Gao Feng: Dear members of the press, good afternoon. Welcome to MOFCOM’s regular press conference. Today, there come our distinguished guests - the famous journalists from the mainstream media of countries along the Belt and Road routes. Let’s welcome them. Today, I have two pieces of information to release to you, and the first one is about China’s foreign investment absorption in the first half year of 2018.

China’s absorption of foreign investment in January-June 2018 mainly showed the following features:

1. The newly established enterprises increased rapidly and the actual use of foreign capital rose up slightly. In January-June, 29,591 foreign invested companies were newly established, with an increase of 96.6% year on year; the actual use of foreign capital reached 446.29 billion yuan, increasing by 1.1% year on year, and it was 68.32 billion in terms of the US dollars, up 4.1% year on year. In June, 5,565 foreign invested companies were newly established, up 92.3% year on year; the actual use of foreign capital was 100.7 billion yuan, up 0.3% year on year, and it was 15.66 billion in terms of the US dollars, up 5.8% year on year.

2. The high-tech manufacturing industry maintained the momentum of growth. The actual use of the foreign capital in manufacturing industry was 134.83 billion yuan, up 4.9% year on year with the proportion reaching 30.2%. The actual use of high-tech industry increased by 1.6% year on year, taking up 20.9%. The actual use of foreign capital in high-tech manufacturing reached 43.37 billion yuan, with an increase of 25.3% year on year. Among these, the actual use of foreign capital in electronic and communication device manufacturing, computers and office equipments manufacturing, medical instruments and instrumentation industry increased by 36%, 31.7% and 179.6% respectively year on year. The actual use of foreign capital in high-tech service sector reached 50.03 billion yuan, among which the commercialization of research findings increased by 22.2% year on year.

3. Free Trade Pilot Zones led the growth of the national foreign investment, and foreign investment absorption in the western area maintained its growth. 4,281 foreign invested companies were newly established in 11 Free Trade Pilot Zones, and the actual use of foreign capital reached 57.84 billion yuan, up 32.6% year on year, taking up 13%. The actual use of foreign investment in western area was 28.84 billion yuan, up 13.2% year on year.

4. Among the main investment sources, the investment from the US, Singapore, South Korea, UK and Macao maintained a favorable growth. In January-June, among the main investment sources, the actual input value from the US, Singapore, South Korea, UK and Macao increased by 29.1%, 19.7%, 43.8%, 82.5% and 78.7% respectively year on year. The actual input value from the ASEAN increased by 24.4% year on year and that from the countries along the Belt and Road routes increased by 24.9% year on year.

II. Reports on the Development Index of China’s Shopping Centers and Prosperity Index of China’s Convenient Stores in 2017

Today, MOFCOM released The Report on the Development Index of China’s Shopping Centers and The Report on the Prosperity Index of China’s Convenient Stores in 2017 which analyzed the present situation and trend of the two kinds of business modes.

The Report on the Development Index of China’s Shopping Centers showed that in 2017, the development index of China’s shopping centers was 68.5, 1.3 points higher than that over the same period of last year, 18.5 points higher than the PMI (Purchasing Managers’ Index), which means that the overall shopping center market continues to keep a sound momentum of steady rise. Among these, the present situation index was 65.1, an increase of 0.9 point year on year. The expectation index of the entire shopping center market was 73.5, increasing1.8 points year on year, showing that the market confidence of the shopping mall owner continued to get stronger.

In terms of region, the development index in 7 regions was above the PMI, among which east China took the lead, and northeast China stood out. In terms of cities, benefiting from the huge consumption market, the index of the first-tier cities was higher than that of the second and third-tier cities, the international brands presented a downward trend in the third-tier cities. In terms of business modes, the index of the Outlet-styled property continued to take the lead over the urban, regional and community property modes. Over 70% of the operators were optimistic about the rental income, sales value, and profitability of projects. China’s shopping centers are expected to get better on the basis of steady rise and upgraded consumption.

