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 China’s development of domestic trade in 2017.

In 2017, China ‘s domestic trade kept steady and fast development with its scale steadily expanded, the structure continuously optimized and its benefits significantly improved, providing strong support for stabilizing growth, adjusting structure and bettering the people's livelihood. It mainly showed the following five highlights:

1. China's total retail sales of social consumer goods kept a two-digital growth for 14 consecutive years and the consumption served as the first driver of economic growth. In 2017, the total retail sales of social consumer goods reached 36.6 trillion yuan, up 10.2% than that in the last year, keeping a two-digital growth for 14 consecutive years. The average annual increase in 2013-2017 was 11.3% and the real growth was 3.2 percentage points higher than the growth of the GDP over the same period. The online sales of physical goods reached 5.5 trillion yuan, up 28%, takin up 15% of the society’s retail sales, 2.4 percentage points higher than that of the last year. The contribution of final consumption to economic growth reached 58.8%, remaining to be the first driver of the economic growth for 4 consecutive years.

2. The added value of domestic trade reached 10 trillion yuan, becoming the big business of national economy. In 2017, the main sectors of domestic trade included the wholesale and retail industry, accommodation and catering, resident services, maintenance and other service industries and the added value reached 10.7 trillion yuan, exceeding 10 trillion yuan for the first time, taking up about 13% of the GDP, and second only to the manufacturing industry. Among these, the added value of the whole and retail industry was 7.8 trillion yuan, up 7.1%, 0.4 percentage points higher, hitting a three-year high. The added value of accommodation and catering industry amounted to 1.5 trillion yuan, up 7.1%, 0.2 percentage points higher, hitting a seven-year high.

3. The main market players exceeded 66 million and became an important carrier of mass entrepreneurship and innovation. In 2017, the newly established market players of domestic trade reached 12,753,000, up 14.2% year on year, with an average of 35,000 daily and newly established. At the end of 2017, the main market players of domestic trade reached 66,747,000, up 10.9% than last year, taking up 68% of the total amount of national market players. Among these, the market players in wholesale and retail industry reached 50,479,000, up 8.3%, that in accommodation and catering industry amounted to 8,731,000, up 24.8% and that in resident services, maintenance and other service industries reached 7,536,000, up 14.6%.

4. About 200 million people were employed, highlighting the role of expanding employment and benefiting people's livelihood. At the end of 2017, the number of employed persons in domestic trade reached 192 million, with an increase of about 10% over the previous year, accounting for nearly one-fourth of the total employment in China and accounting for more than 50% of the employment in the tertiary industry, making it an important area for employment. Among these, the employment in wholesale and retail industry amounted to 141 million, up 7.7%; that in accommodation and catering industry reached 30 million, up 18% and that in resident services, maintenance and other service industries amounted to 21 million, up 15%.

5. The tax amount of the wholesale and retail industry increased by 20% and contributed almost one fourth to the tax revenue. In 2017, the tax revenue of the wholesale and retail industry reached 2123.2 billion yuan, up 20.3% than that of the last year, 9.5 percentage points higher than the growth of the total tax revenue, with a contribution rate of 23.5% to the tax revenue. The tax revenue of accommodation and catering industry reached 58.3 billion yuan, down 11.9% than that of last year, which meant that the policy of “replacing the business tax with value-added tax” played a positive role and the taxes of the related industries were obviously cut somehow.

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

Economic Information Daily: On January 30, the American Chamber of Commerce in China released a report, saying the business environment in China is getting better. What’s your comment?

Gao Feng: We’ve noted the 2018 China Business Climate Survey Report the Amcham China released recently. According to the survey, American businesses in China believe the business climate is improving. The report gives an array of data. In 2017, 73% of US companies in China reported profits. 74% have plans to expand investment in China in 2018, a record high in recent years. Some 60% see China as one of the top three investment destinations. Almost all respondents agree China maintains or increases the momentum of enforcement in the field of protecting intellectual property rights. 46% of respondents are confident that China will further open up the market to foreign capital in the coming three years. 62% think that the past five years witnesses transparency rising in the process of drafting policies by the Chinese government. And the list goes on. In our view, it shows most of American companies in China are optimistic about China market, recognize the business climate is getting better and show stronger investment confidence here.

A recent UNCTAD report also shows that despite a 16% decline in global FDI flows, inflow of
foreign capital to China hit a new record, up 4% YOY. China remains the biggest FDI attractor among developing countries and is the second largest destination of foreign investment in the world.

Amcham China also gives some useful advice, which is welcomed. We will work hard to coordinate and help address reasonable concerns, continue to maintain a fair, transparent and predictable business environment, slash restrictions on market access, and provide increasingly better services for all market entities, including foreign invested enterprises. In doing so, China will remain an attractive destination for foreign investment. Thank you.

