[Gao Feng]: Dear friends from the press, good afternoon. Welcome to the press conference of MOFCOM. The theme of today’s press conference is national foreign investment utilization. We are pleased to invite Director of MOFCOM Department of Foreign Investment Administration Mr. Zong Changqing and Deputy Director Mr. Ye Wei to brief you on the use of foreign capital. I am the host of today's press conference, Deputy Director of MOFCOM General Office and spokesperson.

Today, Director Zong Changqing will first introduce the relevant situation of China's use of foreign capital in January-October this year, the overall situation of this year, and the related information about The Opinions on Further Improving the Work for the Utilization of Foreign capital (Document No 23 released by the State Council ) . The two speakers will answer questions from you

[Zong Changqing]: Dear friends, good afternoon. Today I will mainly release three pieces of information.

I. About the use of foreign capital in the first ten months of this year

(1) The actual use of foreign capital this year has maintained a steady growth.

From January to October, 33,407 foreign-invested enterprises were newly established nationwide, and the actual use of foreign capital was 752.41 billion yuan, with a year-on-year increase of 6.6%. In October, the actual use of foreign capital was 69.2 billion yuan, with an increase of 7.4%. This is the first information.

(2) Rapid growth of foreign investment in service industry and high-tech industry

From January to October, the actual use of foreign investment in the service industry was 538.35 billion yuan, with an increase of 13.5%. The actual use of foreign capital in the high-tech industry was 222.48 billion yuan, with an increase of 39.5%, accounting for 29.6%. The actual use of foreign capital in high-tech manufacturing was 78.69 billion yuan, with an increase of 5.5%. The actual use of foreign capital in the high-tech service industry was 143.8 billion yuan, with an increase of 69.3%.

(3) Significant growth of foreign investment in the Yangtze River Economic Belt and the Pilot Free Trade Zones

The actual use of foreign capital in the eastern, central and western regions increased by 6.8%, 6% and 5.2% respectively. The actual use of foreign capital in the Yangtze River Economic Belt was 368.3 billion yuan, with an increase of 8%, accounting for 49% of the national total. The actual use of foreign investment in the Pilot Free Trade Zone was 108.39 billion yuan, with a year-on-year increase of 23.9%, accounting for 14.4%.

(4) Significant growth of investment in the Asian region and countries along the Belt and Road routes

Investments in Hong Kong, Macao, Singapore and South Korea increased by 10.5%, 56.2%, 31.7% and 23.9% respectively. The actual investment amount of countries along the Belt and Road routes and in ASEAN increased by 19.3% and 22.1% respectively.

Overall, China's use of foreign capital this year has maintained a steady and positive trend, and it is expected that the scale of foreign investment will continue to be stable throughout the year. This is the first aspect of the briefing.

[Zong Changqing]: Second, I will introduce the foreign investment work this year.

In accordance with the plan on stabilizing foreign investment of the Party Central Committee and the State Council, MOFCOM has mainly led or coordinated the following six kinds of work this year:

First, focus on improving the foreign investment legal system. The Foreign Investment Law was introduced, and the formulation of supporting regulations sped up. We took the lead in the establishment, modification and abolishment of the relevant laws and regulations, cooperated in in promoting the rolling out of the Regulations on Business Environment , and established and improved the foreign investment information report system, striving to create the business environment under the rule of law.

Second, make efforts to introduce policy measures on stabilizing foreign investment. Recently, the State Council announced the Opinions on Further Improving Work for the Utilization of Foreign Capital. This item will be introduced to you in detail as the third content.

Third, endeavor to promote opening up. The negative lists for foreign investment nationwide and in pilot free trade zones were issued, and the measures for restricting foreign investment access beyond the negative list were comprehensively cleaned up. The State Council’s Reply to the Plans on Promoting the Opening up of the Comprehensive Pilot Program of eService Sector in Beijing on all Fronts was issued.

Fourth, focus on guiding foreign investment. The 2019 version of Catalogue of Encouraged Foreign Investment Industries was issued to guide foreign investment in modern agriculture, advanced manufacturing, modern service industries, and the central and western regions.

