Friends from the media:
Let’s begin the regular press conference of this month. At first, I will brief you the situation of business performance in November 2015.
I. Market performance and features
Since the beginning of this year, the domestic consumer market was roughly steady, and very recently a steady growth has been picking up for 4 consecutive months. In November, the retail sales of consumer goods reached RMB2.8 trillion, up 11.2% year on year, 0.2 percentage points higher than that of October. With the price factor excluded, the actual growth was 11.0%. Sales of the retail enterprises monitored by the Ministry of Commerce in November were up 4.7%, 0.3 percentage points higher than that of October. In January-November, the retail sales of consumer goods were up 10.6%, 0.1 percentage points higher than the first three quarters. The expected growth of retail sales of consumer goods in the whole year was about 10.7%. The main features of the consumer markets in October are as follows:
1. New business types enjoyed a rapid growth. According to the National Bureau of Statistics, the online sales of physical commodities in January-November were up 33% year on year, accounting for 10.6% of the total retail sales of consumer goods and 0.6 percentage points higher than that of the previous month. In November, the growth of online sales of enterprises monitored by the Ministry of Commerce was 6 percentage points higher than that of the same period of last year. Growth of sales of shopping centers was 2.9, 7.0 and 9.7 percentage points higher than that of supermarkets, department stores and special stores respectively.
2. Automobile market picked up rapidly. The policy of halving the acquisition tax of small-displacement automobiles presented obvious stimulation effects, and the automobile market witnessed a large-scale growth for two consecutive months. According to the statistics of China Association of Automobile Manufacturers, the sale of automobile in November was up 20% year on year. Among it, the sale of passenger vehicles with 1.6 L and below was up 29% year on year, showing an obvious growth momentum. Sales of automobiles of enterprises above the designated size were up 9% year on year, 1.9 and 7 percentage points higher than those of last month and last year respectively.
3. Consumption for housing continued to pick up. The up-and-up of the real estate sales and the upgrading of home furnishing drove the growth of the related consumption. In January-November, the sale acres and sale volume of commercial housing were up 7.4% and 15.6% year on year respectively, 0.2 and 0.7 percentage points higher than that of January-October respectively. In November, the sales of household appliances, building materials and furniture of enterprises above the designated size were up 18%, 16.9% and 14.5% year on year respectively, 6.7, 1.4 and 1.7 percentage points higher than those of the same period of last year respectively.
4. Consumption for services continued to speed up. The catering market maintained a rapid growth. In November, the catering revenue was up 11.5%, 1.7 percentage points higher than that of the same period of last year. The markets of culture and entertainment, and leisure tourism were still hot. The sales of cultural products and office supplies for enterprises above the designated size in November were up 22.2% year on year, 13 percentage points higher than those of the same period of last year. In January-November, the revenue of film box office reached about RMB 40 billion, up 50% year on year.
5. Consumer price increased slightly. In November, the CPI was up 1.5%, 0.2 percentage points higher than last month and 0.6 percentage points higher than that of the same period last year. According to the Ministry of Commerce, the general price level of farm products in the 36 large and medium sized cities was up 1.5% year on year, with those of pork, vegetable and milk up 11.9%, 6.9% and 2.8% year on year respectively; and mutton, eggs and fruits down 11.9%, 6.9% and 5.5% year on year respectively.
II. Foreign Trade
According to the Customs statistics, China’s total import and export in January-November 2015 reached RMB3, 565.53 billion, down 8.5% year on year. Among them, the export was RMB2, 052.32 billion, down 3% year on year, and the import was RMB 1, 513.21 billion, down 15.1% year on year. In November, China’s import and export reached US$ 340.39 billion, down 7.6%. Among them, the export was US$ 197.24 billion, down 6.8%, and import US$ 143.14 billion, down 8.7%.
The foreign trade in January-November presented the following features:
1. In terms of the trade patterns, the export of general trade maintained the growth with the proportion increasing. In January-November, the export of general trade reached US$ 1,099.0 billion, up 1.1%, accounting for 53.6% of the foreign trade export, and 2.2 percentage points higher than that of the same period of last year; the export of processing trade was US$ 720.1 billion, down 9.7%, accounting for 35.1% of the foreign trade export, and 2.6 percentage points higher than that of the same period of last year.
