Friends from the media:
Good morning! Welcome to the press conference today. I’m glad to meet you again. I will brief you the situation of the business performance in January-May and that in May 2016, and answer the questions of your concern.
I. Market performance
In May, the domestic consumer market enjoyed a steady growth. The retail sales of consumer goods reached RMB 2.66 trillion, going up 10% year on year. The actual growth was 9.7% with the price factor excluded，0.4 percentage points higher than that of April, up 0.8% month on month. The growth of the total retail sales of consumer goods in January-May was up 10.2% year on year. The actual growth rate (price factor excluded) of the retail sales of 5,000 major retail enterprises monitored by the Ministry of Commerce has picked up for three consecutive months. The main features are as follows:
1. The upgraded goods were in great demands. In May, the automobile sales of enterprises above the designated size was up 8.6% year on year, 3.5 and 6.5 percentage points higher respectively than that of April and that of the same period of last year; the sales of SUV was up 36.3% year on year; that of new energy automobiles was up 141% year on year. Consumption related to housing grew rapidly. The sales of building materials of enterprises above the designated size increased 16.8%, and that of furniture up 15.1%. Intelligent and environment-friendly products were hot in the market. Among the enterprises monitored by the Ministry of Commerce, the growth rates of sales of 4K TV, double-door refrigerator, 4G cell phone and tubling-box washing machine were 15.9, 14.7, 13.8 and 12.6 percentage points higher than those of the products of the same kinds.
2. Trade in services witnessed a good growth trend. In May, the national catering revenue reached RMB 287.8 billion, up 10.9% year on year, and up 11.3% year on year in January-May. In January-May, the revenue of film box office reached RMB 20.7 billion, exceeding that of the first half of last year. Tourism consumption remained prosperous. During the Labor’s Day Holiday, the per capita consumption of domestic travel surpassed RMB 2,000, up 10% year on year.
3. Online retail maintained a rapid growth. In January-May, the online retail sales of physical commodities reached RMB 1.46 trillion, up 25.9% year on year. Its proportion in the total retail sales of consumer goods increased to 11.3%. In May, the online retail sales of the key retail enterprises was up 25.5% year on year, 23.4, 18.3 and 17.9 percentage points higher than those of department stores, supermarkets and shopping centers respectively.
4. Consumer price remained steady. In May, CPI was up 2.0% year on year, 0.3 percentage points slower than that of April. In 36 large and medium size cities monitored by the Ministry of Commerce, the prices of agricultural products were up 6.4% year on year, 4.1 percentage points slower than those in April, down 5.4% month on month. The prices of grain, oil, vegetable and eggs maintained steady. The price of pork continued to increase, with the wholesale price of pork reaching RMB 26.36 per kilogram, up 3.2% month on month, up 36.5% year on year and 0.7 percentage points lower than that in April.
II. Foreign Trade
According to the Customs statistics, China’s total import and export in January-May reached RMB 9.16 trillion, down 3.2% year on year (the same below). In terms of the US dollars, in January-May, China’s total import and export reached US$ 1.41 trillion, down 8.6% year on year. In May, China’s total import and export reached RMB 2.02 trillion, up 2.8%. Among these, the export was RMB 1.17 trillion, up 1.2%; the import was RMB 0.85 trillion, up 5.1%. The trade surplus was RMB 324.8 billion, down 7.7%. In terms of the US dollars, China’s import and export in May reached US$ 312.1 billion, down 2.6%. The foreign trade in January-May presented the following features:
1. The export maintained a little bit growth and the import realized the positive growth. In May, China’s export continued its growth. The year-on-year growth was 2.9 percentage points slower than that in April, but the export increased by RMB 46.43 billion compared with that in April. Because of the low cardinal number of the same period of last year, the import of May realized the first positive growth since November 2014. Calculated by the comparable price with the price factor excluded, the export in May was up 4.7% and the import up 10.4%.
2. Export to major economies fell while import from Brazil and Australia increased. In January-May, export to the traditional markets like the U.S., EU, Japan and Hong Kong was better than the average export level of the whole country. Among these, export to EU and Hong Kong was up 1.6% and 1.0% respectively, while export to the U.S. and Japan was down 4.3% and 1.1% respectively. Export to the countries alongside “Belt and Road” like Philippines, Thailand and India maintained its growth. In May, export to ASEAN and EU was up 9% and 3.8% respectively, 3.6 and 5.6 percentage points lower than that in April. Export to the U.S. decreased 6.5%, dragging the whole export growth down 1.2 percentage points. Export to Russia and India was up 36.4% and 18.5% respectively, 12.1 and 11 percentage points higher than that in April. Import from Brazil and Australia was up 32.6% and 17.9% respectively, 21.2 and 28 percentage points higher than that in April.
