Gao Feng: Members of the press, good afternoon, welcome to MOFCOM regular press conference. Since I have no announcement to make, I’d like to take your questions now.
The floor is open.
International Business Daily: The central rural work conference was just held. What will MOFCOM do next year to promote rural revitalization?
Gao Feng: The Ministry of Commerce will follow the arrangement of the central leadership, ground its efforts in the “three important roles” of commerce work, and focus on circulation, openness, cooperation, and job creation. MOFCOM will continue to play its role as a link between home and abroad, urban and rural areas and production and sales. We will consolidate and expand the achievements in poverty eradication, provide a stronger engine of economic growth in the long term for the regions just lifted out of poverty and actively advance the rural revitalization strategy.
First, we will ensure unimpeded rural and urban economic circulations to promote rural revitalization. MOFCOM will accelerate the building of county-wide commerce network, improve the logistics and distribution systems at village, township and county levels, develop cold chain logistics for agricultural products, and foster the backbone network for agricultural products circulation. We will implement the project of rural revitalization by going digital, expand the coverage of e-commerce in rural area, and improve circulation in areas just pulled out of poverty. Second, we will promote revitalization by opening up and expand the development space of rural area. We will optimize and enhance the role of Canton Fair, make good use of foreign trade transformation and upgrading bases and other platforms, accelerate the processing of imported goods in the border trade, deepen bilateral and multilateral economic and trade cooperation in border areas, introduce international aid resources, and promote the opening up and development of these areas. Third, we will promote revitalization by industry and support industrial development in rural area. We will use such platforms as investment and trade fairs to support areas just lifted out of poverty in attracting investment, promote transfer of processing trade, and align production with sales more effectively. We will continue to provide training on agricultural specialty products certification and conduct network-based brand cultivation and promotion, help rural market entities grow, and promote rural revitalization through industrial development. Fourth, we will promote revitalization by employment and create more jobs in the country. We will move deeper with rural revitalization through domestic services project, and build brands of domestic services in the areas just lifted out of poverty. We will continue to help these areas send workers overseas, strengthen the reserve of overseas labor, and protect their legitimate rights and interests. All these will ensure people just lifted out of poverty stay employed. Fifth, we will promote revitalization with talents and cultivate grass-root commerce professionals. We will strengthen the training and cultivation of commerce officials, rural e-commerce talents and households in the areas just lifted out of poverty, help farmers explore new thinking and ways to get rich and start businesses, and promote rural revitalization with talents. Thank you.
Shanghai securities: The 2021 version of foreign investment negative lists have been published lately. What are the new changes and highlights of the new lists?
Gao Feng: Compared with the 2020 version, the 2021 version that has just come out reduced the number of entries from 33 to 31 in the nationwide list, and from 30 to 27 in the pilot free trade zone list, down by 6.1% and 10%. This fully demonstrates the confidence and the firm resolve of the Chinese government to expand high-level opening-up, and share market opportunities with the world. The main changes to the lists are as follows:
First, the manufacturing sector is opened wider. The access limits in car making was removed, and the access limit on the ground receiving facilities for satellite TV broadcasting and production of key components was also removed in both the nationwide list and the PFTZ list. This means all the entries on manufacturing sector have been removed from the PFTZ list, shaping a new landscape of all-dimensional opening-up of the manufacturing sector.
Second, pilots for service opening-up are extended. In the PFTZs, the JV requirement for market surveys was removed, while for radio and television rating surveys, the controlling stake shall be held by the Chinese party. Foreign investment in social surveys is allowed.
Third, the negative-list based administration is more targeted. To meet the diverse financing needs of domestic companies that operate businesses prohibited by the negative lists, and to expand investment channels for foreign investors, efforts are made to realize more targeted administration based on the negative lists. When certain conditions are met, domestic companies that operate businesses prohibited by the negative lists are allowed to issue stocks and get listed overseas.
Fourth, the negative lists-based administration are optimized. In accordance with the Foreign Investment Law and its implementing rules, it is further clarified that the market access negative list apply to both domestic and foreign investors. Foreign-invested enterprises must be subject to the foreign investment negative list when investing in China. In this way, investors and FIEs can have a clear picture of the policies and make investment decisions based on the negative lists. Thank you.
Economic Information Daily: RCEP, which is in the limelight now, will come into effect soon. As member countries enjoy tariff concessions offered by RCEP, what implications will it have on domestic consumption and the public?
Starting from January 1, 2022, the Regional Comprehensive Economic Partnership (RCEP) will enter into effect for ten countries, namely Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia. Republic of Korea will join the rank to implement RCEP from February 1. The entry into force of RCEP will deliver tangible benefits to companies and consumers within the region, including China.
Regarding tariff concessions, over 90% of commodity trade within the region will enjoy zero tariff in a phased manner. From January 1, 2022, over 65% of China’ trade with ASEAN, Australia and New Zealand will see immediate tariff elimination, whereas the proportions with ROK will reach 39% and 50%. The entry into force of RCEP represents establishing free trade relations with Japan, with 25% and 57% of bilateral trade enjoying immediate tariff elimination. Eventually 86% of Japan’s exports to China will be exempt from tariff, whereas 88% of China’s exports to Japan will receive zero-tariff treatment.
For instance, with tariff cuts, ASEAN’s coconut juice, pineapple products and paper products, and Japan’s induction cookers, electric ovens, most machinery equipment, instruments and apparatus, and car parts will be exempt from tariff gradually when entering the Chinese market. China’s exports of machinery products, instruments and apparatus, textiles and garments and some aquatic products and vegetables to Japan will also enjoy zero tariff in a phased manner. The tariff concessions offered by RCEP will greatly reduce production costs for companies within the region and provide more quality and cheaper products to consumers.
