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Regular Press Conference of the Ministry of Commerce (October 26, 2017)

Dear friends from the press,

Good morning, welcome to the regular press conference of the Ministry of Commerce (MOFCOM). First of all, I have two pieces of information to release.

I. How the consumption, investment and export fueled the national economic growth in the past three quarters.

The 19th CPC National Congress has just concluded successfully. President Xi Jinping’s report at the 19th CPC National Congress has elaborated China’s major achievements of economic construction since the 18th CPC National Congress. China’ s economy has kept mid- and high-speed growth, the supply-side structural reform has been deeply promoted, the economic structure has been constantly optimized, the new system of the open economy has seen gradual improvement and the foreign trade, foreign investment and foreign reserve have stayed ahead of the world.

According to the business operation in the past three quarters, the “three horse-drawn vehicles”-consumption, investment and export-have greatly promoted China’s economic growth.

In terms of consumption, we vigorously promoted the modernization of circulation in the past three quarters and the synergetic development of e-commerce and entity business. This is to actively guide and expand consumption. The total retail sales amount of consumer goods amounted to 26.3 trillion yuan, up 10.4% year on year. The final consumption expenditure contributed 64.5% to economic growth, 2.8 percentage points higher than that of last year over the same period. Consumption continued to become the biggest motive force of economic growth.

In terms of foreign trade, we have deeply implemented policies and measures conducive to stabilizing foreign trade growth and adjusting its structure, and have cultivated new foreign trade business patterns to help enterprises develop international markets. In the past three quarters, China’ s imports and exports amounted to 20.29 trillion yuan, up 16.6% year on year. In January-August, our imports and exports of trade in services reached up to 3.06 trillion yuan, up 9.8% year on year. The growth of foreign trade was higher than the economic growth over the same period and its pulling effect for economic growth was further enhanced.

In terms of foreign capital absorption and foreign investment, we have implemented the important policies of foreign capital utilization to expand opening up. We try to build a stable, fair, transparent and expectable business environment. This has fostered foreign investors’ confidence. China’s actual use of foreign capital reached up to 618.6 billion yuan, up 1.6% year on year. Foreign capital flew more to the high and new technology industry with the use of foreign capital of hi-tech manufacturing industry and high-tech service industry up 27.5% and 24% respectively. At the same time, we have effectively restrained the irrational outward investment and led enterprises to invest in the real economy, promoting the transformation and upgrading of domestic industries through foreign investment.

The report of the 19th CPC National Congress pointed out that the system and mechanism to promote consumption should be improved in order to strengthen consumption’s fundamental power over economic development. The reform of investment and financing systems should be deepened to give a full play to investment’s crucial driving force for optimizing the supply-side structural reform. The foreign trade should be expanded and new business patterns should be developed to strengthen China via promoting trade. Next, we will earnestly study and implement the spirit of the 19th CPC National Congress and take President Xi Jinping’s socialism with Chinese characteristics for a new era as our guidance. Keeping that in mind, we will promote the domestic and foreign trade and the two-way investment, and contribute more in order to pull economic growth by the “three horse-drawn vehicles” of consumption, investment and export.

II. About the climate index of China’s convenience stores in the third quarter of 2017

MOFCOM released the Report on the Climate Index of China’s Convenience Stores in the Third Quarter of 2017 today.

The Report showed that the climate index of China’s convenience stores in the third quarter of 2017 was 69.25 in general, falling slightly compared with that of the previous two quarters. This means the practitioners are becoming more rational while having strong confidence in the development of convenience stores. Among these, the industrial climate index was 77.0 and that of the stores was 64.1, all falling slightly compared with that in the previous quarter, but above the 50.0 PMI benchmark line. This showed the practitioners remained positive for the development prospect.

The Report stated that the managers of convenience stores industry have sufficient confidence in the cost control in the fourth quarter while staying positive about the improvement of store numbers, income from main operation and business environment. However, compared with the situation of the first half of the year, they are more concerned over the sales and the number of the practitioners in the fourth quarter. The store operators’ expectation for service items and commodity prices has increased and their anxiety for the costs of electricity, water and labor has been eased. Whether the rent of store could be further reduced or not remained to be the key issue for the store operators.

In general, owing to the rapid development in the first half of the year and the structural adjustment of commodities for the changing season, the convenience store practitioners still showed high confidence index for the prospect of the fourth quarter and the prospect tends to be stable and rational. The industry has been enjoying a healthy and upward development on the whole.

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

The Economic Observer: It was proposed in the Report at the 19th Party Congress that China would explore the establishment of free trade ports. What’s the progress of this and what are the plans for the next step as far as MOFCOM is concerned?

Gao Feng: President Xi Jinping proposed in the Report at the 19th Party Congress that China would give pilot free trade zones greater autonomy to reform, and explore the establishment of free trade ports”, which has in effect raised the standard for developing the test field of reform and opening up and shown us a new direction with higher standards for ushering in a more comprehensive and in-depth landscape of opening up.