2. In terms of the major commodities, the export of mechanical and electrical products kept the growth, and the export of labor-intensive products decreased. In January-November, the export of mechanical and electrical products was US$ 1181.5 billion, up 0.2% year on year, accounting for 57.6% of foreign trade export, and 1.8 percentage points higher. Among them, the export of mobile phones, ships and lanterns were up 11.7%, 12.6% and 14.9% respectively. Export of seven kinds of labor-intensive products reached US$ 426.76 billion, down 3.3% year on year, with those of textile, clothing and shoes down 2.6%, 7.7% and 5.4% respectively.
3. In terms of business players, the exports of private enterprises maintained growth. In January-November, the exports of private enterprises registered US$921.6 billion, up 1.2% year on year, taking up 44.9% of China’s foreign exports, with 1.8 percentage points higher than that over the same period of last year. The exports of foreign-invested enterprises stood at US$911.2 billion, decreasing 6.2% year on year, and the exports of state-owned enterprises reached US$219.5 billion, down 5.7% year on year.
4. Affected by the price drop of bulk commodity and weak domestic demands, the imports still run at low price. In January-November, the imports of 11 kinds of bulk commodities such as crude oil, iron ore, plastics, soybean, refined oil products, natural gas, pulp, cereal and copper concentrate increased，but their prices dropped, with a decrease of US$182 billion (RMB1.15 trillion) payment exchange, greatly reducing the production cost of domestic enterprises and improving the efficiency.
5. From a global vision, China’s foreign exports are still better than that of major global economies and rising countries with emerging markets. According to the monthly statistics by the WTO, in January-September, the value of global trade in goods exports decreased 11.1%, and exports of US, EU, Japan, South Korea, India, South Africa, and Brazil went down 6.2%, 12.8%,9.2%, 6.6%, 16.6%, 7.9% and 16.8% respectively. China’s market share has risen to 13% from 12.4% at the end of 2014 and still maintained its No.1 position as a global trading power.
III. Foreign Investment in China
In January-November 2015, a total of 23,648 newly-established foreign-invested enterprises were approved, going up 11% year on year. The actually utilized foreign capital was RMB704.33 billion (US$114.04 billion), up 7.9% year on year. In November, 2,626 newly-established foreign-invested enterprises were approved, up 27.7% year on year. The actually utilized foreign capital amounted to RMB64.9 billion (US$10.36 billion), up 1.9% year on year. The characteristics of foreign investment in China in January-November are presented as follows:
1. In terms of industrial distribution, the industrial structure was further optimized. In January-November, the actually-utilized FDI in service sector stood at US$69.58 billion, up 18.8% year on year, taking up 61% of the national total, that in hi-tech service sector amounted to US$7.23 billion, up 51.7% year on year. Among these, digital contents and relevant service, information technology service and R&D and design service stood out with an increase of 85.9%, 55.1% and 29.7% respectively year on year. The utilized FDI in manufacturing reached US$35.84 billion, down 0.2% year on year, taking up 31.4% of the national total, of which the actually utilized FDI in high-tech manufacturing was US$8.54 billion, up 11.7% year on year, taking up 23.8% of the total actually utilized FDI in manufacturing. Among these, the actually utilized FDI in biological and pharmaceutical products manufacturing, communication equipment manufacturing, and electronic computer components manufacturing increased 366.3%, 142.6% and 18.6% respectively year on year.
2. In terms of investment source, the main countries/regions maintained a steady growth of investment in China. Investment from ASEAN countries, EU, Hong Kong, and Macao increased 13.1%, 6.9%, 11.1% and 55% respectively, and that from Japan, the US and Taiwan dropped 25.3%, 2.2% and 18.2% respectively.
