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Regular Press Conference of the Ministry of Commerce (December 27, 2018)

Gao Feng: Members of the press, good afternoon. Welcome to MOFCOM’s routine press conference. Today, I have one piece of information to release to you. It is about China’s import and export of services in January-November 2018.

In January-November 2018, China’s import and export of services kept a steady growth. In the first 11 months, the total volume of service import and export reached 4741.35 billion yuan, up 11.5% year on year. Among these, the export was 1580.29 billion yuan, up 14.7% year on year; the import was 3161.06 billion yuan, up 10% year on year. In the first 11 months this year, China’s import and export of services mainly showed the following features:

1. The rapid growth trend since this year has been continuing. In November, the growth rates of import and export of services, the import, and the export reached 14.9%, 18.6% and 12.9% respectively. The rapid growth of import and export of services showed that Chinas’ service economy was steady while enjoyed a good trend, and the endogenous power of service trade continued to be strengthened.

2. The proportion of service export in the total volume of import and export hit a new record high. With the gradual enhancing of the brand influences of “China Service,” China’s capacity of service export was obviously strengthened. In the first 11 months, the growth rate of service export was 4.7 percentage points higher than that of service import, and the proportion of service export in the total volume of import and export of services reached 33.3%, 0.9 percentage points higher over the same period last year.

3. Import and export of knowledge-intensive services realized balance development. In January-November, export of knowledge-intensive services was 777.71 billion yuan, up 26.2% year on year; the import was 735.71 billion yuan, up 15.6% year on year. Among these, export of telecommunication, computer and information services was 275.59 billion yuan, up 64.3%, the import was 141.28 billion yuan, up 20.9%; the export of technical services was 102.04 billion yuan, up 14.3%, and the import was 75.1 billion yuan, up 10%; the export of individual culture and entertainment services was 6.91 billion yuan, up 47.6%, and the import was 19.53 billion yuan, up 19.2%.

4. Service trade turned to high quality development, and the import and export of high-end services related to intellectual property became highlight. In the first 11 months, the value of the import and export of royalty of intellectual property was 246.49 billion yuan, up 20.9%, among which, the export was 33.27 billion yuan, up 15.4%, and the import was 213.22 billion yuan, up 21.9%; the export of services related to research and development was 58.94 billion yuan, up 13.6%, and the import was 135.72 billion yuan, up 12.1%. The rapid growth of import and export of services related to intellectual property, showed that China’s demands for high-end productive services witnessed constant growth, and also showed that China’s capacity for scientific and technological innovation enjoyed gradual improvement.

The above is the message I want to release and now I’d like to answer the questions from the media.

CNS: We’ve noted that regarding the bilateral trade talk, China and the US have recently sent one positive signal after another. What concrete progress has been made and what is the possibility of reaching agreement on some specific matters in the near future? Besides, could you disclose more details of the bilateral consultation on 21st?

Gao Feng: What I can tell you is that the two economic teams have maintained close contact even though it is the Christmas and holiday season in the US. Relevant work is moving forward smoothly as scheduled.

CCTV: We have noted some reports saying that the US will send a delegation to Beijing for consultations around January 7th, 2019. Is it true? If so, what matters will be discussed?

Gao Feng: As I’ve said, the two teams are in close contact and they have arranged a face-to-face talk besides intensive telephone conferences. Thank you.

Economic Daily: The draft of foreign investment law has been proposed to the National People’s Congress for review, which is expected to replace the existing three laws governing foreign investment. What are the features of the foreign investment law and how is it different from the three relevant laws?

Gao Feng: Over the past 4o years since reform and opening up, China has gradually put in place a legal framework for foreign investment underpinned by the Law on Chinese-foreign Equity Joint Ventures, Law on Chinese-foreign Contractual Joint Ventures and Law on Foreign Capital Enterprises, which serves as an effective legal guarantee for China’s further opening up and active utilization of foreign capital.

The newly-drafted foreign investment law will become the fundamental law governing foreign investment in the new era in lieu of the above three laws. The new law has the following features which distinguish it from the former three laws.

