Gao Feng: 2. Situations about the Service Trade in January-February 2018

In the first two months, China’s import and export of trade in services reached 811.14 billion yuan, up 9.3% year on year. Among these, the export was 265.96 billion yuan, up 4.6%, and the import was 545.18 billion yuan, up 11.8%. The major features were as follows:

1. The import and export of trade in services maintained its stable and rapid growth. In January-February this year, the total value of the import and export of trade in services increased by 9.3% year on year and by 17.7% year on year in US dollars, the highest growth since last June. The growth of trade in services remained high, showing that our import and export of service trade still kept a stable and upward development in general.

2. The growth of import and export of emerging services exceeded the overall growth. In the first two months, the import and export of emerging services reached 256.14 billion yuan, up 10.4%, 1.1 percentage points higher than the overall growth. Among these, the export was 139.63 billion yuan, up 5.6%, 1 percentage point higher than the overall service export. The import was 116.51 billion yuan, up 16.6%, 4.8 percentage points higher than the overall service import. To be specific, the import and export of insurance services, financial services and personal entertainment services ran noticeably well with an increase of 28.3%, 29.2% and 22.4% respectively.

3. The import and export of traditional services continued to grow rapidly. In January-February this year, the import and export of transportation services reached 142.88 billion yuan, up 14.1%, that of the construction services reached 39.15 billion yuan, up 17.4% and that of the traveling services reached 348.96 billion yuan, up 7%.

4. The import of services rebounded aggressively caused by multi-factors. Due to the release of the need for services and the Spring Festival, the import of services increased largely in January-February. Among these, the import reached 272.87 billion yuan in February, up 16.9%, 10.3 percentage points higher than that in January.

5. The growth of service export slowed down while that of the knowledge-intensive services maintained a rapid growth. Because of the Spring Festival, the service export increased by 4.6% year on year in the first two months. However, the export of knowledge-intensive services rose fast with technology related services, professional management advisory services, R&D achievements transfer fees and consigned R&D, and the license fees for audio-visual and related products increasing by 10.6%, 9.2%, 26.8% and 30.1% respectively.

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

CCTV: According to Robert E. Lighthizer, the United States Trade Representative, the period of notice and comment for a proposed list of Chinese products and any tariff increases on such products will be extended from 30 days to 60 days, which means that the additional duties on relevant Chinese products will not be collected before this June. What is MOFCOM’s view on this? Thank you.

Gao Feng: We have noticed the relevant US comments. China’s position remains unchanged. We hope that the US will get a clear picture of the situation and follow the historical trend of economic globalization and trade and investment liberalization. We urge the US to abandon its unilateralist and trade protectionist practice, take concrete measures and resolve differences through dialogue and consultation to truly safeguard China-US trade and economic cooperation. Thank you!

Economic Daily: Some believe that US has launched a “trade war” against China because that the level of openness in the Chinese market is less than expected and China has not earnestly honored its WTO accession commitments of lowering tariffs. What is the response of MOFCOM to this? Thank you.

This is completely inconsistent with the facts. After its accession to the WTO, China has earnestly and comprehensively honored all accession commitments and constantly opened up its markets.

As for the fulfillment of WTO commitments of lowering tariffs, China’s general tariff level has been reduced from 15.3% at its accession to 9.8%. China has honored its commitments to all WTO members and has achieved or even exceeded the WTO requirement for developing members. If trade structure is considered, China’s actual trade-weighted average tariff is only 4.4%, already very close to that of the developed members. The trade-weighted actual import tariff is 2.4% for the US, 3% for the EU and 4% for Australia.

Apart from honoring the accession commitments, China has also further reduced the import tariff of 201 items of IT products based on the results of ITA expansion talks. To further open up its market, China has also taken the initiative to reduce the import tariff of some products. Premier Li Keqiang also stressed in the press conference for the “Two Sessions” this year that China will continue to open up and is committed to bringing China’s import tariffs down still further.

