Friends from the media, good morning! Welcome to the regular press conference today. I will brief you the situation of the business performance in the first half of this year and that in June 2016, and answer the questions of your concern.

I. Market performance

In the first half year of 2016, China’s consumer market realized a stable growth. The retail sales of consumer goods in January-June reached RMB 15.6 trillion, going up 10.3% year on year, 0.1 percentage points higher than that of the first five months; the retail sales of consumer goods in June went up 10.6%, 0.6 percentage points higher than that in May. It is the highest growth rate of a single month this year. In June, the actual growth rate of the retail sales of the 5,000 enterprises monitored by the Ministry of Commerce was 0.2 percentage points higher than that in May, realizing a four-month going up. The main features are as follows:

1. Online retail sales and part of entity business maintained a rapid growth. In January-June, the online retail sales of the national physical commodities was up 26.6% year on year with the accumulated growth rate speeding up for two consecutive months; its proportion in the total retail sales of consumer goods was further promoted to 11.6%, 0.6 percentage points higher than the total amount of the whole 2015. Among the entity businesses, the sales of shopping malls, convenience stores and supermarkets enjoyed a relatively rapid growth, with the growth rate of 7.5%, 7.3% and 6.8% respectively.

2. The growth rate of rural areas and Middle and Western China took the lead. The growth of rural consumption was higher than that of urban areas. In the first half year, the rural retail sales of consumer goods reached RMB 2.2 trillion, up 11.0% year on year, 0.8 percentage points higher than that of urban areas, maintaining the trend that is higher than that of the urban area since 2013. The consumer market of the Middle and Western China accelerated the growth. In January-May, Chongqing, Guizhou, Yunnan, Sichuan, Anhui and Henan realized a rapid growth of 11.4% to 12.9%.

3. The sales of the automobile market picked up obviously. Impacted by the upgraded consumption and new policies such as halving the automobile purchase tax for 1.6 or lower liter cars, the sales of automobiles of enterprises above the designated size in January-June was up 7.7% year on year, 2.4 percentage points higher than that of the same period of last year; that in June was up 9.5%, accounting for 25.4% of the retail sales of consumer goods of enterprises above the designated size, 0.8 percentage points higher than that of the same period of last year. In the first half year, the sales of automobile was up 8.1% year on year, among these, the sale of passenger car of 1.6 liter or lower liters was up 17.9% year on year; the sales of SUV was up 44.3% year on year; and the sales of new energy automobiles was up 126.9% year on year.

4. The market of service consumption continued the expansion. In January-June, the national catering revenue was up 11.2% year on year, among which, that of the enterprises above the designated size was up 6.6%, 0.3 percentage points higher than that of the same period of last year. The catering enterprises were active in transformation and development. Public catering and online take-out catering were welcomed. In June, the growth of sales of Chinese fast food of the catering enterprises monitored by the Ministry of Commerce was 6.3 percentage points higher than that of Chinese dinner. Consumption for culture and entertainment continued to thrive. In the first half year, the national film box office totaled RMB 24.6 billion, up 21% year on year. Tourism market was in great demand. In the first half year, the Chinese civil aviation transported passengers 230 million, up 12.5% year on year.

5. The price of life necessities fell slightly. In January-June, CPI was up 2.1% year on year, 0.8 percentage points higher than that of the same period of last year. The growth of the prices of pork and vegetable, whose price increased obviously at the beginning of the year, slowed down or decreased recently. In 36 large and medium size cities monitored by the Ministry of Commerce, the prices of agricultural products in June were up 4.3% year on year, 2.1 percentage points slower than those in May， down 3.4% month on month. The wholesale price of pork was up 0.4% month on month, and up 31.8% year on year with the year-on-year growth 4.7 percentage points slower than that of May; the prices of vegetable and eggs decreased 4.6% and 1.1% respectively year on year.

With the implementation of China’s reform policies, the resident income increased steadily. It is expected that the consumer market in the second half year would enjoy a steady growth.

II. Foreign Trade

According to the Customs statistics, China’s total import and export in January-June reached RMB 11.1335 trillion, down 3.3% year on year. Among these, the export was RMB 6.4027 trillion, down 2.1%; import was RMB 4.7307 trillion, down 4.7%. (In terms of the US dollars, in January-June, China’s total import and export reached US$ 1.7127 trillion, down 8.7% year on year. Among these, the export was US$ 98.55 billion, down 7.7%; the import was US$ 72.72 billion, down 10.2%). In general, the trend that China’s foreign trade is picking up has not changed and it shows the following features:

1. The private enterprises were still the major force of export. In January-June, the export of private enterprises accounted for 46.7% of the national total, 2.6 percentage points higher than that of the same period of last year.

2. The export to part of countries and regions related to the “Belt and Road” was better than the general. In January-June, China’s export to India, Thailand and Russia increased 1.8%, 2.9% and 10% respectively; export to Japan and EU decreased 6.1% and 4.4% respectively, better than the average level.

3. The export of the large-sized complete sets and high value-added products kept a positive growth. In January-June, the export of the large-sized complete sets of equipments was up 3%, and the export of the high value-added products like communication equipments and integrated circuit increased 10% and 2.9% respectively.

4. The Import and export of the new business types of foreign trade grew rapidly. Cross-border e-commerce trade, marketing purchase trade, foreign trade comprehensive service enterprises continued to remain a rapid growth, becoming the new growth points of foreign trade.

