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Regular Press Conference of the Ministry of Commerce (December 21, 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 one piece of information to release.

It is about the consumption market operation situation of China in from January to November in 2017.

According to the statistics of the State Statistics Bureau, the total retail sales of consumer goods in November amounted to 3.41 trillion yuan, up 10.2 % year on year, 0.2 percentage points higher than that in October. That from January to November increased by 10.3% year on year, the same as that of the first ten months. The retail sales of 5,000 key enterprises monitored by MOFCOM increased by 5.2% in October year on year, 0.2 percentage points higher than that of this October and 0.3 percentage points higher than that of the same period last year. That from January to November was up 4.7% year on year, 0.8 percentage points faster than that of the same period last year.

China’s consumption market maintained a smooth and upward growth in November, mainly presenting the following characteristics:

Firstly, the online retail sales maintained a rapid growth. According to the National Bureau of Statistics, the online sales of national entity reached 4.9 trillion yuan, up 27.6% year on year from January to November, accounting for 14.8% of the total retailing of social consuming goods, 2.4 percentage points higher than that of the same period last year.

Secondly, the entity retail sales continued an upward growth. Since this year, the innovation and transformation of entity retail sales and the joint efforts of online and offline have been remarkable. This year’s “Double 11” shopping spree (November 11) happened to be on the weekend, the entity retail companies all joined the sweeping promotion activities, which has achieved good results. In November, the sales of key stores and shopping centers monitored by MOFCOM rose by 3.2% and 7.4% respectively year on year, 1.1 and 0.3 percentage points higher than those in the same period last year respectively.

Thirdly, the sales of upgraded goods were thriving. The big promotion in November 11 further stimulated the demand for consumption upgrading and the sales of upgraded goods speeded up obviously. In November, the sales of communication equipment, cosmetics and clothing above the designated size increased by 33.9%, 21.4% and 9.5% respectively year on year, 16.1, 13.3 and 4.4 percentage points higher than those in the same period last year respectively.

Fourthly, the consumption price went up slightly. The CPI increased by 1.7% year on year in November, 0.2 percentage points lower than that of last month, staying the same month on month. The market supply has remained relatively sufficient recently. The price of edible agricultural products from 36 large and medium cities monitored by the MOFCOM was up 0.1% month on month in November, down 2.3% year on year, 1.6 percentage points lower than the falling gap of last month. From January to November, the price of edible agricultural products decreased by 3.4% year on year.

The consumption market is expected to reach the goal of keeping a stable and faster growth, and the fundamental influence of consumption on economic development will further appear, as the development of the national economy is stable and upward, the residents’ income keeps growing, the employment situation stays up-beating and the overall price of commodities is stable.

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

CCTV-2: Nikkei Asian Review reported that MOFCOM started a merger review on Toshiba deal to sell memory chip unit. Could you confirm that? How long does it take to conclude the investigation? When will MOFCOM release its decision? It is also reported that SK Hynix plays a part in the merger and may hold a big share of the unit, which will lead to monopoly and hurt the interests of Chinese companies. Is that true? Thank you.

Gao: MOFCOM has received Bain Capital LP’s undertaking concentration filing material concerning the deal of buying Toshiba memory chip unit.

According to the Anti-monopoly Law, MOFCOM should conduct a preliminary investigation into business concentration filed by undertakers and decide whether or not to carry out further investigations within 30 days after the date of receiving the paper and material in conformity with regulations. If a further investigation is required, MOFCOM should conclude the review within 90 days after making such a decision. Under certain legal circumstances, it is allowed to extend the review but the extension should not exceed 60 days.

In accordance with the Anti-monopoly Law and Measures on Business Concentration Review, MOFCOM is doing a comprehensive market survey related to the deal. We will follow the legal procedures rigorously, evaluate the impact of the concentration on competition and make a decision within the time limit. Thank you.

CRI: The just-concluded Central Economic Work Conference charts the course for Chinese economy in the coming year. What are the changes and trends facing MOFCOM in terms of all-round opening-up and access of foreign capital? Thank you.

