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Regular Press Conference of the Ministry of Commerce (November 9, 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. The situation of China’s foreign trade operation in January-October 2017

According to the statistics of the Customs, in January-October 2017, China's total import and export value reached 22.52 trillion yuan, with an increase of 15.9% year on year. In it, the export reached 12.41 trillion yuan, with an increase of 11.7%, and the import reached 10.11 trillion yuan, with an increase of 21.5%. The surplus was 2.29 trillion yuan, narrowing down 17.8%.

In terms of commodity structure, exports of mechanical and electronic products registered 7.16 trillion yuan, up 12.4% year on year, taking up 57.7%, 0.3 percentage points higher than that of the same period last year. Among these, the exports of automobile, computer and its accessories, ship and mobile phone grew by 28.7%, 19.7%, 10.8% and 8.3% respectively. Exports of China’s seven labor-intensive industries like textile and clothing enjoyed relatively high growth, with an increase of 8.6%.

In terms of operation body, the exports of private enterprises reached 5.79 trillion yuan, up 13.8%, taking up 46.7%, 0.8 percentage point higher than that of the same period last year. The private enterprises continued to be the largest operation body regarding exports. The exports of foreign-invested enterprises reached 5.34 trillion yuan, up 10.0% year on year, taking up 43.0% of China’s exports, 0.7 percentage point lower than that in the same period last year.

In terms of trade mode, the imports and exports of general trade reached 12.73 trillion yuan, up 18.0% year on year, taking up 56.5% of the total value of national foreign trade, with 1 percentage points higher than in the same period last year.

In terms of the international market, China’s exports to the traditional markets such as the US, the EU and Japan grew by 15.6%, 13.3% and 8.9% respectively and those to the BRICS countries and the countries along the “Belt and Road” line like Brazil, Russia, India, South Africa and Malaysia grew rapidly, with a growth of 39.0%, 20.9%, 20.2%, 17.7% and 17.1% respectively.

China’ s stable and rapid growth in imports and exports in January-October mainly benefit from the following factors:

1. The international market picks up. Considering the world economy has picked up since this year and the demand of international market has recovered, main international organizations all lifted their predicted value for the world economy and trade growth. The International Monetary Fund (IMF)’s latest prediction for the global economic growth for 2017 and 2018 were both raised to 3.6% and 3.7% by 0.1 percentage points respectively. The WTO increased its prediction for the growth of the global goods trade volume for 2017 to 3.6% by 1.2 percentage points. The WTO World Trade Outlook Indicator reached 102.6, the highest since April 2011.

2. The stable and upward domestic economy drives the continuous growth of imports. Since this year, the stable, upward and progressive growth momentum of national economy has been continuously consolidated. The statistics from the State Statistics Bureau show that in January-September this year, the added value of the industries above a designated scale increased by 6.7% year on year and the profits of them increased by 22.8% year on year. In October, the Purchasing Managers Index in manufacturing industry and non-manufacturing Business Activity Index continued to rise, reaching 51.6% and 54.3% respectively. The stable and upward national economy drives the continuous growth of imports. According to the statistics of the WTO, our speed of import growth is obviously above the average global level and those of the trading powers such as the US, Germany and Japan.

3. The policy effect further appears. Since this year, MOFCOM, together with the departments and regions, has continued to pay special attention to the series of policies and documents issued by the State Council which aim to promote foreign trade development, in order to practically reduce the enterprises’ burden and create favorable business environment for them. The policy effect appears gradually.

4. The enterprises’ structure adjustment and power steering accelerate. The business environment of new industry formats is gradually improving, and the growth rates of cross border e-commerce and market purchasing are obviously above the overall speed, which has become the new highlight of foreign trade growth. Many enterprises started from the supply side, sticking to innovation-driven method, accelerating power steering, adjusting structure and fostering new foreign trade competitiveness as the core of technologies, brand, quality, service and standard. The enterprises' innovation ability and international competitiveness are strengthened, and the added value of products and brand influence are further enhanced.

Next, we will seriously carry out the guiding principles from the 19th CPC National Congress, and firmly foster and carry out the new development ideas. We will deepen the supply-side structural reform of foreign trade area and vigorously implement the new innovation-driven method. We will continue to promote the “five optimizations” and “three constructions”, actively cultivate the new trade formats and modes, enhance the creative development of processing trade, actively expand imports and further improve the level of trade facilitation. We will consolidate and upgrade the traditional advantages while fostering new competitive advantages of foreign trade in order to promote the transformation from a large trading nation to a powerful one, play a more important role in promoting national economy and social development and make bigger contribution to the “Two Centenary Goals”.

