the service trade was beyond 10% in the two consecutive seasons, an increase of 10.6% in the first season and 15.7% in the second season year on year respectively, showing a rapid growing momentum.
The service business import and export continuously maintained a double-digit growth. In January-June, the service export of China was US$112.1 billion, with an increase of 10.9% and the import was US$206.7 billion, with an increase of 14.6%. The acceleration of the high-added service export further optimized the export structure. The export of telecommunication, computer and information service, the advertising service, the royalty of intellectual property and the culture and entertainment service all enjoyed rapid development, with an increase of 22.7%, 22.7%, 64.9% and 58.65 year on year respectively. The service business import was mainly driven by the traditional service such as tourism and construction, with an increase of 52.7% and 1.6 times respectively.
The proportion of service business import and export in the foreign trade was improved. In January-June, the proportion of the total service business import-export volume in the foreign trade (the sum of goods and service import and export) was 14.5%, with an increase of 0.6 percentage points compared with the same period last year.
In January-July, Chinese enterprises newly signed 1,786 foreign projects contracts with 60 countries along the line of the “Belt and Road Initiative”. The newly-signed contract value of US$49.44 billion accounted for 44.9% of the newly-signed contract value of the foreign projects at the same period, with an increase of 39.6%. The completed turnover was US$34.46 billion, accounting for 43.6% of the total value at the same period, with an increase of 4.2%.
VII. The Situation of Several Significant Activities in the Near Future
1. Minister Gao Hucheng will attend a series of East Asian trade and economic ministers’ meeting
Invited by the rotating chair of ASEAN the Minister of International Trade and Industry of Malaysia Mustafa, the Minister of Commerce Gao Hucheng plans to go to Kuala Lumpur Malaysia to attend the 14th China-ASEAN (10+1) Conference, the 18th ASEAN-China, Japan, Korea (10+3) Conference, the 3rd Trade and Economic Ministers’ Conference of EAS and the 3rd Trade and Economic Ministers’ Meeting of RCEP on August 22-24. This series of ministers’ meeting is aimed at providing the trade and economic preparation work for a series of meetings of the East Asian leaders by the end of this year. It hopes to conduct the negotiations on strengthening the trade and economic cooperation between China and ASEAN and promoting the upgrading negotiations between China and ASEAN FTA and the negotiations of RCEP. It also intends to and exchange views on the relevant regions and the hot issues of the world economy.
2. China will attend the first Oriental Economic Forum
The First Oriental Economic Forum will be held in WO Russia on September 3-5 this year. According to the consensuses reached by the heads of China and Russia during the meeting in the UFA in July, China will send a high-level government delegation to participate in the forum to strengthen the cooperation with Russia in the far-east development.. With relevant departments, the three provinces in Northeast China and Inner Mongolia Autonomous Region, the Ministry of Commerce will organize a strong delegation of entrepreneurs to attend the meeting The delegation includes the large-scale central enterprises, the well-known private enterprises, the financial organizations as well as the key local enterprises conducting much cooperation with Russia. It is estimated that about 150 Chinese enterprises will attend the meeting, expected to be the largest participant.
3. 2015 China-Arab States National Expo will be held
2015 China-Arab States National Expo, jointly hosted by the Ministry of Commerce, the China Council for the Promotion of International Trade and the people’s government of Ningxia Hui Autonomous Region, will be held in Yinchuan Ningxia on September 10-13. The theme of this Expo is “promoting the spirit of the Silk Road and deepening the China-Arab cooperation”. Relevant conferences, forums, docking and exhibition activities will be held, focusing on the joint construction of the Silk Road Economic Belt, trade and economy, information, science and technology, agriculture, health, tourism, culture, etc. Jordan, as the “guest of honor” of this Expo, will hold a series of activities with China in the fields such as the trade and economy, investment, tourism, culture, etc.
CCTV: Statistics show that export declined markedly in July, and that the decrease in export was accelerating whereas that of import was slowing down. What are the main reasons? Further, what is you forecast of foreign trade growth in the second half of the year? (2015-08-19 11:06:01)
Shen Danyang: Our initial analysis indicates that, in addition to the compounded effect of the weak demand in international markets, the rising cost of domestic production factors, the long-term appreciation of the effective exchange rate of the RMB, and the relocation of industries and orders, there is another special reason for the sharp decline in export in July, which is that some irregular growth in the same period last year has raised the basis for the year-on-year rate. This factor ruled out, it is fair to say that the export decline in July is still within the reasonable band of fluctuation.