5. The import volume of part of bulk commodities kept growth. In January-June, the import volume of 10 kinds of bulk commodities like crude oil, iron ore and copper concentrate increased but the prices decreased. The volume was up 2.3%-38.7% but the prices down 9.0% -35.8%. The payment was reduced US$ 52.65 billion, which benefited the enterprises in reducing cost and improving efficiency.

III. The Foreign Investment in China

The national overall absorption of FDI sustained its growth. In January-June, a total of 13,402 newly-established foreign-invested enterprises were approved, up 12.5% year on year. The actually utilized FDI amounted to RMB 441.76 billion (US$69.42 billion), up 5.1% year on year (data of bank, security and insurance were not included). In June, 2,531 newly-established foreign-invested enterprises were approved, going up 8.5% year on year, and the actually utilized foreign capital reached RMB 98.21 billion (US$15.23 billion), increasing 9.7% year on year.

The absorption of FDI in hi-tech service sector and hi-tech manufacturing increased, with the growth of hi-tech service being bigger than that of hi-tech manufacturing. In January-June, the actually utilized FDI in service sector reached RMB 310.79 billion (US$ 48.94 billion), up 8% year on year, taking up 70.4% of the national total. That in hi-tech service sector accumulated to RMB 53.74 billion (US$8.47 billion), going up 99.7% year on year. Among these, the information technology service, data content and relevant service, R&D and the service of design stood out with an increase of 305.9%, 67.9% and34.9% respectively year on year.

The actually utilized FDI in manufacturing was RMB 124.85 billion (US$19.53 billion), down 2.8% year on year, taking up 28.3% in the national total. Among these, that in hi-tech manufacturing reached RMB 31.47 billion (US$4.92 billion), going up 6.2% year on year. That in medicine manufacturing and medical equipment and instrument manufacturing stood out with a growth of 107.8% and 74.9% respectively year on year.

The investment from major sources kept a steady growth. In January-June, the actual input of the investment from the top ten countries and regions (calculated by actual input value of foreign capital) amounted to RMB 417.73 billion (US$ 65.65 billion), taking up 94.6% of the total national actual use of foreign capital, going up 5.7% year on year. Among these, those from the US, UK and Germany grew by 142.6%, 114.3% and 97.6% respectively. The growth of information transmission, computer service and software industry, scientific research, technology service and geological prospecting industry and manufacturing stood out. Over the same period of time, the actual input of foreign capital from the ASEAN countries stood at RMB 20.88 billion (US$ 3.27billion), up 1.3% year on year. That from 28 EU countries reached RMB 35.76 billion (US$ 5.64 billion), up 42.5% year on year. That from countries related to “Belt and Road” reached RMB 21.42 billion (US$ 3.36 billion), down 7.7% year on year.

In June, the actual input of foreign capital from the ASEAN countries stood at RMB 1.87 billion (US$ 290 million), down 57% year on year. That from 28 EU countries reached RMB 9.74 billion (US$ 1.51 billion), up 108.5% year on year. That from countries related to “Belt and Road” reached RMB 2 billion (US$ 310 million), down 56.9% year on year.

The input of FDI in western China was higher and that in eastern China remained stable. In January-June, the actually utilized FDI in western China amounted to RMB 32.91 billion (US$5.13 billion), going up 29.5% year on year. The actually utilized FDI in eastern China reached RMB 385.32 billion (US$60.59 billion), up 7% year on year. The actually utilized FDI in Middle China amounted to RMB 23.53 billion (US$ 3.7 billion), down 32.6% year on year. The actually utilized FDI Yangtze River Economic Zone amounted to RMB 196.78 billion (US$ 30.58 billion), up 8.3% year on year. In June, the actually utilized FDI in Yangtze River Economic Zone amounted to RMB 43.69 billion (US$ 6.67 billion), up 27.5% year on year

There are a large number of the newly set large enterprises with added capital. In January-June, there were more than 380 large foreign invested enterprises with a total investment amount over US$ 100 million, and more than 210 enterprises added US$100 million to their capital. Among them, there were not only manufacturing enterprises that engage in R&D and manufacturing of new materials, new energy automobiles and batteries, aircraft components, integrated circuit and chips, but also service enterprises that engage in medical care, old-age care, e-commerce, cloud computing and R &D and the application of the Internet of Things technology.

The actual use of foreign capital by foreign M&A continued to increase. In January-June, a total of 674 newly-established foreign-invested enterprises were approved with an actual use of foreign capital RMB 92.17 billion (US$14.01 billion), up 5.2% and 14.2% respectively year on year, taking up 5% and 20.9% respectively of their total figures.

IV. Outward Investment and Economic Cooperation

Foreign direct investment. In January-June 2016, the Chinese domestic investors carried out the non-financial direct investment in 4,797 outward enterprises in 155 countries and regions, with an accumulative investment of RMB$580.28 billion (US$88.86 billion, up 58.7% year on year). In June, the foreign direct investment was RMB 100.17 billion (US$15.34 billion, up 44.9% year on year). By the end of June, the non-financial direct investment of China amounted to RMB6.2 trillion (US$951.9billion).

Foreign contractual projects. In January-June, the turnover of the foreign contractual projects was RMB431.33 billion (US$66.05 billion), down 2.2% year on year. The newly-signed contractual value was RMB 651.01 billion (US$99.69 billion), up 15% year on year. The turnover completed in June was US$15.97 billion, up 0.4% year on year, and the newly-signed contractual value was US$24.20 billion, up 26.8% year on year.