II. The situation about the Development Index of China’s Shopping Centers in the third quarter of 2017.

Today, MOFCOM released The Report on the Development Index of China’s Shopping Centers in the third quarter of 2017.

The report showed that in the third quarter of 2017, the development index of China’s shopping centers was 66.9, 2.1 points higher than that in the second quarter, which means that the overall shopping center market continues to keep an upward momentum. The present situation index was 63.4, 5.5 points higher than that in the second quarter, mainly benefiting from the significant upswing of the operating performance indicators and the improved cost control.

The report showed that the operating performance index of shopping centers was 83.0, 10.2 points higher than that in the second quarter, presenting an obvious increase. The sales and projects’ rental income of 72 percent and 74 percent projects increased in the third quarter. The cost control index was 37.5, 12.5 points lower than the threshold of PMI (Purchasing Managers’ Index) , and was improved when compared with that of the second quarter. This means the operators are still actively updating their business strategies to control the cost payout in a better way. The indexes of the first-tier cities and cities of and beyond third-tier increased by 3.2 points and 3.0 points respectively than those of the second quarter while that of the second-tier cities was 64.9, with a slight increase of only 0.5 points than that of the second quarter. This means the successive launch of new projects has put investment-attracting pressure on parts of the present projects in the second-tier cities.

On the whole, the shopping center market maintains an upward growth trend. The national resident income continues to keep a rapid growth, and in this favorable environment, better adjusting and adapting to the changing consumption demand is the significant way to keep the sound development of the shopping centers.

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

CCTV: US President Trump arrived in Beijing yesterday afternoon. What opportunities will his visit bring for China-US relations? What progress will be achieved in China-US trade and economic relations? In particular, China and the US have frequent trade frictions in recent years. How would they resolve them this time? Thank you.

Gao Feng: We always believe that China-US economic relations and trade are the ballast and propeller of their bilateral relations. President Trump’s first visit to China and the historic meeting between the two state leaders will further charter the course of China-US bilateral relations, including economic relations and trade.

Yesterday afternoon, Vice Premier Wang Yang met with US Commerce Secretary Wilbur Ross. They witnessed the signing of 19 business deals valued at US$8.2 billion in total between China and US companies, involving extensive areas of energy and chemical industry, agricultural produce, aircraft and relevant components, life sciences, environmental equipment and smart cities. This morning, the Ministry of Commerce of China and the Department of Commerce of the US are holding the US-China Business Exchange in the Great Hall of the People. Government officials and business representatives of the two countries are having dialogues and exchanges on cooperation in energy, environmental protection, IT, agriculture, medical and health services between Chinese and US companies. President Xi Jinping and President Trump will meet the business representatives of the two countries in person and witness the signing of deals for major business deliverables. In addition, Chinese and the US companies have also signed many other cooperation deals during the visit. While their signing were not witnessed by the two Presidents, they remain important economic and trade deliverables of President Trump’s visit to China. For example, GE and the Silk Road Fund will sign an agreement of intent for building a “Belt and Road” Investment Cooperation Platform. It is fair to say that President Trump’s visit to China will achieve historic, mutually-beneficial and balanced trade and economic outcomes. These deliverables, achieved with the joint efforts of both sides, will benefit companies and peoples of China and the US, a full proof that China and the US can achieve win-win results with cooperation.

As for trade frictions between China and the US as you mentioned, I consider them as the two sides of the same coin. We always believe that, on trade and economic issues, China and the US should strive to expand their cooperation, unleash positive energy and control differences with dialogue and communications in order to maintain a strong momentum for bilateral economic cooperation and trade in a new era.

The 19th Party Congress proposed that China will further open up, significantly ease market access, and protect the legitimate rights and interests of foreign investors. Guided by the important consensus reached by the leaders of the two countries, we will strengthen China-US economic cooperation and trade with a more open approach, achieve mutually-beneficial and win-win results, boosting world economic growth and building a community with a shared future for mankind. Thank you.

China Daily: What measures will MOFCOM take to regulate and guide ODI of private companies according to laws and regulations? Thank you.

Gao Feng: As a matter of fact, when we guide companies in their efforts to “go global”, we never differentiate companies of different types. The government of China encourages all qualified companies to go global in a regulated and orderly manner and constantly improve their abilities to operate abroad. Following the spirit of the 19th Party Congress, we will offer more guidance and services to companies “going global”.

First, we will create a sound investment and legal environment for companies. We will guarantee the legitimate rights and interests of Chinese companies by signing FTAs, bilateral investment agreements, infrastructure cooperation agreements and bilateral labor cooperation agreements.