What I want to stress is that the series of measures taken by the US over its trade and economic relations with China are typical trade protectionism. Behind all these lurks the logic of the Cold War and zero-sum mentality. China merely serves as an excuse. China’s determination and confidence to open up its markets remain unchanged and have been strengthened. We will not change our course based on external pressure. We hope that the US will not go its own way and will return to the right track of win-win cooperation between China and the US. Thank you!

21st Century Business Herald: As we all know, the US has committed in the Statement of Administrative Action accompanying the Uruguay Round Agreement Act that unfair trade practice covered by WTO rules will be brought to the Dispute Settlement Body of the WTO and the domestic Section 301 investigation will no longer apply. Based on the Section 301 investigation, if the US unilaterally impose tariff on China, will it be a violation of WTO rules and relevant commitments? In addition, we learned that China and the US has debated under the Dispute Settlement Body of the WTO. The US argued that it has challenged China’s IP-related violation under the WTO, while its other accusations against China have nothing to do with the WTO. What is MOFCOM’s view on that? If the evaluation under the Section 301 investigation of the measures taken by the Chinese government is not in the scope of WTO rules, how will we deal with it? Thank you.

Gao Feng: This is a very good question. If the US increases tariff on Chinese products based on the Section 301 investigation, it would be an open violation of its international obligations under the WTO. According to Article I of GATT 1994, the tariff treatment the US accords to China should be no less favorable than what it accords to other WTO members. According to Article II of GATT 1994, the tariff treatment the US accords to China should be no less favorable than what is provided for in the appropriate Schedule annexed to GATT. The US practice both violates its tariff concession commitments under Article II of GATT 1994 and the Most-Favored-Nation treatment obligations under Article I. This is an overt challenge to the multilateral trading rules.

As for a solution to the China-US trade dispute, I believe that whoever started the trouble should end it. The US must stop its wrongdoings and abandon its unilateral and trade protectionist “stick”. Only by equal and mutually-beneficial consultations can one find a win-win solution towards cooperation. Thank you!

CRI: President Trump has announced tariffs on up to $60 billion Chinese goods and restrictions on Chinese investors. Should they be implemented, how deeply and broadly will they affect China’s foreign trade, especially with the US?

Gao Feng: I’d like to give you a set of figures. In 2017, China’s foreign trade in goods was over $4.1 trillion, among which $580 billion were import from and export to the US, taking up 14.1% of the total. China made $120 billion non-financial direct investment overseas, among which $7.8 billion went to the US, taking up 6.5%. I’d like to underscore that China has the strength and confidence to tackle any protectionist practices.

The key question is that the US, by placing tariffs on Chinese goods, has set an egregious precedent that is a flagrant breach of WTO rules, disregard of and contempt for the multilateral trading system. Such despicable action could trigger a chain effect in trade protectionism, once again casting shadow on the global economy that is already recovering. The tariffs could push up the prices of raw materials and consumer goods on its domestic markets, which will affect its manufacturing and consumers and eventually harm the wellbeing of American people. We have taken note of the call from the US industries and public against such measures.

I’d like to stress again that China will take all proper measures to defend the interests of our nation and people. We urge the US not to go any further before it’s too late, otherwise we will fight to the end.

Global Times: It is reported that MOFCOM organized a Chinese trade delegation to India between 23rd and 27th of February. Could you share the details? What is the value of agreements signed? Will it balance the trade surplus? We noted that on March 24 there is a trade deal between China and India companies. Could you share with us what it is about and what it means at this point of time? Thank you.

Gao Feng: A trade delegation composed of over 30 representatives from 22 companies spanning textile, pharmaceuticals, agricultural products, petrochemicals, and commerce held bilateral commercial exchanges in India between 23rd and 27th of March, as an effort to strengthen the commercial links and business cooperation between the two countries, and promote trade balance. The two business communities signed 101 trade agreements, with a value of $2.368 billion, covering over 60 kinds of products, such as black tea, sea food, and pharmaceuticals.

