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. About China’s Outward Investment Cooperation in January-November 2017
In January-November 2017, the homeland investors’ non-financial FDI in 5,796 overseas enterprises from 174 countries and regions amounted to US$107.55 billion, down 33.5% year on year, and the irrational outward investment was effectively restrained. The turnover of the overseas contracted projects amounted to US$134.4 billion, up 1.6% year on year, and the total value of the newly signed contracts was US$209.92 billion, up 9.1% year on year. The number of the labor service personnel dispatched overseas reached 461,000. At the end of November, the labor service personnel dispatched overseas amounted to 973,000.
The outward investment cooperation in January-November mainly showed the following features:
Firstly, the investment in the countries along the Belt and Road line and the cooperation with them were promoted steadily. In January-November, the new investment in 59 countries along the Belt and Road reached up to US$12.37 billion, accounting for 11.5% of the total volume and increasing by 3.2 percentage points over the same period last year. The total value of the newly signed contractual projects in 61 countries along the Belt and Road routes amounted to US$113.52 billion, taking up 54.1% of China’s total value of overseas contractual projects over the same period of time, up 13.1% year on year; the turnover was US$65.39 billion, taking up 48.7% of the total amount in the same period, up 6.1% year on year.
Secondly, the falling gap of the outward investment narrowed down and the industry structure continued to be optimized. In January-November, the falling gap of our non-financial outward direct investment decreased by 7.4 percentage points than that of the first ten months, further narrowing down. Among these, the non-financial outward direct investment in November amounted to US$21.24 billion, up 34.9% year on year, registering monthly year-on-year positive growth for the first time within a year. The outward investment mainly flew to lease and commercial service industry, wholesale and retail industry, manufacturing and information transmission, software and information technology services industry, taking up 28.4%, 21.5%, 14.5% and 9.2% respectively. No new projects were added in real estate, sports and entertainment areas.
Thirdly, there are many newly signed big contractual foreign projects, obviously pulling up the export. In January-November, the value of 617 overseas contractual projects was over US$50 million, adding up to US$161.31 billion, accounting for 76.8% of the total value of the newly signed contracts. The exported goods pulled up by contractual projects amounted to US$13.73 billion, up 3.9% year on year.
In January-November 2017, MOFCOM and the major provincial commerce administrative departments filed and checked 5,528 overseas investment enterprises, among which 5,480 were filed and 48 were approved.
II. About China’s assimilation of foreign investment in January-November, 2017
In January-November, 30,815 foreign invested companies were newly established, with an increase of 26.5% year on year; the actual use of foreign capital reached 803.62 billion yuan, increasing by 9.8% year on year. In November, 4,641 foreign invested companies were newly established, with an increase of 161.5% year on year; the actual use of foreign capital reached 124.92 billion yuan, increasing by 90.7% year on year. There was substantial growth in November.
Specifically speaking, there are mainly four features:
Firstly, the assimilation of foreign investment in different industries maintained growth. In January-November, the actually utilized FDI was 207.76 billion yuan, up 0.2% year on year, taking up 25.9% of the total foreign investment. Among these, that in chemical raw material and chemical products manufacturing was up 18.1% year on year and that in electrical machinery and equipment manufacturing was up 10.8% year on year. The actually utilized FDI in service sector amounted to 582.75 billion yuan, up 13.5% year on year, accounting for 72.5% of the total foreign investment. Among these, that in the production and supply of electric power, gas and water was up 60.7% year on year, that in computer application services was up 20% year on year and that in construction industry was up 18.6% year on year.
Secondly, the assimilation of foreign investment in hi-tech industries kept a favorable growth momentum. The actually utilized FDI of high-tech manufacturing was 60.15 billion yuan, up 9.9% year on year. Among these, the actual use of foreign capital in computer and office equipment manufacturing and medical instruments and instrumentation industry increased by 42.7% and 27.8% respectively year on year. The actually utilized FDI in hi-tech service sector reached 177.1 billion yuan, up 100.9% year on year. Among these, that in information service and scientific achievement transformation service grew by 167.1% and 40.5% respectively year on year.