Foreign labor cooperation. In January-June, China has sent all kinds of laborers abroad with a number of 223,000, with a decrease of 41,000 compared with that of the same period last year. In June, China sent 42,000 laborers abroad, with a decrease of 10,000 compared with that of the same period last year. By the end of June, the number of China’s dispatched laborers reached 991,000, with a decrease of 24,000 compared with that of the same period last year.

In January-June, China’s outward investment and economic cooperation mainly presented the following features:

1. The outward investment and cooperation maintained a rapid growth in general. In January-June, the Chinese domestic investors carried out the non-financial direct investment in 4,797 outward enterprises in 155 countries and regions, with an accumulative investment of US$88.86 billion, up 58.7% year on year. In June, the foreign direct investment was RMB 100.17 billion (US$15.34 billion), up 44.9% year on year. The newly-signed contractual value was RMB 651.01 billion (US$99.69 billion), up 15% year on year. The newly-signed contractual value in June was US$24.20 billion, up 26.8% year on year.

2. The distribution pattern of outward investment industry was further optimized. The investment in the manufacturing industry grew rapidly. In January-June, China’s outward investment mainly flew to business service industry, manufacturing industry, wholesale and retail industry and mining industry, accounting for 24.6%, 19.8%, 16.4% and 4.7% of the total investment volume of the first half year respectively. The investment in the manufacturing industry reached US$17.59 billion, up 245.6% year on year. Among these, the investment flew to the equipment manufacturing industry reached US$12.04 billion, 5.4 times more than the same period last year, accounting for 68.4% of the outward investment of the manufacturing industry. The investment in the fields such as culture and education, art designer and sports, entertainment products manufacturing industry, papermaking and paper products, comprehensive usage industry of waste resources and medicine manufacturing industry realized a high-speed growth of more than 4 times and the international capacity cooperation showed a favorable momentum.

3. The contractual project business of the relevant countries along the line of the “Belt and Road” enjoyed a rapid development. In January-June, the Chinese enterprises signed 3,080 foreign contractual projects with 61 relevant countries along the line of the “Belt and Road”, with a newly contractual value of US$51.45 billion, up 37% year on year, accounting for 51.6% of the newly signed contractual value of the foreign projects of China in the same period. The contractual value of the Egypt new capital construction project undertaken by China State Construction Engineering Corporation reached US$2.7 billion, marking the biggest contractual project of the Chinese enterprises in the bid of the relevant countries along the line of the “Belt and Road” in the first half of this year.

4. The outward investment of provinces and cities along the line of the Yangzi River Economic Belt was active. In January-June, the outward investment of provinces and cities along the line of the Yangzi River Economic Belt was US$30.12 billion, 2.2 times over the same period last year, accounting for 33.9% of the total foreign direct investment of China, and accounting for 37.3% of the local outward investment. Among these, the investment flow of 5 administrative units at provincial level exceeded US$1 billion in the first half of this year, including Shanghai (US$14.52 billion, up 162% year on year), Zhejiang (US$5.56 billion, up 173.8% year on year), Jiangsu (US$3.86 billion, up 52.5% year on year), Hunan (US$1.17 billion, up 20.7% year on year) and Chongqing (US$1.06 billion, up 35.8% year on year).

V. Service Trade and Service Outsourcing Situation

Service trade situation. Since this year, China’s service import and export has maintained a rapid development. In January-May, the service import and export volume reached RMB2.07828 trillion, with an increase of 22.7% year on year. Among these, China’s service export was RMB731.84 billion, with an increase of 8.6% year on year and the service import was RMB1.34644 billion, with an increase of 31.9% year on year. In May, the service import and export volume reached RMB413.58 billion, with an increase of 20.4% and the export and the import was RMB145.36 billion and RMB268.22 billion respectively, with an increase pf 26.1% and 17.6% year on year. Major features are as follows:

1. The import and export scale was expanded rapidly. In January-May, the Chinese service trade accounted for 18.5% of the foreign trade, 3.2 percentage points higher than that of the same period last year. In March-May, China’s service import and export maintained a double-digit growth for three consecutive years.

2. The service export structure was optimized continuously. In January-May, the computer service export was RMB65 billion, with an increase of 20.4% year on year and the technical service export was RMB37.6 billion, with an increase of 23.9% year on year. Besides, the service export growth of finance, advertisement and information all exceeded 20%. The proportion of the middle-and-high value-added service export of the Chinese service export was constantly improved.

3. The service import enjoyed a high-speed growth. In January-May, the growth of China’s service import exceeded 30%. Among these, the travel service (including tourism) import reached RMB880.3 billion, with an increase of 53.4% year on year, marking the major reason that drives the service import.

According to the preliminary estimate, China’s service import and export volume in the first half of this year was about RMB2.5 trillion, up more than 20% compared with that of the same period last year.

The service outsourcing situation. In January-June, the service outsourcing contractual volume signed by the Chinese enterprises was RMB506.99 billion and the executed value was RMB305.65 billion, with an increase of 39.6% and 13% year on year respectively. Among these, the contractual value of the offshore service outsourcing was RMB358.21 billion and the executed value was RMB196.12 billion, with an increase of 55.2% and 9.7% year on year respectively. Some features are presented as follows:

1. The contract awarding market pattern of the offshore service outsourcing was stable. In January-June, the executed value of the offshore service outsourcing undertaken by China form the United States, China Hong Kong, Japan and South Korea was RMB41.94 billion, RMB33.51 billion, RMB32.08 billion, RMB15.75 billion and RMB12.25 billion respectively, accounting for about 70% of the total executed value of the offshore service outsourcing of China.

