Gao Feng: Dear friends from the media, good afternoon. Welcome to the regular press conference of the Ministry of Commerce. First, I have two pieces of information to release to you.

I. About China’s outward investment and cooperation in January this year

In January 2019, Chinese domestic investors made non-financial direct investment in 973 overseas enterprises in 137 countries and regions, with an accumulated investment of US$9.19 billion. The contractual value of the newly signed foreign contracted projects was US$9.15 billion, with a turnover of US$8.14 billion. 34,000 laborers of all types were dispatched overseas for foreign labor cooperation. By the end of January, there had been 977,000 laborers of all types overseas, increasing by 11,000 over the same period of last year.

In January 2019, China's foreign investment and cooperation developed stably, healthily and orderly, mainly showing the following characteristics:

First, the investment and cooperation in the countries along the “Belt and Road” routes have been steadily advanced. In January this year, Chinese enterprises increased investment in 47 countries along the “Belt and Road” routes, totaling US$1.33 billion, up 8.1%. The contractual value of the newly signed foreign contracted projects in the countries along the “Belt and Road” routes was US$4.13 billion, accounting for 45.1% of the total amount of the same period; the turnover was US$4.23 billion, accounting for 52% of the total amount of the same period.

Second, the structure of outward investment continued to be diversified. In January this year, foreign investment mainly flowed to traditional investment fields such as leasing and business services, manufacturing, wholesale and retail, and construction, accounting for 26.6%, 21%, 11.2%, and 10.3% respectively. The investment flowed to the tertiary industry was US$6.24 billion, up 29.5%, accounting for 67.9%. Irrational outward investment has been effectively curbed.

Third, cross-border mergers and acquisitions (M&A) were carried out orderly. In January this year, Chinese enterprises implemented 30 cross-border M&A projects in 18 countries and regions around the world, involving 10 major industries of the national economy such as manufacturing. The actual turnover reached US$1.372 billion. From the perspective of the industry structure of mergers and acquisitions, manufacturing, leasing and business services, information transmission, software and information technology services took the lead.

Fourth, many large contractual projects overseas were newly signed. There are 36 newly signed contractual projects overseas reaching the contractual value of over US$50 million, accounting for 80.3% of the total value of the newly signed contracts. Among these, 13 projects valued over 100 million of dollars mainly were concentrated in transportation construction, communication engineering construction and petrochemical. The turnover of contractual projects overseas was mainly concentrated in transportation, power engineering construction and general construction industry, jointly accounting for 73.5% and effectively improving the infrastructure conditions of host countries.

In January 2019, the relevant departments handled 438 newly established and M&A outward investment enterprises, and China’s contractual investment reached US$8.33 billion. Among these, 436 newly established non-financial M&A outward investment enterprises were handled, and China’s contractual investment reached US$7.89 billion. Two newly established financial M&A outward investment enterprises were handled and China’s contractual investment reached US$440 million.

II. The development of China’s online retail market in 2018

In 2018, the scale of China’s online sales market continued to expand. The national online retail sales exceeded 9 trillion yuan. Among these, the online retail sales of physical goods reached 7 trillion yuan, increasing by 25.4% year on year, with its contribution to the total retail sales of social consumption goods reaching 45.2%, 7.3 percentage points higher than that of last year. While the scales were increasing, the transformation from old engine to the new one was accelerated, and the new engines such as online and offline integration, business pattern innovation and quality and service improvement accelerated their formation. China’s online retail market in 2018 mainly showed the following features:

1. The retail quality continued to improve, promoting and deepening consumption upgrading.

In 2018, the quality of China’s online retail continued to improve, powerfully driving the consumption’s upgrading. According to the monitored big date of commerce, the B2C market share which has more advantages in quality and service increased by 4.4 percentage points than that of last year. Smart products such as smart watches, smart audio and video, and translation machines were favored by consumers, increasing by over 80% year on year. Cosmetics, grain, oil, food and furniture also achieved rapid growth, increasing by 36.2%, 33.8% and 30.1%, respectively.

2. Rural online sales enjoyed rapid growth, opening up new upstream channels for agricultural products.

According to the monitor of the big business data, the national rural network retail sales in 2018 reached 1.37 trillion yuan, with an increase of 30.4% year on year, and the national agricultural product network retail sales reached 230.5 billion yuan, with an increase of 33.8% year on year. E-commerce has become an important way of poverty tackling. Under the guidance of the Ministry of Commerce, China E-Commerce Poverty Alleviation Alliance founded by 29 parties has covered 351 poverty-stricken counties. It has pushed enterprises to carry out “three products and one standard” certification for agricultural products in poverty-stricken areas and enhance their branding and standardization and standardization, and it has promoted new progress in agricultural products.

