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Regular Press Conference of MOFCOM (February 10, 2022)

Gao Feng: Friends from the press, good afternoon. Welcome to MOFCOM’s regular press conference. Since I don’t have any announcement to make today, we can proceed directly to the Q&A session.

The floor is open.

Xinhua News Agency: During the China-Russia leaders’ meeting on February 4, MOFCOM and its Russian counterpart signed the Joint Statement on Completing the Formulation of the Roadmap for High-Quality Development of Trade in Goods and Trade in Services and the Memorandum of Understanding on Promoting Investment Cooperation in Sustainable (Green) Development. Could you brief us on this development? Have the two sides made other significant achievements with respect to practical trade and economic cooperation?

Gao Feng: On February 4, President Xi Jinping had a talk with Russian President Vladimir Putin, laying out the blueprint and charting the course for China-Russia relations under new historical circumstances. Their talk has yielded fruitful outcomes. During the talk, MOFCOM and the Russian Ministry of Economic Development signed two cooperation documents.

The first is the Joint Statement on Completing the Formulation of the Roadmap for High-Quality Development of Trade in Goods and Trade in Services. The roadmap is co-compiled by multiple government agencies, local authorities and institutions from both sides, with MOFCOM and the Ministry of Economic Development as its focal points, as a plan for the pathways towards the US$200 billion trade target set by the two leaders. Covering more than 200 cooperation initiatives and projects in over 20 areas including oil and gas, chemicals, machinery and electronics, agriculture and forestry, and high-tech, as well as transportation and customs clearance, financial services, trade and investment facilitation, intellectual property, and subnational cooperation, the roadmap will be a boost to and support for high-quality development of China-Russia trade.

The second is the Memorandum of Understanding on Promoting Investment Cooperation in Sustainable (Green) Development, under which MOFCOM and the Ministry of Economic Development, as focal points, will work with relevant authorities from both sides to advance investment cooperation in green development. The two sides agree on encouraging their companies to carry out investment cooperation in low-carbon energy and green infrastructure, pushing forward green technology innovation, and building new growth drivers for green and low-carbon cooperation.

During the leaders’ talk, relevant authorities and businesses also signed cooperation agreements on oil, gas, satellite navigation, and information technology, which will lead to new progress in bilateral energy trade and cooperation on key projects. In agriculture, the two sides signed cooperations documents for inspection and quarantine of Russian barley, wheat and alfalfa exports to China, creating positive factors for expanding China-Russia agricultural products trade. The two countries also signed mutual recognition arrangements of Authorized Economic Operators, which will further enhance trade facilitation.

In the next step, China will work with Russia to implement the important consensus and outcomes of the leaders’ meeting, carry out the Roadmap for High-Quality Development of Trade in Goods and Trade in Services, deepen investment cooperation in green development, and pursue practical cooperation in all areas including bilateral economy and trade, energy, agriculture, science and technology, aerospace, connectivity, and finance, so as to make steady progress towards our leaders’ US$200 billion trade target. Thank you.

CNR: What are the new highlights and features of this year’s consumption during the Spring Festival holidays compared to previous years?

During this year’s Spring Festival holiday, our consumption market remained generally stable with improved quality.

First, quality products posted strong sales. The Spring Festival coincided with the Beijing 2022 Winter Olympics, which gave rise to the sales of festival purchases, China-Chic and innovative cultural products, Olympic souvenirs, etc. Smart products, flowers and greenery, organic food and other health-related and quality products became first choices for consumers’ festival purchases. During the holiday, as monitored by MOFCOM, sales of travel-related petrol products and cars jumped by 18.2% and 11.3% respectively. Some e-commerce platforms saw their sales of green home appliances increase by over 110% year-on-year. The turnover of Kunming Dounan Flower Market grew by over 130% year-on-year. The total sales of 10 offshore duty-free shops in Hainan jumped by more than 1.5 times.

Second, catering consumption gradually picked up. The integration of online and on-site consumption is making faster progress in catering, with thrift and safety as the priorities for most consumers. The sales of pre-made dishes on some meal delivery platforms rose by over three times. The turnover in catering on some large e-commerce platforms increased by nearly 10% year-on-year. In many places across China, special events were held to promote local cuisines during the Spring Festival. Local governments also called for thrift in dining and actively advanced the “Clean Plate” Campaign.

