The Ministry of Commerce held a regular press conference on February 9. Spokesman Sun Jiwen answered the hot issues that concern media at home and abroad. Here is the record:

I. Development Situation and Features of the Online Retail Market in 2016

In 2016, China’s online retail turnover reached RMB 5.16 trillion, up 26.2% year on year. Among these, the online retail turnover of physical commodities was RMB 4.19 trillion, up 25.6% year on year, 15.2 percentage points higher than the growth of total retail sales of consumer goods in the same period. Online retail market continued to maintain a medium and high speed growth, and presented the following features:

1. The growth was rapid. The permeation of online retail increased constantly, the online retail sales of physical commodities accounted for 12.6% of the total retail sales of consumer goods, 1.8 percentage points higher than that of the same period last year. Online retail became the major force that drove the growth of the retail industry. MOFCOM’s monitoring over the major retail enterprises showed the growth rate of online retail was 25.4%, much higher than that of other retails business like department stores, supermarkets and shopping malls.

2. Online retail was becoming mature gradually. Market entities were further optimized. The advantages of B2C were strengthened, accounting for over 55% of online retail business. The competitive modes enjoyed a benign development. Small sized e-commerce platforms in the fields of baby and maternal products, fresh products, cross-border business, home decoration and fashion conducted diversified competition, cultivating advantages in their own industry and clients. Online promotions became more orderly. Large e-commerce platforms no longer conducted “price campaign” and “public relation campaign”, but introduced high quality services, organizing activities like entertainment show and live telecast, and creating an atmosphere of “shopping day” participated by all of the industries.

3. Online retail contributed to supply-side structural reform. Online retail exploited and released consumption potential. Online shopping became more popular in rural areas, and the growth rate of orders from Central and Western China and third-tier cities was higher than the average growth rate, becoming new driving force for consumption. Online retail provided platforms for domestic brands. In the markets of household appliances and mobile phone, domestic brands firmed its dominant position, and traditional brands opened the markets among young clients through e-commerce. Big data of online retail supported custom-made productions, and numerous manufacturing enterprises began “exclusive custom-made” activities. Through studying numerous data accumulated by e-commerce platforms, enterprises introduced new products rapidly to adapt to the consumers’ changing demands.

4. Online and offline sales were constantly promoted. Retail giants were jointly associated to form an integration model with complementary advantages and to promote resources’ optimal configuration in retail industry. E-commerce platforms provide both online and offline channels for shops, realize a new model of “order online, deliver in stores”, “order in stores, distribute from warehouse”, accelerate digitization of traditional business. Service consumption on life service, entertainment, tourism, travel, education and health grew rapidly with innovated model. Share economy like second-hand deal and joint renting saw fast growth. The O2O market size in 2016 grew up 45% year on year.

5. New technology advanced service upgrading. E-commerce platform further consolidated its support and cloud computing service providers improved their processing ability. Technology like unmanned warehouse, autonomous driving and unmanned aerial vehicle also transformed from concept to application, greatly improving logistics efficiency and solving the last kilomoter distribution. The application of new technology also drove innovation of marketing models, big data and artificial intelligence technology support personalized scene and realize directional shopping and promotion targeted at different consumers. Virtual reality and augment reality technology were gradually mature, shortened consumers’ visual perception distance with goods, improve users’ experience and help to make a transaction.
　
II. The Situation and Characteristics of Automobile Sales in 2016

China’s auto sales in 2016 saw a double-digit growth again. A total of 28,028,000 cars were sold in 2016, up 13.7% year on year, ranking NO.1 in the world for 8 years in a row and hitting a record high. In 2016, sales of automobile above the designated size took up 26.2% of the sales of consumer goods, 0.9 percentage point higher than that in 2015. Auto sales’ leading role continues to stand out and present the following characteristics:

1. Sales of passenger vehicle grew rapidly and enthusiasm for SUV did not wane. In 2016, the sales of passenger vehicle grew up 14.9% year on year, 1.2 percentage points higher than the overall growth and its contribution rate to auto sales reached 94.1%. SUV sales sustained a high-speed growth, up 44.6% year on year.