Thirdly, the central region kept its growth in foreign investment intake. In January-November, the central region kept its growth in foreign investment intake and its actual use of foreign capital amounted to 52.09 billion yuan, with a year-on-year increase of 29%
Fourthly, among the main sources of investments in January-November, the actual input value from China’s Hong Kong, China’s Taiwan, Japan and Japan grew by 20.1%, 47.2% and 7.4% respectively year on year.
It is necessary to point out that the reasons for the rapid increasing of the actually utilized FDI in November are as follows: firstly, the substantial growth of newly established companies in November has effectively enhanced the foreign capital inflow. Secondly, some big projects received their capital intensively. Thirdly, the No.5 and No.39 Document of the State Council were issued successively this year which showed the increasing influence of the policy.
Next, we will continue to well implement the decisions and arrangements of the CPC and the State Council and keep promoting the opening up and improving business environment in order to be more attractive to foreign investment.
That’s all the information I’d like to share with you. Now I’d like to answer your questions.
Economic Information Daily: We know that the 11th WTO Ministerial Conference has just concluded. Could you please talk about the main outcomes of this Conference and the role China played in it?
Gao Feng: The 11th WTO Ministerial Conference has just concluded in Buenos Aires, the capital of Argentina. The Conference ended with ministerial decisions on Fisheries Subsidies, the Work Programme on Electronic Commerce, the Work Programme on Small Economies, TRIPS non-violation and situation complaints, and the creation of the working party on accession for South Sudan. In addition, a considerable number of WTO Members jointly issued a joint ministerial statement on investment facilitation and micro, small, and medium-sized enterprises (MSMEs), as well as a joint statement on domestic regulation in services.
At the Conference, Commerce Minister Zhong Shan made a speech, in which he shared with the membership China’s firm position that had been clearly set out at the 19th Party Congress for supporting the multilateral trading system and building an open world economy and a community of a shared future for mankind. He also made an introduction to the China International Import Expo to be held in China in 2018.
China has taken real actions by playing an important role in securing the positive outcomes at this Conference. The Chinese proposal has received wide attention and high praise at the Conference. China participated in the discussions on all topics of this Conference. Particularly, it played a constructive role on issues such as agriculture, fishery subsidies, domestic regulation in services and electronic commerce, as well as new issues such as investment facilitation and MSMEs, as part of an enormous effort to promote greater consensus and reduce differences amongst the Members.
On the eve of the Conference, China successfully hosted a roundtable on WTO accession for the LDCs under the China Programme and a ministerial breakfast meeting on investment facilitation. Minister Zhong Shan and DG Azevedo jointly signed a Memorandum of Understanding on the 7th phase of the China Programme and a Memorandum of Understanding on China’s contributions to the WTO Trade Facilitation Agreement Fund. The breakfast meeting ended with a joint ministerial statement on investment facilitation jointly signed by 70 Members.
China News Agency: Thank you sir. Also on the issue of the 11th Ministerial Conference of the WTO, we noticed that both the United States and the EU criticized the WTO's efficacy at this Conference. Only China defended the WTO. U.S. Trade Representative Lighthizer said that the WTO has now lost its primary focus and become an institution focused on litigation. The EU’s Trade Commissioner also said that the WTO cannot address the concerns of its Members. I would like to ask about MOFCOM’s comment on this? What role will China continue to play in the WTO? Thank you.
Gao Feng: As we all know, with the active promotion of the United States and other countries, the GATT in 1947 became one of the three pillars of the post-war world economic system. After nearly half a century of development, similarly with the active support of the United States, the European Union and others, the GATT in 1995 turned into the World Trade Organization. The establishment and operation of this multilateral trading system has provided an irreplaceable institutional guarantee for the recovery and development of the post-war world economy. It has also played a role as the mainstay for promoting global economic growth and curbing trade protectionism. In the face of the challenges of economic globalization, we also believe that the role of the WTO is indispensable in safeguarding a sound international economic and trade order.
Since the beginning of reform and opening up, China has been actively integrating itself into the global economy in an open manner. After 13 years of lengthy negotiations for the resumption of its GATT status and its accession to the WTO, China officially became a member of the WTO family in 2001. China has always cherished its membership and has always been an active participant, a staunch defender and a major contributor for the multilateral trading system.