Regarding trade in services, member countries generally commit to open over 100 service sectors, covering areas of finance, telecommunications, transportation, tourism and research and development. They also promise to turn to use negative lists within six years upon the entry into force of the Agreement to further liberalize markets. This means ample opportunity for emerging business models and patterns such as cross-border e-commerce, internet finance, teleworking, online education, telemedicine and online trade fairs. People within the region will also enjoy more benefits and convenient services.
Regarding rules of origin (ROO), the originating materials from other RCEP members in the production by one member’s companies can be all considered as originating materials, so that the value of originating materials can be accumulated, making it easier for members to reach the threshold beyond which they can enjoy tariff concessions. For instance, for a a fridge produced by a Chinese company and exported to ASEAN, in production it uses components (such as the compressor) produced by South Korea and the value of such materials exceeds 60% of the fridge’s price. Under the China-ASEAN Free Trade Agreement, this fridge can’t enjoy tariff concessions as it falls short of the 40% threshold for regional value content. However, under RCEP, the compressor produced by South Korea can be regarded as originating materials, hence the fridge using South Korea’s compressor and exported to ASEAN can enjoy tariff concessions. This common ROO provided in RCEP will help minimize production costs and maximize trade efficiency within the region, which will intensify cooperation on industrial and supply chains, and improve consumers’ sense of fulfillment and well-being. Thank you.
The Paper: During the recent pandemic response actions in Xi’an, Shaanxi, some residents have raised concerns over difficulties in buying groceries. What guidance does MOFCOM provide for local authorities to ensure supply and stabilize prices while fighting Covid-19? Has Xi’an already taken measures in response? And what are they, if any?
Gao Feng: Since the start of this round of outbreak, MOFCOM has immediately activated the supply coordination mechanism, establishing a platform to secure supply for Shaanxi that incorporates six provinces, namely Anhui, Shandong, Guangxi, Hainan, Sichuan, and Yunnan, to coordinate cross-provincial transport and optimize supply channels of daily necessities.
As for the daily necessities supply difficulties at the outset, Xi’an Commerce Bureau has coordinated in multiple ways. In general, there is sufficient supply of daily necessities on the local market.
In response to the development of the outbreak and market supply dynamics, MOFCOM will work anytime with relevant local authorities to further ensure supply and price stability of daily necessities. Thank you.
China Business News: Could you please talk about newly established foreign-invested enterprises (FIEs) this year? What’s MOFCOM’s assessment of how China’s business environment has improved?
Gao Feng: From January to November this year, 43,370 FIEs were established, up 29.3% year-on-year. In terms of source countries, the numbers of new Japanese-, Korean-, U.S.-, and European-invested companies increased by 32.1%, 31.6%, 30.2% and 28.9% respectively. In terms of sectors, the numbers of new manufacturing and services FIEs grew by 24.1% and 30.1% respectively, and the number of new high-tech FIEs expanded by 25.4%, accounting for 28% of all new FIEs.
This year, owing to the instructions of the CPC Central Committee and the State Council, as well as the joint efforts of all relevant departments and local authorities, China’s foreign investment environment has seen continuous improvement.
First, higher-level opening-up. The negative lists for foreign investment continued to be shortened. The numbers of foreign investment limits for the whole country and for pilot free trade zones were reduced to 31 and 27 respectively in the recently published 2021 negative lists. The demonstration zones and pilots for greater openness in the services sector have made steady progress. Tianjin, Shanghai, Hainan, and Chongqing were added as pilot zones with a total of 203 pilot measures; together, they have formed a “4+1” pattern with the national integrated demonstration zone for greater openness in the services sector in Beijing.
Second, greater investment facilitation. We have compiled the Foreign Investment Guide of China (2021 Edition) which incorporates introductions to China’s investment environment, legal systems, and investment procedures, to help FIEs and foreign investors work on investment strategies and start investment and business operations in China. We have also worked with relevant authorities to introduce policies lowering the tax preference threshold for foreign-invested R&D centers.
Third, better services for foreign-invested companies and projects. The task force on key foreign-invested projects held 74 dialogue and exchange events for FIEs and foreign business associations to promote policy awareness, heed needs from different sides, and respond to FIEs’ concerns. The task force has provided “one-on-one” follow-up service for key foreign-invested companies and projects. By resolving, through coordination, over 1,000 difficulties and problems at central or local levels regarding entry of personnel, clearance of goods, and vaccination, the task force has ensured normal operation of FIEs and sped up implementation of key projects.
Fourth, more effective investment promotion and protection. The 12th Expo Central China, the 21st CIFIT, the 4th CIIE, and other exhibition platforms have played a greater role in investment promotion, successfully bringing in a new batch of foreign-invested projects. Investment promotion activities that showcased the CIIE in provinces and brought multinationals to places across China have effectively supported local efforts to attract investment in industrial chains. The FIE complaint mechanism has kept improving, an example of stronger protection of foreign investors’ lawful rights and interests.
In the next step, we will continue to advance high-standard opening-up, enhance service for foreign investment, improve investment promotion, and step up protection of foreign investors’ rights and interests, all in a bid to foster a business environment that is based on market principles, governed by law, and up to international standards to a fuller extent. Thank you.
Gao Feng: Is there any question? If not, this is the end of today’s press conference.
As the year 2022 is approaching, I, on behalf of the Information Office of MOFCOM, would like to express my heartfelt thanks to all our friends from the media for showing your support and help for our commerce work. Thank you and wish you and your families good health and all the best in the coming year!
(All information published on this website is authentic in Chinese. English is provided for reference only.)