3. Social e-commerce grew rapidly, becoming a “living force” for market development.

In 2018, new e-commerce formats such as social e-commerce, small programs, and short videos developed rapidly. According to the data from the research institutes, the monthly active users of social e-commerce in China reached 170 million people. E-commerce has effectively met the multi-level and diversified needs of consumers, playing an important role in stimulating the consumption potential of small and medium-sized cities and rural areas.

4. Life service e-commerce saw quality improvement and upgrading and ecological circle construction became a new focus.

In 2018, the life service e-commerce developed rapidly, the market’s integration has been accelerated, and the enterprise competition developed from scale expansion to quality improvement. Through the “instant delivery” service system, a series of business formats such as convenience stores, supermarkets and catering service formed an e-commerce ecosystem covering take-out, fresh produce, medicine, housekeeping services and other life services . According to the monitor of the big business data, the online catering market grew by more than 45% in 2018 year on year.

5. Cross border e-commerce reached a new high, and Silk Road e-commerce cooperation was constantly deepened.

According to the statistics of the Customs, the total import and export of cross-border e-commerce in China reached 134.7 billion yuan in 2018, with an increase of 50%. In 2018, China established new e-commerce cooperation mechanisms with 9 countries including Russia and Argentina, and helped relevant enterprises to use e-commerce to explore the international market through convening e-commerce work promotion associations and enterprise matchmaking meetings. The growth rate of cross-border e-commerce transactions between China and Cambodia, Kuwait, UAE, Austria and other countries all exceeded 100%.

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

Phoenix TV: China and the US are holding trade consultations in Washington D.C. this week. What progress could you share with us? Is it possible to reach an agreement by March 1st? If not, what are China’s plans? Will the consultations continue?

Gao Feng: According to my knowledge, the two working teams have started work from the 19th, and the principals’ consultation will take place on 21st and 22nd. The two sides will have further discussion on trade issues based on the last round of talk.

The intensive consultations between the two trade and economic teams aim to implement the consensus of the two presidents and deliver an agreement. As for the progress of the talks, no news can be released until they are over. Thank you.

Economic Daily: If you look at previous statistics, both China’s outbound direct investment and project contracting declined in January. What are the reasons for that?

Gao Feng: In January, China’s outbound investment cooperation had a decline year on year for multiple reasons, according to our analysis. Apart from the prediction by some international organizations about slower growth of global economy and stricter foreign investment screening in some countries and regions, there are also some casual factors. Last year certain sectors made considerable investment into big projects. For example, last January, USD3.75 billion went to the mining industry, compared with only USD 550 million in January this year, down by 85.3% year on year. Factoring out the mining industry, China’s outbound investment actually grew by 22.6% in January.

On the whole, our outbound investment cooperation had a decline in scale in January 2019, but witnessed improved quality and efficiency.

CNR: I have a question about trade in services. According to MOFCOM data, last year China’s trade in service hit a record high. What measures will China take to further develop trade in services?

Gao Feng: In 2019, to push forward the development of service trade, we will make further improvements based on a solid foundation.

First, we will consolidate and expand the strengths of traditional service trade. For example, in terms of service outsourcing, we will issue guidance for the transformation and upgrading of services to provide incentives and introduce competition, inject vitality into outsourcing companies, and develop more quality companies.

Second, we will elevate the industrial chain for service trade. We will foster new highlights in emerging service trade and gain new strengths in the export of digital service and Traditional Chinese Medicine services; we will extend new service models and forms with outsourced pre-sale and after-sale links, such as R&D, design, repair and maintenance, examination, and climb up the supply chain, industrial chain and value chain in the global service market.

Third, we will try to provide smooth policy support for service trade. We will further improve the support policies in export tax and regulation of service outsourcing, establish intergovernmental cooperation mechanisms with major trading partners in service, in particular Belt and Road partners. We will build an open, transparent, and win-win environment for international cooperation in service trade and promote results-oriented business cooperation.