CGTN: US President Trump delivered his first State of the Union address yesterday, in which he mentioned again that the US needs not only fair trade but more importantly mutually-beneficial trade. He also named China and Russia as America’s rival, claiming the two countries challenged interest, economy and value of the US. What’s the comment on the Chinese side? Thank you.

Gao Feng: We have taken note of relevant languages. We hope the so-called “fair trade” that the US pursues is the kind that based on international rules rather than the one in which unilateral rules override international rules. Mutually-beneficial trade should bring mutual benefits and win-win results based on market behaviors, not seeing trade as a zero-sum game, nor using market opening as the single criteria for mutual benefits regardless of national conditions.

When it comes to trade, we prefer to see the US as a “partner”. China and the US have become close partners on trade and economic fronts with interests intertwined. They are each other’s most important trading partner and investment source. Last year, bilateral trade exceeded 580 billion dollars. As President Xi Jinping once pointed out, China-US commercial relation is by nature mutually-beneficial and win-win. Our business cooperation has substantially benefited the two countries and peoples.

We hope the US side discards cold-war mentality and do not politicize trade issues. We should respond to what businesses on both sides want, promote trade and economic cooperation in a practical way, make a bigger cake and push China-US commercial relations forward on the right track.

Caixin: We’ve noticed that on January 18, the deal of Qualcomm buying NXP was approved by Korea and the European Union. The $38 billion deal awaits the decision of MOFCOM. Mr. Spokesman, will MOFCOM make its final decision in the near future, say before the Spring Festival? Will it give the deal green light or approve with restrictive conditions?

Gao Feng: The case is under review by anti-monopoly bureau in MOFCOM. We will issue the decision based on the Anti-Monopoly Law and Measures on Concentration of Business Operators in a timely manner.

Nihon Keizai Shimbun: US President Trump said at the World Economic Forum in Davos that America could rejoin the TPP in the future. What’s China’s comment? If it comes to pass, how will it impact China’s trade policy?

Gao Feng: We’ve noted the statement. It the translation is correct, I’d like to repeat the comments: the US is prepared to negotiate mutually beneficial bilateral trade agreements with all countries, including those in the Trans-Pacific Partnership. The US has already signed bilateral agreements with some TPP countries and would be willing to renegotiate with countries that are part of the Trans-Pacific Partnership, individually, or perhaps as a group, if it is in the interests of all".

China believes in wide consultation, joint contribution and shared benefits in its vision for global governance, and advocates for open, transparent, mutually beneficial and win-win regional trade arrangements. We are positive about anything that is WTO-compatible, open, inclusive, transparent and advances globalization, regional economic integration and the community of shared future for all humankind.

At the same time, we steadfastly preserve the multilateral trading system. We’re actively working on a high-standard FTA network that’s anchored in the region, radiates the Belt and Road and orients to the future. We hope that all sides will uphold the idea of the community of shared future for all humankind and work together for globalization and trade liberalization for mutual benefit, win-win and common development.

CRI: It’s reported that German State Councillor of Economic Affairs said recently that he would like to see China’s acquisition spree contained. Germany, joined by France and Italy, has submitted a bill to the EU for adoption this year, hoping that tougher law will reduce the outflow of technology and knowhow. What’s China’s comment? Thank you.

Gao Feng: China has noted the statement of German economic officials and the wider protectionist movement in some European countries. China’s concerned about EU legislation proposal for a foreign investment screening system at the EU-level. At the just concluded WEF Annual Meeting in Davos, leaders from European countries, including Germany all dismissed protectionism as a pathway to a bright future. Anti-protectionism is the mainstream of the international community.

Let me stress three points.

First, Sino-German two-way investment is moving on a stable and more even track. Despite the rapid growth in recent years, Chinese investment in Germany has just started and still small in scale and proportion. According to Chinese statistics, China’s direct investment in Germany was US$ 2.27 billion in 2017. The accumulative investment from the Chinese mainland, put at less than 1% of Germany’s FDI by Deutsche Bundesbank, is not nearly a so-called threat to Germany.

Second, Chinese companies’ investment and acquisitions in Europe are autonomous corporate acts based on market principles, bringing Europe capital, jobs and access to Asian markets and creating a mutually beneficial and win-win situation. Still take Germany as an example. A recent survey by Handelsblatt, a German newspaper on 42 German companies, including Kuka, and 55,000 employees found that the management and staff are generally highly satisfied with Chinese investors. A report released by PwC Germany in 2017 suggests that Chinese investors have turned around many a German business after their acquisition. The Asia expert of the Bertelsmann Foundation also notes that Chinese investors bring a hopeful future to German businesses and employees.

