Gao Feng: Good afternoon, friends from the press. Welcome to the regular press conference of MOFCOM. At the outset, I have two pieces of information to share.
I.Developments in service outsourcing in January and February 2021
In the first two months of this year, the contract value of services outsourced to Chinese businesses was RMB171.57 billion, of which RMB114.45 billion has been executed, up by 72.3% and 70.6% year on year, and up by 24.2% and 31.8% from the same period in 2019. The contract value of outsourced offshore services was RMB87.57 billion, of which RMB63.07 billion has been executed, up by 43.4% and 56.6%, up by 2% and 23.9% from the same period in 2019. ( In dollar terms, the contract value of services outsourced to Chinese businesses in the first two months of this year was USD25.2 billion, of which USD16.78 billion has been executed, up by 66.7% and 70.4% year on year. The contract value of outsourced offshore services was USD12.99 billion, of which USD9.24 billion has been executed, up by 39.5% and 56.8%).
By structure, in the first two months, the executive value of ITO, BPO, and KPO undertaken by Chinese businesses was RMB34.86 billion, RMB9.86 billion and RMB18.35 billion, up by 90.7%, 21.9% and 31.9%.
By market, in the first two months, the executive value of outsourced services from the US, Hong Kong SAR, and the EU was RMB14.42 billion, RMB12.59 billion and RMB7.75 billion, up by 44.7%, 40.2%, and 38.6%, accounting for 55.1% of the total offshore service outsourcing. The executive value of outsourced services from Belt and Road partner countries was RMB11.99 billion, up by 85.2% year on year.
By region, in the first two months, the executive value of offshore services outsourced to the Yangtze-river delta was RMB29.27 billion, up by 45.4% year on year, accounting for 46.4% of the national aggregate. The executive value of offshore services outsource to 31 exemplary cities for service outsourcing was RMB56.98 billion, up by 60.2% year on year, account for 90.4% of the national aggregate.
By business ownership, in the first two months, the executive value of offshore services outsourced to private businesses was RMB12.42 billion, up by 39.4% year on year. The executive value of offshore services outsourced to foreign-invested enterprises was RMB28.97 billion, up by 127.7%, accounting for 45.9% of the national total.
By employment, by the end of February, the service outsourcing industry has employed 12.978 million people in cumulative terms, of which 8.242 million are college graduates or above, taking up 63.5%. In the first two months, new employment to the service outsourcing industry was 69,000 people, of which 49,000 are college graduates or above, accounting for 71.8%.
Second, China’s ODI Cooperation in Jan-Feb 2021
In January-February 2021, China’s non-financial direct investment totaled RMB 99.38 billion (USD 15.36 billion), down 7.9% year-on-year. The total contract value of newly signed overseas projects stood at RMB 198.17 billion (USD 30.63 billion), down 7.8% year-on-year, with a turnover fulfilled of RMB 118.01 billion (USD 18.24 billion), up 9.3% year-on-year. In terms of overseas labor cooperation, 46,000 persons were dispatched, with 593,000 people working overseas as of the end of February. Overall, the following characteristics can be observed.
First, investment cooperation with Belt and Road countries kept growing and contracted projects moved forward steadily. From January to February, China’s non-financial direct investment in B&R Countries totaled USD 3.05 billion, up 12.1% year-on-year and accounting for 19.9% of the amount over the same period, up 2.4 percentage points over the previous year. The total turnover of fulfilled contracts in B&R countries amounted to USD 10.49 billion, up by 14.8% year-on-year and accounting for 57.5% of the total over the same period.
Second, some areas saw a bigger rise in investment and the investment by sub-central state-owned enterprises registered a growth. In January-February, USD 2.59 billion flowed into manufacturing, up by 48% year on year; USD 1.15 billion into information transmission, up by 36.9%. Sub-central state-owned enterprises made USD 11.86 billion investment in the non-financial sector, up 3.2% year on year and accounting for 77.2% of the total.??
Third, overseas contracted projects concentrated in infrastructure and transformation and upgrade accelerated. In January-February, the value of newly signed contracts overseas by Chinese companies topped USD 25 billion and the turnover of the accomplished contractual projects overseas exceeded USD 15 billion, accounting for 82.6% and 82.7% respectively. Among them, the value of EPC and project financing contracts totaled USD 21.3 billion and USD 21.6 billion, up more than 20% year on year.
That’s all for the announcements.
I am happy to take your questions. The floor is open.
Economic Information Daily: It’s been made clear in the government work report that there will be more services opening-up pilot projects this year and MOFCOM has said on many occasions it will promote the pilot program. What are the considerations behind the expansion of the program? Which places with what conditions will be prioritized?
Gao Feng: The comprehensive pilot program for further opening up of services is an important plan by the Party Central Committee and the State Council to foster an open economy of higher quality and enhance the level of opening up of our country across the board. The first piloted project was launched in Beijing in May 2015. As of now, the Beijing Municipality has put forth four demonstration plans, replicated and rolled out 25 experiences and practices in six batches, setting a good example for the rest of the country.