Hong Kong Commercial Broadcasting: In the Planning Program for the Guangdong-Hong Kong-Macau Greater Bay Area published by the State Council recently, it is laid out that more opening-up measures will be introduced under CEPA framework to grant national treatment to businesses from Hong Kong and Macau as they invest and operate in the mainland. How will MOFCOM implement these opening-up measures? What specific areas will be open to businesses and professionals from Hong Kong and Macau?

Gao Feng: The Guangdong-Hong Kong-Macau Greater Bay Area is a national strategy planned, deployed and promoted by President Xi Jinping. To leverage the supportive and pioneering role of the Bay Area in national economic development and opening-up, integrate Hong Kong and Macau into the big picture of national development, and enrich the implementation of “One Country, Two Systems”, MOFCOM will work on the following areas as priorities:

First, we will promote the policy alignment between the mainland and Hong Kong and Macau. At present, the joint commission between the mainland and Hong Kong and Macau has set up a special trade and economic task force to support the trade and economic development in the Greater Bay Area. In the next step, we will make the best use of the mechanism and work on a range of policy measures in commercial areas to support the Greater Bay Area.

Second, we will facilitate efficient and easy flow of goods, services, personnel and capital through CEPA. The CEPA Agreement on Trade in Goods contains a dedicated chapter on the Greater Bay Area. Through CEPA, we will also further open up trade in services in the Greater Bay Area on a pilot basis and support it in improving market integration and building a world-class business environment.

Third, we will work to jointly build the Belt and Road. We will support Hong Kong and Macau businesses in working with overseas trade and economic cooperation zones to jointly tap into the international market, export the products, equipment, technologies, standards, certification and examination, and management services, and build the Greater Bay Area into an important pillar for the Belt and Road development.

Fourth, we will enhance joined-up coordination to support the Greater Bay Area from multiple perspectives. We will work further on the Guangdong Pilot Free Trade Zone, Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries (Macao), cross-border e-commerce comprehensive experiment zone, and market system development, in order to turn the Greater Bay Area into a new platform for deepening reform and opening-up in the new era, building an open economic system with international standard, and participating in high-level international cooperation.

CNS: We noted that recently the EU initiated AD investigation against steel wheel imports from China. What is your comment?

Gao Feng: We noted that the European Commission published a notice on February 15 to launch probe into steel wheels from China. The application does not meet the filling standards of the WTO as it lacks accuracy and adequacy in terms of the qualification of the applicant's representativeness, the situation of Chinese steel and energy markets as well as the impact of Chinese products on EU industries. The decision of the European commission lacks factual and legal basis. China expresses serious concern over the practice and subsequent approaches to investigation.

The presumption by EU steel wheel industry that Chinese products may cause harm and threat is ill-founded. As a matter of fact, the EU industry is generally in good shape, with stable sales, growing employment, declining stock, and expanded investment. China is not the EU's main source of import. Chinese products serve as a useful complement to diversify the EU market, rather than a detriment to the market. Such investigations would only add to market uncertainty and undermine the interest of EU consumers.

China holds a consistent position against the abuse of trade remedy measures, and expects the European Commission to comply with WTO rules and obligations and handle the case with prudence, so that it will not hamper the normal trade and sound cooperation between the two industries. China will closely follow the progress of the case, and take necessary measures to defend the legitimated rights and interests of Chinese businesses. Thank you.

Reuters: We learned that China and the US have in principle started to draft six MOUs regarding the core issues in the trade dispute and are working on a list of ten measures for China to reduce trade surplus to the US, including purchase of agricultural products, energy and semiconductors. What’s your comment?

Gao Feng: Regarding the concrete content of the MOUs, I do not have any information to share with you. If there are further updates, we will timely release them. Thank you.

AFP: It is reported that China has started to restrict the import of coal from Australia. For example, the Port of Dalian Group has called off all coal imports from Australia. What is the reason for such moves?

Gao Feng: Currently I do not have relevant information. Thank you.

Bloomeberg: My first question is that if China and the US enters into any agreements, would they be effective only bilaterally or to other countries as well, especially when it comes to the opening-up measures that China commits to the US? My second question, it is said that the trade negotiation won’t produce any final agreement until President Xi meets with President Trump? If it’s true, when will they meet?

Gao Feng: As for the first question, I said we will timely release any updates on the details of the consultation. As for the second question, I suggest that you enquire the Ministry of Foreign Affairs. Thank you.

Any more questions? If no, this is the end of today’s press conference. Thank you.

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