Fifth, strengthen the function of the investment platform. We submitted a report to the State Council for its reply to the establishment of the Pilot Free Trade Zone in six provinces including Shandong, and to the establishment Lin-gang Special Area of the Shanghai Pilot FTZ. We submitted to the State Council and issued , upon approval, The Opinions on Advancing innovation in National-level Economic Development Zones and Building a New Highland for Reform and Opening-up.

Sixth, efforts are made to improve the level of investment promotion. We have guided local governments to improve the foreign investment promotion service system, established a tracking service mechanism for foreign-invested enterprises, carried out the activities of "multinational corporations traveling to the west", and carried out multilateral and bilateral investment promotion activities. In particular, China has successfully hosted the China International Import Expo for two consecutive years, which has produced significant investment spillover effects on bringing in foreign investment. The participating countries promote not only products, but also local investment environment. Local governments not only organize products procurement and introduce technology, but also hold various investment promotion activities through the CIIE. The participating foreign companies regard the CIIE as an important platform for understanding the Chinese market and looking for investment opportunities in China. For example, after the first CIIE, Apple, Decathlon, Accenture and other world top 500 and industry leaders set up regional headquarters or R&D centers in China. During the second CIIE, multinational pharmaceutical company AstraZeneca announced that they will upgrade its Shanghai R&D platform to a global R&D center. I went to Gansu for research and investigation a few days ago. Gansu Province introduced us related situation and said that more than 2,000 people participated in the CIIE, including enterprises and local government representatives. In the CIIE, in addition to purchasing goods, a series of investment promotion activities were carried out. Some were intended projects while others were contractual. Great Achievement have been made.

Generally speaking, the Foreign Investment Law was reviewed and approved at the beginning of the year, and two negative lists and one encouraged catalogue were released in the middle of the year. Until recently, the State Council Document No. 23 was issued. This year, China has made combined efforts in promoting foreign investment, and strongly boosted foreign investors' confidence in investing in China. These achievements are the fruits of the appropriate leadership of the CPC Central Committee and the State Council. It is the result of concerted and joint efforts of all regions and departments. It is also the result of China's continuous establishment and improvement of legal and policy systems of foreign investment and the continuous improvement of the business environment.

[Zong Changqing]: Third, I would like to introduce the State Council Document No.23.

The CPC Central Committee and the State Council attach great importance to the utilization of foreign investment. General Secretary Xi Jinping have delivered important speeches on many occasions, stressing that China will further expand the foreign capital market access and form a new pattern of comprehensive opening up. Premier Li Keqiang has repeatedly stated that China will adopt a series of measures to attract more foreign investment. The State Council issued Document No. 23 mainly to further encourage foreign investors to invest and start business in China, improve China's foreign investment structure, and form a new pattern of all-round opening up. This document proposes 20 specific policy measures on 57 items from four aspects, including: four measures on 13 items in deepening opening up; five measures on 10 items in strengthening investment promotion efforts; five measures on 10 items in deepening investment facilitation reform; eight measures on 24 items in protecting the legitimate rights and interests of foreign investment.

Compared with the previous documents, Document No. 23 has three characteristics. First, policy measures are more comprehensive and in-depth. Second, the protection for national treatment of foreign-invested enterprises is further strengthened. Third, it aims to enhance the sense of fulfillment of foreign-invested enterprises, deepens and refines some policy measures of the three previous documents.

After issuing Document No. 23, we mainly implemented it from two levels. First, from the national level, Document No. 23 identifies the division of responsibilities of 23 relevant departments and local people's governments. The Ministry of Commerce will play a leading role, strengthen guidance and coordination to implement various policy measures and release policy dividends as soon as possible. Second, from the local level, the Ministry of Commerce has issued a document, and has made specific arrangements in five aspects: further improving political position, learning the spirit of documents, intensifying promotion and interpretation, working hard in policy implementation, and strengthening organization and coordination. We require that local commercial departments should make every effort to implement Document No.23. At the same time, we also require the local people's governments to regard implementing Document No. 23 as a key task for the coming period and ensure that all policies and policies for stable foreign investment are implemented. Thank you all.

[Gao Feng]: Thanks for the introduction by Director Zong Changqing. Next, we will move on to the Q&A session. Please ask questions regarding the theme of today's conference. As always, please tell us the name of your agency before asking questions. Let’s start.

