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Regular Press Conference of the Ministry of Commerce (June 13, 2019)

Gao Feng: Dear friends from the press, good afternoon. Welcome to the regular press conference of the Ministry of Commerce. Firstly, I have three pieces of information to release to you.

Gao Feng: I. The Foreign Trade Situation of China in January-May 2019

Facing the complex external environment this year, all localities and departments are fully committed to creating a business environment of legalization, internationalization, and facilitation, and the vast number of foreign trade enterprises are rising to meet the challenges to embrace innovation and development. China's foreign trade import and export has maintained a steady and positive development momentum. According to the statistics of the Custom House, China's total import and export value reached 12.1 trillion yuan in January-May 2019, with an increase of 4.1% year on year. Among these, the export reached 6.5 trillion yuan, with an increase of 6.1%, and the import reached 5.6 trillion yuan, with an increase of 1.8%. The surplus was 893.36 billion yuan, increasing by 45%

1. The international market became more diversified. The trade scale of the countries along the Belt and Road routes has further expanded, with import and export increasing by 9% and the proportion increasing to 28.8%. Import and export with the EU, ASEAN, Russia and Brazil increased by 11.7%, 9.4%, 10.0% and 11.2% respectively. During the same period, import and export with the US fell by 9.6%.

2. Private enterprises accounted for more than 50% of the export. The export of private enterprises was 3.28 trillion yuan, with an increase of 13.8% and its proportion increasing by 3.2 percentage points to 50.4%. The export of foreign-invested enterprises was 2.58 trillion yuan, with an increase of 0.5%. That of State-owned enterprises was 637.51 billion yuan, down 5.9%.

3. The commodity structure was constantly upgraded. The export of mechanical and electronic products registered 3.8 trillion yuan, increasing by 5.1%, with its proportion reaching 58.4%. Among these, the export of integrated circuit and electric motor and generator grew by 25.1% and 7.6% respectively. The seven kinds of labor intensive products kept their advantages with their export reaching 1.21 trillion yuan, increasing by 7.2%. Among these, those of toys, plastics and furniture increased by 30.1%, 18.6% and 9.6% respectively.

4. The export of general trade experienced fast growth. The export of general trade reached 3.82 trillion yuan, up 10.3%, with its proportion edging up 2.1 percentage points and reaching 58.8%. The export of processing trade reached 1.92 trillion yuan, down 1.5%.

5. Domestic regional layout became more balanced. The export of the central and western regions increased by 14.7%, with its proportion increasing by 1.3 percentage points and reaching 17.6%. That in the eastern area increased by 4.4%, with its proportion reaching 82.4%.

Gao Feng: II. China鈥檚 Absorption of Foreign Investment in January-May 2019

In the first five months of 2019, China鈥檚 absorption of foreign investment mainly showed the following features:

1. First, the actual use of foreign investment kept its stable growth. In January-May, 16,460 foreign invested companies were newly established, and the actual use of foreign capital reached 369.06 billion yuan, increasing by 6.8% year on year, equivalent to US$54.61 billion, up 3.7% year on year. The actual use of foreign capital in May reached 63.83 billion yuan, increasing by 8.5% year on year, equivalent to US$9.47 billion, up 4.6% year on year.

2. The high-tech manufacturing industry and high-tech service industry both enjoyed a rapid growth. The actually utilized foreign capital of manufacturing industry reached 112.89 billion yuan, up 12.4% year on year, and that of service industry reached 250.11 billion yuan, up 4.2% year on year. The actually utilized foreign capital of hi-tech industry increased by 47.2% year on year, taking up 28.5% of the total amount. The actually utilized foreign capital of the high-tech manufacturing industry was 41.7 billion yuan, up 23.2% year on year. Among these, the actual use of foreign capital in electronic and communication device manufacturing, chemical manufacturing, medical diagnostics, monitoring and treatment equipment manufacturing increased by 43.9%, 7.5% and 287.8% respectively year on year. The actually utilized FDI in hi-tech service sector reached 63.31 billion yuan, up 68.9% year on year. Among these, that in information service, R&D and design錛and the transformation of scientific and technological achievement increased by 56.5%, 44.6% and 83.5% respectively year on year.