The Report on the Prosperity Index of China’s Convenient Stores showed that the quarterly prosperity index of China’s convenient stores in 2017 remained at a higher level, 21.68 points higher than that of the PMI, reflecting the operators’ high confidence in the industry development in 2017. Among these, the prosperity index of convenient stores was 80.2, 30.2 points higher than the PMI, that of the shops was 66.1, 16.1 points higher than the PMI, reflecting great confidence from both the manager of the convenient stores and the shop operator. Meanwhile, a continuous rise of rent and HR cost, and loss of talents also challenged the convenient stores. China’s convenient store market is expected to maintain a steady growth in 2018.

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

Economic Daily: The US accuses China of IP theft and forced technology transfer. What is your comment?

Gao Feng: The US allegations of so-called forced technology transfer and IP theft ignore historical facts and are totally unacceptable. Since reform and opening up, China’s low-cost labor has joined with international capital and technology, delivering high-speed growth of the Chinese economy, world economic prosperity and bumper returns for foreign companies. Such cooperation is purely voluntary acts of Chinese and foreign enterprises based on commercial contracts. Over the years, foreign businesses have reaped enormous benefits in China. However, the US government is accusing China of forced technology transfer and IP theft, which not only misrepresents China’s reform and opening up and historical facts, but also undermines business credit and breaches the contract spirit. We believe such practices are very dangerous and will shake the institutional foundation of the market economy and free enterprise. Thank you.

CNR: The statement of the USTR Office accuses China’s industrial policy of market distortion. What’s MOFCOM’s comment?

Gao Feng: The US accusation is totally unfounded. Any country has the right to development and the right to promote development through appropriate industrial policy. Historically, Hamilton, the first treasury secretary of the US, was an early advocate of industrial policy. In the 1950s and 60s, the US implemented industrial revival programs in aerospace and defense with good results. Against the backdrop of economic globalization and technology acceleration, we are against differential and protective industrial policy and need development policy that is more practical, future-oriented and places more emphasis on open, cooperation, competition promotion and education quality.

Phoenix Satellite TV: Regarding the China-US trade war, after the tariffs came into effect, have there been consultations between the two sides? Will there be consultations moving forward? The US has drawn up a new list. Does this mean the trade war will expand? It’s said that Tesla has reached agreement with Shanghai and will set up a plant in Shanghai. What are your comment and expectations?

Gao Feng: For your first question, China has made it clear many times that the premise for consultations is credit. To my understanding, the two sides are not yet in contact for restarting negotiations.

As for whether the trade war will expand, I think it’s entirely up to the US. China’s position on trade war is clear and consistent. We don’t want a trade war, but are not afraid to fight one and have to fight it when necessary. This is a point of principle with multilateralism vs. unilateralism, and openness vs. protection. China has no other option.

Far from resolving any issue, escalation will bring about many secondary impacts. China has noted that many experts, premier think tanks, MNCs and industry organizations across the world have expressed their concerns about the trade war waged by the US and its huge externality.

As for Tesla’s new plant, China welcomes Tesla to invest and build plants in China. This is as much an achievement of China’s proactive open-up as an example of mutually beneficial and win-win China-US commercial cooperation. We will continue to improve domestic investment environment to attract more outstanding foreign businesses to China for shared development amid China’s development opportunity.

Thank you.

AFP: Yesterday, the US announced additional tariffs on USD 200 billion in Chinese imports. How will China counteract? What measures does China intend to take? Does China want a new round of negotiations with the US?

Gao Feng: US moves to accelerate the escalation of the trade war has caused serious concern to the international community. US actions are taking the world economy into the uncertainty trap. If implemented, the measures will hurt more innocent companies and consumers, dealing a body blow with recessional impact to the world economy.

China is firmly opposed to US trade bullyism and will have to hit back as necessary in defense of national and people’s interests, global free trade and the multilateral system.