In November, a total of 97 newly-established enterprises invested by ASEAN countries were approved, going up 3.2% year on year and the actual input of foreign capital reached US$650 million, going up 40.6% year on year. 146 newly-established enterprises invested by 28 EU countries were approved, going up 10.6% year on year. The actual input of foreign investment registered US$470 million, down 40% year on year.
3. In terms of regional distribution, eastern China sustained sound a momentum for attracting FDI. With the constant deepening of reforms on pilot free trade zones, the actually-utilized FDI in eastern China in January-November registered US$97.42 billion, going up 10% year on year. A total of 10,811 newly-established enterprises in Yangtze river economic belt zone were approved, up 7.7% year on year, taking up 45.7% of the national total.
4. In terms of forms of foreign capital, the ways of utilizing FDI are innovative and foreign M&A becomes active. In January-November, the number of newly-established foreign-invested enterprises by M&A reached 1,265 and the actually utilized FDI registered US$16.82 billion, going up 16.1% and 181% respectively year on year. The percentage that M&A takes up among the national total of the actually utilized FDI in January-November has risen to 14.7% from 5.6% over the same period of last year.
IV. China’s Investment and Economic Cooperation Overseas
Direct investment overseas. In January-November, the Chinese investors have made non-financial direct investment in 5,985 enterprises in 153 countries and regions, with an accumulative investment of RMB646.16 billion (US$104.13 billion), going up 16% year on year. By the end of November, China’s combined non-financial direct investment amounted to RMB5.3 trillion (US$849.12 billion). In November, China’s direct investment overseas registered US$8.92 billion, going up 12.6% year on year.
In January-November, the number of countries and regions with Chinese foreign direct investment flow above US$100 million reached 51. Among these, 11 countries were above US$1 billion, including China’s Hong Kong, Cayman Islands, the U.S., Singapore, the British Virgin Islands, Netherlands, Australia, Kazakhstan, Laos, Indonesia and Brazil.
In January-November, the investment from Chinese mainland to seven major economies such as Hong Kong, ASEAU, EU, Australia, the United States, Russia and Japan reached US$76.19 billion, accounting for 73.2% of the total foreign direct investment of China in the same period. The investment to ASEAN and the United States and increased rapidly by 109.9% and 55% respectively year on year. The investment to Hong Kong and Japan increased 12.8% and 11.1% respectively. The investment to EU, Russia and Australia decreased 40.5%%, 15.2% and 10.1% respectively.
Contracted projects overseas. In January-November, the turnover of China’s contracted projects overseas amounted to RMB807.43 billion (US$130.12 billion), up 7.3% year on year. The newly-signed contract value was RMB1.01165 trillion (US$163.03 billion), up 1.3% year on year. In November, the turnover stood at US$15.28 billion, up 13.9% year on year with a newly-signed contract value of US$14.11billion, down 59.7% year on year.
In January-November, there were 590 projects with a newly-signed contracted value of more than US$50 million (up 40 year on year), with a total value of US$134.54 billion, accounting for 82.5% of the newly-signed contracted value. There were 342 projects with a value of more than US$100 million, up 40 year on year. In November, there were 63 projects with a newly-signed contracted value of more than US$50 million (down 3 year on year), with a total value of US$10.93 billion (down US$20.23 billion year on year), accounting for 77.5% of the total newly-signed contracted value in October. There were 35 projects with a value of more than US$100 million, increasing by 1 year on year.
By the end of November, the contract value of China’s contracted projects overseas amounted to US$1.66224trillion, with a turnover of US$1.1661 trillion.
Labor service cooperation overseas. In January-November, the labor service personnel dispatched overseas amounted to 476,000, with a decrease of 22,000 over the same period of last year, going down 4.4% year on year. In November, a total of 48,000 labor service personnel were sent abroad with a decrease of 2,000. Labor service personnel dispatched overseas were 1,038,000 by the end of November, with an increase of 33,000. By the end of November, the labor service personnel dispatched overseas reached 7,960,000.