2. The proportion of business process outsourcing was improved. In January-June, the executed value of the offshore information technology outsourcing, business process outsourcing and knowledge process outsourcing undertaken by the Chinese enterprises was RMB93.49 billion, RM32.02 billion and RMB70.61 billion, with an increase of 7.5%, 26.9% and 6% year on year respectively, accounting for 47.7%, 16.3% and 36% respectively. The cross-border e-commerce drove the rapid development of supply chain management, data processing and internet marketing advertising, and promoted the rapid development of business process outsourcing.

3. The newly-signed contractual value of the markets of the “Belt and Road” increased rapidly. In January-June, the contractual value of the service outsourcing newly signed by the Chinese enterprises with the relevant countries along the line of the “Belt and Road” was RMB62.51 billion, with an increase of 33.5%, mainly including businesses such as software research and development and technical service, supply chain management service and engineering design. Among these, the contractual value of service outsourcing newly signed by the Chinese enterprises with the Southeast Asian countries was RMB 1.41 billion, with an increase of 53.7% year on year. The market scale in Singapore and Czech was big with rapid development, marking the most market-potential country in Southeast and Central and Eastern Europe respectively.

4. The business scale of provinces and cities along the Yangtze River Economic Belt was stable. In January-June, the contractual value of the offshore service outsourcing undertaken by 11 provinces and cities along the line of the Yangtze River Economic Belt was RMB145.93 billion and the executed value was RMB116.9 billion, with an increase of 5.6% and 3.8% year on year respectively; the whole business scale accounted for almost 60% of the whole country. It remains to be the region with the highest convergence of the Chinese service outsourcing industry.

VI. Situation of Promoting to Build Comprehensive Pilot Trials of New Open Economic System

After two months’ positive promotion, the12 comprehensive pilots and pilot areas of new open economic system that are to be constructed include Dongguan Guangdong, Pudong New District of Shanghai, etc. The report work of the implementation plan was completed, has completed report work such as, marking the launching of the constructing the new open economic system comprehensive pilot work. The implementation plans of all regions fully embodied the general requirements of China’s 13th document on constructing the new open economic system, firmly focused on the working goals of “the new mechanism of market allocation resource, the new mode of economic operation management, the new open comprehensive pattern and the new advantage of the international competition cooperation”, refined and implemented “six explorations” and put forward a series of new measures of reform and innovation.

In terms of exploring the new mode of open economic operation management, the pilot areas positively promoted the administration approval system of reform, the opening promotion mechanism, the system of management concerning foreign affairs and the public service system, and promoted the pilot work by legalization. For example, Zhangzhou put forward to build a business opportunity docking center, to set up the “enterprise service 110” and to provide 24-hour comprehensive service for enterprises. Fangchenggang, a seaside city, proposed to promote the reforms of big department system and the law enforcement system, and to improve the law enforcement system of market supervision. Tangshan put forward to build a market integration mechanism of Beijing, Tianjin and Hebei, and to build a mutual recognition mechanism of administration licensing, technical standards and industrial qualifications. Pudong New District of Shanghai proposed to implement the lists of supervision work in the course and afterwards of 111 key industries and to perfect the in- the- course and afterwards supervision systems. The city circle of Wuhan put forward to explore building cooperation mechanism of regional economy and to realize the most optimum allocation of market resources and the development of the cluster of industries.

In terms of exploring and forming new mechanism of synergic opening of all kinds of development areas, the pilot areas integrated the policies which have been first implemented and tried in all kinds of gardens at large, innovated the development mechanism of gardens and released the “integration effect” of pilot reform. For example, Kingpu district of Dalian put forward to explore the reciprocal and mutual sharing mode of policies in the new national-level district, the economic and technological development zone, bonded area, export processing zones and bonded port areas and to realize the resource sharing between the functional zones. Xixian district of Shanxi proposed to build and share the new mechanism of g dislocation development together with Xi’an and Xianyang, and to realize the unified management in the development strategy of new district, land planning, tender-invitation promotion, fiscal financing and risk control and prevention. Jinan put forward to carry out the reform of administration management of gardens, personnel system and distribution system, to build a new platform for industrial innovation and open innovation, and to explore the new mode of China-Germany industrial international cooperation.

In terms of promoting the new mode of international investment cooperation, all pilot areas positively promoted the reform of foreign investment project, reformed the working mechanism of investment attraction, pushed forward the facilitation of overseas investment and explored the new path of international capacity cooperation. For example, Pudong New District of Shanghai proposed to perfect the management mode of the negative list and promoted the implementation of the measures of service industry of free trade pilot area and the opening up of manufacturing industry. Nanchang put forward to innovate the mode of carrying on industry transfer, explored “using big capital to operate and using small capital to attract business” and used industrial investment to guide capital and fund to carry out capital attraction. Tangshan proposed to combine the capacity and the international capacity cooperation; it also innovated the international capacity cooperation mode focusing on the advantageous industries such as steel, cement, coal and equipment manufacturing. Wuhan city circle put forward to urge the state-invested enterprises to build the organizational structure adapting to the international operation, to be strict with the investment management efficiency evaluation and to perfect and improve the notification and disposal mechanism of the typical problems of responsibility investigation.

