Gao Feng: Members of the press, good afternoon. Welcome to MOFCOM’s online Newsroom 27 for today’s press conference. We are happy to have with us today DG Li Xingqian for foreign trade, DG Zong Changqing for foreign investment administration, and DDG Wang Bin in charge of market operation. I’m Gao Feng, MOFCOM’s spokesman.

We have no announcements to make today and would like to take your questions. The floor is open.

Phoenix Satellite TV: Have local governments and businesses taken innovative measures to ensure market supplies while preventing and containing the outbreak?

Wang Bin: Since the outbreak of COVID-19, while preventing and containing the epidemic, the localities, with reference to the transmission patterns, have guided businesses to reduce contact frequency and concentration risks and raise delivery efficiency, accelerate innovation transformation, optimize management services, create a series of new models and business types to facilitate and ensure the supply of life services, address delivery for the last 100m, and improve the efficiency of fresh goods distribution and delivery, with a view to dispersing the population and diverging channels for significantly lower contact and concentration risks and meeting people’s basic necessities. Recently, the General Office of MOFCOM printed and issued the Circular on Promoting Best Practices in Ensuring the Supply of Necessities in the Fight against COVID-19, summarizing 11 best practices across the country for nationwide rollout. They include the following five aspects.

First, online ordering + contactless delivery. Key suppliers like e-commerce platforms, marts and restaurants across the country are leveraging new technology, new equipment and new standards to optimize distribution. Smart robots and self-service pickup lockers are introduced for delivery of little or no contact. On some e-commerce platforms, over 80% of the orders are fulfilled through contactless delivery.
  
Second, traditional retail + innovative integration. Traditional marts, restaurants and gas stations in some regions are stepping up innovation and transformation to break the boundaries between online and offline business and between the sectors for integration and cooperation. Many supermarkets are exploring online shopping to fulfill online orders while sharing their staff with restaurants to ease labor shortage. Some gas stations are branching into non-oil business, offering groceries to widen the supply channels of fresh goods such as fruits and vegetables.
 
Third, community group buying + centralized delivery. Marts and businesses in Wuhan, Huanggang and Xiaogan in Hubei Province have launched diversified packs of fruits and vegetables, meat and egg, oil and grain, and household chemicals according to community demand for centralized delivery. Contacts designated by communities then deliver the goods to households to meet the needs of residents in isolation.
  
Fourth, safe group meal + designated caterer. Entities in certain regions purchase group meals from designated caterers to meet the demand of government agencies, businesses and other organizations that have reopened.

Fifth, temporary network + targeted direct supply. Some localities connect communities with suburban agricultural cooperatives, vegetable farming bases, wet markets and marts with temporary supply networks in neighbors and housing estates to increase supply channels.
  
Thank you.

China Daily: MOFCOM has launched the nine-province joint supply security mechanism to ensure market supplies in Wuhan and Hubei. How is it going?

Wang Bin: Since the launch of the mechanism, it has played a positive role in ensuring market supplies in Wuhan and Hubei. To better leverage the platform to ensure steady supplies of daily necessities in Hubei, we have worked with related departments to improve the coordination mechanism for higher standards and stronger support with positive progress. Since Jan. 23rd, the 8 member provinces have sent over 33,000 tons of necessities to Hubei, including 27,000 tons of fruits and vegetables. The mechanism has addressed over 50 calls for help in transport, undersupply of certain goods, lack of disinfectants and business reopening.
  
First, we have further improved the collaboration mechanism, printing and issuing the Circular of the General Office of the Ministry of Commerce on Further Improving the Nine-province Joint Supply Security Mechanism in the Fight against COVID-19 to guide related localities to improve the operation model in terms organizing and leadership, tasks and objectives, transfer channels, business reopening and sales channels. We have worked with the National Food and Strategic Reserves Administration, the NDRC, MARA, SASAC, the Ministry of Civil Affairs and the GACC to improve the program to secure necessities supplies, identify responsibilities and goals, establish institutionalized coordination and cooperation mechanisms and ensure market supplies of necessities in Wuhan.

