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The Regular Press Conference of the Ministry of Commerce (March 17, 2016)

Friends from the media, good morning:

Welcome to the press conference today. I will brief you the situation of the business performance in January-February, and answer the questions of your concern.

I. Market performance

In January-February, the domestic consumer market remained steady in general. The retail sales of consumer goods reached RMB 5.3 trillion, 0.5 percentage points slower than that of the same period last year. With the price factor excluded, the actual growth was 9.6%. According to the monitoring of the Ministry of Commerce, the sales of the key retail enterprises were up 3.3% year on year, 1.4 percentage points slower than that of the same period last year. In general, the consumer market enjoyed a steady opening. The main features were as follows:

1. Online sale and sale of communication equipments enjoyed a rapid growth. According to the National Bureau of Statistics, in January-February, the online retail sale of the physical commodities was up 25.4%, accounting for 9.5% of the total retail sales of consumer goods, driving it up about 2.1 percentage points. The sale of communication equipments grew fast. In January-February, the sale of communication equipments of enterprises above the designated size was up 20.1% year on year. The sale of 4G mobile phone of key retail enterprises monitored by the Ministry of Commerce was up 46.6% year on year.

2. Service consumption continued its increase. In January-February, the national catering revenue was up 11.3% year on year, 0.1 percentage points higher than that of the same period last year. Among these, the catering revenue of the enterprises above the designated size was up 6.4%, up 1.3 percentage points. The national film box office exceeded RMB 11.2 billion, among which, that of February was about RMB 6.9 billion, hitting a new record of monthly box office, and ranking the first in the world, surpassing the North America. During the Spring Festival Holiday, the number of tourists was up 15.6% year on year and the earning of tourist industry was up 16.3% year on year.

3. Real estate heated up, driving the increase of the related consumption. In January-February, the sales of housing and building material products of the enterprises above the designated size were up 16.4% and 14.9% year on year respectively, 4 and 2.4 percentage points higher than that of the same period of last year respectively.

4. Consumer price continued to pick up. In January-February, CPI was up 2.0% year on year, 0.9 percentage points higher than that of the same period last year. Among these, CPI was up 2.3% in February, enjoying a pick up for four consecutive months. According to the monitoring of the Ministry of Commerce, in January-February, the price of farm products in 36 large and medium size cities was up 6.2% year on year. The prices of pork and vegetable were up 24.3% and 19.3% year on year respectively, and those of fruits, mutton and eggs down 13.7%, 12.1% and 4.8% respectively.

II. Foreign Trade

According to the Customs statistics, China’s total import and export in January-February reached RMB 3.31 trillion, down 12.6% year on year (the same below). In terms of US dollars, in January-February, China’s total import and export reached US$ 510.73 billion, down 17.4%. In February, China’s import and export was RMB 1.43 trillion, down 15.7%. Among these, the export reached RMB 0.82 trillion, down 20.6%; the import was RMB 0.61 trillion, down 8%; the trade surplus was RMB 209.5 billion, down 43.3%. In terms of US dollars, in February, China’s total import and export reached US$ 219.7 billion, down 20.8%. The foreign trade presented the following features:

1. Export decreased largely, and the decrease of import slowed down. In February, the growth of China’s export witnessed a large decrease, attributed to the depressed foreign demands and the high cardinal number of the same period last year. In January 2016, the import volume of 35 economies that had released the data (accounting for 70% of the total import volume of the world) was down 13.9%. China’s export volume in February 2015 was RMB 1.03522 trillion, the highest since 2009, forming a higher comparable cardinal number. All these factors led to the decrease of export in February which was 13.9 percentage points higher than that of last month. Dragged by the price of bulk commodities, the import continued its negative growth. But the decrease in February was 6.7 percentage points slower than that of January. With the price factor excluded, the export of February was down 19.7%, and import up 1.7%.

2. The exports to major trade partners decreased, and the imports from BRICS diversified obviously. In February, China’s export to the U.S., Japan and EU decreased 18%, 14.8% and 14.7% respectively, 13, 14.3 and 7.3 percentage points higher than that of last month. Imports from BRICS diversified. Imports from Brazil and Russia increased 19% and 0.1% respectively, while those from South Africa and India decreased 19.1% and 17.8% respectively.