Third, China and Europe enjoy strong economic complementarity. With huge potential in two-way investment, win-win cooperation remains the general trend of two-way economic relations and trade. China and Europe both firmly support trade and investment liberalization and facilitation. China will further expand opening up and constantly improve its business environment, while encouraging qualified Chinese companies to invest in and trade with Europe. We hope that Germany and other European countries could take an objective and rational view of companies’ market behavior and create a stable business environment for companies of China and other countries. Concrete actions speak louder than words when it comes to anti-protectionism. Thank you.

China Business Network: A Member of the Political Bureau of the CPC Central Committee and General Office Director of the Central Leading Group for Financial and Economic Affairs, Liu He, stressed during the just concluded World Economic Forum in Davos that China would take further measures to open up the services sector, particularly the financial sector. What measures will MOFCOM take to further open up the services sector? Thank you.

Gao Feng: President Xi Jinping has stressed many times that China will not close its door to the world and will only become more and more open. This year marks the 40th anniversary of reform and opening up. Director Liu He stated at the World Economic Forum Annual Meeting that the best way to mark the anniversary is to take further measures to open up.

As a matter of fact, we made a lot of efforts to further open the services sector last year, with the focus on removing restrictions on market access to highway passenger transport, ocean shipping tally, credit investigation and rating service, accounting and auditing and wholesale market for agricultural produce.

In addition, in the opening-up timetable and roadmap for some sectors publicized last November, we have made plans for substantial relaxation of market access for banking, securities, funds and insurance. Some restrictions will be phased out in the future.

In the next step, according to the arrangements of the CPC Central Committee and the State Council, we will work with other authorities to orderly open up finance, education, culture, medical care and other sectors and relax restrictions on foreign investment in child and old-age care, building design, accounting and auditing, commercial and trade logistics and e-commerce, so as to create a more attractive investment environment for foreign investors. Thank you.

Xinhua News Agency: We have noticed that, according to foreign press coverage, after AT&T, the second largest wireless telecommunications provider in the US, canceled a deal to sell relevant Huawei smartphones in the US, the largest provider Verizon has made the same decision under political pressure. We would like to confirm whether this is true. What is MOFCOM’s view on this and do we have any corresponding measures? Thank you.

Gao Feng: We have noticed relevant press coverage. We hope that business cooperation between China and the US will not be influenced by political factors.

We also take note that China-US economic relations and trade tend to be politicized in the US. Some people and media base their comments about economic relations and trade on hearsay evidence, which will only damage the interests of Chinese and US companies and consumers and impede economic development of the two countries in the end.

We always believe that the nature of China-US economic relations and trade features mutually-beneficial and win-win results. We believe that by fully considering the strong wishes of China and US businesses to enhance cooperation and the interests of consumers, the US will create a fair, open, transparent and convenient business environment and work with China for the healthy and stable development of China-US economic relations and trade in the long run. Thank you.

CNR: British Prime Minister Teresa May began her visit to China yesterday. Sino-British relations are considered by both leaders to be in a Golden Era. We have noticed that Teresa May said on the plane that this time she hoped to reach a formal trade contract with China. May I ask what specific cooperation is involved on the trade and investment front this time? In addition, we have noticed that yesterday a CEO Council was also set up between China and Britain. What is the main intention of doing this?

Gao Feng: Trade and economic cooperation is the "ballast" and "propeller" of Sino-British bilateral relations. In 2015, President Xi Jinping made a successful state visit to the United Kingdom and launched the Golden Era of Sino-British relations. The visit of the British Prime Minister Teresa May to China this time will push forward the strategic alignment of economic development between the two countries, promote the pragmatic cooperation between China and Britain on the Belt and Road, and further promote the commercial ties between China and Britain in the Golden Era.

To our knowledge, during the visit, the British side will bring a 50-person business delegation. Enterprises from both countries will hold a number of business activities and are expected to sign approximately 9 billion pounds worth of commercial contracts. These contracts will involve the Belt and Road, finance, innovation, agriculture, science and technology, etc. Both sides also agreed to jointly build a finance and tech park in the Xiong'an New Area and a Sino-British innovation industry park in Qingdao.

Yesterday, the China-UK CEO Council was inaugurated and held its first meeting. This is an important measure to implement the outcomes of President Xi Jinping's visit to the UK in 2015 and to set up a platform for the exchange and cooperation of enterprises between China and the United Kingdom. The Council is composed of representatives of the economic circles in China and Britain, covering such areas as finance, energy, automobile, communications, transport, medicine and so on. Currently, it consists of 15 corporate members from the Chinese side and 16 from the British side. We believe that the CEO Council will provide advisory opinions to the two governments from the perspective of trade and economic cooperation, and play an important role in promoting the pragmatic cooperation between the two countries. It will become an important platform for deepening cooperation between China and UK under the Belt and Road initiative framework, especially at a project level.