Second, we have raised the standards of supply security. We have organized businesses in Hubei and surrounding provinces to further improve the standards of supply security in Wuhan by raising the stock of grain, meat and cooking oil to thirty days’ worth, lifting the stock standards for eggs, milk and vegetables, among other necessities, and outlining the minimum stocks for supply security to ensure sufficient and stable supplies of necessities in Wuhan and Hubei at the critical juncture of the response.
  
Third, we’ve further increased the number of large secure suppliers. Following the higher supply standards, we’ve worked with related departments to increase the number of key secure suppliers in grain production and meat processing. The number of backbone secure suppliers in Hubei and surrounding provinces has increased from 150 to nearly 200, ensuring sufficient supplies and robust support.
  
Thank you.

South China Morning Post: What is MOFCOM’s assessment of the epidemic’s impact on supply chains and industrial chains? Are you worried about potential relocation of supply and industrial chains? What concrete measures will you take to support champion foreign-invested enterprises?

Zong Changqing: China has long been integrating itself into global supply and industrial chains, actively contributing to world economic growth and economic globalization. The outbreak compounded with the Spring Festival， has taken tolls more or less on all kinds of businesses in China. They now face difficulties in transport and logistics, human resources, upstream-downstream coordination, supply of protective equipment and rising operational costs while trying to reopen business and production.
  
The CPC Central Committee and the State Council take this very seriously and call for efforts to strengthen coordination and communication with economic and trading partners and to prioritize the resumption of work and supply for champion companies and key links of major impact on global supply chains to maintain the stability of global supply chains. President Xi Jinping pointed out at the Meeting Coordinating the Prevention and Control of COVID-19 with Economic and Social Development on Feb. 23rd that as industrial chains are interlinked, congestion in one place would hold up the operation of all upstream and downstream businesses. He emphasized that regions should strengthen the matching of upstream production with downstream sale to promote coordinated return to work and production across the industrial chains. Recently, related departments and localities have all taken effective measures to support the reopen of key industries and champion businesses, including FIEs. MOFCOM has successively printed and issued the Circular on Strengthening FIE Services and Attraction in Response to COVID-19, the Circular on Stabilizing Foreign Trade and Foreign Investment and Promoting Consumption in Response to COVID-19, and the Circular on Promoting the Return to Work and Production of Commerce Businesses with Effective Protection against COVID-19, giving continuous guidance to localities to coordinate and resolve practical issues facing FIEs in investment, production and operation and minimize the impact. These measures are showing good effect. For example, Shanghai has stepped up support for key FIEs. As of Feb. 25th, over 99% of the key FIEs under monitoring had reopened. The municipal government is organizing forces to visit 720 regional headquarters of multinationals in Shanghai and key FIEs within two weeks from Feb. 25th to help address difficulties and problems on site. Guangdong province leverages the governor-MNCs direct liaison mechanism to strengthen coordinating services for logistics, labor, raw materials and protective equipment and has actively addressed issues and requests reported by Walmart, LG, Danone, Cargill and Toray, among 40 plus MNCs and business chambers. Related problems have already been solved with construction of BASF project and other large-scale foreign-invested projects resuming construction.

We believe that the pronounced issues facing FIEs as they return to business and production will soon be resolved gradually. In the long-run and overall, the impact on supply chains and industrial chains are short-term and temporary. China’s critical role in global supply and industrial chains will not be changed by the epidemic. We haven’t seen large-scale relocation of supply and industrial chains abroad due to the outbreak. Generally speaking, the investment and operation decisions of multinational investors are long-term, comprehensive and strategic. Short-term epidemic only has limited impact, though urgent and tactical adjustments are made in certain cases. A recent AmCham survey shows that 55% of the respondent companies believe it’s too early to name the impact of the epidemic on their operational strategies for three to five years. 34% of the businesses foresee no impact. Several surveys and studies suggest that the Chinese economy’s positive fundamentals in the long-term haven’t changed. China’s comprehensive competitive advantages in attracting FDI haven’t changed. The confidence and strategy of most MNCs in investing in China haven’t changed. Some are increasing their investment in China. For example, BMW-Brilliance, BMW’s JV in Shenyang, has fully returned to work. BMW indicates that it will continue to advance the €3 billion facility construction and product upgrade investment program to show its strong confidence and stable expectations for investing in China.