Nothing is perfect. The WTO also needs to develop. We are not in favor of completely negating the role of WTO on account of some individual members’ demand not having been met. China will continue to unswervingly uphold the multilateral trading system with the WTO as the core and actively promote the development of the WTO. As a developing member, despite many challenges, we will continue to push for progress in the multilateral trade negotiations and constantly improve the level of liberalization and facilitation in international trade so as to inject new impetus into the sustained growth of the world economy.
China Business News: You just mentioned that the paid-in FDI in November grew fast. However, the US has just recently launched its largest tax reform in more than 30 years. How will that influence China’s attraction to FDI? What progress has MOFCOM scored in attracting more FDI? Some believe that the huge tax cut will speed up the flow of Chinese capital to the US. What is the view of MOFCOM on this? Thank you.
Gao Feng: The US tax reform has indeed attracted wide global attention. Based on what we know, this possible policy change may add to the effects of Federal Reserve’s previous monetary policy of interest rate hike and exert some influence on global capital flow. We have also noticed that some economies have tightened their monetary policies and started or planned tax cut plans. Some economies, emerging economies in particular, have expressed their concerns that this US policy may cause capital outflow in their countries, add to difficulties in their attraction of FDI and give rise to financial turbulence and other potential spillover effects.
We hope that the recent concerns of those economies will not become a reality. We always believe that world economic growth requires all economies to join hands and enhance policy coordination. The outbreak of the 2008 global financial crisis in the US brought major global economies together in tackling difficulties and challenges. The G20 Hangzhou Summit further transformed the crisis response mechanism into a long-term governance mechanism, which is a very good example. Today, amidst economic globalization and deep integration of global industries, development should not and could not be confined to any economy alone. “Perhaps if you want to go fast, you should go alone. However, if you want to go far, you should go together.” We look forward to mutually-beneficial and win-win development of all and we will continue to make our own efforts for that.
You have asked about the possible influence on China’s attraction to FDI. We believe that taxation policies are important factors influencing investment decisions made by companies, but not necessarily decisive ones. Investment is also determined by macroeconomic stability, market potential, production factors, business environment and other comprehensive factors of the host country. China has relatively complete industrial chains and highly skilled industrial workers. Its macro economy maintains mid-to-high growth and domestic consumption has huge market potential. We are also striving to improve investment and business environment and constantly expanding market access. For example, 30 restrictive items under the Catalogue for the Guidance of Industries for Foreign Investment were removed in its latest version this year.
China will not stop its efforts for opening up; it will only become more and more open. We will step up reforms and significantly reduce restrictions on market access. We will implement the system of pre-establishment national treatment plus a negative list across the board and continue to offer better services for foreign companies. We are confident that China will remain an attractive investment destination.
CCTV: The President of ROK will start a four-day state visit to China starting from the 13th this month. Taking opportunities offered by this visit, the ROK public calls for a review of its economic relations and trade with China. Could you brief us on the economic and trade issues that will be discussed during the meeting of the two state leaders? In addition, the ROK foreign minister called for a resolution of the difficulties encountered by their companies in China. What is the response of China for that?
Gao Feng: China and the ROK are important economic and trade partners to each other. Their economies are highly complementary, with huge cooperation potential. China is the largest trading partner of the ROK and the ROK is China’s third largest trading partner among countries. According to Chinese customs statistics, the trade volume between China and the ROK reached US$ 253.7 billion in the first eleven months of this year, a year-on-year increase of 12.1%. Up till now, China has 63,000 projects with paid-in ROK capital, which has exceeded US$ 71.6 billion. China and the ROK has large room for cooperation in strategic alignment, jointly developing the “Belt and Road” Initiative, improving trade and investment facilitation and promoting international cooperation on production capacity.
Another important area of cooperation is the negotiation on China-ROK Free Trade Agreement. Since China-ROK FTA took effect in December 2015, the two sides have delivered three rounds of tariff cuts. Against the gloomy rising protectionism around the world, it helps deepen China-ROK bilateral economic cooperation and trade and promote economic growth of the two countries, widely benefiting the industries and consumers of China and the ROK.