3. The proportion of general trade increased, and the other trade enjoyed rapid growth. In May, the import and export of the general trade was RMB 1.1659 trillion, up 6.6%, accounting for 57.7% of the total import and export, increasing 2.1 percentage points year on year. Among these, the export was up 4.3%, driving the national export up 2.4 percentage points. The import and export of the processing trade was RMB 557.7 billion, down 7.5%, seeing a 15-month negative growth. The import and export of the other trade was RMB 295.3 billion, up 10.5%, driving the national import and export up 1.4 percentage points, with the export down 2.3% and import up 8.6%.
4. The export of labor intensive products was better than that of the mechanical and electrical products, and the import volume of some of the bulk commodities increased but the price decreased. The export of seven kinds of labor intensive products reached RMB 1.1028 trillion, up 2.0%. In May, the export was RMB 253.8 billion, up 3.9%, 2.7 percentage points higher than that of the total export. The export of toys, plastic products, textile products and clothing was up 9.7%, 9.7%, 7.1% and 5.3% respectively. The export of mechanical and electrical products and high-tech products decreased 0.8% and 2.8% respectively, dragging the whole export down 1.2 percentage points. Import volume of part of the bulk commodities increased but the price decreased. Among these, the import volumes of copper ore, crude oil, refined oil, soybean, natural gas, copper products and paper pulp increased 47.9%, 38.6%, 29.6%, 25.1%, 21.2%, 17% and 16.1% respectively, but their import prices decreased 18.3%, 28.7%, 24.2%, 5.6%, 26.8%, 13.6% and 6.7% respectively.
5. Private enterprise contributed most to the export growth, and the import of state-owned enterprises stop decreasing and began to increase. In January-May, the export of private enterprises was up 5.7%, and the proportion was up to 46.9%. The export of state-owned enterprises and foreign invested enterprises was down 8.0% and 7.8% respectively. In May, the export of private enterprises was RMB 574.1 billion, up 4.3%, contributing 171.6% to the total export growth. The export of foreign invested enterprises was RMB 481.3 billion, down 5.5%, dragging the total export down 2.4 percentage points. The import of state-owned enterprises was RMB 194 billion, up 2%, recovering the positive growth after 24 months. The import growth of foreign invested enterprises and private enterprises was 9.7 and 3.2 percentage points higher than that of April respectively.
6. The import and export of Eastern and Central China were better than those of the whole country, and the import of Western China grew fast. The export of eastern China was down 0.2%, better than the whole country, and accounting for 84.2% of the total export. The export of Central and Western China was down 6.7% and 12.6% respectively. In May, the import and export of Eastern China were RMB 1.7274 trillion, up 2.9%, higher than the overall growth with the export up 1.3%. The import and export of Central China were RMB 150.5 billion, up 5.2%. Among these, export was up 10%, with the proportion in the national total export up 0.6 percentage point year on year. The import and export of Western China were RMB 141 billion, up 0.5% with the import up 18.5%.
III. The Foreign Investment in China
In January-May, China’s utilization of foreign investment showed the following features:
1. China’s input of FDI continued a steady growth while the actual use of FDI in May decreased slightly. In January-May, a total of 10,871 newly-established foreign-invested enterprises were approved, up 13.5% year on year. The actually utilized FDI amounted to RMB343.55 billion (US$54.19 billion), up 3.8% year on year(excluding the data of banking, security and insurance). In May, 2,573 newly-established foreign-invested enterprises were approved, going up 43.6% year on year, and the actually utilized foreign capital reached RMB56.77 billion(US$8.89 billion), decreasing 1% year on year.
2. The absorption of FDI in hi-tech service sector and hi-tech manufacturing increased. In January-May, the actually utilized FDI in service sector reached RMB241.8 billion (US$38.22 billion), up 7% year on year, taking up 70.4% of the national total. Among these, that in hi-tech service sector accumulated to RMB40.38 billion (US$6.37 billion), going up 94.7% year on year. The amount of the actually utilized FDI increased remarkably in the information technology service, digital content and its relevant service, R&D service and design service, reaching RMB 15.32 billion, RMB7.69 billion and RMB9.89 billion respectively, and going up 238.3%, 88% and 33.9% respectively year on year.
In January-May, the actually utilized FDI in manufacturing was RMB98.86 billion (US$15.52 billion), down 3.2% year on year, taking up 28.8% in the national total. Among these, that in hi-tech manufacturing reached RMB25.88 billion (US$4.06 billion), going up 2.3% year on year. Those in medicine manufacturing and medical equipment and instrument manufacturing stood out with a growth of 111.6% and 47.4% respectively year on year.