Moving forward, we will follow the CPC Central’s decisions and plans to stabilize the FDI base and take multiple measures while preventing and controlling the epidemic to strengthen service and support for FIEs. First, we’ll strengthen classified guidance and precise assistance with emphasis on the return to work and production of champion companies of major impact on global supply chains and their supporting companies. Synchronized reopening will be coordinated for FIEs and their upstream and downstream companies in automotive and electronics, among other sectors. Second, we’ll protect the lawful rights and interests of FIEs, make sure that supporting policies introduced by governments of all levels are equally applicable to foreign and domestic companies with equal treatment. Third, we’ll implement national regional development strategies, push central and western regions to take in more relocated foreign-invested industries, guide businesses to take advantage of policy incentives in central and western regions for encouraged FDI in business income tax and import duties so as to attract FIEs seeking lower costs from the eastern seaboard. Fourth, we’ll work to attract, assure and stabilize businesses, enforce the Foreign Investment Law and State Council Document No.23 to continuously optimize the business environment. Fifth, we’ll consider and introduce new measures to expand open-up, widen market access for foreign investors and boost their confidence in long-term investment and operation.

Thank you.

Li Xingqian: I’d like to add some points. China is an important link in many multinationals’ global supply chains. The impact of the outbreak on foreign trade supply chains is mainly on manufacturing supplies, and thus product integration faces temporary difficulties. The impact is local, limited, and fully controllable.
  
China has the world’s largest, most complete manufacturing system with the widest range of supporting supplies. Its strength in whole industrial chains is irreplaceable. With its great resilience, ample room for manoeuver and strong innovation ability, China's foreign trade development is sound and will remain sound over the long term. China's position in global industrial and supply chains will not change. As we adopt more and more policies to ensure stable foreign trade, greater benefits will be brought to foreign trade industrial chains.

Thank you.

CNR: MOFCOM and SINOSURE jointly issued a notice to further expand the coverage of short-term export credit insurance. How will this measure help companies enhance export risk management? Thank you.

Li Xingqian: Right after the COVID-19 epidemic broke out, MOFCOM surveyed foreign trade companies to figure out the difficulties they faced in production and operation. According to our survey of over 7,000 foreign trade companies, over 90% of them had to postpone shipment, failed to receive foreign exchange on time and faced great risks of buyers canceling orders and refusing to take delivery or pay. They were, therefore, in urgent need of export credit insurance support. In response, MOFCOM and SINOSURE conducted in-depth research and made arrangements for work related to short-term export credit insurance in 2020 to fully support foreign trade companies in coping with the impact of the outbreak. The arrangements aim at guiding foreign trade companies in making good use of short-term export credit insurance, effectively guarding against exchange collection risks, and at the same time securing banks’ financing support with insurance policies.
  
There are four ways to support foreign trade companies. First, expanding the coverage of short-term insurance, providing badly-affected companies with particular support and insuring every company that should be insured to benefit more of them. Second, opening a green channel for claim settlement and paying all the claims that should be paid as soon as possible. Third, further lowering premium for medium, small and micro foreign trade companies and allowing reasonable delays in payment to reduce the financial burden on companies. Fourth, expanding the scale of insurance policy financing and helping companies secure more funding support from banks. We believe that these measures can effectively alleviate the difficulties facing companies.
  
Going forward, MOFCOM will urge local commerce authorities and SINOSURE agencies to implement thoughtfully-designed special measures in order to guide companies in making full and good use of export credit insurance policies. At the same time, we will keep a close eye on the effect of the policies, collect feedback from foreign trade companies and figure out their difficulties and demands in a timely manner, strengthen policy research in a more targeted fashion, and introduce more support measures when appropriate.