Despite the downfall in the total value of import and export in July, we do still identify quite a few highlights. For instance, as I said just now, the product mix, market structure and regional distribution are all in the process of optimization. The share of import and export done by private enterprises was rising to 36.2% of total foreign trade, up by 2.1% year on year. The export by private enterprises, which grew by 4.6% in July against the decline in overall export, was a particular highlight.
In terms of import, despite the fall in commodity price and weakening domestic demand, import is still rather low. However, because the quantity of imported commodities such as crude oil, plastic, soybean, finished oil, natural gas, pulp, cereals and cooper-zinc ore has increased thanks to the rising demand for them, the decrease of import value has slowed down, even if the prices of such commodities remain low. The decrease has been slowing down for two consecutive months, and the rate of decrease is now a single-digit one.
Based on the foreign trade growth in the first half of the year and the projection for the second half, we find that the domestic and external situations facing China’s foreign trade are grimmer and more complex than predicted, and are full of uncertainties. Last September, the WTO forecast that world trade would grow at 4% this year. After the second quarter, it downwardly adjusted its forecast to 3.3%. However, based on the import and export statistics of the first seven months of the year, and particularly of the first half of the year, whose statistics were already released, the growth rate of this year’s global trade volume is very likely to be negative. Judging from the statistics gathered and published by the WTO for the first seven months, both major developed and emerging economies have registered negative growth. For instance, the export growth rates in the first half of the year are -5.2% for the US, -15.6% (from January to May) for the EU, -8.1% for Japan, -5.1% for ROK, -2.8% for Hong Kong, -16% for India, -6.4% for South Africa and -14.7% for Brazil. This shows that the world economic recovery is much weaker than expected, and that there is a serious lack of external demand. Therefore, we are less than optimistic about our export performance of the year. Considering that the base figures in the second half of last year was relatively high, and that there was extraordinarily high growth in some months, we cannot rule out the possibility that we will see negative export growth in some individual months in the second half of the year. Yet even so, we expect that there is still hope that we would be able to realize positive export growth for the entire year. China’s share in the global market in terms of export will still increase, whereas decline in import will continue to slow down. The quality and efficiency of foreign trade will further improve. Thank you for your questions. (2015-08-19 11:06:29)
China News Service: The US International Trade Commission (ITC) determined that certain passenger car and light truck tyres imported from China had caused material injury to the US domestic industry and would be subject to high antidumping and countervailing duties. What is the impact of this determination on Chinese enterprises? Is China considering continuing to take the US to the WTO? In addition, we have learnt that some domestic tyre makers are planning to increase exports to the EU and build factories abroad in order to mitigate the impact of the measures. Some believe that an elimination race for the domestic tyre industry is about to begin. What is MOFCOM’s view on this? Thank you. (2015-08-19 11:12:35)
Shen Danyang: Last June the US Department of Commerce made a final determination on its antidumping and countervailing investigation against certain passenger car and light truck tyres imported from China. The duties to be applied to those Chinese enterprises that responded to the investigation range from 30.61% to 51.33%, while the China-wide rate on all other companies is 107.07%. In July the US ITC ruled that there was material injury to the US domestic industry by Chinese imports. This means that the US will impose deposit on involved Chinese tyres exports based on those rates, thus causing a huge impact on Chinese tyre exports to the US.
The US side’s handling of the case, from case initiation to final determination, has many problems. At the beginning when the case was filed, the Chinese side questioned about the eligibility of the petitioner in the case. Yet the US side still decided to accept the petition even though US domestic tyre manufacturers said they were neutral in the case. In the process of investigation, the US investigative authorities used surrogate country data and adverse facts, and artificially determined high duties. Furthermore, the US side, having disregarded China’s specific national condition and relevant WTO precedents, rejected Chinese SOEs’ application for individual duties and imposed a China-wide duty for all other companies. Such was discrimination against and restriction on China’s SEOs and economic system. During the injury investigation, the US determined that the import of relevant products caused injuries to its domestic industry. This determination is contradictory to the truth, apparently influenced by politics and full of protectionist sentiments. Therefore, even if a final determination was made on this case, the Chinese side still urges the US to adopt a responsible attitude and manner, correct the wrongdoing, and create a stable environment for the cooperation between Chinese and American tyre industries. Meanwhile, the Chinese side will continue to defend its own legitimate rights and interests through channels including the WTO Dispute Settlement Mechanism.