Gao: The Central Economic Work Conference concluded yesterday makes specific plans for stepping up reform and opening-up and creating a new landscape of all-round opening-up. Guided by the spirit and requirement of the Conference, MOFCOM is working on detailed measures to implement the central plans. We will vigorously cultivate a new pattern of comprehensive opening-up featuring a wider scope, a deeper level and a better structure.

As for using foreign capital, we will focus on the following work. First, we will reduce restrictions on market access step by step, further open up manufacturing sector, speed up liberalization of producer services and push forward opening-up in financial sector in a steady way. Second, we will roll out the pre-establishment national treatment and negative list approach comprehensively, grant post-establishment national treatment to foreign investors, and improve the complaint and protection mechanism for foreign investors to protect their legal rights and interests. Third, we will optimize the distribution of foreign investment among regions. We will support China’s western areas in building platforms to attract more and better foreign investment, thus ensuring coordinated FDI growth for all regions. Fourth, we will continue to prioritize innovation of the FTZs and give the FTZs the maximum autonomy and right to reform. Thank you.

MASTV: I have two questions. First, on December 18, the mainland and Macau signed agreements to upgrade CEPA. What are the bright spots of CEPA? Macau also watches closely if the duty will come down further when it re-exports the processed goods using raw material imported from Portuguese-speaking countries to mainland. Second, on the same day, MOFCOM and other ministries released a document on standards of conduct for private enterprises doing business overseas. Could you say something about the background for the document and Chinese outbound investment as well? Thank you.

Gao: As for your first question, the CEPA agreements include an Investment Agreement and an Agreement on Economic and Technological Cooperation, which are integral part to the CEPA 2.0. This special trade deal under the One Country, Two Systems and in accordance with the WTO rules fully speaks to Beijing’s support for long-term stability and prosperity in Macau.

There are three highlights for CEPA Investment agreement. First, Macau enjoys a much wider market access. Mainland reserves just 26 measures in non-services sector in the form of a negative list, gives more preferences in such areas as ship, aircraft, energy and resources, and makes it clear Macau continues to enjoy the most favorable treatment in investment. Second, for the first time, Mainland and Macau co-design an institutional arrangement for investment protection in line with the principle of One Country, Two Systems which meets the needs to solve disputes and provides a comprehensive and efficient institutional guarantee for protecting the rights of investors of both sides. Third, many new result-oriented measures are created to facilitate investment.

The CEPA Economic and Technological Cooperation Agreement highlights the distinct feature of Macau, supports Macau in initiatives such as the platform to serve commercial cooperation between China and Portuguese-speaking countries, Belt and Road initiative and sub-regional cooperation with a view to promoting diverse and sustainable economic growth in the region.

With respect to your second question about exporting processed products to mainland, I think what you mean is rules of origin and inspection and quarantine. Now under CEPA, trade in goods between mainland and Macau enjoys zero-tariff treatment. The CEPA Economic and Technological Cooperation Agreement includes measures on facilitating customs clearance and inspection and quarantine. We will work together with Macau SAR in the coming negotiations on CEPA Trade in Goods Agreement to look into details.

As for your second question, the Code of Conduct for Outbound Investing of Private Business is introduced mainly to further guide and regulate the directions of outbound investment by the private sector, promote rational, compliant and orderly outbound investing of private companies, and manage and address outbound investment risks for healthy and sustained ODI and mutual benefit and shared development with host countries.

In recent years, with remarkably accelerating outbound investment, Chinese private companies have become a force to reckon with in the country’s corporate ODI, playing a positive role in the continued and healthy growth of the national economy and the mutual benefit and cooperation between China and related countries. According to MOFCOM statistics, as of the end of 2016, the ODI stock of the public sector accounted for 69%, whereas the non-public sector contributed 31%. In 2016, 32% of the ODI growth came from public-held investors and 68% was from non-public players.

At present, the private sector’s outbound investment, though good overall, is not without problems. For example, due to lack of systematic planning and scientific debate before going global, some get into trouble in later operations and suffer big losses; some have made irrational investment in property and sports clubs; and others do not pay enough attention to environmental protection, energy efficiency and safety standards and requirements, causing conflicts and disputes. Therefore, it’s necessary to guide the ODI activities of private companies to enhance the quality and standards of going global.