3.The Investment from major countries and regions continued to increase and that from ASEAN and EU decreased slightly in May. In January-May, the actual input of the investment from the top ten countries and regions (calculated by the actual input value of foreign capital) amounted to RMB324.64 billion (US$51.22 billion), taking up 94.5% of the total national actual use of foreign capital, going up 4.5% year on year. Over the same period of time, the actual input of foreign capital from the ASEAN countries and 28 EU countries stood at RMB19.01 billion (US$2.98 billion) and RMB26.02 billion (US$4.12 billion) respectively, going up 16.8% and 27.4% respectively year on year. That from the countries along the “belt and road” reached RMB19.42 billion (US$3.05 billion), going up 4.5% year on year.
In May, the actual input of foreign capital from the ASEAN countries and 28 EU countries stood at RMB3.37 billion (US$530 million) and RMB3.95 billion (US$620 million) respectively, going down 39.2% and 18.9 % respectively year on year.
4. The input of FDI in western China was higher, that in central China decreased and that in eastern China remained stable. In January-May, the actually utilized FDI in western China amounted to RMB26.25 billion (US$4.1 billion), going up 31.2% year on year, far more higher than the national average. That in central China was RMB 20.19 billion (US$3.18 billion) going down 25.8% year on year. The actually utilized FDI in eastern China reached RMB297.12 billion (US$46.91 billion), up 4.7% year on year.
5. The actual use of foreign capital by foreign M&A continued to increase. In January-May, a total of 544 newly-established foreign-invested enterprises were approved with an actual use of foreign capital RMB71.77 billion (US$11.11 billion), up 3.2% and 19.9% respectively year on year.
IV. Outward Investment and Economic Cooperation
Foreign direct investment. In January-May 2016, the Chinese domestic investors carried out the non-financial direct investment in 4,136 outward enterprises in 151 countries and regions, with an accumulative investment of RMB$479.26 billion (US$73.52 billion, up 61.9% year on year). In May, the foreign direct investment was RMB87.61 billion (US$13.44 billion). By the end of May, the non-financial direct investment of China amounted to RMB6.1 trillion (US$936.56 billion).
In terms of the distribution of countries and regions of the foreign direct investment, in January-May, the investment of China in North America, Oceania, Asia and Latin America increased 208%, 72.4%, 62.8% and 50.5% respectively year on year. The investment in Africa increased 5% slightly and the investment in Europe decreased 14.7%. The non-financial direct investment in 49 countries related to the “Belt and Road” was US$5.63 billion, up 15.8% year on year, accounting for 7.7% of the total in the same period.
Foreign contractual projects. In January-May, the turnover of the foreign contractual projects was RMB326.46 billion (US$50.08 billion), down 3% year on year. The newly-signed contractual value was RMB492.1 billion (US$75.49 billion), up 11.7% year on year. The turnover completed in May was US$10.52 billion, up 7.6% year on year, and the newly-signed contractual value was US$16.55 billion, up 53% year on year.
Foreign labor cooperation. Since 2016, China has sent all kinds of labor with a number of 181,000. In May, China sent 40,000 people, with a decrease of 4,000 compared with that of the same period last year. By the end of this May, the number of China’s dispatched laborers reached 987,000, with a decrease of 20,000 compared with that of the same period last year.
V. Service Trade and Service Outsourcing
In January-May, the contractual value of the Chinese service outsourcing was RMB349.07 billion (US$53.06 billion) and the executed value was RMB227.42 billion, up 24.8% and 11.2% year on year respectively. Among these, the contractual value of the offshore service outsourcing was RMB237.58 billion and the executed value was RMB146.98 billion, up 37% and 9.2% year on year respectively. In May, the contractual value of the offshore service outsourcing undertaken by China was RMB40.45 billion and the executed value was RMB32.86 billion, up 32.8% and 21.5% year on year respectively. Some features are presented as follows:
Firstly, the United States, Europe, Hong Kong, Japan and South Korea are the major markets of China's international service. In January-May, the executed value of the offshore service outsourcing undertaken by China from the United States, Europe, China Hong Kong, Japan and South Korea was RMB32.93 billion, RMB24.42 billion, RMB22.73 billion, RMB11.69 billion and RMB10.29 billion respectively, accounting for 69.4% of China's total executed value of the offshore service outsourcing. China’s service outsourcing undertaken from South Korea enjoyed a rapid development and the executed value increased 55.3% year on year.