V. Service Outsourcing
In January-October, the service import and export volume reached US$544.22 billion, with an increase of 14.2% year on year. The service export was US$187.72 billion, with an increase of 8.5% year on year. The export of telecommunication, computer and information service was US$20.28 billion, with an increase of 18.6% year on year. The export of advertisement service, cultural and entertainment service and intellectual property royalty increased 20.7%, 51.6% and 74.9% respectively. At the same time, the service import was US$356.5 billion, with an increase of 17.4% year on year. The import of tourism and construction service increased 62.8% and 116.3% year on year respectively. In January-October, the service trade import and export volume accounted for 14.4% of the total foreign trade volume (the sum of trade in goods and service import and export) 2.5 percentage point higher than the same period last year.
In January-November, the contract value of service outsourcing newly signed by the Chinese enterprises was US$111.23 billion and the executed value was US$80.32 billion, with an increase of 22.1% and 16.5% year on year respectively. The contract value of offshore service outsourcing was US$73.82 billion and the executed value was US$53.25 billion, with an increase of 22.8% and 14.1% year on year respectively. Some features are presented as follows:
Firstly, the provinces and cities along the line of the Yangtze River Economic Zone maintained a rapid growth. In January-November, the contract value of the offshore service outsourcing undertaken by 11 provinces and cites along the line of the Yangtze River Economic Zone was US$41.11 billion and the executed value was US$33.14 billion, accounting for 55.7% and 62.2% respectively, with an increase of 13.7% and 14.5% year on year respectively. Hubei, Hunan and Sichuan seized the favorable opportunities of transferring the service outsourcing industry to the central and western provinces and attracted enterprises to settle down in local regions. The executed contract value of the offshore service outsourcing undertaken by these provinces increased 50.7%, 48.4% and 24.3% year on year respectively and the increase was far higher than the average level of the whole country.
Secondly, the position of Hong Kong, as the contract awarding market, was improved. In January-November, the executed value of service outsourcing undertaken by Chinese enterprises from the United States, China Hong Kong, the EU and Japan was US$12.63 billion, US$7.88 billion, US$7.78 billion and US$4.76 billion respectively, with an increase of 16%, 23.4%, 16.3% and -5.1% year on year respectively, and their added total accounting for 62.1% of the executed value of the offshore service outsourcing of China. Hong Kong first surpassed the EU and became the second largest offshore contract awarding market of China, highlighting its importance in exploring the international market of the service outsourcing in the Chinese enterprises.
Thirdly, the newly-signed contracts of offshore service outsourcing with large amount increased obviously. In November, the contract value of offshore service outsourcing undertaken by China was US$10.34 billion, with an increase of 55.2% year on year. There were 10 projects with the contract value of the newly-signed offshore outsourcing of more than 100 million US dollars and 91 projects with that of more than 10 million US dollars.
The above is the general situation. You are welcome to raise any questions.
China Daily: Foreign trade has always been an important force driving China’s economic growth. But customs statistics in the first ten months indicate that foreign trade did not grow strongly enough. Why? Thank you.
The first thing I shall point out is that actually China’s foreign trade has been growing fairly strongly this year. I noticed that when writing about foreign trade some media used the words “not strong”. If it has to be written in that way, I think what is not strong is the external demand rather than external trade. This is well proven by data. Data of economic institutions such as the IMF, the World Bank and the WTO, among others, shows that global trade growth has been slower than economic growth since the beginning of this year because of sluggish world economy and weak demand in international markets. Global trade growth rate once doubled that of global economic growth rate, but this trend has been reversed in recent years when trade growth was evidently slower than economic growth. Data about the first nine months of this year released by various international organizations indicates that this year will probably see the biggest decline of global trade except the year 2009 as more than 70 major economies are seeing negative growth of import trade and their export trade also decreased. The month-by-month statistics of the WTO show an 11.1% decrease of global merchandise export trade from January to September. To be specific, the US export trade declined by 6.2%, the EU 12.8%, Japan 9.2%, Korea 6.6%, India 16.6%, South Africa 7.9%, and Brazil 16.8%. Recently the Ministry of Commerce conducted a survey on 6000 companies in 70 key industries and surveyed companies reported that they were faced with a situation of global demand even worse than that in 2009 when the world was hit by the financial crisis. Another reason causing weak external demand is the rise of trade protectionism. From January to October there had been 65 trade remedy investigations initiated by 21 countries (regions) against China with a total subject value of USD 5.83 billion.