Third, consumption related to winter sports grew quickly. The consumption spree stimulated by the Beijing Winter Olympics enabled a sharp increase of passenger flows in local skating rinks, skiing rinks and ice and snow theme parks. Winter sports such as indoor ice hockey, skating and skiing are flourishing, and some niche activities like ice climbing and snow rafting are sprouting up. According to the data of some e-commerce platforms, during the Spring Festival, the sales of ski gear jumped by more than 180% year-on-year, the sales of ice sport-related products by over 300%, and the turnover of ice and snow-related scenic spots by more than 80%.

Fourth, leisure activities became very popular among consumers. During the Spring Festival, suburban tours, city tours, folk custom experience activities and exhibitions were among the top choices for consumers. For some large e-commerce platforms, the orders for intra-provincial tourism products accounted for 65% of the total, a substantial increase from last year. Resort hotels in the suburban areas were very popular, as their turnover on some e-commerce platforms was up by around 10% year-on-year during the Spring Festival, and the orders of detached B&Bs on some e-commerce platforms rose by nearly 60%.

Fifth, the supply of daily necessities was sufficient and prices stable. The local market supply of daily necessities was sufficient, with rich varieties and generally stable prices. As monitored by MOFCOM, during the Spring Festival, the prices of grain and egg in the 100 large wholesale markets of agricultural and sideline products remained flat compared with those of the week before the Chinese New Year, with the prices of pork, beef and mutton up by 0.2%, 0.4% and 0.8% respectively. The average prices of 30 kinds of vegetables and 6 kinds of fruits rose by 3.7% and 2.0% respectively, as compared with the pre-Spring Festival level. Thank you.

AFP: It’s reported that the exports of goods from the U.S. to China in December last year dropped, far behind the purchase targets China committed in the Phase-One Agreement between the two countries. The Bureau of Census of the U.S. said on Tuesday that trade figures between China and the U.S. suggest that China is far from meeting its commitments of purchasing another USD200 billion worth of agricultural products, manufactured goods, energy and services from America on top of the level in 2017. The U.S. officials called on China to take “concrete actions”. What is China’s response to it?

The Phase-One Agreement between China and the U.S. benefits both countries and the world. Since the entry into force of the Agreement, China has made all-out efforts to work with the U.S. to implement the Agreement despite the multiple challenges brought by the pandemic, global economic recession and supply chain disruptions. We hope that the U.S. can remove additional tariffs, sanctions and other suppressive measures against China, so as to create a sound environment for broadening trade cooperation between the two sides. Thank you.

South China Morning Post: Deputy USTR Bianchi said the other day that Chinese government subsidies for businesses and non-market economic policies and practices are a serious threat to US economic interests. What is MOFCOM’s response? How are the talks of the two countries’ trade and economic teams going?

Gao Feng: The US accusation is totally untrue. Since its accession to the WTO, China has honored its commitments and fulfilled the obligations under the WTO Agreement on Subsidies and Countervailing Measures by fully eliminating the prohibited subsidies under the Agreement. As regards subsidies allowed by WTO rules, China’s subsidies are all in line with WTO rules in terms of level and mode.

One view attributes China’s economic success to government intervention, which we oppose. Facts of the past 40 plus years show that China’s economic success is the result of the reform and opening up policy and the effective combination of market mechanisms and government efforts. China’s reform and opening up is good for China and the world, promoting domestic economic growth while contributing to world economic prosperity.

At present, the trade and economic teams are engaged in normal communication. We will release further information when it is available. Thank you.

The Paper: China’s services deficit in 2021 hit a new low since 2011. What is MOFCOM’s take on that? Why? Will new measures be introduced this year to boost trade in services?

Gao Feng: In 2021, MOFCOM implemented the decisions and plans of the CPC Central Committee and the State Council in earnest and coordinated ongoing Covid response with the development of trade in services around the six stabilities and six guarantees, introducing a slew of policy measures with related departments to stabilize trade in services. Trade in services continued to grow rapidly throughout the year. Total services imports and exports reached RMB 5.29827 trillion, with the deficit narrowed down to RMB 211.27 billion. This fully speaks to the positive effects of China’s efforts to restructure services trade and improve its export competitiveness.