As for your question regarding consultations, I’ve already answered it.

Thank you.

Follow-up: What are the countermeasures?

Gao Feng: As I said just now, we will have to hit back as necessary.

Next question.

Economic Information daily: It’s reported that the US will give US companies importing Chinese goods 90 days to apply for tariff exemption. This is good news for American companies caught up in the trade war. But additional tariffs will still be enforced on other companies. What’s MOFCOM’s comment? Do you see it as a clear signal of US targeting China?

Gao Feng: This is America’s domestic policy procedures. I want to emphasize that a trade war started against the background of economic globalization will surely create an uncertainty trap for global industrial chains and value chains, not only causing losses to other countries, but also inevitably hurting the interests of domestic companies and average consumers. The right policy choice is to refrain from trade war for the security of global industrial chains and value chains.

China Media Group: U.S. Trade Representative Lighthizer said in a statement that new tariffs against the US products by China is groundless and cannot be justified under the international law. What is China’s response to that?

Gao Feng: I think that we are all clear it is completely the gangster logic in which “a robber acts like a cop”. The US first violated the WTO rules and imposed additional tariffs unilaterally based on its domestic laws, which is a typical unilateral and trade protectionist practice. It is groundless and cannot be justified under the international law by nature. In order to protect the interests of the country and the people and safeguard free trade and the multilateral trading system, China has to take necessary countermeasures and bring the case to the WTO, which is completely consistent with principles of the international law. The US itself is treading on the multilateral trading system while accusing the self-defense that China is forced to employ. I think the merits are self-evident here.

China News Service: In the first half of this year, the growth of China’s export to the US decreased by 13.9 percentage points compared with the same period last year and 23.8 percentage points in June alone. What is MOFCOM’s view on this? Are the trade frictions between China and the US the main reason behind the plunge of export growth? Although the export growth dropped, China’s trade surplus with the US remains at a relatively high level, what is your view on this? As for trade in the second half of this year, will the growth of China’s export to the US further decrease because of the trade frictions between China and the US?

Gao Feng: As China continues to restructure its economy, the ratio of China’s current account trade surplus to GDP has decreased sharply, from 9.9% in 2007 to 1.4% in 2017. At the same time, the trade surplus of China with the US is still relatively large. Thus it is clear that the reason behind such reverse contrast should be attributed to US itself. The long-term export control policy, low deposit rate, the tax system discouraging export and USD as a reserve currency all make large-scale foreign trade deficit inevitable for the US. It is totally wrong for the US to first violate such fundamental economic rules and then make unwarranted charges against China.

The fact that the US provoked and constantly escalates the trade war will bring serious challenges to bilateral business cooperation and the effects are expected to show gradually in the second half of the year. We will strive to make trade more diversified and explore third-party market to give proper responses. In addition, the government of China will continue to seek advice from the market and take more targeted measures. Thank you.

21st Century Business Herald: In the USD 34 billion worth of tariff list issued by the US against China, nearly 60% involve foreign companies in China. After the tariff measures are implemented, will there be any risk of foreign companies choosing to transfer or move to other countries? How will China respond? Will it influence China’s position in the global value chain?

Gao Feng: The US tariff measures will indeed influence foreign companies in China, including US companies. We also feel sorry about it. We hope that the US companies can try to persuade the US government and protect their interests. China has a stable investment environment, strong industrial supporting abilities and a consumer market of huge potential being upgraded and opened up. According to my knowledge, recently GE, Ford, BMW, Tesla and other foreign companies are all expanding their production capacity, business scale and investment in China. We will continue to improve our business environment and protect the legitimate rights and interests of foreign companies in China so that China will remain the top choice for foreign business investment. Thank you.

TASS: The 5th China-Russia Expo was hosted from July 9-12 in Yekaterinburg, Russia. What is MOFCOM’s take of it? Does China have any special expectations for the Year of China-Russia Local Cooperation and Exchange? The second question, Premier Li Keqiang arrived in the EU last week. He attended the Summit of China and Central and Eastern European Countries in Sofia and paid an official visit to Germany. What is MOFCOM’s comment on the result of consultations during this visit?