According to the China-ROK FTA, the two sides will start the second round of negotiations within two years after the agreement entered into force. In other words, negotiations on services and investment will proceed under the negative list approach and the two sides are actively preparing for it now. We stand ready to work with the ROK to strengthen economic cooperation and trade and build a mutually-beneficial and win-win bilateral trade and economic relations so as to boost our bilateral relations.
21st Century Economic Report: I have two questions. It is reported that the EU and the US will collectively place pressure on China for steel capacity cuts and technology transfer. What’s your comment? Could you brief us on the latest progress of China in steel capacity reduction? Second, a growing number of Chinese investors are facing increasingly long screening as they invest in the US. What’s you comment? Thank you.
Gao Feng: I’m not sure about the source of this piece of news. I have clarified China’s position on steel capacity cuts and technology transfer in the previous press conferences. I hope the collective pressure you referred to was not true. I would like to underline that we oppose it when certain developed countries jointly place pressure on developing countries. We always believe that the differences in international trade could be properly settled by the relevant parties through friendly consultations.
As for China’s progress on resolving steel capacity, from 2011 to 2015, China phased out 90 million tons of steel; since 2016, China has cut over 100 million tons of steel. According the 13th five-year plan, China will cut 100 to 150 million tons of steel. To achieve it, we have paid a huge price and overcome numerous difficulties. In 2016, we resettled 201,000 workers who lost their jobs, larger than the steel workers in the US and Japan respectively, or over 60% of steel workers in Europe. It is fair to say that China leads the world in steel capacity cuts, and has made significant contribution to reining in excess capacity globally.
As for the lengthy screening of Chinese investors, we noted that some US congressmen have proposed reforms to have stricter security checks on foreign investment since the beginning of this year. Some Chinese companies are strictly restricted or blocked by CFIUS as they attempt to acquire or merger US companies
In recent years, the rapid growth of Chinese investment in the US has become the highlight in China-US commercial cooperation. Chinese-invested companies have covered 46 States and created 141,000 jobs for the US. In mid-June, 155 Chinese business leaders attended the Select USA Investment Summit, more than any other countries and regions.
The US government claimed many times that it will actively attract foreign investment. We hope for consistent words and actions from the US and look forward to a stable and predictable investment environment for foreign investors, including Chinese investors. China is willing to encourage Chinese companies to invest in the US and work with US partners. We hope the security screening will not hamper the business cooperation between China and the US.
Shanghai Securities News: It is said that the Russian government has sent a delegation to Shanghai to learn more about the China International Import Expo (CIIE) and meet with local authorities. Could you brief us on the latest progress of the CIIE? Thank you.
Gao Feng: As you said, the delegation from the Ministry of Industry and Trade of the Russian Federation is now visiting Shanghai for the information about CIIE, and has met with the Expo Bureau. Russia is the first country invited to come to China for on-site visit and coordination. They have demonstrated great attention and full support to China’s initiative. It also shows how attractive the CIIE is. According to our knowledge, the Russian government accords great importance to the CIIE and has confirmed that they will participate in the country pavilion for trade and investment as well as the business exhibition. The Russian government also plans to set up a dedicated committee to coordinate all the work relating to their participation.
Up to now, we have sent invitations to over 200 trading partners in the world. Over 70 countries and regions have designated their local organizers and coordinators. It is expected that 150,000 professional purchasers will participate in the Expo. We are collecting information on their demand as well. On the sidelines of the Expo, we will hold Hongqiao International Trade Forum to discuss world economic development and win-win cooperation measures with relevant economies and international organizations.
Currently, the preparations for the Expo are advancing smoothly. We hope the CIIE will be an open platform for all economies to jointly discuss global economic development, build global economic governance systems, and share the benefits of development.