Secondly, the information technology outsourcing continued to hold a dominant position. In January-May, the executed value of the offshore information technology outsourcing, business process outsourcing and knowledge process outsourcing undertaken by China was RMB72.77 billion, RMB23.78 billion and RMB50.43 billion respectively, accounting for 49.5%, 16.2% and 34.3% correspondingly. The service business of the integrated circuit and electronic circuit design and the software research and development undertaken by the Chinese enterprises increased 25.8% and 13.6% respectively year on year, driving the executed value of information technology outsourcing to rise 10.3% year on year. The information technology outsourcing maintained the leading advantage.
Thirdly, the provinces and cities along the line of the Yangtze River Economic Belt continued to maintain a high-middle-speed development. In January-May, the contractual value of the offshore service outsourcing undertaken by provinces and cities along the line of the Yangtze River Economic Belt was RMB116.4 billion and the executed value was RMB91.65 billion, up 9.6% and 6% respectively year on year, accounting for 49% and 62.4% of the whole country correspondingly.
Fourthly, the onshore market potential has been constantly released. With the profound implementation of the strategy of the “Internet+” and “double creation project”, the scale and potential of the onshore service outsourcing market have been constantly released and motivated. In January-May, the contractual value of the domestic onshore service outsourcing was RMB111.49 billion and the executed value was RMB80.44 billion, up 5% and 15% respectively year on year.
VI. Trade and Economic Cooperation between China and Serbia, Poland and Uzbekistan
Trade and economic cooperation between China and Serbia. In 2015, the bilateral trade volume between China and Serbia was US$549 million, up 2.2% compared with the last year. Among these, the export of China was US$420 million, down 2.2% and the import was US$130 million, up 18.8%. In January-April 2016, the bilateral trade volume was US$176 million, down 1.9% year on year. Among these, the export of China was US$121 million, down 9.2% and the import was US$55 million, up 19.1%. China mainly exports mechanical and electrical products, shoes, vehicles and accessories, steel products and textile to Serbia. China mainly imports wood and wooden products and electrical machine from Serbia.
By the end of April 2016, China invested US$85.51 million in Serbia and the major investors were China Machinery Engineering Corporation, China Shandong International Economic and Technical Cooperation Group Ltd and Healthcare Co., Ltd, etc. Serbia invested US$34.46 million in China. The turnover of the contractual projects completed by Chinese enterprises in Serbia totaled US$750 million.
Trade and economic cooperation between China and Poland. Poland is one of the most important trade and economic partners of China in the Central and Eastern Europe. In recent years, the two countries have constantly made positive progress in the cooperation in the fields such as trade, investment and project contracting.
In 2015, the trade volume between China and Poland was US$17.09 billion, down 0.6% year on year. Among these, China’s export was US$14.35 billion, up 0.6% and the import was US$2.74 billion, down 6.5%. Poland has become China’s largest trade partner in the Central and Eastern Europe for 11 consecutive years. In January-April 2016, the trade volume between the two countries was US$5.42 billion, up 2.6% year on year. Among these, China’s export to Poland was US$4.56 billion, up 5.2% and the import from Poland was US$860 million, down 9.5%.
By the end of April 2016, Poland invested 303 projects in China with an actual investment of US$210 million and the direct investment of China in Poland was US$364 million. The turnover of contractual projects completed by China in Poland was about US$485 million.
Trade and economic cooperation between China and Uzbekistan. In recent year, the China-Uzbekistan trade and economic relationship maintained a sound development. China has become the second largest trade partner, the largest investor and the largest cotton export market (accounting for about 40% of the cotton export of UZ) of Uzbekistan.
China mainly exports mechanical equipment, chemical products, agricultural products, steel and oil products to UZ and mainly imports natural gas, cotton and natural uranium from UZ. According to the statistics of China, in 2015, the trade volume between China and UZ was US$3.5 billion, down 18.2% year on year. Among these, China’s export was US$2.23 billion; down 16.7% year on year and the import was US$1.27 billion, down 20.7% year on year. In January-April 2016, the trade volume between China and UZ was US$1.19 billion, up 3.6% year on year. Among these, China’s export was US$650 million; down 2.9% year on year and the import was US$540 million, up 12.5% year on year.
According to the statistics of the MOFCOM, by the end of April 2016, the non-financial direct investment from China to UZ was about US$510 million. According to UZ, the direct investment and debt from China to UZ has exceeded US$6.5 billion by now. There are 70 implementation projects of cooperation, mainly in the fields such as energy, exploitation of mineral resources and light industry. There are 600 Chinese enterprises registering in UZ. UZ invests 62 projects in China, with an accumulative investment value of US$7.88 million. The contractual value of contracted projects signed by China in UZ was US$6.83 million, with an accumulative turnover of US$4.75 billion.