With regard to exploring the new system of foreign trade promotion driven by quality and efficiency, all pilot areas focused on the construction of the “single window” of international trade, cultivated the self-owned brand of foreign trade and overseas marketing system and formed a policy support system with the development of processing trade, border trade and service trade. For example, Dongguan proposed to reform the innovation development promotion mechanism of processing trade, innovated the enterprises’ research and development incentive mechanism of processing trade, promoted the “processing trade+smart manufacturing” and built a new operation system of processing trade products. Fangchenggang put forward to accelerate the reform pilot of transformation and upgrading of trade among the inhabitants of border areas and to set up the development fund of import and export processing industry. Kingpu new area of Dalian proposed to set up the fixed hatch fund of foreign trade; this intends to support the enterprises to build overseas location and overseas operation center of export projects. Suzhou industrial park proposed to construct an open innovative system, to build and perfect the international innovative cooperation mechanism and to explore the mechanism of integration of international and domestic innovation resource. Liangjiang area of Chongqing proposed to form a mechanism which promotes the cluster development of industry; it also proposed to build a public service platform of technology research and development, industrial design and knowledge property of processing trade transformation and upgrading.

With regard to the new measures of the open economy of financial service, some pilot areas promoted to build forecasting and early warning platforms of regional financial risk. Some pilot areas endeavored to innovate and have developed featured financial products and services on the premise that the risk is controllable; they promoted the mode that the headquarter of an enterprise guarantees to bank and the bank lends to the enterprise; they also expanded the cross-border use of RMB, promoted the facilitation of cross-border financing and explored to form a new system of financing support of “bringing in and going abroad”. For example, Pudong New District of Shanghai proposed to promote the system innovation of finance, perfected the financial market system which faces the globe and explored to set up a forecasting and early warning platform of cross-department financial risk. Suzhou industrial park put forward to set up the financial support mechanism of “going abroad”, set up the overseas investment financing mechanism and supported the setting up of the cross-border cooperation industry funds with a down payment value of US$1 billion. Kingpu area of Dalian proposed to develop port and shipping finance. Xixian area of Shanxi proposed to develop energy finance and Jinan proposed to develop cultural finance.

With regard to exploring forming a new comprehensive pattern, all pilot areas highlighted their features, positions and functions in the “four boards” and “three strategies”. They perfected the communication and promoting mechanism of trade and economy, science and technology and humanity by building and sharing industries, gardens, platforms and think tanks together and formed a new open two-way pattern,. For example, Nanchang proposed to deepen the communication and cooperation of the “Belt and Road” and strengthened the cooperation and communication in culture, education, health, science and technology and tourism with the countries along the line of the “Belt and Road”. Dongguan put forward to perfect the comprehensive cooperation mechanism with Hong Kong, Macao and Taiwan. Zhangzhou proposed to innovate the new integrating mechanism of “crossing the straits, yet being one family.” Zhangzhou also deepened the investment cooperation of the industries of both sides, explored the integration mode of the basic level of both sides, facilitated their personnel exchange mechanism and perfected the service guarantee of Taiwan businessmen and Taiwan compatriots. Fangchenggang put forward to innovate the cooperation mode of cross-border education, medical treatment, recreation and sports and tourism. It also pushed forward the reform of cross-border labor cooperation. Pudong New District of Shanghai put forward to set up the synthetic mechanism of customs business of Yangtze River Economic Belt and promoted the construction of circulation system of agriculture products of Yangtze River Economic Belt. Liangjiang area of Chongqing put forward to establish a cargo storage center facing the Eurasian area relying on the international trade channel. Xixian area of Shanxi proposed to promote the investment cooperation of the industries of the Silk Road Economic Belt and jointly built the demonstration gardens with major cities and areas along the line of “Silk Road.”

Defining the tasks of pilots and the reform measures, all pilot areas established a strong organizational leadership mechanism to guarantee the orderly advance of pilot work. The relevant coordinative guarantee, division of responsibilities, assessment and examination, time schedule and task decomposition are being implemented. Next, MOFCOM will guide pilot areas to implement plans step by step with the National Development and Reform Commission to strive for early results.

We will inform you of the situation of the 12 pilot areas in other ways. What is important is that the reform plans have been formulated for these 12 pilot areas and these plans have been reported to the National Development and Reform Commission and the Ministry of Commerce. We will publish these plans on the internet recently, maybe this week. By then you can check the detailed information of these plans at the internet. The above is the major situation. Now, you are welcome to ask any questions.

Takungpao: There were big price movements of garlic during recent years. This year too has witnessed price surges. After the latest season of garlic was brought to the market, garlic price has gone down a bit. However, it is still much higher than in previous years. Mr. Spokesperson, why have there been such big price movements in garlic this year? Is there room for price decrease going forward?

Shen Danyang: Garlic price has indeed experienced some ups and downs in recent years. Sometimes, it went up a bit sharply. In fact, the latest round of garlic price rise began in July last year. The rising momentum has continued into this year, reaching the highest point for this round in April. So what is the reason for this round of garlic price rise? Some media believed that this was a result of speculation. In fact, the current round of garlic price surge was mainly due to the decrease in planting acreage last year and the reduction of yield. According to data from the Ministry of Agriculture’s monitoring system over 580 key vegetable-growing counties nationwide, total garlic growing areas shrank by 2.2% year on year in 2015. Another set of figures indicated that garlic-growing acreage in Jinxiang County of Shandong Province was 53.6 mu in 2015, down by 14% year on year; while yield went down by 4.7% to 587,000 tons.