Moving forward, we will fully draw on the proven experience and practices of other countries, abide by international rules and work out with related departments the Outbound Investment Regulations to set the promotion, service, regulation and guarantee of ODI on the course of rule of law and create a lasting mechanism to ensure and promote the regulated and healthy development of outbound investment.

China Daily: According to the ODI figures MOFCOM released last week, irrational outbound investment has been further curtailed with no new deals in property, sports and entertainment. Is this owing to withheld approvals by MOFCOM and related departments or other reasons? What steps does MOFCOM take to guide and regulate the ODI of Chinese business? Thank you.

Gao: On irrational ODI, since the end of last year, following the unified deployment of the CPC Central and the State Council, we have worked actively with related departments in ODI authenticity and compliance review. So far, property, sports and entertainment have registered no new deals. As businesses’ awareness and capability to manage risks keep improving, their outbound investment is increasingly rational.

For the next steps, as required by the 19th Party Congress and the Central Economic Work Conference, we’ll focus on the following areas:

First, we’ll keep innovating on ODI models to promote international capacity cooperation, create a global-oriented network for trade, investment and finance, production and service, and foster new advantages in international economic cooperation and competition more swiftly.

Second, we’ll continuously improve the quality and efficiency of outbound investment to better serve the supply-side structural reform and the real economy.

Third, as required by the reform to streamline administration and delegate power, balance regulation and deregulation and optimize services, we’ll keep innovating on ODI management model, further improve ODI filing and reporting system, step up mid- and post-event regulation and ensure effective random checks featuring “two randoms and one publish”.

Fourth, we’ll strengthen the management model of “encouraged + negative list” to guide and regulate the investment directions and scope of outbound investment by the three categories of encouraged, restricted and prohibited.

Fifth, we’ll improve public service system, step up platform building for ODI public service, consolidate resources and deliver one-stop information service. Thank you.

CCTV-4: We understand that US President Trump issued the first national security strategy in his term on 18th, which reaffirms the principle of America first and describes China as a strategic competitor, accusing Beijing of maintaining a repressive vision and pursuing policies of economic aggression aimed at weakening the US while vowing to strengthen protection for US economic interests in commerce and investment. What’s MOFCOM’s response? Thank you.

Gao: Regarding the National Security Strategy report published by the US, the spokesperson of the Ministry of Foreign Affairs outlined the Chinese position at the press conference of Dec. 19th. I want to emphasize that a key dimension to China’s bid to build new international relations in the new era is cooperation and win win. On the commercial front, we are against the zero-sum game perception. We see US and other commercial partners more as cooperators than competitors. Owing to its own experiences, China has never and will never pursue so-called policies of economic aggression.

We’ve also noted that the publication has raised concerns of economic circles around the world about the stability of the world economy moving forward. As the world economy recovers slowly, stable expectations are crucial to maintaining the momentum of recovery. In the face of common challenges in global economic growth, it will take the joint efforts of all economies to deliver mutual benefit, win win and shared development.

Since the establishment of Sino-US of diplomatic relations some 40 years ago, bilateral commercial ties have come a long way owing to the common efforts of both governments and business communities. Bilateral trade jumped remarkably to US$ 524.3 billion last year from US$ 2.5 billion in 1979. From January to November this year, bilateral trade was up 12.8%, hitting US$ 527.22 billion. In 2016, stock two-way investment reached US$ 200 billion. As global value chains grow, the two economies are increasingly intertwined with both peoples receiving huge benefits. History shows fully that the commercial ties between the two countries have gone way beyond competition and can deliver shared development through cooperation. We also believe that as long as the cold war mentality and the quest for global hegemony are rejected, China and the US, as the world’s biggest economies, may well continue to work together for win win and shared development and bring about global economic prosperity.

We hope that the US can face up to history, go with the tide and work with China to maintain and grow healthy and stable Sino-US commercial relations and benefit both peoples. Thank you.

Beijing TV: In the first three quarters of this year, consumption was the biggest contributor to China’s economic growth. As 2018 draws near, what further measures will the MOFCOM take to create a better consumption environment and drive consumption upgrade? In addition, the year 2017 is known as the first year of “new retail” in China. In light of the new consumption hotspots, how will MOFCOM tap into the demand-side potentials in 2018 in addition to efforts in the supply-side reform? Thank you.