3. The absorption of foreign capital in the central and western regions and the Pilot Free Trade Zone continued to grow steadily. The actual use of foreign capital in the central region was 25.44 billion yuan, up 5.2% year on year. The actual use of foreign capital in the western region was 28.5 billion yuan, up 25.2% year on year. The actual use of foreign capital in the Pilot Free Trade Zone increased by 7.4% year on year, accounting for 11.9%.

4. Major investment sources saw sound investment growth. Among the main investment sources, Hong Kong, South Korea, Japan, the United States, the United Kingdom, and Germany increased their investment in China by 3.7%, 88.1%, 18.9%, 7.5%, 9.2%, and 100.8% respectively; the actual foreign investment of the EU increased by 29.5%.

[Gao Feng]: III. About China鈥檚 outward investment cooperation in January-May this year

In January-May of 2019, Chinese domestic investors made non-financial direct investment in 3115 overseas enterprises in 149 countries and regions, with an accumulative investment of 301.15 billion yuan(US$44.54 billion), down 1% year on year in RMB. In January-May, the turnover of the accomplished contractual projects overseas amounted to 374.99 billion yuan(US$55.46 billion), up 3.8% year on year and the contractual value of the newly-signed projects was 525.97 billion yuan(US$77.79 billion), down 3.2% year on year. 19,300 laborers of all kinds were dispatched overseas for cooperation projects, increasing by 15,000 over the same period of last year. At the end of May, the number of all kinds of laborers overseas was 970,000.

In January-May, the outward investment cooperation maintained healthy and orderly development, mainly presenting the following features:

First, investment cooperation with countries along the Belt and Road routes were steadily advanced. In the first five months, Chinese enterprises made additional investment in 51 countries along the Belt and Road routes, with a total amount of US$5.63 billion, accounting for 12.6% of China鈥檚 total outward investment in the same period. The contractual value of the newly-signed projects in the countries along the Belt and Road routes was US$46.93 billion, accounting for 60.3% of the total value of the same period. The turnover of the accomplished projects was US$ 30.57 billion, taking up 55.1% of the total amount of the same period.

Second, the structure of outward investment continued to be improved. In January-May, China鈥檚 investment in Africa, Europe and North America increased by 19.5%, 18.9% and 2.7% respectively. The outward investment mainly flew to leasing and commercial service industry, manufacturing industry, wholesale and retail industry, and information transmission/software and information technology service industry, taking up 26.8%, 18.7%, 9.7% and 9.4% respectively. The outward direct investment flew to the manufacturing industry and information transmission/software and information technology service industry increased by 16.1% and 47.4%. There were no new outward investment projects in the real estate industry, and sports and entertainment industry.

Third, there were many large contractual projects overseas, driving local development and realizing mutual benefits and win-win. In the first five months, there were 287 newly signed contracted projects overseas reaching the contractual value of over US$50 million, increasing by 13 over the same period of time last year and accounting for 82.5% of the total value of the newly signed contracts. The turnover of contracted projects overseas was mainly concentrated in transportation construction industry, general construction and power engineering construction, jointly accounting for nearly 70% and effectively improving the infrastructure conditions of the host countries.

In January-May of 2019, the relevant departments handled 2011 newly established and M&A(mergers and acquisitions) outward investment enterprises, and China鈥檚 contractual investment reached US$35.49 billion. Among these, there were 2003 newly established and M&A non-financial outward investment enterprises, and China鈥檚 contractual investment reached US$34.78 billion. There were 8 newly established and M&A financial outward investment enterprises and China鈥檚 contractual investment reached US$710 million. 512 capital increasing financial outward investment enterprises were handled , and China鈥檚 contractual investment reached US$11.32 billion. Among these, 505 capital increasing financial outward investment enterprises were handled and China鈥檚 contractual investment reached US$9.78 billion. Seven capital increasing non-financial outward investment enterprises were handled and China鈥檚 contractual investment reached US$1.54 billion.