Gao Feng: On your first question, as the largest comprehensive exhibition between China and Russia at the highest level, the China-Russia Expo has been held in Russia for the second time. It is also an important outcome of the Year of China-Russia Local Cooperation and Exchange. This year’s expo has three features: First, the expo is very popular among companies. Nearly 200 Chinese companies from 15 provinces and municipalities attend the expo, with more than 1200 participants to relevant events. Russian companies are from more than 20 provinces and districts. Second, the areas of this expo are extensive. The total area of this expo is 8500 square meters, including 5500 square meters for Chinese exhibitors, whose exhibits are mainly in the areas of equipment manufacturing, scientific innovation, modern agriculture and trade in services. The Russian exhibits focus on the areas of metallurgy and chemical industry, industrial automation and mechanical manufacturing. The exhibition is highly specialized. Third, diversified business activities are held. The two sides hosted 14 key commercial activities on agriculture and forestry development, cross-border e-commerce, technology innovation, financial services and youth exchanges, with different features and sound effects. This is the first time for the China-Russia Subnational Cooperation Forum to be hosted under the framework of the expo. More than 200 representatives from the governments, localities and industries of the two countries participated in the forum. They had in-depth exchanges over strengthening local cooperation on economy and trade, investment, science and technology, culture and infrastructure, building an important platform for dialogue and cooperation between the localities and companies of the two countries.

As you mentioned, at the beginning of this year, the leaders of China and Russia agreed to jointly host the Year of China-Russia Local Cooperation and Exchange. We stand ready to work with Russia to take this opportunity and fully leverage the China-Russia Expo and other cooperation platforms to help more localities, companies and the public of the two countries enhance mutual understanding and expand mutually-beneficial cooperation for greater contribution to the sustained and healthy development of China-Russia business relations.

On your second question, the visit to Germany by the Premier. During Premier Li Keqiang’s visit to Germany, the two sides achieved a series of major business consensus in the following four areas:

First, we should jointly oppose protectionism, and uphold the free trade system underpinned by multilateral rules. We should support the negotiations on the China-EU investment treaty, strive for speedy progress, and achieve high-level outcomes as quickly as possible.

Second, we should push bilateral trade and investment cooperation forward, open wider to each other and relax market access. Germany has confirmed to attend the first China International Import Expo as a guest country.

Third, we should deepen financial and fiscal cooperation, strengthen policy coordination under bilateral mechanisms such as high-level financial dialogue, and establish bilateral or trilateral financing platforms.

Fourth, we should support businesses to explore other markets together, seek connection between the BRI and European infrastructure program, and use each other’s advantages to conduct cooperation on Industrie 4.0.

During Premier Li’s visit, Chinese and German companies signed USD 30 billion worth of commercial agreements on areas of vehicles, self-driving cars, etc. German auto industries are allowed to have more equity of the joint ventures established in China. Chinese and German car makers will jointly build research and development centers and conduct strategic cooperation in self-driving cars, new energy cars, among others. Aiming at the commanding height of future industry, Chinese and German auto industries leverage each other’s strengths, conduct mutually beneficial cooperation and lead innovation of the industry. Besides, business cooperation on industrial manufacturing is going deeper. Chinese internet companies and German manufacturers will jointly build an industrial internet platform.

We believe China-Germany trade and economic cooperation will scale new heights under our joint efforts.

Thank you.

CBN: The China-US trade dispute is now at a new stage. The United States announced tariffs on USD 200 billion worth of Chinese goods in a way that is accelerating and escalating the situation, and passed a bill restricting Chinese businesses’ investment in the United States. In the meantime, the United States is blocking the selection procedure of WTO appellate body members. Under such pressure, what will China do to help companies cut loss?