Xinhua News Agency: How do you characterize the work to attract foreign investment amid sluggish global trade and investment?

Zong Changqing: That’s a good question. As you said, global trade and investment at present are losing steam, posing challenges to our efforts in attracting foreign investment.

In recent years, China has unveiled a range of measures in six aspects, including granting pre-establishment national treatment based on negative list to ease market access; drafting the Foreign Investment Law with the focus on opening to, serving and protecting foreign investment. The State Council has published four documents to improve the policy framework governing foreign investment. These measures have helped to consolidate our advantages in attracting foreign investment. This year we are optimistic that the target of “stabilizing foreign investment” can be achieved.

Looking at FDI attraction this year, we could observe the following features: first, stable size of FDI. In the first ten months, FDI grew by 6.6% year on year, testifying the confidence and sound expectation of foreign investors in China; second, a large number of big projects. According to our statistics, major projects above 50 million dollars surpassed 1300 this year, up by 5.4% year on year. BASF, ExxonMobil, Tesla have invested in large projects over tens of billions dollars and are moving forward the implementation. Third, the structure of FDI continues to optimize, which is also demonstrated by the figures I provided. Investments in service and high-tech industries are growing fast and by a large margin. In fact, one third of the FDI goes in high-tech industries, particularly the high-tech service industry, which has grown by 70%. Thank you.

Economic Daily: DG Zong, you are optimistic about hitting the target of “stabilizing foreign investment this year. But what are the difficulties, if any? Foreign investors are concerned about the Foreign Investment Law, which will be effective next year? When do you expect the implementing rules to be published? How will it be implemented?

Zong Changqing: Thank you for the question. I’d like to invite DDG Ye Wei to answer your question.

Ye Wei: Thank you for the question. As DG Zong noted, this year the attraction of FDI features stable size, large projects, and sound structure. FDI for the whole year is expected to remain stable, which is not easy against the backdrop of sluggish growth around the world. There are many challenges to foreign investment utilization in China, such as lackluster global economic outlook, profound adjustments to global investment landscape, and the need to improve domestic business environment. As the Foreign Investment Law is about to launch, we are expediting the work to improve the institutional framework that promotes, protects and administers foreign investment, so as to build a high-standard open economy.

Regarding the implementation of the Foreign Investment Law, we are working in three areas in accordance with the arrangement of the central government. First, develop implementing regulations. The Ministry of Justice, in collaboration with the Ministry of Commerce and NDRC, has put the implementing regulations open to public comments online. We value your suggestions and comments. The judicial interpretation of FIL is also being drafted, so as to address the concerns of foreign investors and FIEs after its implementation. Second, sort out the related rules. The No.23 document of the State Council requires all localities and departments to sort out the related legal provisions by revising or abolishing those that are inconsistent with the FIL, so that they are not at odds. Initial progress has been scored. At MOFCOM, we reviewed all the FDI-related rules and normative documents developed or led by MFOCOM, and are considering abolishing or revising scores of legal documents. The process has already been launched. Third, organize training on the interpretation. In order to help the localities grasp the significance of the FIL and understand it accurately, MOFCOM has provided training to the commerce departments nationwide starting from the second half of this year, laying a sound foundation for its implementation. The No.23 document also requires applicable authorities to provide interpretation and training of the law and regulations, so as to help all levels of government understand and implement the FIL in an accurate manner, ensure proper law enforcement by different levels of government, and help foreign investors and FIES learn and abide by the FIL and related rules. Thank you.

International Business Daily: Last May, the State Council issued the Opinions on Promoting Innovation and Upgrading in National Economic and Technological Development Zones (NETDZs) to Build the New High Ground for Reform and Opening-Up. We have also noticed additional supportive measures for NETDZs in the document No. 23 issued by the State Council early this month. Could you give a detailed introduction to the development of NETDZs in recent years? What are the rationales behind these measures?

