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Regular Press Conference of the Ministry of Commerce (July 13, 2017)

Dear friends from the media, good morning. Welcome to the Ministry of Commerce to take part in the regular press conference. Today, I have four pieces of information to release.

I. China’s Assimilation of Foreign Investment in January-June

In January-June 2017, 15,053 newly-established foreign-invested enterprises were approved, with an increase of 12.3% year on year; the actual use of foreign capital reached 441.54 billion yuan, decreasing 0.1% year on year. In June, 2,894 newly-established foreign-invested enterprises were approved, with an increase of 14.3% year on year; the actual use of foreign capital reached 100.45 billion yuan, increasing 2.3% year on year.

In January-June, the scale of China’s assimilation of foreign investment was basically steady, and the structure was being continuously optimized, keeping the trend of gathering to the high-end industries. There were mainly three features specifically:

Firstly, assimilation of foreign investment in different industries was stable, and the assimilation of foreign investment of the manufacturing industry realized growth. In January-June, the actually utilized FDI was 128.6 billion yuan, up 3% year on year, accounting for 29.1% of the total. Among these, that in general equipments manufacturing was up 14.4% year on year, that in petrochemical engineering, coking and nuclear fuel manufacturing was up 329.4% year on year, and that in chemical raw material and chemical products manufacturing was up 38.4% year on year.

The actually utilized FDI in service sector amounted to 309.99 billion yuan, taking up 70.2% of the total. Among these, that in the production and supply of electric power, gas and water increased 100.2% year on year, that in farming, forestry, animal husbandry and fishery services increased 76.8% year on year and that in construction and related engineering service increased 56.3% year on year.

Secondly, assimilation of foreign investment in hi-tech industries grew rapidly. The actually utilized FDI of high-tech manufacturing was 34.97 billion yuan, up 11.1% year on year, among which, that of computer and office equipment manufacturing, spacecraft and equipment manufacturing and pharmaceutical manufacturing increased 178.9%, 149.4% and 10.3% year on year respectively.

The actually utilized FDI in hi-tech service sector reached 64.72 billion yuan, up 20.4% year on year. Among these, that in information service, R&D and design service, and scientific achievement transformation service grew by 35.6%, 13.9% and 46.3% year on year.

Thirdly, the main sources of investments from Hong Kong, Taiwan, and Japan grew rapidly. In January-June, the actual input from the top ten countries and regions amounted to 420.09 billion yuan, taking up 95.1% of China’s total actual use of FDI. Among these, the actual input value from China’s Hong Kong, China’s Taiwan and Japan grew by 10%, 48.4% and 5.4% respectively year on year (including their investment through free port).

II. China’s Outward Investment and Cooperation in the first half year of 2017

In January-June 2017, Chinese domestic investors carried out non-financial overseas direct investment in 3,957 overseas enterprises across 145 countries and regions, with an accumulative investment of US$ 48.19 billion, down 45.8% year on year. The completed turnover of contracted projects overseas was US$ 67.28 billion, up 1.9% year on year; the newly-signed contracts value reached US$ 123.78 billion, up 24.2% year on year. The labor service personnel dispatched overseas reached 219,000. At the end of June, the labor service personnel dispatched overseas amounted to 917,000.

China’s outward investment and cooperation in the first half of 2017 presented the following characteristics:

Firstly, investment and cooperation with countries along “Belt and Road” was steadily promoted. In January-June, the Chinese enterprises conducted new investment to 47 countries along “Belt and Road”, amounted to US$ 6.61 billion, taking up 13.7% of the total in the same period, and 6 percentage points higher than in the same period last year. The newly-signed contracts value in the countries along “Belt and Road” was US$ 71.42 billion, accounting for 57.7% of the total and 6.1 percentage points higher than the same period last year; the complete turnover reached US$ 33.07 billion, accounting for 49.2% of the total and 2.7 percentage points higher than the same period last year.