Gao Feng: We will continue to evaluate the impacts on businesses by the actions the United States has already taken or may take, and adopt targeted measures correspondingly. For example, we will encourage companies to adjust import structure, explore emerging markets, and unlock consumption potential. In particular, we will urge businesses to translate challenges to opportunities, actively transform and upgrade themselves, and restructure the industry, market and investment in accordance with people’s needs and the requirement for high-quality growth. We will also support them in doing vocational training. All in all, where there is a challenge, there are always multiple ways out.

CCTV-2: We’ve noted Mayor of Chicago led a trade mission to China a couple of days ago. What does the visit mean against the backdrop of the escalating trade dispute between China and the United States?

Gao Feng: To celebrate the fifth anniversary of the joint working group on trade and investment cooperation between Chinese cities and Chicago, Mayor Emanuel led a large business delegation consisting of over 50 entrepreneurs to visit China between July 9 and 12. Chicago signed with eight Chinese cities a five-year cooperation plan for priority industries from 2018 to 2023, the first of its kind between local governments of China and the United States. It draws up the blueprint for expanding commercial exchanges and mutually beneficial cooperation between Chicago and China.

In recent years, Chicago has taken trade and economic relations with China seriously. Since 2010, China has been the largest trading partner of Chicago. In terms of investment, Chicago has become the bridgehead for Chinese investors in the United States. Over 60 Chinese companies including Wanxiang Group, Bank of China, and Lenovo Group have a strong presence in the region.

There are a whole bunch of states and cities in the United States like Chicago that are willing to expand trade and economic cooperation with China. MOFCOM, together with 25 Chinese provinces and cities, has established trade and investment cooperation working groups with seven states and cities in the United States. Amity between the people holds the key to sound state-to-state relations. Commercial cooperation between local governments has become an important foundation for China-US commercial relations. Thank you.

CBN: On July 11, local time in Geneva, the WTO began a routine review on China’s trade policy. Some members criticized China for a tendency towards mercantilism. What’s MOFCOM’s comment?

Gao Feng: It’s hoped that some members do not hold prejudice against China, or wrongly label China with an obsolete mindset. Since its accession to the WTO, China has always obeyed rules and honored its obligations as a responsible member. We will continue to let the market play a decisive role in resource allocation, deepen reform, open up wider, and push for win-win results and common development for all WTO members. Thank you.

MASTV: The 3rd meeting of the Central Committee for Comprehensively Deepening Reform endorsed Opinions on Improving Consumption Mechanism and Further Unleashing Resident Consumption Potential last Friday. Will MOFCOM speed up promoting consumption? China is projected to become the world’s largest consumer market. Some people think this may alleviate the impacts of the trade war between China and the United States. What do you make of it? What measures will be taken to further expand consumption?

Gao Feng: China has a huge consumer market with nearly 1.4 billion people, whose demand for a better life is ever growing. In 2017, consumption contributed 58.8% to China’s GDP growth. The share rose to 77.8% in the first quarter this year. It has always been high on our agenda to promote and expand consumption. No matter how China-US commercial relations change, we will advance our work in an active and steady way as scheduled.

Going forward, we will follow the requirement for high-quality growth and the new trend of resident consumption, and make efforts from the perspectives of both supply and demand to do the following work. First, to promote convenient consumption in rural and urban areas. We will push forward development of community service circles that consumers can have access to within 15 minutes. Second, to increase medium to high-end supply. We will concentrate on building high-end pedestrian streets and international consumption cities while expanding imports via platforms such as the China International Import Expo to deliver more goods and services. Third, to improve supply chains. We will press ahead with pilot projects of modern supply chains and highly efficient logistics system. Fourth, to create a safe and reliable consumption environment. We will continue to improve traceability of edible produces, food and other important products and advance the building of a commerce credit system.

In a word, we will continue to work with relevant agencies to secure sustained, stable and high-quality growth in consumption. Thank you.

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