At present, according to the unified arrangements of the CPC Central Committee and the State Council, we are working with the relevant provinces, municipalities and departments to build a free trade port area on the basis of the high-standard, high-quality pilot free trade zone. For example, the Shanghai Pilot Free Trade Zone, in its plan for comprehensive deepening reform and opening up, clearly sets out to establish a free trade port area that benchmarks the highest international standards and adopts a trade regulation system of higher standards. It should adopt an intensive management system based on state mandate, explore the implementation of finance, foreign exchange, investment and entry/exit management systems in line with international practice, and establish and improve risk prevention and control systems. Presently, we are working with Shanghai municipality and relevant departments to study and formulate relevant development plans. Another example is the Zhejiang Pilot Free Trade Zone, which has set a development goal of initially building a pilot zone of the free trade port area to promote the free international trade of commodities such as oil products using international standards.

Going forward, we will thoroughly study and implement the spirit of the 19th Party Congress, and work together with the relevant provinces, municipalities and departments to focus on the core task of making institutional innovation in the pilot free trade zones and increase efforts to explore the development of free trade ports in accordance with the decisions of the CPC Central Committee and State Council, and further demonstrates the role of the zones as a test field for comprehensively deepening reform and expanding opening up. Thank you.

China Radio International: We have seen a notice published on the website of the Ministry of Commerce on the 16th of this month regarding the filing of an anti-dumping case on hydroiodic acid originating in the United States and Japan. We know that US President Donald Trump is going to visit China next month. I am wondering why the two sides are launching anti-dumping investigations into each other’s products on the eve of the Trump visit to China? Does this mean that China and the United States are raising their stakes in a trade rivalry? Thank you.

Gao Feng: On October 16, MOFCOM filed an anti-dumping case on imported hydroiodic acid. This is a regular trade remedy case launched upon applications of China’s domestic businesses. The scope of the investigation is imported hydroiodic acid originating in the United States and Japan. MOFCOM will conduct relevant investigations according to relevant Chinese laws and regulations and WTO rules.

We always believe that the nature of China-US economic and trade relations was not simply competition, but mutually-beneficial and win-win cooperation. With this principle in mind, bilateral China-US trade grew from several billion dollars when the two countries first established diplomatic relations to more than 500 billion dollars now. Trade in services and two-way investment also flourished and areas of cooperation keep expanding. At the same time, as the largest two economies in the world, trade frictions and differences are unavoidable. Following the principles of mutual respect, cooperation and win-win result, we stand ready to work with the US to appropriately manage differences and strive for common development through dialogue and consultation. Thank you.

Economic Daily: Could I invite the spokesperson to elaborate on your understanding of making new ground in pursuing opening up on all fronts proposed in the Report at the 19th Party Congress and how MOFCOM will further open up? Thank you.

Gao Feng: General Secretary Xi Jinping stated in the Report at the 19th Party Congress that we would make new ground in pursuing opening up on all fronts, which is very inclusive. In my opinion, pursuing opening up on all fronts will require handling several relations well: First, the relation between “bringing in” and “going global”. We should focus both on “bringing in” and “going global”. While actively utilizing foreign capital, introducing advanced technologies, managerial expertise and thinking from abroad and improving the quality and level of foreign capital, we will support companies in “going global” with active and steady steps, making their operation more international and achieving common development with their host countries. Second, the relation between opening up in coastal areas and opening up in inland and border areas. While further opening coastal areas, we will devote more efforts to opening up western areas and moving central and western inland and border areas towards opening up frontiers, making them new highlands in opening up. We hope to make new ground in opening China further through links running eastward and westward, across land and over sea, promoting coordinated regional development. Third, the relation between opening up manufacturing sector versus services and other sectors. China opened its manufacturing sector widely at an earlier time, while the opening up of services falls relatively behind. We need to open up the services sector wider while opening up the manufacturing sector in depth. Fourth, the relation between expanding trade in goods and developing together with other trading partners. By pursuing a comprehensive and balanced development of foreign trade, we will turn China into a trader of quality. We will better open to our trading partners, including developing and developed economies, for common development. Fifth, the relation between pilot programs and comprehensive rollouts. On the basis of promoting pilot programs and experiments on further opening up in pilot free trade zones and exploring the opening of free trade ports, we will timely roll out mature and replicable experience nationwide and achieve comprehensive opening up across the nation through pilot programs and experiments on opening up. In addition, we will also actively participate in global economic governance with a more open approach, promote multilateral and regional economic cooperation and strive for an open world economy.

Moving forward, we’ll further study the important statements and profound substance of the 19th Congress Report related to comprehensive opening-up and follow the CPC Central’s overall deployment to actively but steadily advance work on all fronts, including the Belt and Road, national rejuvenation with trade, improving FDI environment, optimizing regional open-up landscape, innovating on ODI cooperation model, promoting trade and investment liberalization and facilitation, among others to foster a new landscape of comprehensive opening-up.

China News Service: Still on Trump’s visit to China, what will be the key issues for Sino-US commercial cooperation? What outcomes does the Chinese side expect? Thank you.

