Dear friends from the press, good afternoon. Welcome to the regular press conference. Today, I have one piece of information to release.
I. The Operation Situation of China’s Consumption Market in August of 2018
According to the statistics of the State Statistics Bureau, the total retail sales of consumer goods in August 2018 amounted to 3.1542 trillion yuan, up 9% year on year, 0.2 percentage points quicker than that in July. The growth rate in January-August was 9.3% accumulatively, the same as that of January-July. The sales of 5,000 key enterprises monitored by MOFCOM increased by 4.9% year on year, 0.3 percentage points faster than that of July.
In August, China’s consumption market kept a steady development trend in general, and mainly showed the following features:
1. The online retail sales of physical goods kept a rapid development. According to the statistics of the State Statistics Bureau, in January-August, the online retail sales of physical goods nationwide increased by 28.6% year on year, taking up 17.3% of the total retail sales of consumer goods, 3.5 percentage points higher than that of last year. In August, among the retail types monitored by MOFCOM, the growth of sales of online retail, shopping centers and supermarkets increased by 1.3 percentage points, 1 percentage point and 0.1 percentage points compared those that in July respectively.
2. The public’s enthusiasm for service trade was still high. In August, the catering revenue nationwide reached 351.6 billion yuan, up 9.7% year on year, 0.8 percentage points higher than that of commodity retailing. In June-August, the total box office of movies in summer reached 17.4 billion yuan, hitting a new high. It is expected that the total film box office in the whole 2018 would exceed 60 billion yuan. In the summer vacation, demands and supply of tourism were both flourishing. Parent-child tour, study tour, summer resort tour and self-driving tour have been the hotspots, and tickets for some G-series high-speed train were hard to get.
3. Sales of petroleum and products, as well as daily necessities increased fast. In August, among the categories of retails in the enterprises above designated size, and affected by the increasing price and many summer tours, the sales of petroleum and products was up 19.6% year on year, 1.2 percentage points higher than that of last month. The year-on-year growth rates of sales of gold, silver and jewelry, daily necessities, household appliances, culture and office supplies and building materials were 5.9, 4.5, 4.2, 3.6 and 2.5 percentage points faster than those of the previous month.
4. The consumption price went up mildly. The CPI rose by 2.3% in August, 0.2 percentage points higher than that of the previous month, and the growth rate in January-August increased by 2.0% year on year accumulatively. The price of edible agricultural products from 36 large and medium cities monitored by the MOFCOM in August was up 0.4% year on year, down 0.5% month on month, and that of January-August increased by 0.6% accumulatively.
The consumption market is expected to keep its stable development trend with the stable and upward development trend of the national economy, and the implementation of a series of consumption-promoting policies.
The above is the information I want to inform you of. Next, I will answer the questions from the press. Please.
[Xinhua News Agency]: MOFCOM indicated recently that the trade and economic teams of China and the US had been engaged in communications and that the US had sent an invitation for consultations. At such a time, the US has still gone ahead with the additional tariffs on US$ 200 billion worth of Chinese imports. Will the consultations and engagements between the two sides continue?
[Gao Feng]: In our remarks on Sept. 18th on US tariffs on Chinese goods worth US$ 200 billion, we pointed out the new uncertainties brought to bilateral consultations by the willful levy of the US side. It is hoped that the US will show sincerity and goodwill and make timely corrections through convincing means to appropriately address Sino-US trade and economic issues. Thank you.
[CRI]: Regarding the previous tariffs on Chinese goods of US$ 50 billion, China estimated that nearly 60% of overseas Chinese companies would be affected. Does China have an estimate for this round of tariffs? What companies will be affected? On what scale?
Gao Feng: We are assessing the impact of US tariffs on US$ 200 billion in Chinese imports.
A preliminary look points to six categories of goods, namely, mechanical and electrical products, light industrial goods, textiles and apparel, resources and chemicals, agro-produce and drugs. Of the affected companies, foreign-invested ones might account for nearly 50%. It can be seen that US unilateral trade protectionist measures hurt not only the interests of Chinese and US consumers, but also the security of global industrial and supply chains.
The Chinese government is considering targeted measures for timely release to help Chinese and foreign companies in China actively deal with potential difficulties and challenges. Thank you.
[China News Service]: We’ve noted that among China’s countermeasures against US levies on Chinese imports worth US$ 200 billion, the levels of tariffs have decreased to two from four of August with reduced rates. What are MOFCOM’s considerations?
[Gao Feng]: Actually, the announcement of the Tariff Policy Committee of the State Council on Sept. 18th already answers your question.
The US announced additional tariffs of 10% on Chinese imports of US$ 200 billion on Jul. 11th, and raised the rate further to 25% on Aug. 2nd. China announced on Aug. 3rd that it was forced to take countermeasures of putting additional levies of 25%, 20%, 10% and 5% on US imports worth US$ 60 billion for synchronized implementation with US measures. On Sept. 18th, the US named Sept.24th for the implementation of the tariff measures and dialed the rate back to 10%. On the same day, China announced it would implement the tariff measures in sync with the US at rates of 10% and 5%. Thank you.