Gao: Consumption in China has entered a new phase in which demand is diversified, consumption scale continues to expand, and consumption structure is optimized and upgraded. Since 2014, consumption has become the number one driver of national economic growth and its contribution to economic growth has gradually risen to nearly 65%. Consumption plays a fundamental role in economic growth.

In the first 11 months of this year, China's total retail sales of social consumer goods reached 33.2 trillion yuan, up 10.3% over the same period of last year. It is estimated that total retail sales will grow by more than 10% for the whole year and maintain double-digit growth for the 14th consecutive year. Meanwhile, consumption structure continues to upgrade while services consumption grows rapidly. For example, in the first 11 months of this year, revenues from catering and movie box office sales increased by 10.8% and 22% respectively over the same period of last year.

Actually, there is an interplay between supply-side reform in consumption and demand-side forces.

Currently, the major contradiction is not the lack of demand, but imbalanced and insufficient supply. In 2018, focusing on the contradiction between the significant increase in and diversified development of consumer demand at present and the imbalanced and insufficient market supply, we will create a better consumption environment, and cultivate new areas of growth in such areas as medium- and high-end consumption, the innovation drive, green and low carbon development, sharing economy, modern supply chain and human capital service, so as to generate new driving forces and further unleash potentials in consumer demand. To that end, we will adopt the following measures:

First, we will increase the effective supply of the market to meet the needs of consumer spending upgrades. We will take the preparation of the China International Import Expo as an opportunity to implement the strategy of brand building in circulation, build a platform for consumption promotion, take multiple measures to increase the effective supply of goods and services, promote medium- and high-end consumer spending, and allow consumers to fully enjoy the fruits of development.

Second, we will promote the transformation and upgrade of retail and enhance the sense of benefit among consumers. We will foster rapid e-commerce development, and increase e-commerce penetration in the countryside and the communities. We will deepen the innovation and transformation of brick-and-mortar retail, promote the integration of online and offline operations, and encourage the adoption of new technologies and new tools to explore new business formats and business models. We will let consumers fully experience the new changes in the new era.

Third, we will reduce costs and fill in the gaps, and improve the sense of happiness among residents while spending. We will strive to build a unified market, promote the informatization, standardization and intensification of circulation, promote the innovation and application of the supply chain, enhance the efficiency of circulation and reduce the cost of circulation, so that consumers will appreciate the convenience and benefits while doing shopping.

Fourth, we will rectify market order and enhance the sense of safety among consumers. We will focus on the rectification on the Internet and in rural markets, carry out the “carefree household services” campaign, build a credit system for the household service industry, and continue to push for the establishment of a traceability system for key products, so that consumers can make their purchases with confidence. Thank you.

China National Radio: We have seen reports saying that subsidies for new energy vehicles will be tightened further next year and subsidies may be canceled at local levels. How’s the consumption of new energy vehicles been going this year? Should the subsidies be tightened next year, will it affect the new energy vehicle consumption and sales?

Gao: Regarding the consumption of new energy vehicles, the market for new energy vehicles has maintained rapid growth so far this year. From January to November, the cumulative sales totalled at 609,000 units, up by 51.4% year on year, while the annual sales are expected to exceed 700,000 units.

In the long run, as technologies evolve and related infrastructure improves, consumers will be even more in favor of new energy vehicles. The market demand for new energy vehicles will also continue to expand. Thank you.

Global Times: From 2018 onwards, China will implement a unified negative list system for market access across the country. What is the progress of the implementation of this system? Thank you.

Gao: The implementation of a unified market access negative list system across the country is a major institutional innovation in our country's economic governance. It mainly identifies by way of a list the industries, areas and businesses in which investment is either prohibited or restricted. For areas that are not listed, all market players can have equal access to them according to law. Our aim is to establish a unified market that is fair, open and transparent, and let the market play a decisive role in the allocation of resources.