Gao Feng: The teams on both sides are engaged in active communications on ideas and outcomes to further deepen Sino-US trade and economic cooperation for President Trump’s upcoming visit. We look to reach more agreements on Sino-US commercial relations and economic cooperation through the visit and the meeting of the two presidents. During the visit, US Commerce Secretary Ross will head a delegation to China to co-stage related commercial activities. The Chinese side is in close contact with the US side about related arrangements, in the hope of scoring positive and practical outcomes, taking bilateral commercial cooperation to a new high, and jointly promoting the healthy and steady development of Sino-US commercial relations. Thank you.

Phoenix Satellite TV: I have two questions. First, we’ve noted the official figures of China-North Korea trade, which show that in the year to September, bilateral trade was up slightly by 3.7%. Although China’s imports from the DPRK dropped 16%, its exports grew 21%, a remarkable figure. What do you make of that? Is it against the spirit of the UN resolution toughening sanctions against North Korea? Second, it’s reported that the famous US electric vehicle manufacturer Tesla will set up a factory in Shanghai. Rumor has it that the Chinese government might break rules and allow it to do it independently rather than through a joint venture. Could you confirm that? Separately, according to some analysis, during President Trump’s visit, China and the US might discuss the BIT, with the US seeking breakthroughs like the Tesla case, in which US companies can establish wholly-owned plants without an equity cap. Could you confirm? Will there be other breakthroughs on investment? What are the specific areas? Thank you.

Gao Feng: For your first question, as a permanent member of the UN Security Council, China fully and faithfully follows through the UNSC’s DPRK-related resolutions and fulfills its international obligations despite huge sacrifices. Related departments of the Chinese government have issued announcements banning the import of minerals such as coal, iron, gold, copper, lead and zinc, textiles and aquatic products from North Korea. Due to related measures, bilateral trade has slowed significantly this year, up by 3.7% year-on-year from January to September, 27.7 percentage points less than Q1 this year. Starting from March, China’s monthly imports from North Korea have dropped substantially. Chinese exports to North Korea also turned downward in August, down by 6.7% year-on-year in September.

With the inertia in trade activities, it takes time for any trade measure to show results. The slowdown in China-North Korea trade this year is also in line with that pattern. I’d like to emphasize that China’s execution of UN resolutions is serious and unquestionable.

With respect to your second question, as far as we know, Tesla is working with Shanghai’s government on setting up a manufacturing facility in the region. We always welcome foreign investors, especially investment in high technology, energy-saving and environmental protection, and strategic emerging industries. In the spirit of the 19th National Congress of the CPC, we will widely relax market access, expand opening up, make an effort to create a law-based, international and favorable business climate for foreign investors and effectively protect their lawful rights and interests.

Regarding the outcomes of US President Trump’s visit to China on trade and economic fronts, as I just said, the working teams on both sides have been working very hard in an hope to achieve more consensus and positive and real results and to strive for long-term stable and sound development of commercial cooperation between China and the US.

China Daily: The 19th Party Congress report highlights “bring-in” and “go-global” in China’s opening up. However, China has slowed the pace of overseas investment since the start of this year. Mr. Spokesman, what measures have MOFCOM taken to help Chinese enterprises go global? Thank you.

Gao Feng: The 19th Party Congress report points out that we should create a new landscape of opening up across the board while putting equal emphasis on “bringing in” and “going global”. I don’t think we can put inward investment and outward investment into perspective by simply looking at numbers.

As far as “going global” is concerned, China’s overseas direct investment in non-financial sectors has totaled 1.3 trillion dollars. China’s investment stock ranks the sixth in the world. We pay more attention to the quality of investment. We improve the industrial structure of overseas investment so that enterprises going global can better serve real economy at home and optimize the distribution of outbound investment so as to better support the Belt and Road development. Besides, we have promoted sound development of enterprises going global and protected their lawful rights and interests, and at the same time, avoid irrational outbound investment. In doing so, enterprises can not only enhance their international management level but also strengthen risk prevention capacity.

After the press conference, my colleague from the Department of Outward Investment and Economic Cooperation will be here to take your questions concerning specific measures for going global. He will give you detailed introduction to you all.

In the interest of time, the last question please.

CRI: Also about China-DPRK trade, we have noted that the Customs data in September shows China still imported coal and iron ore from the DPRK. Why is that and does it mean after October there will be no such imports? Thank you.

Gao Feng: The UN Security Council adopted the Resolution 2371 on August 6 banning imports of coal, iron ore and other relevant products from the DPRK, allowing a transitional period of no longer than 30 days. MOFCOM and GAC released the No. 40 Notice on August 14 to implement the Resolution. The coal and iron ore that had arrived at Chinese ports before the Notice entered into force, namely before August 15, are allowed to pass. Starting from September 5, the Chinese customs has stopped handling imports of those goods from the DPRK. China’s Notice and practice fully conform to the Resolution. As for the imports of coal and iron ore in the September data you mentioned, I think they were recorded between September 1 and 4. You may contact GAC for more details. Thank you.

That is all for today’s press conference. Thank you all!

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