Since mid-April, things have begun to change. As the new garlic crops entered the market, garlic price started to fall. According to MOFCOM monitoring, in the week before last (27 June to 3 July), the wholesale garlic price in 36 medium- and large-sized cities in China was 10.85 RMB per kilo, down by 9.2% from the high in early April. Overall, supply for the garlic market is guaranteed, and there is still room for price to fall further.

As regards the price fluctuations of agricultural produce such as garlic, one really needs to stay calm sometimes, in that the market itself has a self-regulating mechanism that stimulates production when prices are high, and pushes down prices when production output goes up. Therefore, there is no need to panic about such phenomena. Thank you for your questions.
CRI: A US firm petitioned to the USITC recently for an investigation under section 337 regarding some Chinese firms. This is the 14th investigation case initiated by US companies that involved Chinese firms this year. What is MOFCOM’s response to this?

Shen Danyang: On 5 July, a US firm filed a complaint to the USITC based on US domestic laws, accusing that the Certain Access Control Systems and Components Thereof exported to the US, imported into the US or sold in the US by some Chinese firms have infringed upon its valid patent rights registered in the US, and requested that the Commission issue an exclusion order or prohibition order.

The number of investigations under section 337 initiated by the USITC remained high in recent years. A third of these investigations were against goods exported from China to the US. Especially in the first half of this year, the US has launched 11 investigations under section 337 against Chinese exports. The number exceeds the total of cases occurred for the whole of last year. Besides, three more section 337 cases are currently under investigation.

MOFCOM has always attached great importance to such IPR disputes between Chinese and American businesses. I must point out once again that we hope the USITC could investigate in an objective, fair and just manner and properly resolve the issue. We believe that only in this way can it benefit trade cooperation between relevant Chinese and American businesses, thus ensuring sound bilateral commercial cooperation. Thank you for your question.

Phoenix Satellite TV: ASEAN’s investment in China dropped drastically by 57% year on year last June. Why? Is it possible that is had something to do with the ongoing issue on South China Sea? Secondly, we have noticed that the DPRK did some missile launch tests this morning in response to the deployment of the THAAD system in the Republic of Korea. There have been voices coming out here at home suggesting that China should step up its assistance to the DPRK. What is the level of assistance to the DPRK lately as far as MOFCOM is concerned? Is it possible that the sanctions against the DPRK may be loosened?

Shen Danyang: Overall speaking, ASEAN’s investment in China has been on the rise over the past few years, especially last year when some member states registered sizeable increases regarding their investment in China. As for the declines in the first half of this year, I believe there were normal market and investment phenomena. China’s utilization of FDI fared pretty well overall during the first half of this year, with some steady growth in general and double growth in both high-tech services and high-tech manufacturing in particular. We can see that the direction of our inward FDI structural adjustment is mainly towards the high-tech, high-quality and high-level end, which is why those regions that witnessed an increase in their investment to China were precisely developed countries and regions in Europe and America. In this light, there is no necessary connection between the drop in ASEAN’s investment in China and the South China Sea issue.

On your second question, which is about assistance to the DPRK, I have no specific statistics to offer for the moment. We see no fundamental changes in our overall policy on the DPRK. Thank you for your questions.

China News Service: We have noted that a recent report by the Australian Bureau of Statistics indicated that of the 4,000 or more new Australian exporting enterprises in 2014-2015 Fiscal Year, more than 1,300 had exports to China. This shows the robust development of Australia’s export to China. Could you talk about Australia’s export to China in the first half of this year?

Shen Danyang: Right now China is Australia’s largest trading partner and biggest export market. At present, exports from Australia to China are mainly primary commodities such as minerals and agricultural produce.

As we all know, Australia is China’s largest source of iron ore. In 2015, we imported over 600 million tons of iron ore from Australia, worth approximately USD 35.86 billion, accounting for 63.7% of China’s total iron ore imports. However, perhaps you don’t know that Australia is also the largest source of many other commodities for China, such as coal and alumina in 2015. In 2015, we imported 70.85 million tons of coal worth USD 5.3 billion from Australia, accounting for 34.7% of our total coal imports; and 2.866 million tons of alumina that was worth USD 950 million.

At the same time, Australia is also the largest supplier of agricultural products such beef, wool and wheat to China. Last year, China imported 156,000 tons of beef, worth USD 790 million, from Australia, accounting for 32.9% of total beef imports; 174,000 tons of wool valued at USD 1.57 billion; and 4.362 million tons of wheat with a value of USD 1.25 billion.

As we all know, the China-Australia FTA entered into force on 20 December last year. According to Chinese customs statistics, Australia’s export to China in the first half of this year was valued at USD 30.59 billion. Iron ore, agricultural products and coal were the top three export commodities. Even if there was some negative growth in our imports from Australia during the first half of this year due to price reasons, we believe that as the China-Australia FTA is implemented step by step, more and more high-quality products from both China and Australia will enter into each other’s market going forward. With huge growth potential in our bilateral trade, Australian businesses will have great many opportunities in China in terms of trade, investment and other forms of cooperation. Thank you for your question.