3. Processing trade continued the negative growth, and the proportion of other trades saw some increase. In February, the import and export of the general trade was RMB 789.2 billion, down 17.6%. Among these, the export decreased 24%. The import and export of processing trade reached RMB 448.8 billion, down 15.6%, witnessing the negative growth for 12 consecutive months with the export down 17.2%. Import and export of other trades was RMB 196.1 billion, down 7.3%, with the proportion in the total import and export up 1.2 percentage points. Among these, the import and export decreased 12.3% and 2.7% respectively.

4. Exports of high-tech products were better than the overall situation, and imports of some major bulk commodities increased but the price dropped. The export of mechanical and electrical products was RMB479 billion, down 18.4% year on year. The export of high-tech products stood at RMB237.3 billion, down 11.6%, 3.3 percentage points higher than that of the total exports year on year. The export of seven kinds of labor intensive products reached RMB168.3 billion, down 28.8% year on year. Among them, the export of toys, bags and suitcases and shoes decreased 33.4%, 31.9% and 29.8% respectively. The import volume of some major bulk commodities increased but the price dropped. The import volume of crude oil, natural gas, iron ore, steel and soybean went up 24.4%, 14.9%, 13.8%, 8.5%, 6.8% and 5.8% respectively, and the import price went down 35.2%, 17.2%, 27.1%, 34%, 14.8% and 12.9% respectively.

5.The imports and exports of the state-owned and foreign-invested enterprises began to drop and the private enterprises saw a positive growth of imports. Imports and exports of state-owned enterprises registered RMB226.1 billion, down 20.8% year on year, with export and import going down 22.3% and 19.4% respectively. The imports and exports of foreign-invested enterprises were RMB687 billion, going down 13% year on year and that of private enterprises reached RMB520.9 billion, down 16.9% year on year, with its exports being RMB362.9 billion, down 23.2%, and imports being RMB158.1 billion, up 2.7% year on year.

6. The export of eastern China was better than the national, and the decrease margin of central and western China was expanded. The imports and exports of eastern China reached RMB1.2164 trillion, down 14.8%, 0.9 percentage point lower than the national total. Among these, the exports of eastern China fell down 18.7%, 2 percentage points higher than the national total exports year on year. The exports of central China and western China reached RMB60.5 billion and RMB75.3 billion respectively, down 28.7% and 29.4% respectively.

III. Foreign Investment in China

In January-February, the actually-utilized foreign capital reached RMB141.88 billion, going up 2.7% year on year. The characteristics of foreign investment in China are presented as follows:

1. The actual utilized FDI grew slightly and the number of the newly-established enterprises reduced. In January-February, a total of 3,396 newly-established foreign-invested enterprises were approved, going down 11.4% year on year. The actually utilized foreign capital reached RMB 141.88 billion (equivalent to US$22.52 billion), up 2.7% year on year (excluding the data of bank, security and insurance). In February, a total of 1,388 newly-established foreign-invested enterprises were approved, going down 11.3% year on year. The actually utilized foreign capital reached RMB 53.63 billion (equivalent to US$8.44 billion), up 1.8% year on year

2.The actual absorption of foreign investment in service sector continued to grow, of which hi-tech service sector grew greatly. In January-February, the actually utilized FDI in manufacturing was RMB 39.1 billion(US$6.18 billion), down 14.9% year on year, taking up 27.6% of the national total. The actually utilized FDI in service sector was RMB 89.16 billion(US$14.21 billion), up 5.7% year on year, taking up 62.8% of the national total. Among these, that in hi-tech service sector continued to grow with an actually utilized FDI of RMB15.91 billion(US$2.52 billion), up 156.6% year on year, taking up 22.5% of the total in service sector(excluding the real estate). The actually utilized FDI in digital contents and relevant service, information technology service and research and design service grew rapidly with RMB5.18 billion (US$830 million), RMB4.66 billion (US$720 million) and RMB3.06 billion(US$490 million) respectively, up 538.9%, 134.4% and 68.8%.