Thank you.

CNBC: Does MOFCOM think there will be a big shortage of goods later? What prevention and control measures have been taken?

Wang Bin: Generally speaking, China’s production capacity and inventory of daily necessities are steadily increasing, and more work and production gradually resume. There are adequate supplies on the market, and the prices are generally stable. There’s no need to worry about a big goods shortage later.
  
First, there is a solid foundation for abundant market supplies. In 2019, China's total grain output reached 664 million tons, up by 0.9% year on year, hitting another record high. The output of beef, mutton, poultry, eggs, vegetables, fruits, and aquatic products grew steadily, and meat imports increased rapidly. At present, China has adequate stocks and reserves of daily necessities such as grains, oils, meat, eggs and milk.
  
At present, steady progress is being made in spring ploughing and ploughing preparation. With favorable weather conditions in spring this year, agricultural production is generally on track. Winter wheat production area is basically stable. 84 million mu (about 5.6 million hectares) of land is now planted with winter and spring vegetables. Wheat and vegetable supply increased by 2.7% over the same period last year. Pig production is recovering steadily. In January, inventory of breeding sows, increasing for the fourth consecutive month, was up by 1.2% month-on-month. There is a solid foundation for abundant market supplies of daily necessities.
  
Second, more work and production gradually resume. With a series of supportive policies and measures introduced by the central and local governments, various enterprises have resumed work and production in an orderly manner. More than 70% of China’s grain processing capacity for emergency response has been restored. Daily necessity producers such as meat, milk and food processors are moving faster to resume production. More and more circulation companies are getting back to work, with 95% of large chain supermarkets and around 80% of brand-name convenience stores opened. An increasing number of e-commerce express delivery companies have resumed work. Smoother transport, unimpeded supply chains of daily necessities and better coordination between producers and sellers will effectively help increase market supply of daily necessities.
  
We have also taken notice that since the outbreak began, due to such factors as labor shortages, impeded harvesting, transport and sales, as well as declining demand from catering and restaurant groups, agricultural produce in some localities has become unsalable. In response, while ensuring supply, MOFCOM worked with relevant departments in helping match producers and sellers and setting up sales promotion platforms to ensure stable market operation.
  
The top priority now is to resume work and production in localities outside key areas for epidemic response and make every effort to get production and people’s life back on track under the precondition of adequate prevention and control efforts. MOFCOM will continue to closely monitor the impact of the outbreak on market demand and supply and encourage more companies to resume operation as soon as possible in order to guarantee market supply.
  
Thank you.

Shanghai Securities News: This year is the last year of the critical battle against poverty. What plans does MOFCOM have for poverty alleviation through e-commerce and consumption? What supportive policies will be adopted?

Gao Feng: The year 2020 is the last year for us to win the critical battle against poverty on all fronts. In response to the impact of the COVID-19 outbreak, MOFCOM and relevant departments have introduced targeted measures to promote sales of agricultural produce during the outbreak and facilitate the orderly resumption of work by companies in the housekeeping services and outbound labor sector to consolidate the fruits of poverty alleviation.

Going forward, MOFCOM will follow the requirements of the CPC Central Committee on coordinated progress in epidemic response and poverty alleviation. We will continue to give full play to the strengths of commerce in connecting China and foreign countries, urban and rural areas, as well as producers and sellers in order to support poor areas in stepping up production and circulation, opening up further and creating jobs. As regards e-commerce-enabled poverty alleviation, MOFCOM will empower more villages with e-commerce and build better e-commerce channels for poverty alleviation to consolidate and improve the effect. We will send e-commerce experts to villages in deeply-impoverished areas to provide primary-level officials and representatives of poor households with face-to-face guidance and support. We will organize presentations and business negotiations for relevant brands and allow qualified products of companies in poor areas to bear the symbols of pollution-free agricultural produce, green food, organic food and geographical indication. As regards consumption-enabled poverty alleviation, MOFCOM will continue to expand sales and marketing channels for agricultural produce and organize a series of matchmaking events for producers and sellers with a focus on areas of extreme poverty like the “three regions [i.e. Tibet, four prefectures of southern Xinjiang, and the areas of Sichuan, Yunnan, Gansu, and Qinghai provinces with large Tibetan populations] and three prefectures [i.e. Liangshan in Sichuan, Nujiang in Yunnan, and Linxia in Gansu].” We will continue to help expand the market for poverty-alleviation products through such exhibitions as the Canton Fair.