2. The pulling role of automobiles with small output volume is obvious. Affected by policy of reducing by half the purchase tax of passenger cars with a displacement below 1.6 liters , sales of cars with a displacement below1.6 liters came to 17,607,000, up 21.4% year on year, accounting for 72.2% of the sales of passenger cars, 3.6 percentage points higher than that over the same period of last year and the contribution rate to auto sales reached 97.9%.
　
3. New energy cars developed fast. Sales of new energy cars in 2016 amounted to 507,000, up 53% year on year. Among these, sales of pure electric cars came to 409,000, up 65.1% year on year.

III. MOFCOM Jointly Issues the Guidance on Promoting Reform and Innovative Development of Lao Zihao with 16 Departments

16 Departments such as the Ministry of Commerce, State Development and Reform Commission, Ministry of Culture, State Administration of Industry and Commerce and General Administration of Quality Supervision have jointly issued the Guidance on Promoting Reform and Innovative Development of Lao Zihao (hereinafter referred to as the Guidance).

“Lao Zihao” is the focus representation of excellent national brand and traditional business culture, possessing unique product, technology and service passed down from generation to generation. Since the launching of “Prospering Lao Zihao Project” in 2006, MOFCOM, together with relevant departments, has carried out a series of work focusing on “building a protection system, promoting system and excavating the connotation of Lao Zihao”. The development environment of Lao Zihao has been constantly optimized and the development situation has been greatly improved. At present, most Lao Zihao enterprises enjoy favorable development momentum, but some enterprises are facing difficulties in development because of rigid mechanism, old concept, insufficient innovation and weak inheritance, etc. Promoting the development of the Lao Zihao enterprises not only can provide common people more good-quality products and service with distinctive characteristics and strong competition power, but also has great significance of profoundly promoting structural reform of supply side, expanding quality consumption and publicizing outstanding Chinese traditional culture.

The Guidance proposed eight tasks from three aspects such as promoting inheritance and innovation of Lao Zihao, strengthening protection of business outlets and pushing forward property right reform. Namely, carry forward excelsior craftsman spirit and maintain the originality of Lao Zihao, implement the project of “Lao Zihao+Internet” and promote the integrated online and offline development, support Lao Zihao innovating operation and management mode and build modern enterprises mechanism, strengthen the protection of relics of Lao Zihao and keep the original business environment, forge special business street of Lao Zihao and promote collective development, promote the reform and institutional innovation of state-owned Lao Zihao system and cultivate leading enterprises of industry, build brand value assessment system and give a full play to the value of Lao Zihao, encourage docking with the capital market and support Lao Zihao in being great and strong.

Next, MOFCOM will profoundly implement the guiding spirit of General Secretary Xi Jinping on “enabling national brand to show extraordinary talents”, regard promoting structural reform of supply side as the main line, carry out and implement the Guidance issued by the 16 departments and ministries as the key, positively push forward Lao Zihao enterprises to increase products varieties, improve quality and create brands, practically improve the supply capability and quality and better meet the demands of the upgrading of people’s consumption. Firstly, efforts will be made to continue to promote Lao Zihao to reform and innovate, promote Lao Zihao enterprises to positively bring in social capital, combine traditional operation mode with modern technology, especially modern information technology such as internet, internet of things and big data, develop new products, attract new customs and tap new markets. Secondly, efforts will be made to vigorously publicize the cultural connotation of Lao Zihao, implement the protection development project of Chinese Lao Zihao, organize the general enterprises to profoundly learn and promote its excelsior craftsman spirit of valuing quality, upholding its business morality of flourishing business by virtue and credibility of Lao Zihao, play the leading role of Lao Zihao. Thirdly, efforts will be made to constantly optimize the development environment of Lao Zihao, build and perfect archives of Lao Zihao, strengthen its self-disciplines, enhance intellectual property protection and policy supporting, and stimulate the self-reliant innovation vigor of Lao Zihao.