3.The investment from major countries and regions fluctuated and that from US, Japan, Singapore, UK and Germany increased. In January-February, the actually utilized FDI from US, Japan, Singapore, UK and Germany stood at RMB6.29 billion(US$1 billion), RMB4.23 billion(US$660 million), RMB5.75 billion(US$900 million), RMB2.87 billion(US$460 million) and RMB2.74 billion(US$440 million) respectively, going up 110.9%, 14.5%, 53.8%, 120.3% and 8.7% respectively year on year.

4. The contract value of FDI in central and western China grew remarkably. In January-February, the contract value of FDI in central and western China reached RMB25.13 billion (US$3.82 billion) and RMB15.86 billion (US$2.44 billion), going up 26.2% and 14% respectively year on year. The actually utilized FDI in western China reached RMB9.8 billion (US$1.54 billion), going up 8.1% year on year, 5.4 percentage points higher than the national average.

5.Foreign M&A became more and more active. In January-February, the number of newly-established foreign-invested enterprises by M&A reached 199, going down 5.2% year on year. The actually utilized FDI registered RMB39.92 billion (US$6.09 billion), going up 17.3% year on year. The percentage that M&A took among the total actually utilized FDI has risen to 28.1% from 24.6% over the same period of last year.

IV. Outward Investment and Economic Cooperation

Foreign direct investment. In January-February, the non-financial foreign direct investment of China was RMB 195.97 billion (equal to US$29.92 billion), with an increase of 71.8% year on year. The investment to the relevant countries of the “Belt and Road” was US$2.23 billion, with an increase of 41.1% year on year, accounting for 7.5% of the total amount at the same period. In terms of the components of the domestic investors, the local foreign direct investment was US$25.8 billion 2.95 times that of the same period last year, accounting for 86.2% of the total foreign direct investment amount over the same period. The industries of the investment to which the outward investment mainly flew in January- February are as follows: to the service industry with a value of US$10.26 billion, up 31% year on year, accounting for 34.3% of the total investment amount; to the wholesale and retail industry with a value of US$4.28 billion, up 75.4%, accounting for 14.3% ; to the manufacturing industry, with a value of US$3.93 billion, up 145.6%, accounting for 13.2%, among which US$1.82 billion flew to the equipment manufacturing industry, up 193.5%, accounting for 46.3% of the outward investment of manufacturing industry.

Contractual foreign projects. In January-February, the newly-signed contract value of contractual foreign projects business of China was RMB206.65 billion (equals to US$31.55 billion), with an increase of 7.4% year on year and the completed turnover was RMB121.7 billion (equals to US$18.58 billion), down 11% year on year. In January-February, Chinese enterprises newly signed 421 contract foreign projects in the relevant countries along the line of the “Belt and Road”, with a newly-signed contract value of US$15.46 billion, accounting for 49.0% of the whole country at the same time, up 53.2% year on year.

Foreign labor cooperation. In January-February, the labor service personnel dispatched overseas amounted to 65,000, with a decrease of 4,000 over the same period last year. In February, 29,000 labor service personnel were sent abroad with an increase of 5,000 over the same period last year. By the end of February, 989,000 labor service personnel were sent abroad with an increase of 17,000 over the same period last year.

V. Service Outsourcing

In January-February, the contract value of service outsourcing signed by the Chinese enterprises were RMB110.77 billion (equal to US$16.92 billion) and the executed value was RMB79.76 billion, with an increase of 7.5% and 7.1% year on year respectively. The contract value of offshore service outsourcing was RMB75.54 billion and the executed value was RMB52.73 billion, with an increase of 28.5% and 5.2% year on year respectively. In February, the contract value of offshore service outsourcing was RMB31.98 billion and the executed value was RMB26.74 billion, with an increase of 17.1% and 40.6% year on year respectively. Some features are presented as follows:

Firstly, the pattern of the major contract market showed different trends. In January-February, the executed value of offshore service outsourcing undertaken from the United States, China Hong Kong, EU and Japan by China was RMB10.33 billion, RMB9.7 billion, RMB8.48 billion and RMB4.33 billion, with an increase of -19.1%, 54.3%, -3.8% and -4.3% year on year respectively. China Hong Kong became the second largest contract market surpassing the EU. Besides, the contract value of offshore service outsourcing undertaken from Japan by China in the previous two months was RMB4.21 billion, down 27.9% year on year. It was estimated that the market position of Japan would continue to go down.