The establishment of new piloted areas will optimize the layout of the pilot projects, promote experiment and differentiated explorations, open services sector still wider in an orderly manner, accumulate more experiences to roll out nationwide, and facilitate high-quality development of China’s services sector. MOFCOM will act on the plan of the Central Committee and the State Council, focus on fostering a new development paradigm and push for opening up at a higher level, and move the pilot projects forward while taking into account the performance of services sector in relevant places.
CBN: In January and February, China attracted RMB 176.76 billion of foreign investment, up 31.5% year on year. A report published by AmCham China also showed 61% of the respondents still viewed China as their first choice of investment. What will MOFCOM do this year to make China’s business environment better still?
Gao Feng: In recent years, China has continued to push forward with reforms that delegate power, improve regulation, and upgrade services, leading to significant improvement in its business environment. China was ranked 31st in 2019 in the World Bank’s ease of doing business rankings, a big rise from 84th in 2015. There is no such thing as a best business environment, only better. We will continue to push for the revision of the negative list for foreign investment access and the reduction of access restrictions. We will also implement the Foreign Investment Law and its implementing regulations, enact, revise, and repeal supporting rules and measures as necessary, and continue to build a business environment that is market-oriented, based on rule of law and internationalized. We will also continue to strengthen services for key foreign-invested enterprises and projects, and promote the speedy implementation and construction of foreign-invested projects. At the same time, we will implement the “Rules on Handling Complaints of Foreign-Invested Enterprises” to step up protection of the legitimate rights and interests of foreign investors, and continue to update the guidelines for foreign investment in China to continuously enhance the transparency and facilitation of the investment environment. Thank you!
CBN: China got off to a good start with attracting foreign investment, which registered a year-on-year growth of 31.5% in the first two months. What are the main reasons for the growth? What are the uncertainties for stabilizing foreign investment? What measures will MOFCOM take to stabilize foreign investment?
Gao Feng: The rapid growth of paid-in FDI in China in the first two months is mainly attributed to the recovery and growth momentum of our economy. The confidence of foreign investors in the future of Chinese economy is on the rise. In particular, the efforts to foster a new development paradigm at a quicker pace have driven rapid growth in investment flowing into high-tech industry. Moreover, some hard-hit sectors like hotels and restaurants, wholesale and retailing have recovered. Another important factor is the low base of the same period last year.
This year, the landscape of foreign capital utilization in China remains challenging and complex. Following the deployment of the CPC Central Committee and the State Council, in 2021, we will focus on stabilizing foreign investment, improve the structure and quality of foreign investment. Specifically, we will work on the following: first, expanding opening up to a higher level by shortening the foreign investment negative list to reduce entry barriers, further removing restrictions outside the negative lists, and strictly enforcing the policy of “entry unless on the list”; second, promoting the development of opening-up platforms. We will align the opening-up platforms like pilot free trade zones, free trade ports, Comprehensive Demonstration Zones for Expanding Opening-up of the Service Sector and China National Economic and Technical Development Zones, and improve the mechanisms to facilitate pioneering trials, differentiated exploration, innovation and opening up; third, strengthen the services to key foreign-invested enterprises and projects by providing more support in land use, environmental protection, energy consumption, and funding to enable progress in a smooth and orderly manner. Also, we will continue to optimize the environment for foreign investment to provide more convenience and assurance to foreign investors. Thank you!
Japan Economics Newspaper(The Nikkei): China’s Measures for the Security Review of Foreign Investment has entered into force in January. The new measures stress that if the foreign investment declared will affect national security, the office of the Operational Mechanism headed by the National Development and Reform Commission and the Ministry of Commerce shall decide to prohibit the investment. Could you illustrate the definition of “foreign investments that would or could affect national security” since some investors find its definition a little vague?
Gao Feng: Carrying out security reviews of foreign investment has been a common international practice, and major world economies have already set up or are improving such mechanisms. The new rule represents a specified and further detailed version of China’s existing mechanisms on foreign investment security review in line with the requirement of the Foreign Investment Law and it provides the necessary guarantee on the stable and sound development of the Chinese economy. In the long run, it is also conducive for foreign companies' business in China, and it won't put an unnecessary burden on normal foreign investors and firms.
The Measures has clearly identified two types of foreign investment for security review: first, investment in sectors with a bearing on national defense and security, such as the arms industry and sectors that supply the arms industry, and investments in locations in the periphery of military facilities or arms industry facilities; second, the investment made in nine sectors including important agricultural products, important energy, and important resources to the extent that the foregoing has a bearing on national security and that actual control of the investee enterprise is acquired. Thank you.
Gao Feng: Today’s press conference is concluded. Thank you.
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