Question: Recently, some institutions claimed that the investment in the Belt and Road plan as well as in its ongoing projects may not be recovered. How does the Ministry of Commerce comment on this?

Answer: Since the Belt and Road Initiative was put forward, we have adhered to the principles of wide consultation, joint contribution and shared benefits, highlighted pragmatic cooperation, mutual benefit and win-win progress, and continued to deepen investment cooperation with the countries along the routes. In 2016, China's direct investment in the 53 countries along the Belt and Road amounted to 14.53 billion US dollars, accounting for 8.5% of the total over the same period; Chinese enterprises signed 126.03 billion US dollars worth of new engineering contracts with 61 related countries, accounting for 51.6% of the total contractual value of China's overseas contracted projects during the same period with a completed turnover of 75.97 billion US dollars, accounting for 47.7% of the total. Construction of the Pakistan Karakorum Highway II, Karachi Expressway and the China-Laos railway has commenced, while the Turkish East-West high-speed rail and the Hungary-Serbia railway projects are advancing smoothly. These projects have played an important role in improving infrastructure and driving local social and economic development in the countries along the routes.

Investment cooperation projects related with the Belt and Road Initiative, especially some of the infrastructure ones, require large capital input with a long construction period and slow recovery of cost. But in the long run, for the countries along the routes it is of great significance and far-reaching importance in that these projects enhance the level of regional infrastructure connectivity and benefit their peoples. Going forward we will continue to carry out the development of the Belt and Road Initiative, deepen investment cooperation with the countries along the routes, stick to the central role of market-oriented operation, give full play to the main role of the enterprises in project development, promote the delivery of key projects, achieve more early harvests, and better benefit the countries and peoples along the routes.
　
Question: In 2016, China's investment in the US, Europe and Australia hit a new high. However, this has also led to a closer attention of the relevant national regulatory authorities to China's investment. Some countries have gradually tightened their control on foreign investment. Will this affect China's outbound investment? How does the Ministry of Commerce view the outbound investment prospect in 2017?

Answer: China's outbound investment grew rapidly in 2016, serving a positive role in promoting China's national economy and its industrial transformation and upgrading. At the same time, with rising volatility in the international financial markets and increasing uncertainty with the economic policies of some countries, certain developed countries are setting up more barriers to Chinese investment, especially investment by SOEs. Such has raised the risks and uncertainties for Chinese enterprises' outbound investment.

In 2017, as world economic recovery remains weak, China's outbound direct investment is expected to maintain a momentum of steady but slow progress. The Ministry of Commerce will adhere to the general principle of seeking progress while keeping performance stable, and support competent and eligible domestic enterprises to carry out real and rules-conforming outbound investment activities with enterprises being the main players operating on market basis and following international practice and government guidance. The Ministry will support these enterprises to participate in the joint development of Belt and Road Initiative, carry out international production capacity cooperation and integrate into the global industrial chain and value chain. Meanwhile, we will coordinate the medium- and long-term outbound investment institutional development and short-term control mechanisms, prevent outbound investment risks while promoting outbound investment facilitation, improve and standardize market order, further optimize the direction of outbound investment, reinforce the orientation towards the real economy and emerging industries, promote the healthy and orderly development of outbound investment, and make greater contribution to promoting domestic economic restructuring and upgrading, and deepening the mutually-beneficial cooperation between China and the rest of the world.

We sincerely hope that countries around the world could join hands and shoulder responsibility together, categorically oppose protectionism, further promote investment facilitation in the process of opening up, and create an open and win-win cooperation model so that all countries can realize growth and common prosperity together.

Question: Last February, the State Council decided to run pilot programs for the innovative development of trade in services in ten provinces and municipalities and 5 new districts. How are the trials going in the past year? What are the results?

Answer: On Feb. 22nd, 2016, the State Council gave the go-ahead for a two-year pilot covering 15 provinces and municipalities (regions) including Tianjin and Shanghai for the innovative development of trade in services.