Secondly, the growth of business process outsourcing was accelerated and the proportion was improved. In January-February, the executed value of offshore information technology outsourcing, business process outsourcing and knowledge process outsourcing were RMB26.91 billion, RMB8.51 billion and RMB17.31 billion, with an increase of -2.5%, 41.4% and 4.9% year on year respectively, each accounting for 51%, 16.1% and 32.8% . The major reasons of the fast growth in the business process outsourcing lie in the rapid development of data processing, call center and supply chain management service. These drove the proportion of the business process outsourcing to be improved 4.1 percentage points.

Thirdly, the market scale of the countries along the line of the “Belt and Road” continued to be expanded. In January-February, the contract value of service outsourcing undertaken from the countries along the line of the “Belt and Road” by Chinese enterprises was RMB11.8 billion and the executed value was RMB8.83 billion, with an increase of 13% and 10.7% respectively year on year. The contract value of service outsourcing undertaken from the Southeastern countries was RMB7.36 billion and the executed value was RMB5.96 billion, with an increase of 5.8% and 36.4% year on year respectively. The contract value of service outsourcing undertaken from West Asian and North African countries was RMB2 billion and the executed value was RMB1.06 billion, with an increase of 80.8% and 10% year on year respectively.

Fourthly, the provinces and cities along the line of the Yangtze River Economic Belt maintained their growth momentum. In January-February, the contract value of offshore service outsourcing undertaken by the provinces and cities along the line of the Yangtze River Economic Belt was RMB41.87 billion and the executed value was RMB34.72 billion, with an increase of 12.2% and 2.1% year on year respectively, accounting for 55.4% and 65.8% of the whole country. Shanghai, Jiangsu province and Zhejiang province in the Yangtze River Delta Region enjoyed favorable basic conditions and environment of business, and a large number of high-quality enterprises and excellent talents gather here. The scale of the offshore outsourcing business accounted for 95% of the Yangtze River Economic Belt, becoming the major force of the development of the service outsourcing industry.

The above is the situation of the previous two months. Now, you are welcome to ask any questions.

CCTV: It is proposed in this year’s Report on the Work of the Government that efforts will be made to improve the level of foreign investment and that China will remain an attractive and popular destination for foreign investment. Please give us a profile of China’s foreign investment utilization this year. What is MOFCOM’s consideration about improving foreign investment quality? Thank you.

Shen Danyang: According to an UNCTAD forecast, the outlook for cross-border FDI in 2016 is less than promising. China cannot escape this unscathed. In fact, as the cost of domestic production factors rises, China’s traditional advantages in attracting foreign investment are gradually diminishing. With “re-industrialization” strategies implemented in developed countries and better terms for foreign investment in developing countries, China is facing new challenges in its bid for more high quality foreign investment.

Despite these challenges, however, we are still confident about further improving our ability to attract quality foreign investment, and making China a popular destination of foreign investment.

Part of this confidence comes from what we already did, and part of it comes from what we are doing.

In 2015, the actualized foreign direct investment in China reached a record high of USD 135.6 billion, up by 5.5% year on year, making China the largest recipient of FDI among developing countries over the past 24 consecutive years. A survey by the UNCTAD indicates that China continues to be listed as the top destination of FDI for in 2016 and 2017. Surveys by the AmCham, European Union Chamber of Commerce in China and JCIPO all indicate that the majority of the respondent businesses remain optimistic about the Chinese market.

In the first two months of this year, the actualized FDI in China reached RMB 141.88 billion, up by 2.7% year on year. Yet we shall not be content with this. Rather, we should follow the Report on the Work of the Government, do our utmost to create a fairer, more transparent and more predictable investment environment, and further improve the quality of foreign investment. To this end, MOFCOM will carry out “six measures”, namely relaxing foreign investment market access, deepening the reform on foreign investment regime, optimizing the regional distribution of foreign investment, improving pilot free trade zone development, innovating the system and mechanism of national-level economic and technological development zones, and improving the investment climate according to international standards, in order to do a good job on the foreign investment front this year. For instance, we will continue to promote the relaxing of foreign investment market access in services sectors such as finance, education and culture, and further open up general manufacturing. We will promote the implementation of the various measures under the pilot program for expanded services opening up in Beijing, implement the policy relating to the basic liberalization of trade in services between the Chinese mainland and Hong Kong and Macau, and increase the breadth and depth of the opening up of the services sector. We will revise the Catalogue of Advantageous Industries for Guidance of Foreign Investment in Central and Western China, and direct more foreign investment to the central and western regions. We will innovate the model of opening up for inland and border regions, speed up the process of information exchange, mutual recognition in supervision and mutual assistance in enforcement in order to facilitate customs clearance between inland, border and coastal regions, and support the development of key regions such as border economic cooperation zones and cross-border economic cooperation zones. We will also further enhance the protection of intellectual property, improve the complaint system for foreign investors and safeguard the lawful rights and interests of investors.