Going forward, we will make joint efforts with the British side to make full use of the mechanism of the UK-China Joint Economic and Trade Commission and the Working Group on Trade to conduct in-depth discussions on the future direction of bilateral trade and economic cooperation, jointly plan for the future economic and trade relations between the two countries, further promote Sino-British cooperation under the Belt and Road, strengthen cooperation in the field of innovation, and strive to elevate the trade and economic relations between the two countries to a higher level. Thank you.

China News Service: China recently took a series of measures against the United States, including conducting a sunset review of the ethylene glycol monobutyl ether originating in the E.U. and the U.S. and raising the quarantine standards for soybeans. Does this mean that China has begun to launch countermeasures against the U.S. trade protectionist policies? Thank you.

Gao Feng: The issues you mentioned I think are all individual cases. Regarding the trade remedy measures you mentioned, since January 28, 2013, China has begun imposing antidumping measures on imported monobutyl ethers of ethylene glycol and diethylene glycol for a period of five years. According to China’s "Anti-dumping Regulations", when the measure is close to expiry, the original petitioner has the right to submit an application for a sunset review. On November 27, 2017, MOFCOM received the application for the review. Having found that the application met the conditions for initiating an investigation, MOFCOM began the sunset review on January 27, 2018. This is a normal trade remedy case.

As for your question about the inspection and quarantine of soybeans imported from the United States, to our knowledge, China’s AQSIQ and the U.S. Department of Agriculture signed in 2010 a memorandum of cooperation on the inspection and quarantine of soybeans exported to China from the United States. In December 2017, experts from both sides reached consensus on the project for the prevention and control of impurities in US soybean exports to China. From January 1, 2018 onwards, when the United States issues quarantine certificates for its soybeans exports, it will label the impurities content when the content is more than 1%. After the soybeans enter into China, the Chinese side will then impose graded risk management measures on these imported soybeans based on overall quarantine issues relating to imported soybeans. The Chinese side has not taken any measures that go beyond the scope of the consensus. You may inquire the relevant departments for the specifics.

Are there any more questions? Due to time constraints, I will take one last question.

Economic Daily: It is reported that MOFCOM will carry on the pilot program of parallel auto imports, extending the coverage to eight additional provinces and cities. What is your comment? Thank you.

Gao Feng: You rightly pointed out that MOFCOM and seven other authorities recently published a document that adds eight places into the pilot program, building on the original nine. They are: manchuria port, Inner Mongolia; Zhangjiagang bonded area, Jiangsu provinces; Zhengzhou railway port, Henan province; Yueyang Linji port, Hunan province; Qinzhou bonded area, Guangxi province; Chongqing railway port; Qingdao qianwan bonded port. This is a critical step to drive the supply-side structural reform in auto supply, in response to the instructions of the CPC central leadership and the State Council.

Since MOFOM and other seven authorities published the Guidelines on Parallel Auto Imports in February 2016, the related regulators and local governments have introduced detailed policies and measures that have delivered substantial progress of the pilot program. The main progresses are as follows:

First, the sales have grown and the prices have come down, offering real benefits to consumers. In 2017, 100 forerunners in Tianjin and other eight pilot zones imported 136,000 cars, up by 109% year on year. This includes near 180 models, 30 more than 2016. The greater variety of supply offers consumers more choices. It also helped to drive competition on the auto market, with prices of medium to high end cars declining notably. The majority of car witnessed price drop of as much as 15%.

Second, we have put in place and continue to improve “one platform and four systems”. One platform is a one-stop platform for public services; four systems are systems for international market purchase, trade facilitation and customs clearance, after-market services, and government regulation information. Based on four key stages of source, customs clearance, after-market service and regulation, we have built a comprehensive management system for the auto import supply chain, and generated replicable experiences.

Third, we have pressed for a shared, efficient, and privatized auto circulation system. The pilot program is an important step to implement the newly published Regulation on Automobile Sales, under which some pilot companies share and jointly build the purchase, sales and after-market networks with the original car companies. This has effectively enhanced efficiency and services.

Fourth, we have explored new means of trade. The pilot program carried out reforms of the means, policies, and institutions of auto import, and broke the market monopoly. It serves as a vivid example of how to integrate domestic and international rules and build a comprehensive parallel import scheme.

In the next step, MOFCOM will work with other authorities to take the pilot program to a deeper level, strengthen regulation, and step up the after-market services so that the parallel import market and the entire auto market achieve high-quality development. Thank you.

This is the end of the press conference. Thank you.