That鈥檚 all the information I鈥檇 like to share with you. Now I鈥檇 like to answer your questions. Please ask questions now.

Xinhua News Agency: The 19th Shanghai Cooperation Organization Summit will take place in Kyrgyzstan tomorrow. Could you brief us on the trade and economic cooperation under the SCO framework? In June last year, China successfully hosted the SCO Summit in Qingdao. What has MOFCOM done to implement the important agreement on trade and economic cooperation? Thank you.

Gao Feng: Remarkable achievements have been made over the past 18 years since the SCO was established.

First, trade has expanded rapidly. In 2018, total trade between China and other SCO members reached 255 billion dollars, up by 17.2% year-on-year and seven percentage points higher than the overall growth rate of China鈥檚 foreign trade.

Second, investment and financing has produced fruitful results. By the end of April 2019, Chinese total investment in other SCO members exceeded 87 billion dollars. Many major projects in energy, minerals and industrial manufacturing sectors are proceeding smoothly. The total contract value of Chinese projects in SCO members amounted to 237.8 billion dollars. A host of road, transmission lines and oil and gas pipeline projects have boosted regional development.

Third, connectivity has improved markedly. The Agreement on International Road Transportation Facilitation has taken effect. The China-Kyrgyzstan-Uzbekistan highway has opened to traffic. The Central Asia-China gas pipeline and the China-Kazakhstan and China-Russia oil pipelines have been put in operation. The China-Europe block train has been up and running regularly and efficiently. Within the SCO block a compound infrastructure network of highways, railways and oil and gas pipelines has started to take shape, paving the way for closer trade and economic cooperation among SCO members.

Gao Feng: We have made the following efforts since last year鈥檚 Qingdao Summit.

First, we encourage SCO member states to participate in the China International Import Expo. Their active participation in at the first CIIE has yielded many fruits. As many as 388 companies from SCO member states took part in the business exhibition with an area of 12,800 square meters and a total transactional value of 1.35 billion dollars. We鈥檝e heard that businesses from SCO members are equally enthusiastic about the second CIIE this year.

Second, we support the building of a demonstration zone in Qingdao for subnational trade and economic cooperation between China and SCO members. MOFCOM, together with relevant departments and Shangdong provincial government, formulated a master plan for the construction of the demonstration zone. We also support hosting the SCO investment and trade expo in Qingdao, help the demonstration zone attract more investment from the SCO members and import more quality products from these countries.

Third, we make solid efforts to implement the Joint Statement of the Heads of Member States of the SCO on Promoting Trade Facilitation. China is working together with relevant member states on signing an SCO trade facilitation agreement to explore regional trade institutional arrangement and safeguard free trade and multilateral trading system with real actions. Thank you.

CATV: President Xi Jinping is paying a state visit to Kyrgyzstan and Tajikistan. Could you introduce the current trade and economic cooperation between China and the two countries? What economic outcomes will be delivered during this visit?

Gao Feng: President Xi will pay a state visit to Kyrgyzstan and Tajikistan, as well as attend the 19th SCO Summit and the Fifth Summit of the Conference on Interaction and Confidence-Building Measures in Asia from June 12 to 16.

The commercial cooperation between China and Kyrgyzstan has produced fruitful outcomes as the bilateral relationship moves forward steadily. First, bilateral trade has flourished. In 2018, the bilateral trade value stood at 5.61 billion dollars. China has been the largest trading partner of Kyrgyzstan for many years in a row. Export of Kyrgyz agricultural produce to China has grown rapidly in recent years, hitting 13.15 million dollars in 2018. Second, two-way investment cooperation has delivered notable results. By the end of April 2019, the inventory of Chinese investment in Kyrgyzstan exceeded 2.75 billion dollars, making China Kyrgyzstan鈥檚 top investor. Chinese enterprises have promoted Kyrgyz energy self-sufficiency and infrastructure connectivity and local economic development through projects of roads, power transmission, power plant expansion and others. Third, China has provided Kyrgyzstan as much assistance as possible in a bid to improve people鈥檚 life and bring the two peoples closer to each other. China has helped Kyrgyzstan build the largest surgical hospital in Central Asia and improved people鈥檚 living standards through a series of projects such as municipal road network and irrigation systems. In doing so, the local people have enhanced their sense of fulfillment, laying a solid foundation for the people-to-people connectivity between China and Kyrgyzstan under the Belt and Road Initiative.