VII. The 6th APEC E-Commerce Business Alliance Forum
The 6th APEC E-Commerce Business Alliance Forum (hereinafter referred to as “the forum”) will be held in the city of Jinjiang, Fujian province on June 29-30. The forum is hosted by APEC and the Chinese Ministry of Commerce and jointly undertaken by China International Electronic Commerce Center, the Secretary of APEC E-Commerce Business Alliance and Jinjiang Municipal People’s Government. Themed on “boosting the mutually beneficial trade by the cross-border e-commerce”, the topics covers developing of the Internet and data economy, eliminating the obstacles along with SMEs’ internationalization and integration into the global value chains, digging out the new drive for economic growth, and realizing more even, sustainable and inclusive growth. The main activities include the main forum, the foundation meeting for the 2nd panel committee of the alliance and the visits to the cross-border e-commerce enterprises.
The 6th APEC E-Commerce Business Alliance Forum is an important event for the APEC. Hosted by the APEC and the Chinese Ministry of Commerce, it has been held in China every two years since 2004 and five sessions have been held in Yantai, Qingdao, Beijing, Chengdu and Yiwu consecutively. It has contributed to the goal of APEC regional non-paper trade, the application and innovative development of E-commerce and the quality-and-efficiency improvement of the economy of the APEC member countries.
So far, the preparatory work for the 6th APEC E-Commerce Business Alliance Forum has been going on smoothly.. Attending will be the governmental officials from over 10 APEC members such as the US, Australia, Japan, ROK, Philippines, Vietnam, Malaysia, Peru, Chile, Russia, Singapore and China’s Taipei, entrepreneurs from well-known cross-border enterprises and experts from the academic circle. Those who have confirmed to attend the forum includes Assistant Minister of Commerce Wang Bingnan, Executive Director of the APEC Secretariat Dr Alan Bollard,Director of Economic Cooperation and Trade for United Nations Economic Commission for Europe Madam Virginia Matos, and Secretary General of International Port Community Systems Association Richard Morton.
The achievement of this forum will be reported to the APEC Senior Officials’ Meeting and the APEC E-Commerce Steering Group as an important part of the APEC activities in 2016. It will also be released to every APEC economy through the official website of APEC.
VIII. The Theme Day of the Ministry of Commerce for the National Food Safety Publicity Week
According to the uniform deployment of the Food Safety Office of the State Council, the Ministry of Commerce will hold the theme day of the Ministry of Commerce for the National Food Safety Publicity Week -- “ tracing from the wholesale link” in the city of Hefei, Anhui province on June 18, 2016. There will be visits to the retrospective food safety system and the initiative of “jointly building the retrospective food safety system, providing safe service and goods” among industries will be launched. Representatives from the relevant departments, associations, enterprises and media will attend the experience activity.
As the member unit of Food Safety Commission of the State Council, the Ministry of Commerce attaches much importance to the food safety. Since 2010, MOFCOM has supported 58 cities to build the retrospective system for meat and vegetable pilots in five batches, and helped 18 origins of the traditional Chinese medicines to build the pilots of retrospective system for the traditional Chinese medicines nationwide, aiming to promote the model innovation of food safety management through technology innovation, and advance the model transformation of food safety safeguard through the transformation of developmental modes. It’s an important event at the level of central government for the National Food Safety Publicity Week 2016, aiming to publicize the retrospective system and the idea of safe consumption for operators and consumers and urge people from all walks of life to engage in the traceability so as to form a landscape of food safety management engaged by the whole society.
The above is the major situation. Now you are welcome to ask any questions.
Shanghai Securities: One year has passed since China-Korea FTA was signed. We noticed that China-Korea trade in the first four months of this year did not register a growth as anticipated. What are the main reasons? How does the Ministry of Commerce think of the prospect of China-Korea trade? Thank you.
SHEN Danyang: Many media have been watching closely the development of the two-way trade since China and Korea signed the bilateral FTA last year. The trade declined in the first months of this year mainly because of price drop caused by sluggish demand in international markets, changes in short-term demand caused by restructuring of the Chinese and Korean economies, as well as fluctuation of exchange rates. Despite these elements, we are of strong confidence in the prospect of China-Korea trade. We also have an optimistic outlook on further growth of the two-way trade in the second half of this year. In particular, the FTA gives us more reasons to be confident of this trade relationship in the medium to long term.
The China-Korea FTA was signed on June 1st, 2015 and took effect on December 20th. Two tariff cuts were made by both sides on December 20th last year and January 1st this year. On the Chinese side, the two tariff cuts cover 92% of all tariff lines, and 20% of tariff lines are subject to duty free treatment. On the Korean side, the two cuts cover 93% of all tariff lines and 50% of tariff lines enjoy duty free treatment.