Secondly, the decreasing amplitude of foreign investment was narrowed and the industrial structure was continuously optimized. In January-June, foreign investment mainly flew to leasing and business service, manufacturing industry, wholesale and retail trade, information transmission, software and information technology service industry, accounting for 28.3%, 18.3%, 12.7% and 11.4% of the total investment amount respectively in the same period. Foreign investment of real estate industry decreased 82.1% year on year, accounting for 1% of the total investment amount in the same period. In June, foreign direct investment reached the highest value since December 2016, US$13.6 billion, decreasing by 11.3% year on year. The decreasing amplitude was further narrowed, with an increase of 65.5% month on month, realizing positive growth for the second consecutive month.

Thirdly, there are many newly signed big projects of contractual foreign projects and the industrial distribution was relatively concentrated. In January-June, the newly signed contracts of foreign contract projects are mainly focused on the communication and transportation, building and electric power engineering industry, accounting for 25.3%, 25.3% and 18.8% respectively. There were 359 projects with the newly-signed contractual value of more than US$50 million, 12 more than in the same period last year, adding up to US$105.62 billion, accounting for 85.3% of the newly signed contractual value.

Fourthly, the construction of the overseas trade and economic cooperation zone was promoted steadily, promoting common development between China and the host country. In January-June, Chinese enterprises accumulatively invested US$2.3 billion in overseas trade and economic cooperation regions, with a total value of US$8.77 billion. By the end of June, Chinese enterprises have been building 97 overseas trade and economic cooperation zones in 44 countries and regions, accumulatively investing US$28.99 billion, attracting 3,825 enterprises to enter into the zone, paying US$3.09-billion tax revenue to their host country and creating 240,000 employment positions to the local regions.

In January-June, China’s foreign investment dropped. There were mainly three reasons except a relatively higher cardinal number in the same period last year: firstly, the domestic economy was steadily better and better. In the first half year, China’s economy continued a recovery and turnaround momentum, lifting the confidence of investors and leaving more funds within China. Secondly, the uncertainties of international environment increased. Regional conflicts took place frequently, terrorism spread, and some countries tightened foreign investment access exerting a negative impact on China’s foreign investment. Thirdly, the effect of adjustment measures appeared. Since the end of 2016, the Ministry of Commerce, together with relevant departments of the State Council, has strengthened plausibility and compliance check of foreign investment when promoting the foreign investment facilitation. The irrational foreign investment was effectively restrained, the foreign investment structure was further optimized, and the foreign investment in industries such as real estate, hotel, film cinema, entertainment industry and athletic club decreased sharply.

III. The Concentrated Investigation Work against the business owners in the First Half of 2017

In the first half of 2017, the Ministry of Commerce did the concentrated anti-monopoly investigation work against business runners according to law, protected the fair competition of market, cultivate legal, convenient and international business environment and promote the sound development of market economy. By the end of June, MOFCOM received 202 anti-monopoly declarations, put 172 cases on record, concluded 156 cases and approved 1 case with conditions.

The cases mainly have the following features: firstly, major and complex cases increased. Among the concluded cases, there were 43 complicated cases, accounting for 28% of the total cases, increasing by 9 percentage points year on year. There were 29 cases with more than 10-billion-yuan transaction amount, accounting for 20% of the total cases, increasing by 13 percentage points year on year. Among these, there were 6 cases with more than 100-billion-yuan transaction amount, and the transaction scale showed a large-sized trend. Secondly, the merger and acquisition of manufacturing industry still ranked the first. There were 83 manufacturing cases, accounting for 53% of the total cases, marking the industry with the most caseload, up 12 percentage points year on year. Among these, the merger and acquisition in the fields such as semiconductor, automobile and parts grew fast. The year-on-year increase of cases in the service industry such as e-commerce, culture and entertainment was obvious. Thirdly, the overseas merger and acquisition was constantly active. There were 67 overseas inter-enterprise merger and acquisition, accounting for 29% of the total cases, with an increase of 15% year on year. The United States, the EU and Japan were still the main body of overseas merger and acquisition.