Over the past year, MOFCOM rigorously enforced the decisions and deployments of the State Council. Working with related departments and regions, it identified goals, highlighted priorities, specified tasks and focused on implementation. Overall, the trials are going smoothly with initial results.

First, the pilot programs were carefully planned. A master-plan for the pilot was outlined, setting out eight areas of exploration for the participating regions, with guarantees in five aspects supported by government policy. Thoughtful guidance was offered to the pilot regions for the crafting of local programs. Related departments were coordinated to deliver policy support and work guidance.

Second, supporting policies were introduced in an orderly manner. With the approval of the State Council, MOFCOM, in concert with related departments, issued the Catalogue of Guidance for Key Areas of Services Export while actively pushing for the rollout of fiscal, tax, financial, fund and facilitation policies in backing.

Third, the development of regulation platforms was fast-tracked. MOFCOM put together a taskforce for platform building to plough ahead with pilot regulation platforms. So far, the marshaling of the functions of the seven working systems, the sorting of promotion policies for trade in services, and the filing of user names of local commercial authorities have been finished.

Fourth, Supervision and evaluation was continuously stepped up. Last August, the vice minister in charge called a meeting to hear reports by some of the pilot areas and reemphasized research, priorities and implementation. Late last year and early this year, MOFCOM organized two surveys of the pilot and held two roundtables on the pilot for the innovative development of trade in services, to supervise and spur the programs. Currently, intensive efforts are underway to work out the Evaluation Metrics for the Pilot of the Innovative Development of Trade in Services.

Over the past year, the covered regions, bearing in mind local conditions, have made initial progress in the management institution, promotion mechanism, policy system, and regulation model for trade in services.

First, new management institutions have been installed at a quickened pace. All the 15 participant localities have set up joint cross-agency meetings or trade in services leading groups. A management system has been established with MOFCOM as the coordinator and related departments doing their bit to jointly advance the pilot process. Meanwhile, the participants have been exploring localized statistics system and statistical monitoring platforms, so as to support future decision-making and performance evaluation.

Second, institutional innovation has been promoted. With a view to improving comprehensive service standards, the localities focused on legislation, guidance availability and platform development to build a multi-layered promotion system for trade in services. Notably, in terms of the launch of public service platforms, fiscal allocations were extended to fund public services for businesses ranging from personnel training to technical support, to market expansion and language services.

Third, policy frameworks have been improved. The participants worked actively to deliver and complement state fiscal, tax and facilitation policies. Under ever-improving policy frameworks, policies are fully leveraged to fuel the innovative development of trade in services.

Forth, create new models of supervision. Centering on the facilitation and liberalization of trade in services, all pilot areas are studying to institute new measures to facilitate customs clearance and interim and ex poste supervision, and explore innovative approaches to regulate services trade. A number of innovative measures have been rolled out, including integrated customs clearance, cross-agency coordination, random checks on item lists and a credit reference system on major enterprises.

Question: According to an UNCTAD report released on Feb. 1, China buckled the trend against the backdrop of a major slide in global FDI inflows and maintained its position as the 3rd largest recipient of FDI in 2016. Can you please give us more detailed information on that?

Answer: UNCTAD released its 25th World Investment Report on Feb. 1, 2017, which estimated that global FDI flows fell by 13% to USD 1.52 trillion in 2016. FDI flows to developed and developing economies dropped by 9% and 20% respectively. The report indicated that China maintained its attractiveness to foreign investment and ranked as the third largest recipient in the world.

This is a hard-won achievement for China amidst slow global economic recovery and sluggish cross-border investment. Over the past year, we put in a great deal of efforts in the following areas.

First, we advanced the pilot free trade zones in an all-round way. We promoted institutional innovation in investment, trade and finance and actively explored the mode of interim and ex poste supervision. So far, we have gleaned 114 good practices at the national level, which will be replicated across the country to unleash market vitality. 4 pilot free trade zones attracted a total of RMB 87.96 billion of foreign investment over the past year, up by 81.3% year on year. They together accounted for one tenth of China’s FDI inflows on a land area that is only 5/100,000 of the country.