According to the State Council's “Opinions on Implementing a Negative List System for Market Access”, the NDRC and the Ministry of Commerce, together with relevant departments, formulated in 2016 a “Draft of Market Access Negative List (Pilot Version)”. The negative list approached was to be piloted in the first group provinces and cities including Tianjin, Shanghai, Fujian, and Guangdong. In November this year, with State Council approval, 11 provinces and cities including Liaoning, Jilin, Heilongjiang, Zhejiang, Henan, Hubei, Hunan, Chongqing, Sichuan, Guizhou and Shaanxi became the second batch of pilots.  

Next, the two ministries will actively work with relevant departments to step up efforts in the following areas:

First, provide guidance to the pilot provinces and municipalities to carry out work according the plans approved by the State Council, and do a good job in stocktaking and making evaluations. Second, amend the guidelines and finalize the “Negative List for Market Access (2018 Edition)” through comprehensive revision. Third, strive to implement in 2018 a unified market access negative list system across the country according to plans, and gradually explore the establishment of dynamic adjustment and information disclosure mechanisms for the negative list. Thank you

Xinhua News Agency: We noted that MOFCOM, together with other authorities released the Action Plan for Efficient Delivery in Urban and Rural Areas. Lowering cost and improving efficiency in logistics is concerning to the public. Could you brief us on the background of this action plan? What does MOFCOM plan to do in the next step?

Gao: Recently, MOFCOM, the Ministry of Public Security, the Ministry of Transport, the State Post Bureau, and the National Federation of Supply and Marketing Cooperatives jointly released the Action Plan for Efficient Delivery in Urban and Rural Areas. It aims to put in place an efficient, intensive, coordinated, shared, integrated, open and green delivery system by 2020.

The action plan serves to advance the supply side structural reform in commercial logistics and
provide efficient, convenient and safe logistics services to consumers.

Currently, the logistics and delivery industries face some difficulties and challenges. For example, the delivery vehicles have difficulties in traveling, parking and unloading; the rural and urban resources are not integrated adequately; the rural area lacks facilities and faces high cost; the delivery is not standardized, digitalized and concentrated enough.

To address these problems, the action plan outlines five tasks:

First, we will improve urban and rural delivery network, including the construction of trunk lines and terminals. Second, we will enhance the organization of urban and rural delivery system, and make it more concentrated and efficient. Third, we will standardize delivery by applying information technologies to warehousing, delivery, sorting, and packaging. Fourth, promote green development of warehousing, transporting, and packaging. Fifth, we will optimize the management in logistics, traffic and safety.

In the next step, MOFCOM will work with related authorities on three programs: delivery network building; green delivery system, and technology and model innovation. We will spend threes ears to identify 50 exemplary cities and 100 exemplary companies. We will draw the experiences of local governments and the private businesses in delivery and replicate the best practices nationwide. Thank you.

We only have time for the last question.

Phoenix TV: The EU released new anti-dumping regulations which mainly target China on the 19th and a report on the 20th that blames China for serious market distortion. There are comments that the EU has discussed it for years, and the new regulations serve to defend global free trade. What is the response of MOFCOM?

Gao: We noted that the EU introduced new anti-dumping rules that contain the concept of “serious market distortion”. I’d like to emphasize that every country has the right to choose its own development path, and should be respected by the international community. Our experiences prove that the market economy with Chinese characteristics, born out of the trials of the Chinese people, fits into China’s reality and serves the economic development of China in a new era. It has also received positive comments from many countries.

We oppose it when the EU impose its so-called “market distortion” standards onto others and mislead the business. The EU leaders have expressed many times the wish to develop stable and healthy economic links with China. In the first 11 months of this year, our bilateral trade reached USD556.69 billion, up by 12.7%. In breakup, China exported USD 335.1 billion, up by 9.6%; China imported USD 221.59 billion, up by 17.8%. By the end of November, the EU has cumulatively 44,368 investment programs in China, with an actualized value of USD119.76 billion.

These figures speak volume to the momentum of China-EU trade and economic relations. We expect the EU to keep words and actions consistent, send the right messages to the business, and safeguard the momentum and big picture of China-EU commercial cooperation. China reserves its right to seek dispute settlement at the WTO, and will staunchly defend our legitimate interests. Thank you.

This is the end of the press conference.

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