Phoenix TV: Since the start of this winter, many Chinese provinces have been facing “a gas crunch”. Some reports claim that Russia wants to capitalize on the gas shortage in China by exporting natural gas at a higher price. Could you clarify that and brief us on the status quo in Chinese LNG trade? Another question is related to the Philippines. As the China-Philippines relations improve, the bilateral trade has increased rapidly. That said, the Philippines signed an investment guarantee agreement with Taiwan. What’s China’s comment? Will the agreement affect the trade cooperation mechanism between China and the Philippines? Thank you.
Gao Feng: We have not seen the price of Russian gas exported to China rising so far. We’ve noticed the reports that Russian enterprises hope to expand their gas export to China.
Imports from January to November show that Russia is China’s 11th largest LNG import source. According to Chinese custom statistics, China’s import of natural gas reached 60.696 million tons in the same period, up by 26.5% year on year. China imported 384,000 tons from Russia, a year-on-year growth of 49.6%. Russian export of natural gas to China represents 0.63% of the total.
China and Russia enjoy enormous cooperation potential in this field. On December 8, the first stage of the major energy cooperation project between China and Russia—the Yamal LNG project kicked off with an annual output of 5.5 million tons. It is estimated that when all three stages are finished, the annual capacity will reach 16.5 million tons, of which one third will be transported to China. Meanwhile, China and Russia are building the eastern natural gas pipeline. While we continue to support businesses in producing more natural gas at home, we will import natural gas from other countries, including Russia.
With respect to the investment protection agreement between the Philippines and Taiwan, the spokesman of the Ministry of Foreign Affairs has already made comments.
In the first ten months this year, the China-Philippines trade maintained a strong momentum with total imports and exports reaching 41.5 billion dollars, up by 8.2% year on year. Chinese enterprises are increasingly confident in investment in the Philippines. During the same period, Chinese outbound direct investment in the Philippines grew by 6.2% year on year. The two sides are engaged actively in discussions on investment projects such as industrial parks. On top of that, a series of infrastructure and programs related to people’s well-being are also under way, including water conservancy, bridges and railroads. We hope these projects can give a boost to the economic and social development in the Philippines.
Having said that, trade and economic cooperation between us must build on people’s support. We firmly oppose any official contact, signed agreements or cooperative documents of sovereign implications with Taiwan, from countries that have diplomatic relations with China. To sign an investment guarantee agreement with Taiwan is not just a trade and economic issue. We hope the Philippines can observe the principle of One China, handle its commercial relations with Taiwan in an appropriate manner, refrain from hurting our national sentiments, especially the Chinese business community’s, and uphold the good momentum of the bilateral cooperation in order to protect the overall bilateral relations from disruptions caused by Taiwan-related issues.
CRI: One last question about domestic consumption. The Double 12 shopping festival fell on last Tuesday. What are the features of domestic consumption during the shopping festival?
Gao Feng: Some e-commerce enterprises have successively rolled out large scale promotion events on the Web since November, which have played a positive role in upgrading consumption and expanding domestic demand. In general, there are the following features.
First, the shopping festival has gone global, as is testified by both the consumption goods and the sellers and buyers at home and abroad on the shopping spree. According to incomplete statistics, sellers and buyers from over 200 countries and regions have participated in this year’s online promotions.
Second, the trend towards consumption upgrading is plain to see. High-end and smart products are popular. Demand for customized and quality goods continues to grow. An e-commerce company’s data shows that during the Double 12 shopping festival, the sale of high-end TVs worth more than 10,000 yuan soared by three-fold and more, and central air conditioner and smart refrigerators become most sought-after items.
Third, innovations in technology and models abound. Big data, AI, VR, smart logistics and other new technologies are more widely used, thus lifting efficiency in marketing, customer services and logistics. New marketing models keep popping up. Consumers experience has greatly improved.
Fourth, enterprises have strengthened self-discipline. Their awareness of credit and integrity has increased. 238 national model e-commerce enterprises have signed the Letter of Commitment to Operation with Integrity. Some companies have created an anti-fake credit alliance after signing the Protocol on Information Sharing on Anti-Fake Credit, vowing to crack down on actions of earning ratings by cheating or faking.
We will continue to work together with relevant ministries and departments to enhance integrity in e-commerce and continue to enhance quality, boost innovation and promote standardized development of online consumption.
That is the end of today’s press conference. Thank you.