Regarding the trade and economic cooperation between China and Tajikistan, currently the bilateral relation is better than any time in history, with notable results from their trade and economic cooperation. First, bilateral trade grew steadily. In 2018, the trade volume between China and Tajikistan was USD 1.51 billion and China was the third largest trading partner of Tajikistan. The agricultural produce from Tajikistan, such as cherry, dried apricot, almond and walnut, is exported to China and satisfies diversified demands of Chinese consumers. Second, investment and cooperation are fruitful. By the end of April this year, the stock of investment in all kinds from China to Tajikistan exceeded USD 2.03 billion, making China the largest source of investment for Tajikistan. More than 300 Chinese-invested companies have been registered in Tajikistan and developed power transmission and transformation projects, textile and agricultural parks, refineries, mining plants and other projects, which have filled the gaps of relevant local industries, helping Tajikistan transfer from an agricultural-industrial country to an industrial-agricultural country. Third, the assistance projects directly benefit the public. The city road network renovation project conducted by China in Tajikistan significantly improved the urban traffic and school projects conducted by China in Tajikistan gave education opportunities to thousands of students there. Such projects not only enhanced practical cooperation between governments and companies of the two countries, but also forged bonds between peoples of the two countries.

During the visit of President Xi Jinping, China looks forward to sign cooperation documents with Kyrgyzstan about business, investment, inspection and quarantine and agriculture and cooperation documents with Tajikistan about business, investment, inspection and quarantine, environmental protection, agriculture, culture and tourism, science and technology. We believe that this visit will facilitate practical trade and economic cooperation in all areas between China and Kyrgyzstan and China and Tajikistan and create new and strong momentum for jointly developing the Belt and Road. Thank you.

Phoenix TV: Our question is about China-US trade and economic relations. We have noticed that US President Trump recently stated that China wants to make a deal with the US very badly and that he wants either a great deal or no deal at all. He also said that China and the US had a deal and then China went back on the deal, saying that they didn鈥檛 want to have four or five major points. What is China鈥檚 response to that?

Gao Feng: In the just released White Paper, China鈥檚 Position on the China-US Economic and Trade Consultations, we have already briefed the China-US economic and trade consultations in detail. During a negotiation, before an Agreement is reached on all issues, everything on the negotiation table is just for discussion and there is no Agreement. Just like what people often say, 鈥淣othing is agreed until everything is agreed.鈥The US backtracked on its commitments in the consultations and unilaterally escalated economic and trade friction, causing severe setback to the negotiations.

If the US wants to pressure China to give in through unilateralism and coercion, it will never succeed. Thank you.

CGTN: Recently Trump said that China is badly hurt by tariffs and the companies who do not want to pay the tariffs are leaving China. The tariffs will be borne by China and will have little impact on American consumers. Companies will move to the US in the end. What is China鈥檚 comment on that?

Gao Feng: In terms of investment, China remains the most attractive investment destination in the world. China has already formed relatively complete infrastructure and supporting industrial systems, with constantly improved business environment, upgraded consumption market and broad prospects. In 2018, the paid-in foreign investment of China鈥檚 manufacturing sector reached USD 41.2 billion, up by 22.9% compared with that of the last year. As I have just mentioned, in the first five months of this year, China鈥檚 paid-in foreign investment in dollar terms grew by 3.7% year on year. The paid-in foreign investment in the manufacturing sector grew by 8.3% year on year. This has fully demonstrated the firm confidence of foreign investors in the Chinese economy and market.