Zong Changqing: Thank you for your question. NETDZs are mentioned in State Council documents, namely the document No.23 and the important Opinions guiding the development of NETDZs in the next step published in the first half of this year. In the document No. 23, four new requirements for NETDZs are put forward. First, industrial clustering in NETDZs should be accelerated to build well-known platforms for investment promotion. Second, a communication system should be established between NETDZs and key enterprises to cultivate leading enterprises and core enterprises on the industrial chain with a strong driving force and widespread influence. Third, priority will be given to a number of free trade zones to be set up in central and western China to accommodate relocated industries. Fourth, experience from local reform practices to streamline administration, delegate powers and improve government services, such as examination and approval within development zones, Internet Plus government services and one trip at most when handling matters, should be shared among NETDZs to foster a better business environment.

Taking this opportunity, I’d like to share with you some information about NETDZs. It has been 35 years since the first 14 NETDZs in 12 coastal cities were approved by the State Council which were based on the experience of special economic zones. As China expands its opening-up, NETDZs have also been established in inland areas. Now, there are 219 NETDZs in 31 provinces, municipalities and autonomous regions, of which 107 are in eastern China, 63 in central China and 49 in western China. Over the past 35 years, NETDZs have been pioneering institutional reforms, leading China’s reform and opening-up and regional growth and playing a significant role in China’s socio-economic development. I have some statistics to share with you. In 2018, GDP generated by the 219 NETDZs amounted to RMB10 trillion, up by 10% and accounting for 11.3% of the national total. Fiscal revenue from NETDZs reached RMB1.9 trillion, up by 7.7% and taking up more than one-tenth of the national total, or 10.8% to be accurate. Paid-in foreign direct investment (FDI) and reinvestment of foreign-invested enterprises in NETDZs stood at US$51.3 billion, up by 5.5% and accounting for 20.4% of the national total. Total trade in NETDZs was RMB6.2 trillion, up by 10.8% and accounting for 20.3% of the national total.

Entering this year, NETDZs has remained in steady progress, playing a pivotal role in ensuring stability in FDI and foreign trade for stable economic growth.

Last May, the State Council issued the Opinions on Promoting Innovation and Upgrading in NETDZs to Build the New High Ground for Reform and Opening-Up to address outstanding problems related to institutions, the industrial structure and factor constraints, with an aim to build new institutions for open development in NETDZs and boost a higher-level open economy for regional economic development. Upholding the new development concepts, this document focuses on the supply-side structural reform and high-quality development by invigorating foreign trade. It seeks to stimulate innovation in opening-up, science and technology and institutions in NETDZs and improve international cooperation and economic development in general. These innovative measures and improvements will help to build a new high ground for reform and opening-up. In the document, 22 concrete policies are put forward in improving the open economy, granting more autonomy to reform, building a modern industrial system, optimizing domestic and international cooperation platforms, and enhancing support for factors of production and the intensive use of resources.

The State Council has requested that all regions and authorities should take effective measures to implement the document so as to speed up high-level development in NETDZs. MOFCOM will work with relevant authorities to strengthen supervision and guidance so that all policies will be duly implemented. What we can disclose is that we will soon call a working session for NETDZs to plan on implementing the document. Thank you.

CRI: What are the problems we now face in utilizing foreign capital? As the Opinions on Work for Further Making Effective Usage of Foreign Capital gets issued, how will we enhance the capability of utilizing foreign capital?

Zong Changqing: I will give the floor to my colleague Ye Wei, deputy director of the Foreign Investment Department under MOFCOM to answer this question.

Ye Wei: Thank you for your question. Starting from 2019, in light of the deployment of the Party Central Committee and State Council to stabilize foreign capital, MOFCOM has conducted extensive and in-depth researches. Generally speaking, problems reflected by foreign invested enterprises concentrate on market access, fair treatment, policy implementation, IPR protection, standard setting and government procurement, among others. To respond and address such legitimate concerns of these foreign invested enterprises, we follow a problem-oriented approach and issued tailored new policies and measures and based on that, Document No.23 was issued by the State Council.

Going forward, according to the tasks assigned by the Document No.23, MOFCOM will play a leading role in promoting the implementation of all regions and authorities. Here, I’d like to briefly introduce the five key tasks for the MOFCOM identified in the Document No.23.

First, relax market access for foreign capital. Further improve the negative list management for foreign investment and continue to trim the negative lists for the pilot free trade zones (FTZs) and the rest of the country, in particular, further test opening up measures for the pilot FTZs, and work with relevant departments to lift all foreign investment restrictions beyond the negative list.