Second, we will further improve the level of facilitation. MOFCOM released the Measures for Overseas Investment Management in September 2014, establishing a management model focused on filing for record and supplemented with approvals applicable to outbound investment of Chinese companies and introducing the negative list. Today, apart from investment in sensitive countries, regions and industries, which would need to be approved, companies can complete the relevant procedures to file for record within three working days online. We will continue to streamline relevant procedures to facilitate outbound investment of Chinese companies.

Third, we will further improve public service. We will release public service products regularly, such as country (region)-specific guidelines for outbound investment and cooperation and Report on Development of China’s Outward Investment and Economic Cooperation, offering targeted information services for companies “going global”.

To sum up, we will continue to support and promote qualified Chinese companies, including private ones to “go global” steadily, leverage their unique advantages and walk steady and far in their international operations. Thank you.

China National Radio 2: The 122nd session of Canton Fair has concluded recently. We see a marked rise and stronger momentum in orders for Chinese exporters. Could you brief us on that? Thank you.

Gao Feng: As you said, the 122nd session of Canton Fair saw growth in both participants and transactions, the highest level in four years. I have a set of numbers to show the main features of this session of Canton Fair.

First, participants have increased, among which active and new clients are on the rise that are more willing to negotiate deals. New clients represent 39.6%. Guests from overseas have increased to 192,000, up by 3.4% from the autumn Fair last year. Traditional markets of Japan, the US and the EU have increased by 10%, 5.5% and 2.5% respectively. Among emerging markets, clients from the Belt and Road countries have grown by 3.5%, accounting for 44% of the total.

Second, a great amount of transactions have been made. For exports, the transactional value has reached 30.16 billion dollars, up by 8.2% year on year. 60% of sectors have witnessed growth in exports. Ceramics, tools and hardware, building material, clothes, toys have increased by 34.2%, 23.1%, 20.3%, 15.1% and 14.6% respectively, contributing 13.6% to the growth in exports to the Belt and Road region.

Third, innovation has been active. An increasing number of participating enterprises have come up with new products and new brands thanks to their relentless input in innovation of R&D, technology, brand, business models and others. The total number of exhibition booths and transactions of these new comers accounts for 20% and 35.8% respectively. The average transactional value is 1.2 times higher than general booths.

Canton Fair is known as the barometer of China’s foreign trade. The growth in participants and transactions of this session speaks to two things. One is the international market is recovering and the market expectation is picking up. It also shows that the innovation-driven strategy, the supply-side structural reform, and the shift of gear and restructuring add a new competitive edge to China’s foreign trade technology with brand, quality, service and standards as core advantages.

We will follow the requirements of the 19th CPC National Congress report to guide transformation via innovation, expand foreign trade, turn China into a trader of quality, and strive for new developments, breakthroughs and advancement of foreign trade. Thank you.

Phoenix Satellite TV: We have noted the potential mega-merger of Qualcomm and Broadcom. Will MOFCOM conduct a strict and lengthy review? Now that the semiconductor industry is a vital strategic industry in China, will MOFCOM focus more on protecting the interests of Chinese enterprises during the scrutiny? Thank you.

Gao Feng: We’ve noticed relevant reports. From what we have known, the deal is still under negotiations. According to China’s Anti-Monopoly Law, once the deal is made and it meets the threshold of filing, it should notify MOFCOM for review of undertaking concentration.

From initiating to concluding a concentration review, MOFCOM has to follow stringent procedures and standards, including the time for the investigation. We are committed to the principle of treating domestic and foreign enterprises as the same. This position will not change.

Chinese Anti-monopoly Law and merger reviews aim to uphold fair competition in the market. As China opens up wider, we welcome enterprises from all countries to this market and will make greater efforts to protect lawful rights and interests of foreign investors in China. Thank you.

21st Business Herald: Recently, former Vice Minister of Commerce Wei Jianguo predicted that China’s import will grow five to six percentage points faster than export in the next five years. Does MOFCOM hold the same opinion? If it comes true, China’s trade surplus will shrink further. Is that good for China? Thank you.

Gao Feng: From the import and export data in the first ten months of this year, China’s import growth rate is 9.8 percentage points higher than export. The average monthly growth rate of import is 5 percentage points higher than export except in two months. It is partly because of the rise in commodity prices. The ever-growing domestic consumption market in China also drives up imports. As China pushes for the building of a well-off society in all respects and a socialist modern country, its consumption market, especially the middle to high end market, will continue to expand.