International Business Daily: Turkey terminated the safeguard investigations on imported mobile phones in March this year. What is MOFCOM’s comment on this?

Shen Danyang: On 5 December 2014, Turkey initiated safeguard investigations into imported mobile phones. China noticed that on 3 March this year, the Turkish Economic Ministry terminated the investigations. China welcomes the correct decision the Turkish side made based on WTO rules. This move by the Turkish side will be conducive to the normal trade of mobile phones across the world. It is also in line with the overall interests of the Turkish telecom industry. The Chinese side is willing to promote the cooperation between Chinese and Turkish industries to achieve the application and development of telecom products.

Phoenix Satellite TV: China’s import and export value in the first two months of this year dropped by a big margin. Many people are pessimistic about China’s foreign trade this year. How do you view the overall trend of China’s foreign trade this year? Can we achieve the target of steady growth in foreign trade?

Shen Danyang: According to customs statistics, the value of both import and export suffered major declines in the first two months of this year. This shows that demand in the international market in 2016 remains very weak. The outlook for foreign trade is still very grim. It is worth pointing out that the base value in the first two months in 2015 was relatively high. In January export was valued at USD 199.89 billion, ranking the third highest monthly export value of the whole year. In February the export value increased by 48.2% year on year, marking the fastest growth rate of the entire year. This, plus the influence of the traditional Spring Festival, makes the data of the first two months of a year less reliable for making comparisons, and less reflective of the overall yearly trend of foreign trade.

Despite the grim and complicated situation, China’s foreign trade still enjoys many advantages this year. We remain confident and determined about meeting the task set by the government work report for foreign trade, so that foreign trade will stabilize and improve and play a bigger role in economic and social development.

I know there’s a lot of media focus on this year’s foreign trade. Now let me give you a brief analysis. Recently, we surveyed 20 provinces and municipalities. Responding companies widely believe that 2016 will be more complicated and grave than 2015 for foreign trade. The challenges of 2015, far from ebbing, are on the rise.

Globally, the IMF and the World Bank, among other prestigious institutions, have downgraded their forecasts for world economic growth in 2016 to a six-year low; Baltic Dry Index dropped to a record low of 349 points. Prices of commodities and raw materials keep falling and remain weak amidst geopolitical upheavals and rising trade protectionism and trade frictions. We’ve also noted that the exports of the world’s 30 major economies whose trade data this year have come out all registered sharp declines. Over ten economies reported double-digit drops, including the US, down 10.7%; Japan, down 12.9%; ROK, down 18.8%; Canada, down 12.4%; Brazil, down 17.9%; India, down 13.6%; and Taiwan, down 13%.

Domestically, with rising factor costs, China’s traditional competitive advantage in foreign trade is diminishing. Fixed asset investment keeps slowing as import demand slackens. In particular, given the accelerating offshoring of industries and orders, exports of processing trade have been in decline for twelve months in a row, which is worse than the situation in the international financial crisis. All these indicate long-term difficulties for foreign trade.

While recognizing the gravity and complexity of the state of foreign trade, we can still see that China enjoys strong complementarity with developed and developing countries in terms of industrial structure, sound infrastructure, complete supporting industries, ever-improving business environment, and robust comprehensive competitive edge and comparative advantage.