The Ministry of Commerce performs strictly according to law and does a good job in antimonopoly review. It has achieved results from the following aspects: Firstly, it has helped to maintain fair competitions in the market effectively. For example, the conditional approval on Dow DuPont Merger Case according to the law maintains the fair competition of rice agricultural products market, which can protect the interests of farmers and other downstream consumers and maintain fair competitions in relevant markets. Secondly, it has strengthened the conditional supervision and investigation without declaring according to law. Four cases that did not declare according to law were given public punishment, which maintained the authority of Anti-monopoly Law and enhanced the awareness of enterprises’ declaration according to law. Besides, it has done a good job with cases under conditional supervision, ensuring that the review approval of previous cases under conditional supervision is effectively observed and law enforcement is in effect. Thirdly, it has promoted the systematization and standardization of the review by strengthening the construction of anti-monopoly system, paying close attention to the revision of the Anti-monopoly Law, completing the draft of the Centralized Review of Operators, further improving the rules of review and promoting the standardization and systematization of the review. Fourthly, it has further improved the efficiency and quality of law enforcement by improving the quality of case handling, comprehensively using legal and economic analysis and other means of review, strengthening the assessment of market competition and promoting the specialization. It provides pre-filing services, guides enterprises to finish the declaration and promotes the facilitation of declaration. It has speeded up the filing and made clear what materials to add all at once within 5 days after receiving declaration materials. The average filing time of the first half year is reduced by 19% than that of the last year. The review time is further shortened by an average of 11.6% compared with that of last year. 95% of simple cases are concluded in the preliminary review phase (30 days). Fifthly, it has strengthened anti-monopoly international exchanges and cooperation. It has adapted to the international trend of antimonopoly and actively carried out exchanges and cooperation. Moreover, it has signed an anti-monopoly memorandum with the British Competition and Market Authority, carried out law enforcement cooperation with the law enforcement agencies from United States, the European Union and other six countries or regions on more than 10 cross-border mergers and acquisitions cases, and held China-EU Week Seminar on Competition Policy with the EU Competition Secretary. It has actively promoted the competition and cooperation of BRIC and continuously improve the level of cooperation. It has actively participated in the formulation of international competition rules, paced up the negotiation of competition issues for RCEP and other Free Trade Agreement and promoted the cooperation to deal with international trade and investment in the monopoly.

In the second half of the year, in the face of the new situation and problems, the Ministry of Commerce will better adapt to the new normal state of economic development, firmly establish and implement the new development concept, focus on solving problems, continue to improve the relevant legislation, do a good job in the review of major cases, investigate and deal with cases without declaring according to law, strengthen the supervision and implementation of conditional cases, further improve the quality and efficiency of cases, effectively protect fair market competition, create a business environment of legalization, facilitation and internationalization, and promote healthy and stable development of market economy.

IV. Situations on New Zealand made the ruling on the countervailing case against China’s galvanized plate

The New Zealand investigation organization made the ruling on the countervailing investigation against China’s galvanized plate, deciding not to adopt countervailing measures against China’s products. New Zealand affirmed that the involved Chinese products only obtained minute subsidies, and did not cause substantial injury to the domestic industry of New Zealand, which conformed with the facts. China expressed appreciation and welcome to New Zealand’s decision. This will benefit the two countries to further deepen communication and cooperation in the economic and trade field.

At present, the world economy has seen some rebound but it was still not steady. The economic recovery still lacks of power. China is willing to join hands with the other countries including New Zealand, to promote liberalization and facilitation of trade and investment, so as to combat trade protectionism jointly and promote the healthy and steady development of economic globalization.

That’s all information I’d like to share with you. Now I’d like to answer your questions.

Phoenix TV: The first China-US Comprehensive Economic Dialogue will be held this month. What is China’s expectation? What key issues will be discussed? What is the keynote of this event for China? Thank you.

Gao Feng: Thank you for the question. The first China-US Comprehensive Economic Dialogue will be held in Washington on July 19. Held after the Mar-a-Lago meeting and the Hamburg meeting between China and US leaders, this dialogue is very significant. This dialogue will implement the important consensus reached by China and US leaders and create new momentum for the development of China and US commercial relations. The two sides will summarize the positive outcomes achieved in pushing forward the 100-day plan of China-US economic cooperation since the Mar-a-Lago meeting between China and US leaders and discuss the one-year plan of China-US economic cooperation on that basis. The two sides will also discuss further coordination of macroeconomic policies, global economy and governance, and trade and investment issues of mutual interest to enhance China and US commercial cooperation. Thank you.

MASTV: In the just concluded G20 Summit, what consensus on trade is reached? What is China’s ideal and what measures will China take to implement such consensus? Thank you.