What I want to emphasize is that China does not deliberately pursue surplus. Trade balance is totally up to market. We hope China’s foreign trade can grow in a balanced way while we push for stronger development in trade.

Over the past few years, the Chinese government has attached equal importance to import and export and sped up implementation of an active import policy. Since the outbreak of the international financial crisis, China’s import value has increased by 581.5 billion dollars, which accounts for nearly 20% of the total incremental of the world trade, making the country a major driving force of global recovery. The China International Import Expo is expected to share the China’s market with the world through importing more and expanding opening up. We estimate that in the next five years, China will import more than 10 trillion dollars of goods and services. We will further improve the business environment that is law-based, international, convenient and fair, promote sustained, sound, and balanced growth in foreign trade and strive to shift China from a trader of quantity to one of quality. Thank you.

CRI: We would like to learn about the progress of China-Chile FTA upgrading negotiation.

Gao Feng: China-Chile FTA was signed in 2005, and was the first of its kind between China and Latin American Countries. Following that, China and Chile signed supplementary agreements on trade in services and investment in 2008 and 2012 respectively. The agreement has worked well since it entered into force. According to China’s Customs, in 2016 the bilateral trade reached USD31.36 billion, 4.4 times that of 2005, before the agreement was implemented.

To upgrade and enrich the agreement, the two sides announced the launch of upgrading negotiations in November 2016, during President Xi’s visit to Chile. During the negotiations, the two sides not only upgraded the original articles on market access for trade in goods, trade in services, rules of origin, and economic technology cooperation, but also added new elements of customs procedures, trade facilitation, e-commerce, competition, and environment. Currently, the two teams are working closely and are likely to make breakthroughs at the APEC meeting in Da Nang, Vietnam. Thank you.

CCTV: President Xi Jinping outlined the vision for an Ice Silk Road as he met with Russian Prime Minister. Could you elaborate on the plans of MOFCOM to build the Ice Silk Road?

Gao Feng: In July this year, President Xi visited Russia and reached important agreement with Russian leader to explore the North Sea Route and build an Ice Silk Road. MOFCOM takes it as an important task in the alignment of the Belt and Road Initiative with the Eurasia Economic Union. During the 22nd regular meeting of the two prime ministers not long ago, the two leaders had an in-depth exchange of views and reaffirmed the agreement to build an Ice Silk Road.

At present, China and Russia are having positive progress in the exploration of the Artic. First, COSCO Shipping has completed test sailings along the North Sea Route. Second, the transport authorities are discussing the MOU on China-Russia Maritime Cooperation in Polar Water, as an effort to improve the policy and legal framework for the development and cooperation in the Arctic. Third, the two businesses are working on the oil and gas exploration in the Arctic and exploring cooperation on transport infrastructure in the North Sea Route. MOFCOM is working with Russian Ministry of Economic Development to set up a dedicated working mechanism that coordinates the exploration of the North Sea Route, the resource development in the Arctic and cooperation in infrastructure, tourism, and science expeditions.

In the next step, MOFOCM will work with other authorities to deliver on the important agreement of the two leaders on the Ice Silk Road. We will advance the cooperation in the development of the North Sea Route and related areas and turn them into new highlights of the bilateral trade and economic cooperation. Thank you.

Given time, we will have the last question.

The Economic Observer: How is the EU’s investigation into China’s electric bike dumping going? The industries believe the EU has not properly assessed China’s excess capacity and profitability. What’s your comment on that and how are you going to respond? Thank you.

Gao Feng: On the 20th of October, the EU Commission opened investigations into the alleged dumping of e-bikes from China. According to our knowledge, the responding Chinese companies have submitted the sample questionnaires. The China Chamber of Commerce for Import and Export of Machinery and Electronic Products has submitted their comments on behalf of the e-bike industry.

Currently, the EU is still using surrogate country in its investigation, which evidently contravenes the obligations under Article 15 of China’s WTO Protocol. We strongly oppose such practice.

As parties to the Paris Climate Agreement, both China and the EU should contribute to global efforts to tackle climate change. The e-bike, a green vehicle, can play a positive role. The e-bike industry in China is fully liberalized. The two sides have broad cooperation in supplementary supply chains and technology solutions, and could achieve win-win results. We hope that the EU will conduct investigations in a fair and objective manner, and will not disproportionately protect its own industries at the cost of the environment, the upstream and downstream industries, and the interests of consumers.

We will closely follow the case and check whether the investigations are consistent with WTO rules. We will take the necessary measures to defend the legitimate interests of the Chinese companies. Thank you.

This is the end of today’s press conference. Thank you.

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