Second, we sped up reform of the foreign investment administration regime. Building on the successes of the pilot free trade zones, we revised four laws including the Law on Foreign Invested Enterprises. Since the review and approval system was replaced by a record-filing requirement for the establishment and changes of foreign invested enterprises in October 2016, 95.3% of related matters were completed through record filing, greatly enhancing investment facilitation.

Third, we expanded opening-up in an orderly way. Comprehensive trials were carried out in Beijing on liberalizing services sector. Targeted measures were adopted for the 118 trial tasks in the master plan, of which 83% was implemented and 73% completed. In terms of actual outcomes, Beijing’s services sector utilized 13% of the national total. The newly revised Catalogue Guiding Foreign Investment Industries is now open for public comments and will come into force as soon as the required process is completed.

Fourth, we further improved the business environment. We pushed for the State Council’s Notice on Certain Measures to Expand Opening-up and Actively Utilize Foreign Investment, with a view to further easing restrictions on foreign investment. We strived to create a level playing field based on the principle of non-discriminatory treatment to domestic and foreign investors, and advance the new round of higher quality opening up to achieve win-win results.

Going forward, we will work, along with other relevant departments, to implement the policies in accordance with the requirements laid out at the Central Economic Work Conference. We will continue to improve the investment environment, safeguard the legitimate rights and interests of foreign investors and foreign invested enterprises, and enhance the structure, quality and efficiency of foreign investment while steadily expanding its size to keep China’s magnetic power to foreign investors.

Question: China has, for the first time, become Germany’s top trading partner in 2016, according to the Association of German Chambers of Commerce and Industry (DIHK). Will the spokesperson give us an overview on China-Germany economic and trade relations?

A: In recent years, China-Germany comprehensive strategic partnership has constantly evolved, with increasingly strengthened political mutual trust. The two countries have established a government consultation mechanism at the premier level. As an important basis of bilateral relations, trade and economic relations have gradually displayed comprehensive, multilevel and cross-regional features during cooperation. At present, Germany remains the largest trading partner of China in Europe. According to Chinese statistics, the China-Germany trading volume was USD 151.29 billion in 2016, down by 3.5% year on year, but the decrease is 8 percentage points lower than that of last year. Two-way investment is growing faster and becomes an important pillar of bilateral trade and economic relations. By the end of 2016, we had cumulatively approved 9,394 projects invested by German enterprises in China, with a paid-in investment of USD 28.18 billion by Germany. The cumulative non-financial investment of Chinese enterprises in Germany through equity holding and M&A totaled USD 8.83 billion by the end of 2016.
　　
In 2017, China and Germany will celebrate the 45th anniversary of their diplomatic relations and Germany will hold the rotating presidency of the G20. Leaders of two countries will maintain frequent high-level visits. The two countries have huge potential and bright prospects for cooperation on trade, investment, third-party market, smart manufacturing, digital economy and regional development.
　　
The stable development of China-Germany bilateral trade and economic relations is consistent with the general trend of trade and economic relations between China and Europe.

Q: The newly released "No 1 Central Document", Opinions of the CPC Central Committee and the State Council on Deepening and Advancing Agricultural Supply-Side Structural Reform and Accelerating the Generation of New Momentum for the Development of Agriculture and Rural Areas, has mentioned the promotion of rural e-commerce. Measures include stepping up the efforts to establish and improve a standard system serving the development of agricultural e-commerce, supporting the establishment of agricultural e-commerce platforms and rural e-commerce service stations, building comprehensive pilot areas of rural e-commerce and improving agricultural produce circulation backbone network. What measures will the Ministry of Commerce take to promote rural e-commerce this year?
　　
A: From 2014 to 2017, the annual “No 1 Central Documents” have proposed the development of rural e-commerce for four consecutive years. In 2017, along with relevant departments, the Ministry of Commerce will take the following measures to promote rural e-commerce.