First, it stipulates that the pre-establishment national treatment plus negative list approach is adopted for foreign investment, thus locking in the significant achievement of reform since the 18th National Congress of the CPC through legislation.

Second, it stresses stronger investment promotion and protection. The draft has chapters dedicated for harmonizing investment promotion and protection mechanisms, which will give clear legal guidance for governments and institutions at all levels in promoting foreign investment, and provides better legal guarantee for protecting legal rights and interests of foreign investors and foreign-funded enterprises.

Third, its scope of regulation is limited to foreign investors and their investment behavior, not the organization forms, operation and management of their enterprises. Instead, they will be subject to laws and regulations applicable to all sorts of market entities. In doing so, the inconsistency in the current three laws and the Company Law and other relevant laws and regulations is removed.

We believe that formulating the Foreign Investment Law is conducive to creating a level playing field in China, further enhance investment liberalization and facilitation and foster a world-class environment for foreign investment. Thank you.

21st Century Business Herald: Also about the foreign investment law. We’ve seen that there is a chapter on investment protection system. What’s MOFCOM’s comment?

Gao Feng: Regarding investment protection, the Chinese government attaches great importance to protecting legitimate interests of foreign investors and foreign-funded enterprises and steps up protection through formulating and improving pertinent laws and regulations.

On the basis of taking stock of practices, the draft contains chapters and sections on investment protection system, and stipulations that are of great interest to foreign investors including confiscation and compensation, remittance of profits, IPR protection, forced technology transfer, local government keeping their promises, etc.

We believe that the promulgation of foreign investment law will offer reassurance to foreign investors and foreign-funded enterprises with stronger legal protection for their lawful rights and interests and make Chinese foreign investment climate more open, fair, transparent, international and convenient with a better legal framework.

As for what MOFCOM has done, in recent years, we have followed the decisions and plans of the CPC Central Committee and the State Council and worked with relevant departments to issue many comprehensive policy documents to promote foreign investment. We have also adopted a series of policy measures in investment liberalization, facilitation, protection and promotion, among other aspects, playing a positive role in further optimizing China’s investment climate and stabilize FDI flow. We have been committed to “merging three laws into one” and formulating a unified, fundamental foreign investment law. We have proactively pushed for reform of the systems of foreign investment administration and foreign investment laws. On the basis of in-depth research and analysis as well as full solicitation of relevant opinions, we have elevated practical and feasible experience and practices in previous policies and measures to legislation, submitted to the State Council a draft version of the fundamental foreign investment law and cooperated with the Ministry of Justice in legislation review.

Going forward, MOFCOM will continue to follow relevant decisions and plans of the CPC Central Committee and the State Council and actively cooperate with the legislature in legislation review so as to push for early adoption of the Foreign Investment Law and create a more stable, fair, transparent and predictable investment climate for foreign investors. Thank you.

Xinhua News Agency: The NDRC and MOFCOM jointly issued a new market access negative list this week, granting market access to businesses in any unprohibited sector. The market access negative list for foreign investors was issued last June. What are the differences between the two lists in terms of access for foreign investment? Besides, how will you better coordinate and align the two lists?

Gao Feng: The market access negative list issued this week lays down administration measures that apply to domestic and foreign investors alike. That is to say, in their investment, all market actors, including domestic- and foreign-funded enterprises, are subject to a same set of requirements in the list. The market access negative list for foreign investors applies to foreign investors’ investment and operation in China. It sets out special administrative measures targeting at foreign investors’ market access. Both lists embody the principle that “everything which is not forbidden is allowed”.

By the end of March next year, we will work with relevant departments to sort through and remove all access limitations on foreign investors in sectors not included in the negative list for foreign investors, harmonizing market access standards for domestic- and foreign-funded enterprises in these sectors. This will help standardize government behavior, create a level institutional environment and further tap into market vitality. Thank you.

Global Times: The US Department of Commerce recently published the determinations in the antidumping duty (AD) and countervailing duty (CVD) investigations of imports of plastic decorative ribbon from China, finding dumping and subsidization to different extent among Chinese exporters. What’s MOFCOM’s comment?