So why did I say that China’s foreign trade did grow fairly strongly? We can easily draw conclusion from these data that how difficult a situation China has been faced with and how remarkable a growth China’s foreign trade has recorded.
As known to all, difficulty in foreign trade is not only caused by external demand but also many other elements such as slowdown of domestic investment, rise of production factor cost and appreciation of China’s currency value. Companies reported that trade situation this year was “extremely” difficult and even “suffocating”. In such a complicated circumstance, we must base our assessment on real records of achievement in the first eleven months. Although the figure of December is not yet available, we are already able to say China’s foreign trade will achieve five impressive achievements this year.
The first achievement is that the China’s share in global export market has increased significantly from 12.4% at the end of last year to 13% at present. This is by no means an easy achievement. The reason for this share increase is what I mentioned a moment ago. Export trade of the US, the EU, Japan, Korea and India has declined drastically, but China’s export trade only dipped a little bit. Therefore China’s share in global market rose up.
The second achievement is that volume increase and price decrease in import trade has generated big benefits for China and Chinese companies. In terms of import and export price index, export price in the first eleven months of this year remained roughly the same to last year while import price dropped by over 10%. Same volume of export products can exchange for 12% more imported products. Volume increase and price decrease of 11 bulk commodities such as crude oil and iron ore saved 182 billion US dollars or over 1.1 trillion yuan. This means real benefits for the country and the people and lower cost for companies, and therefore helps Chinese companies improve their profitability and competitiveness.
The third achievement is that trade mix is optimized. When facing difficulties, we did not panic. Rather we remain committed to adjusting trade structure whereas maintaining trade growth. As a result, general trade, export by private companies, export of machinery and electronic products and capital goods, and export to emerging markets had all registered a positive growth in the first eleven months of this year and are major forces driving export trade. Export of large complete plants including railway, power and telecommunication equipment to American and European middle-end and high-end markets grew by over 10%. Export to ASEAN nations grew by 3%, and export to Vietnam, Thailand and Singapore grew by nearly or over 10%. Cross-border e-commerce export developed by over 30%, and trade based on wholesale market procurement rocketed by over 70%. This stimulates the export of medium, small and micro businesses, which represents new opportunity of trade growth. Proportions of China’s service trade in global service trade and in China’s overall foreign trade both rose up.
The fourth achievement is that foreign trade continues to contribute significantly to economic and social development. The objective of trade development is to contribute to national economy. China’s net export increased remarkably this year. Experts at the research institute of the Ministry of Commerce calculated the percentage of net export increment in GDP increment, and the calculation projects a 12.3% contribution ration of foreign trade to economic growth for the whole year. More importantly, with the sound performance foreign trade creates directly and indirectly hundreds of millions of jobs.
The fifth achievement is that China remains the world’s largest exporting and trading nation.
Therefore, we believe that it is insufficient assessment of China’s foreign trade performance if one looks at only the statistics on the scale and aggregate growth of trade. In other word, looking at what it is like on the surface is not enough; and the key is to see what lies beneath.
CRI: Early this month, the locomotives and carriages that China helped to make for the Tazara railway were delivered. This railway is of historic significance. I would like to ask you about the details and the follow-ups? Thank you.
Shen Danyang: Recently the Chinese government once again provided assistance to Tanzania and Zambia in the form of special locomotives and carriages for the Tazara railway. The railway is a symbolic aid project from China, and carries an epoch-making significance. To this date, this railway is still regarded affectionately by the local people as the Freedom Railway and seen as a testimony to Sino-African friendship.
Since the Tazara was built, the Chinese government has provided interest-free loans to the governments of Tanzania and Zambia and carried out 15 sessions of technical cooperation in order to ensure the normal operation of the railway, help the Tazara authority to strengthen the management and operation, and improve the conditions of the equipment and infrastructure of the Tazara.