[Reuters]: First question, US President Trump has said that China is targeting US farmers, ranchers and industrial workers because of their loyalty to Trump. What’s China’s response to the accusation? Second question, Chinese media suggested recently that China will only play defense, not offense in a trade war. Does this mean that China will take active actions on the US? Could you share with us the new measures China will take in trade with the US aside from the announced tariffs? The Sino-US trade frictions have been going on for months and have turned into a drawn-out war. What measures will MOFCOM take to support exporters affected by the trade frictions and help them find new markets swiftly? Will the affected exporters be advised to pivot towards the domestic market?
[Gao Feng]: To your first question, I’d like to say that all countermeasures on China’s part are forced and for defense of its legitimate interests and the global order of free trade. They have nothing to do with US domestic politics.
To your second question, we have not seen related reporting and can’t make comments on that.
As for the third question, in terms of trade, we’ll take a host of measures to actively help companies deal with potential difficulties and challenges. Current steps, including trade facilitation measures, such as reducing customs clearance time and fees and regulating charges and fees for enterprises, are completely in line with WTO rules.
Regarding some exporters’ shift of focus to the domestic market, China has a huge domestic market with consumption potentials on continuous release. Some trading companies, including foreign-invested companies, have started to explore China’s domestic market. This is their own choice driven by the market. Thank you.
[Global Times English Version]: Some foreign media have reported that China might devalue its currency in response to the implementation of US tariffs on US$ 200 billion in Chinese imports on Sept. 24th. What’s MOFCOM’s comment?
[Gao Feng]: At the Summer Davos that opened yesterday morning, Premier Li Keqiang said expressly that China will not devalue its currency to boost exports, as the continuous devaluation of the yuan has more cons than pros to the Chinese economy.
China has emphasized many times its commitment to market-oriented exchange rate reform and the spirit of the G20 communiqués and that it will not pursue competitive devaluation or leverage the currency to tackle external disruptions like trade frictions.
In the future, China will continue to deepen market-oriented exchange rate reform, boost the elasticity of the RMB and maintain its basic stability at a reasonable and equilibrium level. Thank you.
[Yicai]: Minister Zhong Shan of Commerce held a meeting with multinationals a few days ago. Public information has it that the business leaders raised a host of recommendations on China’s business environment and IP protection. What areas are these recommendations focused on? Is IP protection a common concern of these companies? What will MOFCOM do to improve in the areas the comments concern to keep their confidence in the Chinese market?
[Gao Feng]: On Sept.17th, MOFCOM held a meeting with MNCs presided over by Minister Zhong Shan and heard their comments and suggestions concerning operations in China.
All attending companies are full of confidence in the Chinese market and future development. The general concern is how to continue to take part in China’s deepening reform and opening up, how to keep expanding investment and cooperation in China and how to secure better development in China. Some expressed concern over IP protection, business environment and market access and shared misgivings about US unilateral trade protectionism, hoping that China and the US can resolve the frictions through dialogue and consultations.
For their specific concerns, we’ll take active actions to coordinate and address related reasonable requests. For issues of common concern and general significance, actually, the Chinese government has been trying to improve investment and business environment, strengthen IP protection and enhance administrative efficiency through streamlined administration, power delegation, regulation-deregulation balancing and improved services to break local protectionism and create a level playing field that treats domestic and foreign companies equally.
We will continue to work with related departments to provide better services for MNCs and enhance investment facilitation. Thank you.
[Phoenix TV]: Last week you gave an overview of the free trade zones in China. We found that among the top 20 economies in GDP terms, China only has FTAs with ROK, Australia, Indonesia, and Switzerland, and is yet to conclude any FTAs with the world’s top ten economies. Does it mean that China has not been recognized by most developed countries? Is it possible for China to enter into FTAs with top ten economies in the future?
[Gao Feng]: As I understand it, by “recognize” you were referring to the acceptance in economic field. But I have reservations as for whether an FTA should be the criteria for such recognition.
Since joining the WTO, China has scored remarkable economic achievement that has drawn worldwide attention. Our contribution to global economy is self-evident.
Building a high-standard FTA network that fits our development is part of China’s efforts to promote trade liberalization and facilitation and economic globalization and meets the needs of our development. Since we started building FTAs in 2002, China has concluded 17 FTAs with 25 countries and regions. We are negotiating with 27 countries for 12 FTAs or FTA upgrading and conducting joint feasibility study or upgrading study with 10 countries. As for the top ten economies you mentioned, we have not signed any bilateral FTAs with them, but we are doing advance research for a potential FTA with a handful of these countries and are moving forward regional FTA agenda with some countries.
We are open to discussion on FTAs with interested countries. Through bilateral and regional free trade arrangements, China will further open its market to the rest of the world, promote trade liberalization and regional economic integration, and jointly build a community with a shared future for mankind.
[Economic Daily]: It is reported that MOFCOM is working on policies to encourage foreign investments in companies listed on China’s mainland and M&A by foreign companies. How is the progress? Will it affect domestic private companies? Thank you.