Gao Feng: Thank you for the question. As we all know, in the just concluded G20 Hamburg Summit, after intensive and in-depth discussions, the participants have achieved four positive and pragmatic trade and economic outcomes:

First, send a positive signal to the outside world that G20 supports an open market and rejects protectionism and emphasize that the opportunities and advantages offered by economic globalization should be better leveraged. Second, all parties agree to support a successful eleventh WTO Ministerial Conference, constructively engage in WTO discussions on e-commerce issues, welcome the entry into force of the Trade Facilitation Agreement (TFA) and call for its comprehensive implementation as early as possible, which fully demonstrate the support of G20 to the WTO. Third, all parties commit to further enhance trade and investment cooperation under G20 and take new measures to facilitate and protect foreign direct investment and improve trade and investment environment, creating positive and favorable conditions for further leveraging the role of G20 trade and investment mechanism and promoting G20’s transition towards long-term governance mechanism.
Fourth, all parties stressed on the importance of a rule-based international trading system and the consistency of bilateral, regional and pluri-lateral agreements with WTO rules, defending the current global trade governance structure.
Trade and investment have always been an important G20 issue. As the world economy is still weighed down by insufficient drivers of growth and protectionism is on the rise, trade and investment is closely followed by all. In the 2016 Hangzhou Summit, all parties have achieved important consensus on revitalizing global trade and investment and introduced a number of key measures. In the Hamburg Summit, the participants have also found the common denominator and kept the confidence of international community in G20.

China is a staunch supporter of economic globalization and trade liberalization. We will work with all parties to implement the outcome and consensus reached by this summit, further strengthen trade and investment cooperation under G20, promote two-way opening up, jointly curb protectionism, firmly uphold the multilateral trading system based on WTO to work for a successful eleventh WTO Ministerial Conference.

While carrying on the Silk Road spirit, following the principles of extensive consultation, joint contribution and shared benefits, we will develop the “Belt and Road” initiative and advance free trade processes, including RCEP and FTAAP, to invigorate an open world economy. Thank you.

CRI: We have noticed that US President Trump just appointed a China trade hawk, Dennis Shea, as deputy U.S. Trade Representative on July 11. What is the view of MOFCOM on that? Thank you.

Gao Feng: Thank you for the question. We have noticed that President Trump just nominated Shea, vice chairman of the U.S.-China Economic and Security Review Commission, as deputy U.S. Trade Representative and Chief of Mission, Geneva. For a long time, China and the US have maintained close communication and cooperation in WTO. We hope that the U.S. Chief of Mission, Geneva will take office soon. China will work with all WTO members, including the United States, for the success of the eleventh WTO Ministerial Conference to be held at the end of this year. Thank you.

21st Century Business Herald: The value of steel scrap has dropped recently and its export increased by a large margin. The export of steel scrap exceeded 80,000 tons in May, setting a new monthly record. What is MOFCOM’s view on domestic distribution and export of steel scrap? Thank you.

Gao Feng: Thank you for the question. We have noticed this issue. Like what you have mentioned, according to Chinese customs statistics, in the first five months of this year, the export of steel scrap totaled 96,000 tons. The export in the first quarter was less than 1,000 tons, a small figure. The export was 15,000 tons in April and more than 80,000 tons in May. As for export markets, the key destinations are the ASEAN, Hong Kong and Taiwan, accounting for 33.4%, 28.5% and 20.9% of the total export in the same period. As for key exporting provinces, Guangdong’s export reached 54,000 tons, accounting for 55.7% or over half of the total export. Jiangxi came the second, with an export of 21,000 tons, or 21.6% of the total. Fujian’s export was 15,000 tons, 16% of the total. In fact, China has always been a net importer of steel scrap. In the first five months of this year, China’s import of steel scrap totaled 1.125 million tons.

The following key reasons can explain why the export of steel scrap has a sudden surge this year:

First, China’s structural adjustment of its steel sector has made steady progress and it has made efforts to reduce overcapacity. We all know that steel scrap is the major raw material for the production of substandard steel products. On June 30, China banned the production of substandard steel products and the inventory of steel scrap built up. Oversupply emerged in the short term, increasing the demand for export.