The fundamentals of China’s foreign trade are in good shape. Meanwhile, foreign trade mix continues to optimize and transformation, upgrading and motivation shift are speeding up. New business types of foreign trade are booming. While focusing on main business, some companies innovate continuously, foster proprietary brands and step up the development of overseas marketing networks. As a result, their international competitiveness keeps rising. More importantly, according to the deployments of the CPC Central Committee and the State Council, MOFCOM has worked conscientiously with related departments to stabilize growth and restructure the economy. A host of targeted policy measures are being implemented or coming, including, among other, rectifying charges in export links and formulating a positive list for charges; further enhancing trade facilitation; optimizing the structure of tax rebate rates and ensuring rebates on time and in full; strengthening export credit insurance, expanding the scale of short-term export credit insurance, and extending full coverage to the export financing of all qualified complete sets of equipment; and encouraging innovation of new business models such as cross-border e-commerce and cultivating new competitive edges in foreign trade. This also means that new momentum of foreign trade is building up. So we estimate that after March, as its slowdown narrows, China’s foreign trade will stabilize and improve. Thank you for your question.

Economic Daily: This year’s government work report sets forth to deepen reform and opening up and introduce new development institutions while emphasizing the essential role of reform in development. How will MOFCOM translate this into specific approaches and measures? Thank you.

Shen Danyang: Following the requirements to advance the overall deployment of the ‘Five in One’ and the strategic layout of the ‘Four Comprehensives’, to implement the development philosophy of innovation, coordination, eco-friendliness, openness and sharing, and to push forward supply-side structural reforms, MOFCOM has put forward a few priorities for deepening reform on the commerce front, including establishing a new institution for commerce development, enhancing IT application, standardization and intensification of circulation, promoting innovative development of trade, raising the standards of FDI utilization, concretely moving forward the Belt and Road, expanding international capacity cooperation, exploring all-dimensional economic diplomacy, and boosting coordinated development of liberalization and security. Each area is broken down into specific implementing measures. Take the innovative development of foreign trade. We will keep to the objective of stabilizing and improving set in the government work report, follow the new requirements for the development of a new system of open economy and do what we can to stabilize and restructure foreign trade for quality imports and exports. Just now, I spoke of the steps we will take for foreign trade. We will also address mechanisms and institutions to resolve bottlenecks in cutting the costs of trade companies, widening their access to finance and enhancing trade facilitation. We will accelerate the cultivation of new growth engine for foreign trade, encourage the innovative development of processing trade, stabilize the export of traditional competitive products, and speed up the growth of cross-border e-commerce, market procurement trade and comprehensive trade service providers. Pilots will be run for innovative development of trade in services while the number of demonstration cities for services outsourcing will be increased. Cultural trade will be promoted. Besides, a more positive import policy will be pursued to guide the reshoring of consumption, enhance import facilitation and improve import discount interest, credit and tax policies to expand the import of advanced technology and equipment, key components and energy and raw materials in short supply. Thank you for your question.

China National Radio: Last week the US Commerce Department said that it was set to place restrictions on ZTE, requiring all its suppliers to apply for an export license before shipping any American-made equipment or parts to ZTE. It was reported that recently the Chinese side is holding talks with the US DOC to discuss the addition of ZTE to the Entity List. How does MOFCOM comment on it?

Shen Danyang: We have noticed relevant report. China’s attitude towards this issue has been very clear. At the moment, ZTE is communicating with the US DOC, and has made some progress. China hopes that the US side will properly handle this issue in view of the overall China-US commercial relations, and refrain from holding back the sound development of China-US business ties. Thank you.

Asahi Shimbun: According to recently released statistics, in January and February China’s outbound investment far exceeded inbound investment to China. Will this situation persist this year? My second question is about services outsourcing. What is your analysis of the continuous decline of Japan’s status in China’s services outsourcing market?

Shen Danyang: Regarding the first question, an important change has taken place in China’s economy and global investment since 2014. That is China has shifted from a net capital recipient to a net capital exporter. In fact, the already published outbound investment data is not complete. This trend already started in 2014 based on comparable terms, and is continuing at the moment. As a result, outbound investment will definitely grow more rapidly than inbound investment this year. As for the overall scale, it is still too early to say whether this year outbound investment will exceed inbound investment, though surely outbound investment will grow faster.

As for the second question on services outsourcing, Japan used to be a major source of China’s services outsourcing businesses. However, based on current trend, its importance is declining. That is to say, Japan is sending less services outsourcing businesses to China. Both changes in Japan’s outsourcing market and structural changes of global service outsourcing markets are at play here. Detailed analysis is needed to identify specific reasons.