We have also noticed that, some recent research by IMF, JP Morgan, Goldman Sachs and other institutions have shown that the costs of the increased US tariffs have mainly been borne by US importers, retailers and consumers. Thank you.

CNBC: I have three questions. How are the trade negotiations progressing? Will the leaders of China and the US meet at the end of the month? My second question, it is reported that the Chinese government told big foreign tech firms that they would be subject to negative impact if they refuse to work with Chinese companies as required by the US government. What is your comment? Lastly, will the unreliable entities list be introduced ahead of the G20 summit? What specific requirements will it contain? Thank you.

Gao Feng: Regarding your first question, we noted that the US has expressed the hope many times for the two leaders to meet during the G20 Summit in Japan. The spokesperson of Foreign Ministry has made a response. As regards China-US trade negotiations, I have no updates to provide.

Regarding the second question, foreign enterprises are always welcome to invest in China. We encourage equal-footed and win-win cooperation between Chinese and foreign firms based on market principles. China protects the legitimate rights and interests of FIEs in accordance with the law. In the meantime, FIEs operating in China should abide by China鈥檚 laws and regulations, and protect the legitimate rights and interests of Chinese companies and Chinese consumers.

I want to stress that the US is using elements of its national power to cripple a Chinese company, generalizing the concept of national security and abusing export control measures, which are typically market distortions and we strongly oppose them. The practices of the US not only hurt the legitimate rights of Chinese companies, but sent shockwaves across global industrial chain and supply chain, and disrupted normal international trade. All companies will suffer from the negative impact, US ones included.

We once again urge the US to immediately stop the wrongdoing and cancel the unilateralist sanctions on Chinese companies. China will take all measures necessary to protect the legitimate rights of Chinese companies.

Regarding the third question, we are going through the procedures for the unreliable entities list, which will come out soon. The specific requirement regarding the list will be clear by then. Thank you.

Bloomberg: Larry Kudlow, economic advisor to President Trump, said yesterday that the US was pretty happy with the agreement and planned to suspend the tariff hikes on USD 200 billion of goods from China before it was derailed, contradicting the rhetoric from the Chinese side. Did the US agree to remove additional tariffs on USD200 billion of goods once a deal is struck? Mr. Kudlow also said the US hoped to return to the previous text. Is that acceptable to China? Or rather, things have to be started all over again?

Gao Feng: The White Paper recently published gave an overview of the trade consultations. Here I can recap some of the key points. During the 11th round of high-level consultation, the US announced the tariff hike from 10% to 25% on USD200 billion of Chinese goods. Later, the US announced the launch of procedures to impose additional tariffs on USD300 billion of Chinese imports. It also abused export control measures by putting some Chinese companies on the entity list, resulting in the escalation of tensions and severe setbacks to the trade talks. The onus is fully on the US side.

As for the next step of consultation, I believe cooperation should be principled and negotiations have bottom lines. China will give no ground on major matters of principle. Thank you.

Economic Daily: It is reported that the NDRC is working on a list to administer national technology security. How is it different from the draft Export Control Law published by MOFCOM in 2017?

Gao Feng: It is an international practice for countries to strengthen protection and administration of key technologies through legal means. The Export Control Law, which is being developed, and the list to administer national technology security both serve to protect national security and development interests.

China Daily錛歊ecently the US threatened that it would impose additional tariffs on about USD300 billion worth of Chines exports to the US if the two leaders don鈥檛 meet during the G20 Summit. What is China鈥檚 comment on that?

We have stressed multiple times that China stands firm in opposition of US unilateral and bullying actions. Our position has been consistent and clear. We don鈥檛 want a trade war, yet we are not afraid of it. We will fight to the end if the US continues to willfully escalate the trade frictions. Thank you.

21th Century Business Herald錛歍he US Treasury Secretary Mnuchin said at the G20 Finance Ministers Meeting that the meeting between President Xi Jinping and President Donald Trump in late June is crucial for China-US trade talks. If China wants to extend the negotiation based on what the two sides have negotiated regarding the agreement in early May, the US has already been fully prepared. How does MOFCOM comment on that?