Gao Feng: We have taken notice that on December 21, the US DOC published the determinations in the AD and CVD investigations of imports of plastic decorative ribbon from China. Relevant US companies applied to the DOC for investigations on December 27, 2017 and the DOC docketed the case on January 17, 2018. According to relevant procedures, the US International Trade Commission (ITC) is currently scheduled to make its final injury determinations in early February, 2019. If the ITC makes affirmative final injury determinations, the DOC will issue official AD and CVD orders.

At the same time, we have also taken notice that in mid-October last year, the US Court of International Trade ordered reinvestigation of two trade remedy cases involving Chinese businesses, requesting the DOC to modify inappropriate practices.

We hope in trade remedy investigations, the US investigating authorities could abide by WTO rules, carry out investigations in a fair and impartial manner and avoid abusing trade remedy measures. We will also take necessary measures to safeguard Chinese businesses’ legitimate rights and interests. Thank you.

CRI: It was announced at the recent Central Economic Work Conference that China would push for a transition from opening-up of the flow of commodities and production factors to liberalization of rules and systems, as well as allow wholly foreign-funded enterprises in more sectors. Does it mean China will further broaden market access on top of lifting equity caps? Besides, what other sectors may allow wholly foreign-funded enterprises?

Gao Feng: China’s economic growth over the past 40 years has been achieved with a commitment to opening-up. In the same vein, high-quality development of China’s economy in the new era can only be guaranteed with greater openness.

We will follow the plans of the Central Economic Work Conference, adapt to new features under new circumstances, actively push for opening-up on all fronts and further ease market access for foreign investors. We will push for faster opening-up process in telecommunications, education, medical service and culture, among other sectors. In particular, the foreign equity caps are going to be raised in the education and medical service sectors, where there is both huge interest among foreign investors and shortage in domestic supply. Thank you.

Business Daily: We have noticed that the subsidy for NEV will be properly reduced next year. According to the notice issued by four ministries and commissions earlier, including the Ministry of Finance, the subsidy standard of NEV in 2019-2020 will be reduced by 40% compared to 2016. How do you view the consumption market for NEV next year after the subsidies are reduced? Also, will there be any new plans in develop new drivers of growth?

Gao Feng: In recent years, China’s NEV market has maintained a fast growth. In the first eleven months of this year, 1.03 million NEVs were sold, up by 68% year-on-year. The fast growth of the NEV market could partly be attributed to various national incentive policies, lower costs of power battery brought by technological advances and the willingness of consumers in accepting and using NEV.

As for general trends, as technological advances speed up, consumer perception enhances and relevant infrastructure improves, guided by policies of two credit systems for passenger cars, China’s NEV market is expected to continue to expand in 2019, with relatively fast growth. According to the estimates of China Association of Automobile Manufacturers, the annual sales this year could reach about 1.6 million.

In the next step, MOFCOM will work with relevant departments to create new drivers for the vehicle market. For example, increasing effective supply and advancing supply-side structural reform through expanding parallel-import for automobiles and increasing FDI in the automobile sector; stepping up fostering and developing market for used cars and striving to unleash consumption potential; speeding up the scrap and renewal of old automobiles to create more space for the consumption of new cars, including NEV. Thank you.

Caixin: On December 21, China and the US had a vice-ministerial call on economic and trade issues. Could you brief us on the call and the progress for the next step?

Gao Feng: I have already answered this question. What I can tell you is that China and the US teams on economic and trade issues have maintained close communication and the negotiations are advancing in an orderly manner as planned. Thank you.

Reuters: According to sources and articles that Reuters has published, President Donald Trump is considering an executive order that would ban American companies from using services provided by ZTE and Huawei. Does China have any comment on this?

Gao Feng: As for the question you raised, I am not informed of it yet. Thank you.

Are there any other questions?

If not, today’s press conference will conclude soon. The New Year’s Day is around the corner. On behalf of the information office of MOFCOM, I would like to wish you and your family good health, happiness and every success in the New Year. Thank you.

(All information published in this website is authentic in Chinese. English is provided for reference only. )