Thank you.

Yicai: After the lockdown of residential communities in Wuhan, some residents complained that they only had limited package choices in group purchasing and the prices were high. Has the situation improved?

Wang Bin: Community lockdown in Wuhan poses higher requirements on ensuring market supply. Earlier some residents complained about expensive group purchasing packages, limited choices and tying sales in some medium and small supermarkets. The CPC Central Committee and the State Council took these complaints seriously and the daily necessity security group of the inter-agency task force of the State Council for epidemic prevention and control made timely recommendations for improving the situation. Hubei province and the city of Wuhan immediately made special plans and took targeted measures to better ensure market supply and meet residents’ diverse consumption needs.
  
First, providing bargain-price vegetable packages. Since February 24, five large supermarket chains, namely Wushang, Zhongbai, Zhongshang, Wal-Mart, and Carrefour, have been selling 5-kilogram “bargain-price vegetable packages” at ten yuan to low-income groups. Residents can choose a package of any three vegetable varieties from white radishes, carrots, potatoes, Chinese cabbages and cabbages. The government subsidizes the gap between the supermarkets’ purchasing prices and selling prices in accordance with the "one-yuan vegetable" policy. On February 25, the five supermarket chains received 90,000 orders for "bargain-price vegetable packages". In order to meet people’s demand for meat, since February 24, the city of Wuhan has put about 10,000 tons of reserve meat onto the market through supermarket outlets at a price 15% lower than the market price.
  
Second, providing a wider variety of group purchasing packages. In order to give citizens more ordering options, local supermarkets are encouraged to provide a wider variety of group purchasing packages and let citizens choose what to be included in their packages. For example, the Zhongbai supermarket offers community group buyers 35 packages of 12 categories, including vegetables, pork, fruits, grains, oils, aquatic products and milk. Five package options are available for vegetables alone.
  
Third, expanding online sales. The government of Wuhan issued online food shopping guides and encouraged 33 e-commerce platforms, including Freshhema, JD.com, and Meituan to join the efforts to ensure vegetable supply for Wuhan. Their delivery services cover the whole city. On February 25, the 33 platforms delivered 279,400 orders of fresh food, which weighed 1,500 tons.
  
By February 25, food could be delivered everywhere in Wuhan through community group purchasing from supermarkets or via other means. On February 25, all kinds of supermarkets in Wuhan received 183,800 group purchasing orders, an increase of 50,000 orders compared with the previous day.

Thank you.

China Business Journal: Recently, some importers said that goods ordered before the Spring Festival had arrived as usual, but low domestic consumption and impeded logistics had resulted in a backlog of goods. Suppliers are also affected by the burden on restaurants. What measures has MOFCOM taken to help address the problems facing importers?

Li Xingqian: Due to the COVID-19 outbreak, recently logistics of some imported goods have been impeded in some places. There were difficulties in logistics connection at a few ports, where freezer workers got back to work later than usual. As a result, imported frozen meat were shortly stuck at ports.
  
In response, following the decisions and plans of the CPC Central Committee and the State Council, MOFCOM has taken five measures to facilitate import. First, we issued notices to encourage enterprises to expand import of medical supplies and daily necessities and helped facilitate the import. Second, we worked with relevant departments in improving the logistics of imported goods to get stuck agricultural produce moving. Third, we streamlined import approval procedures, further enhanced facilitation and shortened time of approval to facilitate import. Fourth, we worked with chambers of commerce and trade associations to help enterprises get better-informed. We encourage trade associations to innovate and optimize services as the bond and bridge in helping enterprises cope with the outbreak. Fifth, we support enterprises in fully tapping the strength of new forms of trade and adopting new models to sell imports on e-commerce platforms. We are moving faster with relevant work and sound progress has been achieved.