The event helped to promote balanced trade between China and India. It represents China’s efforts to further open the market and expand import. At present, the global trade and investment are emerging from the shadow of the financial crisis and entering the track of recovery. However, a couple of countries have an inward-looking tendency, and some even want to pursue their own development with a closed door. But China will stay committed to opening up. We are ready to work with the rest of the world to build an open global economy and ensure stable and healthy international trade and global economy in the long run. Thank you.

Shanghai Securities：China has released a list of US products that may face additional tariffs, following the 232 investigation against steel and aluminum imports. When will the list, which is now open to public comments, be officially implemented? Will there be a second or third list should the US takes further actions? MOFCOM has indicated many times that China does not want to see a trade war but is not afraid of it. Are China and the US likely to see their trade frictions escalate? How would China manage the intensity of a potential trade war? Thank you.

Gao Feng: In response to US slapping tariffs on imported steel and aluminum products under the Section 232, China published the list of goods of suspending concessions with a comment period ending on March 31. After that, we will give a timely assessment on the comments received and reveal when to kick off official implementation in an appropriate time.

About your question about if the trade friction may upgrade, China’s stance is crystal clear. We don’t want a trade war as China is actively growing partnership worldwide and expanding common interests with other countries in a bid to build a new type of international relations based on win-win cooperation. That said, we are not afraid of a trade war. We oppose imposing one’s own will upon another and the strong bullying the weak. We will hold our ground and take every necessary measure to firmly safeguard our legitimate rights and interests.

The US had better not take any action that will harm the bilateral commercial rel
ationship. It will only turn out to be shooting itself in the foot. Thank you.

Reuters: Chinese media reports that China will soon issue a list to respond to rising tariffs as a result of Section 301 investigation by the US. What US imports will be included on the list? How much does the value amount to? When will the list be issued? Are there more to come? Thank you.

Gao Feng: As I’ve said, China will take all appropriate measures to firmly safeguard its legitimate rights and interests. There are no exceptions right now. Thank you.

Chinese News Service: We’ve noted some foreign media reports that China and the US are negotiating in order to avoid a trade war. What’s MOFCOM’s comment? Thank you.

Gao Feng: China is always open to negotiations and consultations. But I want to make it clear that negotiations come with principle. First and foremost, unilateralism and trade protectionism must be discarded. Negotiations must be conducted on equal terms. China does not accept having any consultation while being held at gunpoint. Negotiations should be constructive and balanced. It calls for efforts on both sides. Thank you.

Due to time restraint, last question please.

Phoenix TV: China has launched an anti-dumping probe into phenol imported from multiple countries. What are the considerations under the current circumstances? Are you worried that the trade war might expand? We’ve noticed the EU announced global safeguard measures on steel. What does the external trade environment facing China look like now? Thank you.

Gao Feng: Recently, China has received application by its domestic industry to initiate an anti-dumping investigation into phenol imported from some countries. The probe has been launched based on review and determination that such application satisfies the conditions for initiating a case. Hence, it is a normal trade remedy case. Relevant investigation is going on in a fair and unbiased way in accordance with Chinese laws and regulations as well as the WTO rules.

Regarding the EU’s safeguard measures on steel and related concerns, we’ve noticed that the EU, Japan and others have used trade remedies or launched investigations on relevant products after what the US has done to imported steel and aluminum under the Section 232. The US’s malicious practice is just like opening Pandora’s Box, causing a knock-on effect and the spread of the virus of “protectionism” globally.

Excess capacity is a global issue, which calls for global efforts to address. But closing the door is not a solution. Instead, we should open the door and deepen cooperation while every country can leverage its own advantages and together make a bigger pie. We hope that despite some noises from specific members, all WTO members can unite and continue to firmly oppose trade protectionism, uphold the multilateral trading system and promote economic globalization and trade and investment liberalization so as to bring new developments to all countries and new benefits to all peoples. Thank you.

Gao Feng: That’s all for today’s press conference. Thank you.