Second, promote the reform and innovation of the pilot FTZs. Focusing on the expectations of market players, we have put forward specific measures to support the further opening up and innovative development of the pilot FTZs, and advance relevant preliminary trials on deep-level reforms. Promote the devolution of more provincial economic management approval authority to the pilot FTZs to stimulate market vitality.

Third, improve the quality of foreign investment in opening up platforms such as State-level Economic and Technological Development Zones. Document No. 23 puts forward four clear requirements focusing on that, and MOFCOM must strengthen supervision and inspection with relevant departments to ensure that various measures are to be fully implemented.

Fourth, step up efforts to attract foreign business and investment. On the one hand, we should strengthen the top-level design and improve the national foreign investment service system; on the other hand, we must do a good job in publicizing and interpreting related policies in the foreign investment domain, understand the problems and difficulties blocking policy implementation, and help companies make the most of their policies. At the same time, local governments are also encouraged to formulate and improve assessment and incentive policies.

Fifth, strengthen the protection of the legitimate rights and interests of foreign-invested enterprises. Improve the complaint mechanism for foreign-invested enterprises, promote the upgrading of accepting institutions in all regions, improve handling rules, standardize handling procedures, and improve handling efficiency. Thank you.

Gao Feng: There is one more reporter raising his hand. The last question, please.

China News Service: We found in interviews that some companies have already or are planning to shift production to ASEAN countries to avoid pressure from rising costs and tariffs. How does the Ministry of Commerce look at this? In addition, the previous State Council executive meeting also proposed to implement differentiated policy to promote the transfer of eastern industries to central and western regions. What are the specific focuses of this policy?

Zong Changqing: According to our understanding, although some export-oriented foreign-invested enterprises in some coastal areas in East China with relatively low added value have shifted production out of China, but we believe that is a normal market practice. On the whole, China has not seen large-scale foreign capital withdrawal. Judging from the related investigation reports of some foreign chambers of commerce, most foreign-invested enterprises still regard China as a target market and they are still very optimistic about their investment prospects in China with strong confidence in investment.

2019 China Business Climate Survey Report shows that in 2018, 69% of the companies were profitable, another 21% were reportedly breakeven, and over 60% of the companies still see China as a top-three or first priority in their global investment plans. We can also tell that from some major foreign invested projects, like Germany’s BASF’s plans to build plants in Zhanjiang, Guangdong province, the US Cummins’s project in Hefei, Anhui province and Swiss Ineos’s project in Ningbo. Tesla Gigafactory 3 in Shanghai started its building in January, 2019 and now it has finished building and moved onto a trial production phase.

Meanwhile, as China issues policies and measures on business and investment attraction, we also guide foreign invested enterprises to shift to central and western China. For example, to further reduce the cost of logistics, the Document No.23 proposed to build more integrated bonded areas, and create good platforms for qualified central and western regions. This year, in amending the Catalogue of Encouraged Industries for Foreign Investment, besides the 121 added entries for the Catalogue of Industries for Guiding Foreign Investment Nationwide, 54 entries were further added to the Catalogue of Priority Industries for Foreign Investment in Central and Western China taking into account of the characteristics of central and western regions, encouraging foreign-invested businesses transferred to those regions. For instance, in provinces with labor advantages, entries on labor-intensive industries including textile, clothing and furniture manufacturing were added or revised. Qualified enterprises investing in encouraged industries in China’s central and western regions are eligible to enjoy customs duty exemption or reduction, lower CIT rate and favorable land use policies.

Going forward, together with relevant authorities, MOFCOM will step up efforts to publicize and enable understanding of the policy measures encouraging foreign-invested businesses transferred to the central and western regions and guide on the implementation in those regions. On the other hand, in light of the new conditions, and new characteristics after the foreign-invested businesses relocate, MOFCOM will engage in further researches with provinces in central and western regions and roll out more targeted working measures to guide more foreign capital to China’s central and western regions. Thank you.

Gao Feng: Due to time limits, today’s press conference is concluded. If you have any questions, please contact us. We will actively respond to your questions. Thanks also go to the two spokespersons and friends from the media. Thank you.