China Daily: Recently MOFCOM and relevant departments issued Guidelines on Promoting Parallel Car Importing Pilots (the Guidelines). What are the main policies in the Guidelines? Are there any highlights? Besides, this year’s government work report requires “invigorating used-car market”. There’s reporting saying that MOFCOM is drawing up measures to facilitate used-car trading. Could you please brief us on relevant situation?

Shen Danyang: MOFCOM, along with 8 other ministries including Ministry of Industry and Information Technology, Ministry of Public Security, and Ministry of Environmental Protection, is working on Guidelines on Promoting Parallel Car Importing Pilots. In the Guidelines, a series of policies and measures are stipulated regarding parallel car importing pilots, including how to apply for automatic import license for parallel car importing, and how to deal with detailed issues such as compulsory product certification, inspection and quarantine, customs declaration, registration, etc. At the same time, there are also requirements for parallel car importing pilot companies to perform obligations regarding product safety, product quality, energy conservation, maintenance techniques and information publication. At the same time, the Guidelines further clarify the supervisory responsibilities of local governments in the pilot region. The highlight of the Guidelines is that it demonstrates to the largest extent the reform approach of “doing subtractions with restrictions and doing additions with regulations”.

As for the question on used-car market, as world’s biggest new-car market, China has huge market potential and is on its way to becoming the biggest used-car market. At present, China’s car ownership is around 172 million. Every year more than 24 million new cars are added to the road. In developed countries, the proportion of used cars and new cars in circulation is usually above 1.5:1. Based on this proportion, the trading volume of used cars in China is expected to exceed 36 million in the future. Based on an average price of RMB 55,000, estimated trading value will reach nearly RMB 2 trillion.

This will reduce the stock of used cars, boost the increment of new cars and eliminate old cars so as to unlock the potential of car consumption from all links of the chain. This will also promote the development of repairing, maintenance, insurance and finance, so it is really worthwhile. How can we make the market of used cars more dynamic? According to the studies of MOFCOM, the most important thing is to have quality used cars that are marketable and convenient to use. This will help us address outstanding issues such as lifting limits on transfers of car registration, information transparency and relevant services. MOFCOM is working with relevant government agencies to formulate policies on facilitating transactions of used cars and adopt targeted measures for the above issues at an early date. Thank you for your question.

Southern Metropolis Daily: The day before yesterday was “March 15”, World Consumer Rights Day. We noticed that this year, people feel strongly against fake goods in e-commerce. What kind of measures will MOFCOM take to address it?

Shen Danyang: Just like what was covered by many media on “March 15”, e-commerce indeed faces many problems in its rapid development. The problems worth noting include new problems caused by online virtual transactions and old problems caused by inconsistencies in existing systems and the development of e-commerce. We need to do more targeted work in improving policy and regulatory environment, keeping market in order and strengthening regulations. MOFCOM will focus on coordinating work in five areas this year:

First, we will promote legislation in e-commerce and specify responsibilities of e-commerce platforms and relevant parties. Last year, MOFCOM took the lead in drafting Opinions of the General Office of the State Council on Strengthening the Governance of Infringement and Counterfeit Activities in Internet Area ( No.77, 2015 State Council General Office), drafted Legislation Framework for E-commerce and department rules such as Measures for the Management of the Trading Rules of the Third Party Platform for Online Retail. This year, we will continue to support the NPC Financial and Economic Committee in researching and drafting E-commerce Law and continue to study how to improve regulatory measures.

The NPC Financial and Economic Committee is in charge of drafting the E-commerce Law, which aroused much public interest. MOFCOM supports the Committee in relevant research and drafting of the law. We already did some work last year and will continue this year.

Second, we will establish a unified e-commerce credit system led by the government and joined by all parties. We will crack down on infringement and counterfeit activities in e-commerce harder this year, enhance protection of IPR and create a level playing field for the market.

Third, we will establish an interregional and interagency enforcement coordination mechanism to enhance cooperation between administrative enforcement and criminal justice system and enhance joint supervision.