Under the latest session, which is the 15th session, of technical cooperation, the Chinese government provided a total of 4 diesel main-line locomotives and 18 carriages. A grand ceremony of the delivery was held at the Dares Salaam train station of Tanzania on 2 December this year. Before this, there were 12 functioning locomotives on the Tazara providing 6,015 kilometers of failure-free service. Currently, the number of locomotives has risen to 16, and the non-failure operation mileage to 7,098 kilometers. There are four two-way train services per week, two for each direction, including fast and all-stop trains, with an annual passenger number of 455,000.
The Tazara requires repair and rehabilitation because this railway is in use for decades. The Chinese government is presently making preparations and coordinating with the governments of Tanzania and Zambia with a view to carrying out the repair and rehabilitation as one of the components of the Ten Sino-African Cooperation Plans announced at the recently-held FOCAC Summit, and rejuvenating the railway so that it could contribute new dynamism to the socio-economic development in Africa at an early date.
CBN: Two questions. The Financial Times of the UK reported that the US had lost confidence in the Doha round of negotiations, and called for the first time for the round to be abandoned. Right now, the tenth Ministerial Conference of the WTO is being held in Kenya. What is China’s position on Doha, and what expectations does China have? In the small hours of today, the US Fed finally raised the interest rate. This could trigger fluctuations in currencies and commodity prices. Will it affect China’s foreign trade and foreign trade enterprises? Thank you.
Shen Danyang: On the first question you raised, we have noted this article, which reflects the views of some individual member. The overwhelming majority of the WTO membership does not endorse such a view. Given that this is the view of a major member, China, like other members, finds it deeply disappointing.
Indeed, the Doha round is at a very difficult juncture, owing mainly to the lack of willingness to take the negotiations forward on the part of a small number of members, especially developed country members. The Nairobi meeting is a precious opportunity to shore up confidence and forge consensus among members. The overwhelming majority of the membership expects this meeting to inject a new lease of vitality into the Doha round of negotiations. The vast majority of developing members, including major developing country members like China and India, the ACP group that consists of countries in Africa, the Caribbean and the Pacific, the LDC group and the African group, all insist on continuing to advance the Doha round of negotiations based on the Doha Mandate and the existing framework.
The Doha framework reflects the consensus reached among WTO members over the past 14 years and the positive outcomes achieved so far. Abandoning the Doha framework is going to be unfair and unacceptable to developing countries. China adamantly supports the multilateral trading system and stands ready to work together with other parties to push for positive outcomes at the Nairobi meeting. We believe that as long as parties look for the long-term, abandon the mentality of zero-sum game and demonstrate enough political will, the multilateral trading system can absolutely make a difference.
On your second question, I have just learnt about the Fed’s rate rise. As regards whether or not it will affect China’s foreign trade and foreign trade enterprises, I believe that the Fed’s rate rise will have some direct or indirect impact on China’s foreign trade, international investment, among other things. As for how big the impact is going to be, we still need to do specific analysis and make an assessment based on the actual rate rise, its margin and other supporting policies.
China Ocean Shipping News: Mr. Spokesperson, due to the impact of the world economy, the shipping industry has been in a slump in recent years. I am very excited about the five achievements you talked about. How big an impact do you think will they have on getting the shipping industry out of the slump? Thank you!
Shen Danyang: Foreign trade, be it import or export, will bear significantly on international shipping, in particular ocean shipping. Booming foreign trade boosts shipping. This year, China’s foreign trade has dropped slightly in value, but stayed on the rise volume-wise based on our analysis. China’s trade volume for both import and export has at least shown no sign of steep drop. As a result, the impact on shipping is only modest. We believe that China’s policy measures and orientation for foreign trade next year will continue to feature stabilizing growth and restructuring, and that foreign trade will score a good performance and a sound development trend next year. We hope that trade will provide impetus for and have a positive impact on shipping.
International Business Daily: We’ve learned that the just concluded ITA negotiations have delivered a comprehensive deal. Could you shed some light on what this agreement is about? What benefit will it bring to China as a major party?