[Gao Feng]: MOFCOM is working with authorities concerned on the Administration of Foreign Strategic Investment in Listed Companies, and has solicited public opinions between July 30 and August 29th of this year. We have also had discussions with law firms, securities companies, and business representatives.
The feedback from the public indicates that the move is broadly welcomed, as it reflects the reform direction of further opening-up, streamlining administration and delegating powers. It sends a positive signal to the market that would help shore of investors’ confidence. It is useful for listed companies, including private ones, to expand channels for foreign investment utilization, bring in foreign capital and managerial expertise, and to energize the market.
At present, we are going through all the public opinions collected. We will revise the administration rules based on the sensible suggestions and try to release it at an early date. Thank you.
[CNR]: My question is about domestic consumption. This year the car consumption market started to decline in the second half of this year. In July it registered the first negative growth, and in August the sales of passenger cars dropped further. What is the reason? Is it caused by the slower growth in China’s consumption market? What is your estimate about the car market and consumption in the second half of this year?
[Gao Feng]: According to CAAM, in the first eight months, 18.096 million cars were sold, up by 3.5% year on year and 0.5 percentage points higher than the growth rate of car sales last year. 15.193 million passenger cars were sold, up by 2.6% and 1.2 percentage points higher than the growth rate last year. The automobile consumption remains steady overall.
In August, the sales of passenger cars were 1.79 million, down by 4.6% year on year. There are several reasons:
First, the base in 2017 is relatively high. The auto consumption in China ranked No.1 in the world for nine consecutive years and hit a record high of 28.879 million in 2017, among which passenger cars sales was 24.718 million. There was a clear trend of high-level performance. Starting from the second half of 2017, some consumers rushed to buy cars because the preferential tax for passenger car purchase was due to expire by the end of the year. This drove up the sales of passenger cars month on month and reached a large relatively large base in August.
Second, some consumers adopted a wait-and-see mindset after tariff reduction was introduced. Since the tariff was lowered on July 1st, most consumers expected price adjustments of cars, and held back their consumption. After the price of car imports declined, consumers now have more options and would wait further. But we need to note that sales grew by 200,000 from the 1.58 million sales in July, up by 12.6%. This shows as the price adjustment of imported cars was completed, consumers no longer wait for further developments and the piled-up consumption demand started to be released.
Third, the car consumption is being restructured. According to CAAM analysis, as the share of first-time purchase start to decline, the market share of low-end passenger cars continue to shrink, and the products in specific sections gradually move toward a higher end. Cars with medium displacement, mid-and high end limousines, and SUVs have become the main drivers for growth. In the first eight months, limousine sales grow by 3.7% year on year; SUV sales grew by 6.2% year on year, both higher than the average growth rate of passenger cars.
As for the development in the second half of this year, we expect steady growth of the car market for the following reasons.
First, China is still in the development stage of car consumption. The car ownership is over 200 million, but the per capita ownership in third and fourth tier cities and in central and west China remains relatively low. The market still has growth potential.
Second, the favorable policies for new energy vehicles would help promote NEVs. In the first eight months, the sales of NEVs reached 601,000, up by 88% year on year, and we expect rapid growth in the second half of this year.
Third, car export has taken on an upward trend. According to Customs statistics, in the first eight months, China exported 760,000 cars and chassis that are worth 10.22 billion dollars, up by 21.7% and 25.4% year on year. It is expected the export in the second half of this year will drive up the car sales. Thank you.
[CNR]: My question is about the consumption market. The mid-autumn festival and the national day festival are approaching, but the typhoon hitting China has driven up the vegetable and food prices in some regions. What measures will MOFCOM take to ensure supply and keep the price stable?
[Gao Feng]: In response to the impact of extreme weathers on the supply of daily necessities, MOFCOM has timely launched the grade two emergency response mechanism to ensure ample supply of daily necessities in the regions hit. The vegetable price has gradually declined, businesses have resumed operation, and the facilities are being repaired. As the mid-autumn festival and national day festival approach, MOFCOM will actively take measures to guarantee steady and orderly market supply. First, we have strengthened match-making for sellers and buyers. We encourage large circulation companies to increase stock properly and diversify source of supply. We have held many matchmaking events in Henan, Sichuan, and Shandong province. Second, we will actively guide the market. We have stepped up monitoring of daily necessities such as grain, oil, meat, egg, and vegetables, timely released the supply demand information, and provided better guidance to businesses and consumers for production and consumption. Third, we have increased the supply of quality products. We have carried out a “consumption promotion month” campaign to broaden the channels for supply and consumption and meet people’s demand for high quality goods and services. Fourth, we have intensified contingency guarantee. In case of abnormal market fluctuation caused by weather or emergency incidents, we will work with local commerce departments to roll out detailed response measures and plans to ensure stable market supply. Thank you.
This is the end of the press conference. Mid-autumn day is coming. On behalf of the information office of MOFCOM, I wish you a happy moon festival. Thank you.