Thank you.

Economic Daily: Assistant Minister of Commerce Ren Hongbin said at the press conference of the State Council Information Office on February 24 that the negative list for foreign investment access at the national level and in the pilot free trade zones will be shortened. When will the new negative lists be implemented? What areas will be opened to foreign investment? Thank you.

Zong Changqing: The Foreign Investment Law and its implementation regulation that came into effect early this year establish the foreign investment administration system based on pre-establishment national treatment and negative list. This is a major institutional achievement of China aligning itself with international practices and building an open economy at a higher level. It is also a weathervane for assessing the progress of China’s reform and opening up by the international community. Since the first negative list for the Shanghai Pilot Free Trade Zone was created in 2013, the Chinese government has revised the lists five times and extended the scope of application from the FTZs to the whole country. The lists have been downsized from initial 190 items to 40 for the national list and 37 for FTZ list. The frequent big revisions to the negative lists fully demonstrate how determined and sincere the Chinese government is when it comes to opening up.
  
The CPC Central Committee and the State Council take opening up very seriously and made plans for revising the negative lists on many occasions. At the second China International Import Expo, General Secretary Xi Jinping noted that China will open the market wider to foreign capital and continue to shorten the negative lists. The Fourth Plenum of the 19th CPC Central Committee called for efforts to widen, expand and deepen opening up in all aspects and promote opening up in manufacturing, services and agriculture. The Central Economic Work Conference also urged us to promote higher-level opening up and keep narrowing down the negative lists for foreign investment. On February 23, General Secretary Xi Jinping pointed out at the work conference on Covid-19 response and economic and social development that we should maintain stable fundamentals of foreign trade and foreign investment and further open up the financial sector and other services.
  
In accordance with the arrangement of the CPC Central Committee and the State Council, the NDRC and MOFCOM have worked with relevant ministries to revise the national and FTZ negative lists since the beginning of this year. Going forward, we will strengthen coordination and collaboration, move faster with the procedures of publishing and implementing the two negative lists and further open up the market for foreign investment so as to provide more investment opportunities for foreign investors.

Thank you!

China News Service: Thank you Mr. Spokesman. On February 23, General Secretary Xi Jinping mentioned that specific policies that are compliant with trade rules such as export rebates and export credit insurance should be employed to guarantee the functioning of foreign trade industrial chain and supply chain. What measures will MOFCOM take to remove the blocks in the industrial chain and supply chain of foreign trade?

AFP: Some international companies said they cannot resume normal operation in China because the industrial chain is not entirely back to work. Rules differ from place to place, thus impeding the movement of people and material. What will the government do to respond?

Li Xingqian: Thank you for your questions.
  
Foreign trade companies are faced with the same difficulties as others. Besides they have trade-specific challenges to overcome such as getting orders, fulfilling contracts and increasing trade barriers. MOFCOM has taken three steps to address the issue.
  
First, we help companies resume work and operation with tailored measures. We will make solid efforts to stabilize foreign trade while ratcheting up epidemic containment measures. We will support foreign trade companies to speed up resumption of work and production in order to secure marketplace and orders. We will step up support for trade financing and give full play to policy tools such as credit insurance and export rebates. We will promote companies along the industrial chain to restore production capacity, especially those at the critical links and leading businesses, to prevent global supply chain from disruptions. We will take stock of and scale up good practices and experiences in this regard, provide legal aid and minimize the damages for enterprises.
  
Second, we work to improve the industrial chain and supply chain of foreign trade. We are building the national foreign trade transformation and upgrading base. We make the most of industrial clustering to give key enterprises a leading role to play in the industrial chain. We are fostering new business forms and models of foreign trade by improving policies, innovating regulation methods, and streamlining protocols in an effort to let new trade models play a unique role in logistics during this epidemic outbreak.
  