Shen Danyang: On Dec. 16th, during the WTO MC10 in Nairobi, the parties to the ITA expansion talks issued a Ministerial Statement on the Expansion of Trade in Information Technology Products, bringing the three-and-a-half-year negotiations to a comprehensive conclusion.
The new deal adds 201 products to the 1996 Information Technology Agreement, including ICT products, semiconductor and its manufacturing equipment, audio-visual products, and medical devices, among other products closely related to modern science and technology. All the covered products will be subject to tariff cuts starting from Jul. 1st, 2016. Tariffs on most of the products will be eliminated in three to five years. The zero-tariff will be extended to the whole WTO membership based on the MFN treatment. The expanded ITA, which 54 WTO members are parties to, will affect trade worth trillions of US dollars and around 90% of the total trade value of related goods.
The deal is the first major agreement in the WTO history of around 18 years on eliminating tariffs. As a major party to the negotiations, China has committed enormous efforts and made huge contributions to the conclusion. The implementation of the expanded ITA will help China expand its exports of related goods, consolidate its position in the global value chain and push its IT products up the GVC while boosting the confidence of foreign investors in China and furthering China’s opening up. Thank you for your question.
CNR: A new round of China-Japan-ROK FTA talks is underway in Japan. Could you bring us to date on this?
Shen Danyang: Since the launch of China-Japan-ROK FTA talks in Nov. 2012, eight rounds of negotiations have been conducted in three years. The three parties have exchanged views in an in-depth manner on trade in goods, trade in services, investment and rules, with certain progress. This week, the 9th round DG-level consultations is underway.
China, Japan and the ROK are all major economies of the world, accounting for over 20% of the world’s GDP and total trade when combined. The establishment of the China-Japan-ROK FTA can help tap the industrial complementarity and the potentials of investment and trade among the three countries and further integrate the regional value chain. The three countries share the belief that a comprehensive and high-standard FTA meets the overall interests of the three countries and will boost regional prosperity and development.
Not long ago, the China-Japan-ROK Leaders’ Meeting issued a joint statement, reaffirming further efforts to accelerate the FTA negotiations. China is ready to work with Japan and the ROK to contribute to the early conclusion of the FTA negotiations.
China News Service: We’ve noted that recently the 8th round of China-EU Bilateral Investment Agreement negotiations was held in Brussels. It’s been reported that major progress was made in the talks. Could MOFCOM brief us on that? Thank you.
Shen Danyang: It’s been two years since the launch of the BIA talks. Round 8 was completed early this month. After tough consultations, this round delivered major initial results. First, the two sides scored major progress in the scope of the BIA. Second, the two sides made arrangements for consolidating the texts. In other words, the target set by the 17th China-EU Leaders’ Meeting last Jun. of an agreement on the scope of the BIA and a consolidated text has been basically attained, setting the stage for the next steps of the negotiations.
To strike a high-standard investment agreement at an early date, a goal shared by both sides, will not only lay down a solid foundation for deepening the mutually beneficial and win-win China-EU comprehensive strategic partnership, but also serve to enhance bilateral commercial cooperation standards and benefit businesses and peoples on both sides. The two sides have agreed to conduct five to six rounds of talks in 2016. Round 9 will be held from 12th to 15th of Jan. 2016.
China is pursuing a more proactive opening up strategy while unswervingly building opening-up system and institutions. The Chinese leadership has recently underscored the governance philosophy of deepening the reform by expanding opening up and expanding opening up by deepening the reform and reaffirmed the guidelines that China’s FDI policy will not change; China’s protection of the lawful rights and interests of foreign-invested enterprises will not change; China’s endeavor to provide better services for enterprises from across the world will not change. All these will pave the way for China-EU BIA negotiations moving ahead. We hope that the EU will strive towards the same direction and send positive and clear signals on China’s key concerns, such as recognizing China’s market economy status and launching China-EU FTA talks, so as to consolidate mutual trust and push for fresh substantive headway in the negotiations.