In the context of gloomy global trade, the China-Korea FTA plays a positive role in boosting confidence of businesses and promoting economic and trade links between the two countries. According to the survey and statistics of the Ministry of Commerce, 50% of companies report growth or substantial growth after the FTA entered into force. 57% of companies report increase or substantial increase of inquiries and orders. More and more companies are learning and using the favorable policies granted by the FTA to reap more benefit. Bilateral trade would have suffered an even greater decline if the FTA had not been signed. The above-mentioned factors have had significant impact on China-Korea trade. Thanks to the FTA, bilateral trade did not suffer a deep drop. We hope the trade will resume a positive growth in the second half of this year and will develop robustly next year and in the long run.
It worth noting that driven by the FTA demonstration areas of economic cooperation at subnational levels between China and Korea have achieved preliminary results. For instance, Weihai, one of the demonstration areas, has been developing a fast track for China-Korea trade and facilitating the development of China-Korea cross-border e-commerce companies and service providers. Weihai has seen a steady growth of trade with Korea this year despite the negative overall trend.
Thank you for the question.
We are interested in the acquisition of SAB Miller by AB InBev. It’s said that the US government will soon approve the deal and probably the Ministry of Commerce will also approve it. Is it true? In addition, will the Ministry approve China Resources’ acquisition of equity of Snow Beer owned by AB InBev? Thank you.
SHEN Danyang: The Ministry of Commerce has received the notification on AB InBev’s acquisition of SAB Miller and China Resources’ acquisition of Snow Beer equity. Anti-monopoly Bureau of the Ministry is now conducting anti-monopoly investigation on the two cases. By far there is no confirmed news about approval.
CCTV: It is reported that the US Department of Commerce has issued to Huawei an administrative subpoena, requesting Huawei to submit all information related to its export to DPRK, Iran, Syria, Cuba and Sudan in the past five years as cooperation in the US export control investigation on communication technology. What’s the comment of the Ministry of Commerce?
SHEN Danyang: We have noticed relevant news report. The US Department of Commerce sent administrative subpoena to Huawei to request its cooperation in the export control investigation. The Chinese side is concerned about this move and hopes that the US side can conduct the investigation in a fair and just manner. Thank you for the question.
International Business Daily: Please talk to us about the outcomes of the 4th round of China-Germany Intergovernmental Consultation held from 12 to 14 June on the trade and commerce front.
Shen Danyang: From 12 to 14 June, Premier Li Keqiang and Chancellor Angela Merkel co-chaired the 4th round of China-Germany Intergovernmental Consultation in Beijing. This round of consultation has produced fruitful results on the trade and economic front, of which there has been quite a lot of media coverage. Among all the results, those that were mainly promoted by MOFCOM fall into the following four aspects:
First, Minister Gao Hucheng signed on behalf of the Chinese side two new bilateral cooperation statements with the German side. One is the Joint Statement of Intent under the China-Germany Economic Cooperation Joint Commission signed with the German Federal Ministry for Economic Affairs and Energy. The other is the Joint Statement of Intent on Preparing the China-Germany Sustainable Development Center signed with the German Federal Ministry for Economic Development and Cooperation. In the first statement, the two sides agreed to incorporate regional cooperation into the China-German Economic Cooperation Joint Commission, and organize roundtables and project presentations under the framework of the joint commission to support primarily Sichuan, Anhui and Liaoning provinces in their commercial cooperation with Germany, with a view to promoting economic transformation and upgrading as well as sustainable development of the regions concerned.
The second aspect of deliverables is that the two sides reached much consensus through high-level and pragmatic meetings and exchanges. MOFCOM co-sponsored with the German Federal Ministry for Economic Affairs and Energy a meeting for Premier Li and Chancellor Merkel with the China-Germany Economic Advisory Committee. Business leaders from Germany’s Siemens, Thyssenkrupp, ALBA, CLAAS, and China’s China Railway, CRRC and Baosteel, among others, shared their views and proposals with regard to Sino-German industrial cooperation in smart manufacturing, cooperation in third-party markets, and trade and investment environment. As Premier Li Keqiang said, with candid, pragmatic, pertinent and forward-looking discussions, the China-Germany Economic Advisory Committee played an important role in enabling Chinese and German enterprises to explore cooperation opportunities and making recommendations and proposals to the two governments. The Co-Secretariats of the Economic Advisory Committee also jointly organized a CEO Roundtable, at which 34 renowned business leaders exchanged their views on topical issues such as the prospect of Sino-German trade and economic cooperation under the new circumstances, and synergizing the “Made in China 2025” strategy with Germany’s Industrie 4.0.