Economic Information Daily: On attracting FDI, you have talked about overall FDI attraction just now. We are pretty interested in two sets of data. One is that investment from the US, the UK and Germany to China has increased by a big margin. The other is that the western regions of China have experienced relatively fast growth in inward FDI, with a rate close to 30%. Could you please further elaborate on those two topics? In addition, we have noticed that the services sector has by far outperformed the manufacturing sector either in terms the share of its inward FDI in the nation’s total, or in terms of its year-on-year growth rate. Is such a trend where the services sector outperforms the manufacturing sector likely to continue into future? Thank you.

Shen Danyang: In the first half of this year, actualized inward FDI from the US, Britain and Germany to China has all risen by a very high margin, doubling or nearly doubling the levels in the previous year. Investment from the US rose by 142.6%, the UK 114.3% and Germany 97.6%. Industries such as information transmission, computer services, software, scientific research, technical service, geological survey and manufacturing have witnessed relatively rapid increase.
In the first half of the year, paid-in FDI in China’s western region grew by nearly 30% year on year. Source-wise, major investors and fastest growth come from Hong Kong, Korea, Singapore, the US, the UK and Germany. Specifically, Hong Kong invested RMB 17 billion, up 22.6%; Korea, RMB 7.31 billion, up 59.7%; and Singapore, RMB 3.09 billion, up 9.1%. Korea focuses on manufacturing, whilst Hong Kong and Singapore favor transport, warehousing, postal service, leasing, business service, wholesale and retail.

The US, Germany and the UK invested RMB 480 million, RMB 190million and RMB 740 million in Western China, which, though moderate in size and account for only a small portion of their investments in China, represented significant rises given the low base figures. Investments from the US, the UK and Germany in the western region have all increased by over 400% this year.

As for the growing weight of services, the share of services in China’s total FDI has been rising in the past two to three years and now stands above 70%. Overall, this is good news. That said, this doesn’t mean a lack of attention to foreign investment in manufacturing. We still hope that as services bring in more FDI of improving structure, more foreign investment will flow into the manufacturing sector, not least high-end and hi-tech manufacturing. MOFCOM and the NDRC, among others, are working together on policy measures to further encourage and attract foreign investment in manufacturing, including the twelve pilot areas for building a new open economic system I mentioned earlier. They are also exploring ways to boost foreign investment in manufacturing with further incentives. Thank you.

Global Times: Last month, China and the Eurasian Economic Commission signed a joint statement to officially start the negotiation for the Agreement on Trade and Economic Cooperation between the Eurasian Economic Union (the EAEU) and the PRC. What elements will be covered in the negotiation?

Shen Danyang: Last month, Minister Gao Hucheng of Commerce and EEC Trade Minister Veronika Nikishina signed the Joint Statement on Officially Launching the Negotiation for the Agreement on Trade and Economic Cooperation between the Eurasian Economic Union and the PRC. The two sides are making preparations for the inaugural round. EAEU members are all major countries along the route of the Silk Road Economic Belt. The launch of the negotiation is a major link in connecting the Belt and Road initiative with EAEU development. MOFCOM will join related departments to maintain close communication and collaboration with the EAEU for an early convening of the first round.

The negotiation is yet to kick off. The specific elements to be covered will be determined through communication. That said, the talks are likely to feature the following major aspects:

First, the negotiations should aim at finalizing institutional arrangements for bilateral trade and investment cooperation as soon as possible to further deepen the commercial ties between China and the EAEU and its members.

Second, discussions are likely to focus on devising trade facilitation measures for, among others, customs management, inspection and quarantine, technical standards, trade remedy, and completion policy.

Third, other major elements should include practical cooperation in agriculture, industry, energy, transport and infrastructure, and how to conduct policy dialogue and strengthen information sharing between the two sides.

CCTV-2: Recently, the south of the country has been battered by torrential rain, with Hubei and Anhui among hard-hit provinces. I wonder if market supplies in those regions will be affected. What measures has MOFCOM taken to tackle the floods and ensure supplies?

Shen Danyang: Since the onset of the flood season this year, 26 provinces nationwide, including thousands of counties have been affected. Southern provinces like Hubei, Anhui and Jiangxi are among the worst hit areas by relentless downpour. In the face of such severe flooding, market supplies in the affected areas would almost certainly have failed but for robust measures. Fortunately, MOFCOM and commerce authorities across the level acted preemptively in this year’s flood response and took timely and effective measures. As a result, so far no market supply problems have been reported.

The Ministry of Commerce issued the Notice on the Work against Flood and Drought at the end of March to request commerce departments at local levels to prepare for possible flood and drought. In early April, the Ministry set up a Working Group which visited Shanghai, Tianjin, Zhejiang and Jiangsu to inspect the work of preparation for flood and market supply. After southern provinces were stricken by flood, the Ministry of Commerce intensified market monitoring and adopted measures in accordance with local market demand changes to guarantee the supply of daily necessities. Monitor information shows that production and circulation of daily necessities such as vegetables and egg was affected in Anhui, Hubei and Jiangsu which were seriously hit by flood. For instance, our monitor shows that from June 27th to July 3rd, vegetable price rose by 15.4% in Hefei, 12.2% in Wuhan and 9% in Nanjing while egg price in Wuhan rose by 5.2%. Given the situation, we guided local commerce departments to make prompt preparation and distribution of daily necessities and control the price fluctuation within the smallest range. Now we are able to ensure the supply of daily necessities in all flood-stricken areas, the markets are stable and prices of grain, edible oil and meat remain stable. Floods are still affecting South China and the Ministry of Commerce will keep a close watch on the situation and do our due work. Thank you.