At present, the Chinese tyre industry must diversify their markets and have a global layout if they are to achieve sustainable development. We believe that faced with restricted access to the US market and increasing competition in the domestic market, many tyre manufacturers will be more actively engaged in readjusting production structure and speed up their pace to make investment. MOFCOM will as always support and provide guidance for those Chinese tyre manufacturers that are going global and readjusting their structures with a view to achieving sound and sustainable development. (2015-08-19 11:13:32)
CBN: Recently Qunar.com made relevant submissions to the MOFCOM Anti-monopoly Bureau concerning the suspected violation of the Antimonopoly Law and related regulations in Ctrip’s acquisition of eLong. How does MOFCOM comment on this? Besides, does the explosion accident in Tianjin Binhai New Area on 12 August have an impact on the China (Tianjin) Pilot Free Trade Zone? Do you have any initial estimate about the impact on the trade at Tianjin Port? (2015-08-19 11:14:21)
Shen Danyang: On your first question, MOFCOM has noticed media reports on Ctrip’s acquisition of eLong, and has received Qunar.com’s report concerning the suspected absence of a concentration of undertakings review in the acquisition. MOFCOM has acquired concrete information from the informant. Recently, according to the Antimonopoly Law and related regulations, MOFCOM has summoned Ctrip and relevant parties for a talk to acquire more information about the deal so as to maintain fair competition in the market.
On the second question, we, together with Tianjin Commerce Commission, are following the situations closely and conscientiously assessing relevant impact. Should we have further information, we will keep you informed. Thank you. (2015-08-19 11:14:43)
China Daily: There are media reports recently concerning the planned high-speed railway project from Jakarta to Bandung on Java Island, Indonesia, and the heated competition between Japan and China for the project. It is commented that China has a better project design plan, a better value-for-money proposition and better financing terms than Japan’s. What is MOFCOM’s comment? (2015-08-19 11:23:50)
Shen Danyang: On this project, the Chinese side has a better design plan, a better value-for-money proposition and better financing terms than those of the Japanese side. Apart from these advantages, China’s high-speed rail also enjoys some comprehensive benefits such as comprehensive technologies, high operating coefficients, profit sharing and risk pooling. At the same time, the Chinese side will do more in terms of training talent in high-speed rail for Indonesia, setting up assembly factories to transfer technologies, and the comprehensive development of the regions along the rail route, so as to address Indonesia’s concerns to a greater extent. The implementation of the project will have a model effect on the deepening of cooperation between the two countries. On 10 August, Mr Xu Shaoshi, Special Envoy of President Xi Jinping and Minister of the National Development and Reform Commission, submitted the feasibility report on the Jakarta-Bandung railway to the Indonesian side. This demonstrated the Chinese government’s positive attitude in supporting Chinese company’s bid for the Jakarta-Bandung railway project. (2015-08-19 11:24:23)
International Business Daily: On 11 August, the US Department of Commerce published the preliminary determination of the countervailing duty investigation against PET resin products from China. What is the Chinese side’s comment on this?
Shen Danyang: On 11 August, the US Department of Commerce published the preliminary determination result of the countervailing duty investigation against PET resin products from China, determining that the subsidy margins range from 4.27% to 18.88%. The Chinese side has noted that during the preliminary determination, the US side, irrespective of the defense by the Chinese side, still insisted on using unfair and discriminatory practices of the past, and mistakenly determined that there had been subsidies in policy loans, low price of raw materials supply and low price power supply. The Chinese government is deeply concerned about this.
China has always been against the abuse of trade remedy investigations, and hopes that the US could abide by relevant rules of the WTO and be scrupulous in handling this case. It should positively consider the claims of the Chinese respondents, and arrive at a fair and just final determination. The Chinese side stands ready to work together with the US to actively promote dialogue and cooperation between our industries, properly resolve trade frictions and safeguard the sound development of bilateral trade. (2015-08-19 11:38:25)
China Business News: My first question: now that the ITA expansion talks have reached an agreement, what impact will it have on China’s IT industry? Does the final product list of 201 items fully reflect China’s interests? Second, Qualcomm recently announced its bid for CSR of the UK. It is said that the case has already reached the Anti-monopoly Bureau of MOFCOM for the review of the concentration of undertakings. Has it been approved yet? (2015-08-19 11:40:31)
Shen Danyang: Regarding your first question, as the world’s largest producer and exporter and No.2 importer of IT products, China is a major player in global IT value chain. The newly reached ITA will create a stable trade environment for China’s IT exports while supplying cheaper components and equipment to China’s IT industry. This will entice more foreign investors to set up R&D centers and make greenfield investment, driving industrialization with IT application and pushing China’s IT products up the global value chain.