Shanghai Securities News: It is reported that China may overtake the US to be the largest market for new energy vehicles (NEVs) this year. Are NEVs really sold so well in China and why?
Shen Danyang: China’s NEV market has been booming since this year. The market is exhilarated by the rising sales. According to relevant industrial associations, from January to October, China produced 181,225 vehicles and sold 171,145, growing by 2.7 times and 2.9 times respectively over the same period last year. In terms of blade electric vehicles (BEVs), China produced 121,099 and sold 113,810, growing by 3.3 times and 3.9 times respectively. What is particularly rosy in the picture is that the sales are growing faster than the output. For plug-in hybrid vehicles, China produced 60,126 and sold 57,335, growing by 1.9 times and 1.8 times respectively.
Why are NEVs selling like hot cakes? There are three factors. First, right policies; second, technological progress; and third, changing mindset. The central and local governments have rolled out policies of purchase tax exemption for NEV buyers, which is an effective incentive to consumers. Breakthroughs in key technologies such as power batteries and improvement in charging posts and other infrastructure have also given a strong boost to the industry. Moreover, the increased awareness of green consumption creates an enabling environment for the expansion of the industry. These are the factors behind the rising NEV output and sales.
Economic Information Daily: It is said that MOFCOM has given green light to Royal Dutch Shell’s USD70 billion takeover of BG Group. Is it true? It is also reported that two international chemical conglomerates Dow Chemical Co and DuPont are in talks to merge, which, if all goes well, will create a company worth USD120 billion. Will such transactions lead to monopoly concerns or violations?
Shen Danyang: The first news report you quoted is true. The Anti-monopoly Bureau of MOFCOM received the concentration of undertakings declaration concerning Shell’s acquisition of BG Group on May 26 and decided to approve the deal on December 14 in accordance with the law. On your second reference, the AMB has noticed reports on the merger between Dow Chemical Co and DuPont, but has not yet received the declaration on the concentration of undertakings.
CCTV Business News: China-ROK FTA and China-Australia FTA will both come into effect on the 20th of this month. Can you give us more information on that?
Shen Danyang: Both free trade agreements will take effect on Dec. 20th. I know you are all quite interested, so I will take some time on this question. First, the China-Korea FTA. I believe you have already noticed, effective on Dec. 20th, it will see two successive staging periods within a short time span. According to the agreement, the two sides will implement the first round of tariff cut during the transitional period on the date of entry-into-force and a second round from next year to eventually achieve zero tariff rates. All staging periods should start on Jan. 1 every year. This means China and ROK will start to implement the first staging period on Dec. 20 and after 11 days, start the second round on Jan. 1 2016.
Following the launch of the first staging period on Dec. 20, ROK will abolish duties on 50% of products, covering 52% of import value from China while China will abolish tariff on 20% of products, covering 44% of import value from ROK. Other products will also see tariff cuts to a certain level. Two successive cuts within a short span reflect the shared desire of the two countries to advance trade liberalization and bring benefits to our industries and people at an early date. What is more significant is that the entry-into-force of the agreement will enhance trade facilitation, increase the predictability and transparency of two-way investment and promote the free flow of goods, capital and people between the two countries, thus creating an easier, more transparent and fairer environment for the business community. As the agreement becomes effective, we will see a further expansion in our trade and investment, providing new impetus to our trade and economic cooperation and our respective economic growth and laying a solid basis of common interests for enhancing the China-ROK strategic partnership in an all-round way.
China-Australia FTA is a milestone in our bilateral relations. It will also see two successive staging periods within 11 days after it comes into force on Dec. 20th. We believe it will expand two-way trade, enhance the level of trade facilitation, promote the free flow of goods, capital and people between the two countries and bring benefits to our businesses and people. The agreement will also help forge closer trade ties, promote our respective economic growth and enrich our comprehensive strategic partnership.
I know many people want to know the scope of the first staging period and how it will be implemented, but that cannot be explained in a few words. I suggest you follow the updates on MOFCOM and GAC websites.
This concludes the press conference today. Thank you.