Overall, the main factors behind a narrowing services deficit are as follows.

First, the fast growing services sector laid a solid foundation for the balanced development of trade in services. According to the National Bureau of Statistics, in 2021, the value added of services was up 8.2% year-on-year, accounting for 53.3% of the GDP. With renewed momentum for services growth, new business types and models keep emerging. Meanwhile, the new generation of information technology has greatly enhanced the tradability of services, with continuous integration of manufacturing and services and markedly better quality and efficiency in services supply. All these provide a good foundation for the balanced development of trade in services.

Second, the export competitiveness of China’s knowledge-intensive services improved considerably. Covid-19 has profoundly affected people’s life and work, fueling the surge in online services provision and consumption, such as audiovisual services, healthcare, education and online retail. The wide adoption of digital payment creates space for the rapid growth of knowledge-intensive trade in services. In 2021, it was up 18%. In breakdown, personal culture and entertainment services, intellectual property royalties, and telecommunications, computer and information services exports were up 35%, 26.9% and 22.3%, demonstrating strong export competitiveness.

Third, transport services exports grew rapidly. Thanks to trade in goods and the price factor, transport services exports continued to grow fast throughout the year. In 2021, transport services exports amounted to RMB 820.55 billion, up 110.2%, which makes it the fastest growing sector in trade in services. along with knowledge-intensive services exports, transport drove the rapid growth in services exports for the whole year, which hit 31.4%, 26.6 percentage points higher than services imports, and drove down the deficit by 69.5% on the previous year.

Fourth, tourism services deficit fell sharply. Until recently, tourism services had been the biggest source of China’s tourism services deficit. Since the outbreak of Covid, the deficit had plunged to RMB 643.04 billion in 2021 from RMB 149.416 billion in 2019, which makes it a key factor behind China’s dramatically narrowing services deficit.

This year, in accordance with the arrangements of the CPC Central Committee and the State Council, the Ministry of Commerce will give top priority to stability, pursue progress while ensuring stability, continue to promote the reform, opening up and innovation of service trade, and focus on the following aspects: First, MOFCOM will work with relevant departments to implement the "Development Plan for Service Trade during the 14th Five-Year Plan Period" and implement various tasks and initiatives. Second, MOFCOM will study and promote the introduction of a number of new policies and measures to vigorously promote the high-quality development of digital trade, technology trade and foreign cultural trade. Third, MOFCOM will explore the path for institutional opening up of service trade and promote the introduction of the national negative list of cross-border service trade. Fourth, MOFCOM will continue to promote the implementation of various policy measures under the pilot program of innovative development of service trade, and sum up and roll out more institutional innovations. Fifth, MOFCOM will select the pilot areas with remarkable results and upgrade them into national service trade innovation and development demonstration zones. We will vigorously develop digital trade, build demonstration zones for digital trade, and promote the innovation of science and technology and institutions. Sixth, MOFCOM will promote the upgrading and expansion of bases for featured services export, improve the management system and promotion system of these bases, and implement various policies and measures to support their development. Thank you.

CNR: This year marks the 50th anniversary of the establishment of diplomatic relations between China and Argentina. May I ask the Ministry of Commerce, what are the highlights of economic cooperation and trade between the two countries in recent years? What potential can the two countries develop in their future economic cooperation and trade?

Gao Feng: Since the establishment of diplomatic ties 50 years ago, the economic and trade relations between the two countries have achieved healthy and stable development. In 2021, the bilateral trade increased by 28.3% year-on-year to USD17.83 billion, and China remains Argentina's second largest trading partner. Two-way investment steadily expanded, and investment cooperation projects in new areas such as clean energy have continued to emerge. Argentina is an important market for China in Latin America on contracted engineering projects, and the cooperation between the two sides involves hydropower, railway, energy, communication and other areas.

On February 6, President Xi Jinping met with President Alberto Fernández of Argentina, who came to China to attend the opening ceremony of the Olympic Winter Games Beijing 2022. The two heads of state reached an important consensus on deepening China-Argentina comprehensive strategic partnership and pointed out the direction for the development of China-Argentina economic and trade relations. In the next step, China stands ready to work with Argentina to jointly promote the Belt and Road, promote the further development of pragmatic economic cooperation and trade between China and Argentina in various fields, especially strengthen investment cooperation in emerging areas such as digital economy and green development, continue to improve bilateral economic cooperation and trade, and enhance the well-being of the two peoples. Thank you.