Second, there is a gap between domestic and foreign prices. Based on market expectations, domestic price of steel scrap continues to drop. The domestic steel scrap enjoys the advantage of price in addition to its good quality. Just now you have mentioned May, let us take it as an example. On May 26, the price of steel scrap in the East Asian market and Indian market were USD 230 and USD 267 per ton respectively, higher than China’s domestic price. During the same period, Guangzhou’s price, which is representative in China, was RMB 1,160 per ton, or USD 171 per ton. As the domestic demand is low and the gap between domestic and foreign price is large, the export of steel scrap has a sudden surge.

According to the five development concepts, especially the green development concept, we will support the steel sector in its supply-side structural reform and reducing overcapacity and contribute to the healthy and sound development of global steel industry. Thank you.

[NBD news]We noted that the EU and Japan have reached the most extensive FTA at the G20 summit. Will this affect China-Japan and China-EU trade and economic relations?

[Gao Feng]Thank you. We noted that the EU and Japan announced on July 6th that they have concluded an FTA in principle, i.e. Japan-EU Economic Partnership Agreement. China is open to any WTO-consistent FTA that promotes global trade and free and convenient business environment. The text of the FTA has not been published. We will assess it once it’s available.
On China-EU and China-Japan commercial ties. The EU is China’s comprehensive strategic partner and one of China’s most important trading partners. In the first five months of this year, our bilateral trade reached USD231.9 billion, up by 9.6%. China’s export to the EU has been USD139.9 billion, up by 8.1%. China’s import from the EU has been USD92billion, up by 12%. By May 2017, the EU’s cumulative investment to China reached USD115.78billion, while China’s cumulative investment to the EU reached USD74.26 billion. We will continue to deepen the comprehensive trade and economic relations, align the Belt and Road Initiative with the EU’s development strategies, and advance the negotiation of a comprehensive investment agreement. We would like to explore the launch of feasibility study into China-EU FTA when conditions are right. We will continue to enrich and upgrade China-EU commercial links.

On China-Japan relations, China and Japan are each other’s’ important trading partner. China is Japan’s largest trading partner, largest source of import and 2nd largest market for export. Japan is China’s 5th largest trading partner and export market, and 4th largest source of import. We welcome cooperation with Japan under BRI in energy conservation, environment, high-technology and subnational cooperation. We will continue to foster new drivers for bilateral trade and economic cooperation and cement the foundation for the bilateral relations.

Thank you.

[Global Times] According to a recent report by AmCham Shanghai, 70% of US business in China have seen revenue increase, but worry that China’s policies and measures favor domestic companies. What’s your response to that?

[Gao Feng] Thank you for your question. We noted that Amcham Shanghai published China Business Report 2017 on July 12. The report found that 77% of respondent US business eared profits in 2016, up by 6% from 2015. 73.5% of the business saw revenue increase, up by 12% from 2015. The success of US business in China speaks volume to the fact that China’s business environment has been improved and US business in China have fared exceptionally well in face of growing market competition. We also noted the misgivings about the transparency and fairness of China’s policies and measures. I think they are uncalled for.

In recent years, the Chinese government has committed to creating and preserving a level playing field. The Chinese government has reaffirmed repeatedly that foreign-invested companies are China’s companies. This doesn’t stay on paper, but in actions.

We have kept opening up the market. In the negative list for market access in the Pilot FTZs published by the State Council in June this year, restrictive measures have been further trimmed. 10 entries and 27 measures have been dropped, and the level of openness has been largely improved. It fully testifies that China is pursuing more active opening-up, inclusive regulation and better government services. The 2017 Foreign Investment Catalogue will be officially implemented on July 28th. It has cut restrictive measures nationwide and provides a freer market for foreign-invested business. We have also conducted a series of reforms, such as power delegation, improved regulation and enhanced government services, so as to ease burdens for the business community, improve business environment, and treat domestic and foreign players alike. These all illustrate that China has and will continue to grant comprehensive and full national treatment to foreign investment.

In the next step, MOFCOM will stay committed to effectively utilizing foreign investment, ensuring consistent and stable foreign investment policies, opening up further, addressing the concerns of foreign investors, defending the legitimate interests of foreign investments, and creating a fairer, more transparent and more predictable investment and business environment. Thank you.

That’s the end of today press conference. Thank you.

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