The third aspect is that MOFCOM and relevant German government ministries had a good exchange of views. Minister Gao Hucheng had a meeting with his German counterpart Minister Gerd Müller of the Federal Ministry of Economic Cooperation and Development, in which they compared notes on deepening the new type of Sino-German development cooperation. China International Trade Representative Zhong Shan of MOFCOM had a meeting with his German counterpart Matthias Machnig, State Secretary at the Federal Ministry for Economic Affairs and Energy to discuss issues such as bilateral trade and economic relationship, supporting EU’s delivery on its obligations under Article 15 of the Protocol on China’s Accession to the WTO, and enhancing cooperation in third countries.
The fourth aspect is that witnessed by the Premier and the Chancellor, the two sides signed ten commercial contracts involving areas such as high-speed railway, automobiles, steel and environmental protection, with a total value of over USD 10 billion. Thank you for your question.
CCTV Finance: Statistics released by the Brazilian Federation of Agricultural Exporters indicated that China became the largest monthly export market for Brazilian beef in May. How does MOFCOM view this? Does it suggest that there is a bright prospect for China-Brazil cooperation in agricultural trade and investment?
Shen Danyang: Although I have not yet seen the statistics on China’s imports from Brazil in May from the Chinese customs, I believe that the statistics you have quoted from the Brazilian Federation of Agricultural Exporters are generally reliable. According to these data, Brazil exported to China 20,300 tons of beef valued at USD 84.38 million in May, making China the largest monthly export destination of Brazilian beef for the first time in history.
Agricultural trade is an important component of China-Brazil bilateral trade. Since 2008, China has always been the largest export market for Brazil. In 2015, bilateral trade in agriculture was valued at USD 20.4 billion, accounting for 10.9% of China’s total agricultural trade during the same period of time. China imported USD 19.82 billion worth of agricultural produce from Brazil, which is China’s largest source of soybean and poultry imports and second largest source of soybean oil imports.
We know that China’s market potential for agricultural imports is huge, and that Brazilian agricultural products are competitive and adaptive in the market. Under the current international trade malaise, it is all very reasonable that beef products became a new area of growth in our trade, thanks to the efforts of the two governments in trade diversification and promotion.
The potential in China-Brazil agricultural cooperation not only lies in trade, but also in investment. In recent years, Chinese enterprises such as COFCO, Chongqing Grain Group, Shangdong Guanfeng Seed Science and Technology Co., Ltd. and Anhui Fengyuan Group have had agricultural investment cooperation with Brazil in areas such as agricultural cultivation, processing, storage and logistics, all with pretty good results. I believe with the concerted efforts of the two sides, China and Brazil are going to have a brighter prospect in agricultural trade and cooperation.
Yicai: According to the report by Wall Street Journal on Jun. 10th, XpressWest, a private US railway company, announced the termination of its partnership with CREC on the high-speed railway project connecting Las Vegas with Los Angeles and that the company would continue to look for other partners and cooperation models to move forward the project. What is MOFCOM’s response? Another question, China’s non-financial ODI from January to May amounted to US$ 73.52 billion as compared to US$ 54.19 billion in FDI. Does this mean that China’s ODI this year will be dramatically bigger than FDI? Thank you.
Shen Danyang: For your first question, we’ve noted the recent unilateral declaration by XpressWest of the termination of its cooperation with CREC US, followed by a statement from CREC. As we understand, in Sept. 2015, CREC US and XpressWest signed a framework cooperation agreement on establishing a joint venture and accelerating the launch of a high-speed railway project linking Las Vegas to Los Angeles. The two sides should conduct investment cooperation in line with market principles and common business practices. They should also honour their commitments in done deals and seek appropriate ways to resolve disputes and maintain their rights and interests in accordance with law.
As for your second question, you’ve perceptively grasped the fact that China’s ODI has exceeded its FDI. Such is the situation in the past months. I’d like to raise two points in response to your question.
First, the current FDI growth is sound on the whole. Reflecting the basic law of market development, such growth will continue.
Second, overall, a growing ODI and its overtake of FDI is welcome news. Some market analysis of late has pointed to some anomalies in ODI growth rate, but we believe it’s sound on the whole. Some are concerned that the surge in demand for foreign exchange stemming from exceptionally high and short-term ODI growth might weigh on China’s foreign exchange reserves and balance of payments. Related departments are looking into potential risks in the short term and considering whether this calls for targeted preventive regulatory measures. That said, these won’t affect the large picture. This year’s ODI will overtake FDI by conventional statistics and it’s all right on the whole.