ITA expansion negotiation has spanned more than three years since its inception in 2012. The parties had gone through 17 rounds of heated talks on respective products of interest before agreeing on a list of 201products with overall balanced interest. China is a major trading nation in IT products. Products of Chinese interest account for approximately 20%-30% of the listed items. It is fair to say that the list has fully reflected China’s interests.
As for your second question, I’m sorry for not having the information. We’ll get back to you when more is found out. Thank you for your questions. (2015-08-19 11:41:02)
21st Century Business Herald: E-commerce is booming as off-line retail suffers. According to the statistics of China Commerce Association for General Merchandise, the widespread closing of department stores, which started in 2012, is getting worse this year. As of last April, around 180 domestic and foreign-invested brick-and-mortar department stores had shut down nationwide. What is the cause for that? Where do you think the way forward lies for department stores? Another question is, according to the July statistics that have just come to hand, despite the general growth in outbound investment in the past, ODI dropped markedly in July? What do you make of that? (2015-08-19 11:42:30)
Shen Danyang: Let me first answer your second question related to the ODI decline in July.
The ODI of July stood at USD 7.5 billion, down by 18.6% year on year. Actually this is the second dip after the drop of 15.5% in June. According to our analysis, this is caused by two reasons. One is the technical factor. There were several huge projects in June and July last year, which were absent in the same period of this year. The same rationale is behind the drop of 90.7% in China’s investment in the EU last July. You’ll know if you take a look at the big projects of June and July last year. I won’t go into details today.
The other factor is that energy and mining projects were a big contributor in past ODI. However, energy and mining companies are largely looking on this year. Sagging prices of oil and minerals, among other commodities, drove down mining-bound investment by 22.1% in this year to July. These are the two factors. That said, they won’t bear upon China’s ODI for the whole year. The figures of one or two months can’t represent the large picture of the year, which will continue to see a relatively high growth speed. We estimate direct outbound investment in non-financial sectors to grow by 10%-15% or even higher for the year as a whole.
As for your first question, we have followed and analyzed the closing of brick-and-mortar department stores of late. In recent years, due to outdated business model, rising costs, the emergence of new business types and booming on-line shopping, traditional retailers like department stores and supermarkets have suffered and are being closed to cut losses. You mentioned the number 180. More research is needed for confirmation. That said, there have been many cases of shutdown of department stores and other retailers. Overall, traditional retailing is undergoing accelerated reform and transformation, which reflects the restructuring economy and changing consumer demand and fits the pattern of retail development. Apart from China, many countries in the world are going through the same thing. Off-line retailers need to rely on themselves to explore and change in market competition for the way out. That said, commerce authorities are also responsible for giving guidance. We’ll step up efforts on three fronts to promote the transformation and innovation of brick-and-mortar retailers.
First, we’ll push for the transformation of business model by supporting the joint procurement of brand-goods, and guiding retailers to increase the weight of proprietary trading and shift from sub-lessor-style joint operation to the mixed model of joint operation, proprietary trading and proprietary brands. At present, many department stores and retailers are sub-lessors with very low share of proprietary trading. We need to guide and push these businesses to shift towards a more diversified business model.
Second, we’ll promote the integration of online and offline operation. We’ll guide traditional retailers to embrace the Internet, give full play to the network and logistical strengths of brick-and-mortar stores, and develop integrated models such as online ordering and store pickup, online ordering and store delivery and offline experience, online ordering and online payment.
Third, we’ll guide the coordinated development of multiple business types. Guidance will be offered to department stores and shopping centers to improve business type layout and boost services functions of catering, education, leisure and entertainment to meet varying consumer needs. If department stores sell only goods, consumer demand is obviously limited. But nowadays, many department stores have expanded into catering, education and entertainment like cinema to accommodate multiple layers of consumer demand. So we need to further support the efforts of big retailers for multifunctional and coordinated development of multiple business types. Of course, we’ll also support big retailers to extend to communities and open convenience stores offering fast food, bill payment service and express delivery, so as to provide better services for consumers. (2015-08-19 11:43:04)
Xinhua News Agency: The State Council has recently agreed to launch a comprehensive pilot program for the reform and development of the circulation system of domestic trade in nine cities, including Shanghai, Nanjing and Zhengzhou. Could MOFCOM share with us the goals and contents of the program and the next steps for advancing the pilot? (2015-08-19 11:43:49)
Shen Danyang: The General Office of the State Council printed and issued the Reply Letter on Consenting to Launch a Comprehensive Pilot Program for the Reform and Development of the Circulation System of Domestic Trade in Shanghai and Other Eight Cities on Jul. 29th, which gives MOFCOM go-ahead to work with related departments to run a comprehensive pilot program for the reform and development of the circulation system of domestic trade in nine cities, including Shanghai, Nanjing, Guangzhou, Chengdu, Xiamen, Qingdao, Zhengzhou, Huangshi and Yiwu.