Third, we step up communication and coordination with our trading partners. As China strengthens containment, we’ve noted some Covid-19 cases in a few countries and regions, which are important players in global industrial chain. We will strengthen coordination and communication with our trading partners, publicize the latest developments of the disease and relevant measures, push for closer cooperation among WTO members, and remove unnecessary restrictions so as to make contributions to the smooth functioning of global industrial chain.

In the meantime, we must admit that the epidemic is a crisis. It is a severe public health emergency whose fast transmission, large-scale infection and difficulty in containment is rarely seen in decades. It will inevitably have an impact on the economy and society, including the foreign trade industrial chain. The sector is resuming production but blocks remain in three aspects. First, foreign trade companies along the supply chain, especially the SMEs, have limited financing capacity. Second, delivery of raw material, components and final products may be delayed though the resumption of transportation is picking up. Third, trade and people movement restrictions imposed by some countries affect bilateral trade.
  
Under the strong leadership of the CPC Central Committee and the State Council, MOFCOM spares no efforts to enhance policy support for foreign trade via tax, finance, and insurance and restore production and operation of foreign trade companies in an orderly manner. MOFCOM will address the problems focusing on four areas. First, we will ensure export rebate is paid in full amount to bring the cost down for enterprises and reduce their burdens. Second, we will release more credits to satisfy the demand for financing. Companies that have market and orders to maintain should be provided with due credits to help them fulfill the contract. Foreign trade should be given enough financial support to maintain a normal industrial chain and supply chain. Third, we will expand the coverage of short-term risks of export credit and push for an appropriate rate-cut to boost foreign trade. Fourth, we will strengthen communication with the international community to steer their view on the impact of the epidemic towards a rational direction so that they don’t impose trade-restrictive measures.

Thank you!

Gao Feng: Due to time restraint, last question please.

Global Times: The CPI grew by 5.4% in January, the highest level in the recent years. The prices of food, especially vegetables, show an upward trend. Is the trend going to stay or reverse when the supplies are increased?

Wang Bin: As you said, the CPI grew by 5.4% YOY this January. We think the CPI hike is structural and temporal for three reasons.
  
First, the Spring Festival and tail-raising factor come into play. What happened before indicates that food prices such as vegetable, meat and fruit go up to some extent as consumer demand grows robust during the Festival. This year’s Spring Festival fell in January. Last year it was in February. Therefore, the base figure in January last year is much lower. The tail-raising factor drives up the YOY increase of the CPI.
  
Second, the price of pork is high. The pork price remains at a high level because of the substantial decrease in pig farming capacity resulted from the African Swine Flu, which is a structural factor for the CPI increase. In January, the pork price soared by 116%, contributing to the CPI increase by 2.76 percentage points.

Third, the epidemic pushes the cost up. Since the Covid-19 broke out, some regions have seen cost rising due to workforce shortage, transportation restrictions, and other containment measures. For example, the freight rates nearly doubled YOY and the salary of truck drivers rose by 5- to 7-fold.
  
The prices will become steady and come down as a set of policies are implemented such as tax and fee cut, resumption of work and production, poverty alleviation, logistics facilitation, and agriculture production, the weather gets warmer and the supply of major agricultural produces increase.
  
The supply and price of daily necessities are generally stable according to MOFCOM’s monitor. On February 26, the wholesale prices of grains and edible oil in 100 large agricultural produce markets were the same as the day before and down by 0.9% from the end of January. In breakdown, the wholesale price of pork and beef decreased by 0.5% and 0.1% from the day before and 0.1% and 0.9% from the end of January; the price of dressed chicken and eggs were up by 0.2% and 0.4% from the day before and down by 8.5% and 15.1% from then end of January; the wholesale price of 30 sorts of vegetables were down by 1.1% from the day before and down by 4.8% from the end and January; the wholesale price of six kinds of fruits were up by 0.1% from the day before and 2.4% from the end of January.
  
Thank you.

Gao Feng: This is the end of today’s conference. If you have more questions, we will respond after the conference through other channels. Thanks to the three speakers and friends from the press. Thank you!