Xinhuanet: At the ongoing 8th Straits Forum, Vice Chairman Hu Chih-chiang of the Kuomintang suggested expanding cross-straits petty trade by first, raising the volume of petty trade, and second, opening more ports on the Mainland. As the competent authority, how does MOFCOM take that?
Shen Danyang: Petty trade is a beneficial supplement to cross-straits trade, playing a significant role in advancing cross-straits trade and promoting direct commercial links between the two sides. Thanks to the convenient transport, low costs, short cycles and agility of petty trade, it has become a channel or primary choice for essentials for production and life of Taiwan to access the Mainland market. It is still playing a unique and positive role in serving Taiwanese businesses in the Mainland, enhancing cross-straits trade in agro-produce and fishery products, and facilitating cross-straits people-to-people exchanges.
Since 2007, MOFCOM, in concert with relevant departments, piloted more liberalized regulatory measures for petty trade in Fujian, Zhejiang and Guangdong in three installments. Measures liberalizing tonnage and transaction amount have shown remarkable results. Take Fujian as an example. From 2007 to 2014, its petty trade with Taiwan grew 23.4% annually on average, higher than cross-straits general trade. So moving forward, we will continue to take positive steps to promote the healthy and stable growth of petty trade with Taiwan and further cement our commercial ties.
Outlook Weekly: Judging by the outcomes of the 2rd China-CEEC Ministerial Meeting on Promoting Trade and Economic Cooperation, the cooperation between China and CEEC countries has been deepening steadily. What new opportunities of trade and economic cooperation do you think the two sides have under the Belt and Road Initiative? What major projects does China have in these countries at the moment?
Shen Danyang: The just concluded 2rd ministerial meeting generated a wide range of results. In relation to the Belt and Road Initiative, China and CEEC countries had in-depth discussions on aligning development plans, and deepening mutually beneficial cooperation on trade, investment, international production capacity, equipment manufacturing and infrastructure, which were very productive. We believe market opportunities will multiply in all these areas. Still at a modest size, two-way trade and investment has been expanding rapidly and shows a great prospect. We hope businesses from both sides will closely follow and fully grasp these opportunities.
Moreover, the railway renovation project in Montenegro has commenced, direct flight has opened between China and Hungary, and the Czech Republic, and regular trains between China and the Europe are up and running. We believe with the implementation of the Belt and Road Initiative, businesses will embrace ever more opportunities in CEEC countries with win-win results.
In fact, the Belt and Road Initiative, since it was proposed in 2013, has been widely endorsed and participated by the 16 CEEC countries. As there is a strong demand amongst these countries for economic restructuring and infrastructure upgrading, Chinese companies have already launched or planned to launch a large number of projects in areas such as infrastructure, logistics and storage, railways, energy, communications, chemical industry, aircraft, ship building and machinery manufacturing. For example, a new bridge across Danube between Serbia and Belgrade is open, the dredging and flood control project in Wroclaw, Poland has been basically completed, and the renovation of the Serbian stretch of the Hungary-Serbia railway has been launched. A number of other projects are well under way, such as the E763 Expressway in Serbia, Miladinovic-Stip and Kicevo-Ohrid Expressways in Macedonia, North-South Expressway in Montenegro, installation of power transmission lines in Poland by Pinggao Group, renovation of Kostolac Power Station in Serbia, Stanari power plant in Bosnia and Herzegovina, and the logistics park in Hungary. Moreover, the railway renovation project in Montenegro has commenced, direct flights have opened between China and Hungary, and the Czech Republic, and regular trains between China and the Europe are up and running. We believe with the implementation of the Belt and Road Initiative, businesses will embrace ever more opportunities in CEEC countries with win-win results.
Hong Kong Commercial Daily: Have China and the US exchanged their latest negative lists? Are there any ongoing negotiations? What are the main modifications in the updated negative lists?
Shen Danyang: Information on this shall be released in a day or two, but since you’ve asked, I will briefly explain here. Expectations are high, but it is not easy to conclude the negotiations. We have generally maintained a sound momentum in recent years, and started negotiations on the negative list, which is the most substantive part of negotiations. During the 8th round of Strategic and Economic Dialogue last week, BIT negotiations was naturally the elephant in the room, and the two sides committed to exchange modified negative lists in mid-June and speed up negotiations to reach a high-standard and mutually beneficial agreement. These commitments have been incorporated into the outcomes of the 8th round of Strategic and Economic Dialogue, reflecting the political will and confidence of both sides to advance negotiations. The two sides have exchanged their revised negative list offers as scheduled, and are working for new progress through intensive negotiations. Please be patient and I’m sure you will be updated very soon. Thank you.
Shen Danyang: This concludes our press release today. Thank you.