The program planned to run a year or so aims to explore and establish a unified and open circulation system for domestic trade of sound rules and orderly competition as well as a coordinated and effective circulation management system of clear-cut division of labor and matched power and responsibilities. The piloting comprises four aspects: first, an innovation-driven circulation development system will be established. Efforts will be made to create a favorable environment for e-commerce, accelerate the transformation and upgrading of traditional circulation business, step up the building of commerce logistics networks, coordinate urban and rural business networks, and develop a circulation system of integrated domestic and foreign trade. Second, a business environment based on rule of law will be built. Third, a development model for circulation infrastructure will be put in place. Fourth, a unified and effective circulation management system will be set up.
With these elements outlined, it’s up to the pilot cities to make experiments based on local characteristics so as to provide experience for the rest of the country. Moving forward, MOFCOM will work with related departments of the State Council on policy guidance, supervision and promotion, assessment and evaluation and inter-agency coordination for the pilot cities while summing up experience promptly for replication and dissemination. (2015-08-19 11:44:29)
Financial Times: Some foreign media have argued of late that China’s capacity relocation has squeezed the world economy. What is MOFCOM’s take on that? (2015-08-19 11:51:29)
We have heard such comments and arguments, which are totally irresponsible. The capacity cooperation initiated by the Chinese government is mutually beneficial bilateral cooperation based on the varying needs of the countries’ markets to deepen the practical cooperation on economy and related industries. Such practical cooperation is needed by both sides and can’t be oversimplified to capacity relocation.
As the global industrial restructuring speeds up, a striking feature of economic globalization is cooperation with division of labour and complementarity. There is no such thing as the so called “squeezing”. For example, many multinationals which deploy globally do research and development in one area and make products in another. The allocation of resources around the world is up to companies and markets. The ongoing international cooperation in production capacity in China is similar. Can you call it “squeezing”? What is worth mentioning is that in the process of capacity cooperation with other countries and regions, the government of China has always followed market rules, called for compliance with international rules, domestic and foreign laws and regulations and aimed at mutual benefits, win-win results and common development. The government of China also gives consistent full consideration to such factors as natural endowments, supporting capacity and market conditions of host countries with a view to matching projects with actual local needs. We never impose capacity that is unacceptable to the local community, nor do we leave behind capacity that does not satisfy local needs. In the meantime, the government of China keeps expanding the convergence of interests with host countries to help promote the development of local economy and industry and bring more benefits to local people through relevant cooperation projects. (2015-08-19 11:51:44)
Asahi Shinbun: How will the recent steep devaluation of the RMB affect China’s economy? Some analysts say that the devaluation is the government’s move to boost exports. What’s your view on such analysis? (2015-08-19 11:52:39)
Shen Danyang: Your question is actually two-fold. One is about the impact on economy, which is many-sided. Various industries and sectors may respond in different ways to the impact of the exchange rate fluctuation. Therefore, it is hard to define specifically what the impact will be. We need specific analysis for different sectors and industries.
Regarding the second part of your question, after days of adaptation since the People’s Bank of China announced on August 11th to adjust the yuan’s reference rate against the US dollar based on a market-maker quote system, the RMB central parity rate and spot rate have witnessed a markedly smaller difference and the benchmark and reference of the central parity rate has been reinforced.
In our view, the short-term fall of the yuan’s central parity rate against the US dollar caused by the change in central parity quote system is more like a one-off reparative adjustment in the accumulated deviation of the central parity rate from spot rate since the second half of last year. It is believed that this adjustment helps deepen the reform of market-oriented exchange rate formulation mechanism, gives the market a larger role to play in forming RMB exchange rate and further boosts market confidence in the RMB.
Exchange rate fluctuation is a double-edged sword. The change in RMB value affects foreign trade in many ways. Labor-intensive businesses and companies operating on real-time settlement basis may gain benefits. But as I mentioned earlier, different companies have different responses. Those highly dependent on imports and laden with foreign debts will see a hike in costs. We think that a more flexible exchange rate and the normalization of two-way floating of the currency after adjustment will have a more profound impact on foreign trade than the short-term devaluation of the RMB. We suggest companies further strengthen exchange rate risk management, apply more hedging instruments, settle more in the RMB and constantly increase awareness and ability of responding to exchange rate risks. (2015-08-19 11:53:10)
Shen Danyang: That’s all for today’s press conference. Thank you. (2015-08-19 11:53:45)
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