Xinhua News Agency: we heard from your previous presentation that China’s investment in countries along the Belt and Road route has been increasing by a rapid 37% rate. However we also noticed that in the first half of this year investment of those countries in China dropped 7.7% year on year and slumped by 56.9% in June in particular. What’s the main cause of the decline?

SHEN Danyang: Overseas investment of businesses, including outbound investment of Chinese companies and inbound investment of foreign companies, is affected by three major factors.

The first factor is the competence of companies. The main reason of fast-growing investment of Chinese companies in foreign countries in recent years and in the first half of this year particularly is that Chinese companies have been acquiring stronger competitiveness in international marketplace. Foreign companies investing in China are also faced with strong competition from Chinese companies. In the past it might be quite easy for foreign companies to make money in China, but this is no longer possible because of the all-around competition from Chinese companies including private ones.

The second factor is the market. Chinese companies must explore opportunities in the market when they make overseas investment and it is the same task for foreign companies investing in China. There are many diverse market elements including long- and short-term elements. Short-term elements are quite evident this year such as foreign exchange rate and financial conditions. At present Chinese companies are making fast-increasing investment in countries along the Belt and Road route. Earlier you mentioned the 37% growth rate, but actually increase rate, particularly increase rate of investment in European and American countries, is much higher than 37%. Part of the reason to the fast growth is market elements. Market elements keep changing, which means short-term elements do not necessarily prevail in the long run. The surge of overseas investments by Chinese companies in recent time is mainly caused by long-term elements, but is also reinforced by some short-term elements.

The third factor is policy. Chinese investment is warmly welcomed in almost all countries and regions despite some interference caused by some non-economic elements in certain countries and regions. Many countries and regions are encouraging inflow of foreign capital, and some are advocating the so-called “manufacturing return”. Therefore rise of Chinese investment in these countries and regions is partly driven by favorable policies. On part of China, regulatory regime for FDI attraction has remained stable in recent years despite some adjustments such as those on supra-national treatment. As a result China’s utilization of foreign capital has been increasing steadily at a moderately slower speed when focus is shifted to the structure and quality of foreign investment.

It is quite normal to see considerable increase of Chinese investment to countries and regions along the Belt and Road route driven by the above-mentioned three factors. Since there are quite many countries and regions along the route, their investment to China should not be generalized. Companies in most of those countries are not very competitive at present, and there will not be fast increase of their investment in China in short term. But we expect gradual increase in the future. Thank you for your question.

Shanghai Securities News: Apart from the statistics concerning commerce in the first half of the year, do you have any information about the development of the four pilot free trade zones in the first half of the year? In addition, are there any new considerations as regards the future replication of their experience?

Shen Danyang: Statistics about the overall performance of the four pilot free trade zones for the first half of the year have not come out yet. I will brief you once relevant departments in MOFCOM consolidate the information about the four pilot free trade zones in the first half of the year. In addition, the four pilot free trade zones all publish information on their websites. You may seek information directly from them. As for the replicable experience of the four zones, we are also in the stocktaking process, and will let you know when it is ready.

Economic Daily: The Financial Times wrote last week that a Global Trade Alert report indicated that since 2015 the growth momentum for world trade has disappeared. Some people blame trade protectionism for this, while others share a different view. What is yours? Thank you.

Shen Danyang: Global trade growth has been sluggish over the past few years. The reasons are manifold. People may have different views and their own justifications for them. It is hard to say which is correct and which is not. Nevertheless, rising protectionism is at least an aggravating factor, if not the main cause.

It suffice to show one example of such trade protectionism China has encountered. In the first half of this year, China was made subject of 65 trade remedy investigations launched by 17 countries (regions), involving a total value of USD 8.544 billion, rising by 66.67% in the number of investigations and 156% in value year on year. In breakdown, there were 46 antidumping investigations, 13 countervailing investigations and 6 safeguard investigations.

Those that launched trade remedy investigations against Chinese exports include both developed and developing countries. The ones that initiated the largest number of investigations were the US and India, one being the largest developed country and the other a large developing country. The US launched 18 trade remedy investigations toward China; while India launched 15. In terms of value involved, the US and India were also the top two. What does this mean? It means trade protectionism is indeed rising in every aspect.

It is for this reason that at the recently closed G20 Trade Ministers’ Meeting, ministers reaffirmed their commitment to a standstill and rollback of existing trade remedy measures, and agreed to extend the pledge to the end of 2018. It is also why China has been repeatedly stressing the need for intensified international cooperation and the need to weathering the difficulties together, and that frequent adoption of trade remedy measures offers no help for the economic recovery and revitalization of all countries.

Thank you for your question.

CBN: We have found that people are very concerned about the considerable fall in private investment in the first half of the year. We have interviewed some agencies and experts. They say that this was because investors found it difficult to invest domestically, and as a result chose to invest abroad. I’d like to ask whether there is any association between the rapid growth in outbound investment and the transfer of private capital abroad during the first half of the year.

Shen Danyang: I cannot say that these two are not at all associated. But at least for the time being, there is no statistical evidence for such an association. Although China’s outbound investment has grown rapidly, the amount of overseas investment by China’s private enterprises was still rather limited, accounting for only a small fraction of China’s total domestic investment. That’s why I believe it is not a main reason. There are some short-term factors for the rapid increase in outbound investment. Thank you for your question.

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