We have noted Secretary Mnuchin鈥檚 remarks. As I said, the China-US trade negotiation suffered serious setbacks because of the maximum pressure imposed by the US that led to the escalation of the trade frictions, to which the US should bear the sole and entire responsibility.

China has comprehensively expounded on its principles and stance in the recently released White Paper. Cooperation has to be based on principles. There are bottom lines in consultations. We will never compromise on major principles. Thank you.

Guangming Ribao錛欶oreign trade data shows that there has been a sharp decline in China鈥檚 imports from the US for the first 5 months of this year. Could you tell us more about this decline and the reasons behind that?

According to Chinese Customs, China imported USD49.57 billion from the US in the first 5 months of this year, a year-on-year decrease of 29.6%. The import from the US has dropped for five consecutive months since the beginning of this year. The competitive edge of US products has been affected by the US unilateral escalation of the trade frictions, leading to unstable corporate expectations and disturbance in normal business operation. This, once again shows that there is no winner in the trade war. The trade war will cause recessionary pressure to the US economy and the world economy. Thank you.

Beijing Business Today錛欼 have two questions. First, rare earth export. Customs data this week suggests that China鈥檚 export of rare earth in May dropped by 16% month-on-month. Recently some experts and businesses suggested export control on rare earth. What is MOFCOM鈥檚 take on the decline of rare earth export and the suggestion from these experts and businesses? Second, the management of direct sales companies. This week, MOFCOM updated the review of the registration of direct sales companies. The products and direct sellers of Quanjian Nature Medicine Technology Development Co. Ltd. and Hualin Suanjianping Biotechnology Co. Ltd. have not been registered. Yet these companies still hold direct sales licenses. How will MOFCOM handle this? Will it be a withdrawal mechanism for direct sales companies錛

As for your first question, the fluctuation of the export of rare earth is a result of market changes, and currently China has no new measures regarding the administration of rare earth trade.

With respect to your second question, the investigation on the alleged illegal operation of Quanjian Nature Medicine Technology Development Co. Ltd. and Hualin Suanjianping Biotechnology Co. Ltd. is still underway. We have been following the cases closely and timely measures will be taken according to law after the results come out. As for the establishment of a long-term effect mechanism, MOFCOM will work with relevant departments to continue to regulate the access to the direct sales market, improve relevant administrative laws and systems, strengthen operational and post-operational oversight, and promote the sound industrial development. Thank you.

MASTV錛歐hen will China publish concrete export control measures including the 鈥淯nreliable Entity List鈥 Will it pose a potential threat to foreign companies thus affecting China鈥檚 foreign investment?

With respect to the rules of the 鈥淯nreliable Entity List鈥 I鈥檝e said that we are going through necessary procedures and the rules will be published soon. Foreign companies don鈥檛 need to be worried as long as they comply with Chinese laws and regulations, the market rules, and follow the spirit of contract. China will further improve the business environment, protect the lawful rights and interests of all types of businesses, and safeguard the market order based on the spirit of contract. Thank you.

Shanghai Securities News錛歍he US Treasury Secretary Mnuchin said after his meeting with the Governor of the PBOC, Mr Yi Gang that the US would be willing to negotiate if China wants to return to the negotiation table to strike a real deal. What is China鈥檚 take on that?

I鈥檝e already illustrated China鈥檚 position, that the China-US trade negotiation suffered serious setbacks because of the maximum pressure imposed by the US that led to the escalation of the trade frictions, to which the US should bear the sole and entire responsibility. China has comprehensively expounded on its principles and stance in the recently released White Paper. Cooperation has to be based on principles. There are bottom lines in consultations. We will never compromise on major principles. Thank you.

Are there any other questions?

If no, that鈥檚 the end of today鈥檚 press conference. Thank you.

(All information published in this website is authentic in Chinese. English is provided for reference only. )

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