Fourth, we will launch a real-name system for online qualification review, posting and delivery and facilitate relevant information exchange between regulators and e-commerce platforms to enhance the tracking capacity for infringement and counterfeit activities.

Fifth, we will continue to regulate major products concerning consumer safety and address outstanding issues such as infringement and piracy. Last year, we launched a special campaign against infringement and counterfeit activities online, which was quite effective. This year we will devote more efforts to the work. Thank you for your question.

MNI: Premier Li Keqiang stated in this year’s Report on the Work of the Government that, “we will work to make progress in negotiations on investment agreements between China and the United States and between China and the European Union”. The public are interested to know why these two investment agreements will be signed and the progress of the two negotiations. Could you elaborate on that?

Shen Danyang: Let me first explain what an “investment agreement” is. An investment agreement usually refers to an agreement reached between countries on regulating transnational investment rules in order to promote, protect and regulate transnational investment. By signing an investment agreement, the government of one country offers stable, transparent and predictable investment environment to foreign investors, thus facilitating transnational investment and economic development. In particular, investment agreements signed by countries would usually also make arrangements for opening up investment markets, which offers broader markets and more business opportunities to foreign investors to facilitate economic globalization.

China has signed investment treaties with over 130 countries and regions, but not yet with the US and the EU, which means the three big economies of China, the US and the EU have not made arrangements for rules on investment among them. Thus, China launched bilateral investment treaty negotiations with the US and then the EU to reach high standard agreements on cross-border investment protection, fair competition among investors and market access, in a bid to improve their respective investment environment and market access, and promote cross-border investment and economic development.

On China-US Bilateral Investment Treaty negotiation, since the talks started in 2008, 24 rounds of negotiations have been held and good progress has been made. In July 2013, the two sides agreed to enter into substantive negotiation based on the model of pre-establishment national treatment plus negative list, marking a breakthrough for the negotiation. Following that, the two sides worked conscientiously and basically fulfilled the targets for text negotiation. In the 19th round held in June 2015, the two sides began negotiating the negative list by exchanging offers. Since it was launched, the negotiation has been top on the agenda for the two leaders. During President Xi’s state visit to the US last September, they affirmed it as the top priority in our trade and economic relations, and agreed to push it forward towards a high-standard win-win treaty. This provided immense political momentum for the negotiation. To implement this consensus, the two sides sped up the talks by having four rounds of formal negotiations in the five months following the leader’s meeting and scored new progress.

On China-EU Comprehensive Investment Agreement negotiation, since it was launched in November 2013, nine rounds of talks have been held. Thanks to their joint efforts, the two sides converged on the scope of the agreement by the end of 2015, as requested by the two leaders. The two sides agreed to have five rounds of talks this year and hold intersessions when necessary, with the goal to reach a high-standard and ambitious agreement at an early date. This will not only deepen China-EU comprehensive strategic partnership, upgrade bilateral cooperation, create better conditions and protection for China’s investment in EU, but also help China to deepen reform and opening-up and build a new system of open economy. China will continue to work with the EU side with an active, open and constructive mind for a balanced and win-win outcome. Thank you.

The last question.

CCTV: This year’s government work report aims to “expand the pilot program for cross-border e-commerce and encourage businesses to build offshore export warehouses. What is the consideration for this?

In the so-called “offshore warehouse” model, cross-border e-commerce wholesalers export goods to offshore warehouses by way of general trade and send them to overseas consumers when they complete sales on the e-commerce platform. This is a novel business model. Encouraging businesses to build offshore warehouses is an innovation in foreign trade model to facilitate cross-border e-commerce. It is also an important step to secure growth and upgrading of foreign trade.

Starting from 2014, MOFCOM has been working closely on the e-commerce offshore warehouses to learn the difficulties and potential problems with this model, and we have developed some plans. For the next steps, as requested by the government work report, MOFCOM will take effective measures to support competent businesses to establish offshore warehouses according to international rules, and turn them into new highlights for foreign trade and new drivers for economic growth. We have five measures in general: first, we will make customs clearance more efficient; second, we will cut logistics cost; third, we will streamline marketing chain; fourth, we will make delivery service more efficient; and fifth, we will help businesses to better integrate into overseas circulation system. These are our priorities moving forward. Thank you.

Shen Danyang: That’s all for today’s press conference. Thank you.

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