First, build a public service system for rural e-commerce. We will build comprehensive pilot areas of rural e-commerce and support the establishment and information-based upgrading of e-commerce public service centers in counties and e-commerce service stations in townships and villages. We will offer support in building and improving a three-tier logistics distribution mechanism at county, township and village levels. We will focus on removing the logistic bottleneck of the “first” and “last” kilometers between township and villages so as to help rural residents sell and purchase products. We will cultivate more talents for rural e-commerce and nurture more market players.
　
Second, promote e-commerce for rural products. We will build more infrastructures for classification and grading, packaging, cold chain logistics, storage and distribution for agricultural produce and offer quality control, traceability and brand cultivation services to sell more agricultural produce online. We will link agriculture with e-commerce and encourage e-commerce enterprises to cooperate with agricultural producers and processors. Based on online e-commerce platforms, we will integrate offline storage, processing and distribution resources to build a new supply chain of agricultural produce. In addition, we will sell rural industrial goods, tourism products, and services online, nurture a number of counties, townships and villages featured in e-commerce and inject new dynamism and impetus into rural economic growth.

Third, we will put into full play the role of e-commerce in targeted poverty reduction. In our work on comprehensive demonstration, we will give stronger support to poverty-stricken areas and tilt towards national level poor counties while expanding the scope of support. The event of “E-commerce Experts to the Counties” will be rolled out, sending experts of relevant fields to poor areas to offer on-the-spot guidance. Despite its poor environment for the development of e-commerce, the countryside is rich in potential products. We will push for in-depth cooperation between big e-commerce companies and poor counties, and make explorations to establish market-based targeted assistance mechanism

Fourth, we will step up efforts to summarize and roll out experiences. This year, national on-the-spot meeting on rural e-commerce will be held to advocate best practices of different areas. In the meantime, Service Regulations and Work Guidance on rural e-commerce will be revised, and the second edition of typical cases of rural e-commerce will be released. We will also organize training for the government principals of demonstration counties, and strengthen the exchanges of experiences among different areas.

Moreover, we will carry out “physical examination” for demonstration counties. By way of performance evaluation, we can help them identify problems, improve their work and create favorable conditions for healthy and sustainable development.

Question: In recent years, MOFCOM has been actively promoting the establishment of public welfare agricultural products market system. Could you please brief us on the progress in this regard?

Answer: Agricultural products market matters a lot to public welfare. It is essential to secure market supply, stabilize market price and improve food safety so that the public have access to safe and affordable agricultural products.

To enhance the public welfare function of agricultural products market, actually safeguard and improve people’s livelihood, and let the public have a greater sense of gain, since 2014 MOFCOM, along with other relevant departments, has been actively promoting the establishment of public welfare agricultural products market system. By far, 253 public welfare agricultural products wholesale markets and 5,291 retail markets have been set up across the country. A national public welfare agricultural products system that covers major big and medium scale cities has taken shape. These markets ensure stable supply and make sure the public always have access to the products by setting up reserves of important agricultural products and contingency supply mechanisms; these markets bring more benefits to the public and provide them with affordable products by reducing logistics through direct purchasing and direct selling and lowering charging standards; these markets improve food safety and enable the public buy with ease by applying complete standard operation and setting up quality traceability system. At the moment, the comprehensive charging level for wholesale public welfare agricultural products markets is more than 20% lower than average markets, while the price of fresh agricultural products is 10% lower. The price at retail public welfare agricultural products markets is 10-20% cheaper than that of average markets all year round.

During this year’s Spring Festival, the supply of agricultural products across the country is abundant and the price is stable on the whole. The prices of pork and beef saw a modest rise of 0.2% and 0.4% respectively compared with before the festival. The average price of 30 vegetables including Chinese cabbages is up by 3.9%, eggs 0.1%, and the price of chicken remains unchanged. The price of mutton even drops by 0.5%. It is fair to say that the public welfare agricultural products markets at different localities have played an active role in this process.