Shanghai Securities News: China and Ecuador officially started the FTA negotiation a few days ago. How about the bilateral commercial cooperation and bilateral trade? What benefits will the FTA bring?

Gao Feng: Since the establishment of diplomatic relations between China and Ecuador 42 years ago, bilateral economic and trade relations have achieved healthy and stable development. In 2021, the bilateral trade increased by 44.6% to USD10.94 billion, and China remains Ecuador's second largest trading partner. Ecuador is also an important partner of China in Latin America on investment and contracted engineering projects, and the cooperation between the two sides covers many fields, such as electricity, energy, mining and transportation.

At present, China and Ecuador have officially started the FTA negotiations. China will make joint efforts with Ecuador to actively promote relevant negotiations in accordance with the important consensus reached by the two heads of state. We believe that the signing of the FTA between China and Ecuador will help further tap the potential of bilateral trade, improve the quality and scale of trade, promote the sustained, stable and diversified development of bilateral trade and investment, and bring tangible benefits to enterprises and peoples of both countries. Thank you.

Cover News: How did the online Chinese New Year Shopping Festival go? What are the highlights?

Gao Feng: The 29-day Online Chinese New Year Shopping Festival 2022 has just concluded. It was held under government guidance, led by the business entities, and followed market principles. The SCO Specialty E-commerce Live Streaming Event was held during the same period and worked effectively. Generally speaking, this year’s online shopping festival had the following characteristics:

First, consumers were after quality products, while traditional purchases remained popular. The sales of chocolate, nuts, tea and wine gift sets increased by 66%, 41.4%, 23.2% and 22.7% year-on-year. Time-honored brands moved online rapidly and became the main purchases for the Chinese New Year. Meanwhile, upgraded consumption saw rapid growth. The sales of smart projectors, smart massagers and smart TVs of 65 inches and above increased by 90.3%, 34.3% and 20.7% year-on-year; native brands, museums’ cultural and creative products, ethnic musical instruments and intangible cultural heritage products grew by 94.6%, 33.7%, 26.5% and 16.5% year-on-year; handicrafts with local characteristics, 26.7% year-on-year; furniture, 17.3% year-on-year.

Second, ice and snow consumption was boosted. Winter Olympics merchandise and ice and snow equipment saw a surge in sales. Chartered Winter Olympics souvenirs grew 21.2 folds year-on-year; the sales of ski equipment and suits increased by 62.9% and 61.2% year-on-year. Ice and snow themed tourism grew significantly. During the Chinese New Year Shopping Festival, online ski ticket sales increased by 102.1% year-on-year. Orders for ice and snow tourism products on e-commerce platforms increased by over 30% year-on-year.

Third, green consumption became the first choice. The sales of eco-friendly fur, tableware and bags grew by 265.9%, 20.2% and 17.1% year-on-year; electronic fireworks, 1.4 times year-on-year; organic vegetables, organic milk and organic rice, 335.6%, 78.9% and 24.2% year-on-year. Online catering reservation increased by 28.5% year-on-year, among which the dine-in and takeaway services rose by 48.3% and 22.6%. Data from some e-commerce platforms showed that during the Chinese New Year holiday, the number of New Year's Eve dinner providers doubled and their sales went up 1.4 times year-on-year.

Fourth, SCO quality specialties are widely popular. During the live-streaming campaign of SCO specialties on e-commerce platforms, nearly 1,800 live-streaming events were held, involving over 1,500 categories of products with a sales volume of close to 100 million RMB. Sales volumes of SCO specialties on major e-commerce platforms saw significant growth, which boosted their popularity and influence in the Chinese market. Meanwhile, the live-streaming events also facilitated regional cooperation. Qingdao, Shanghai, Jiangsu, Zhejiang, Fujian, among others, have actively engaged with chambers of commerce, business associations, and enterprises of SCO members, and showed interest in industrial cooperation, injecting new vitality into the economic and trade cooperation among the SCO members. Thank you.

Gao Feng: Are there any other questions? If not, this is the end of today’s press conference. Thank you.

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