SCIO briefing on China's commerce development in 2015

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Gao Hucheng, minister of commerce

Guo Weimin, vice minister of State Council Information Office

Feb. 23, 2016

Guo Weimin:

Ladies and gentlemen, good morning! Welcome to this SCIO press conference. China's economic situation and its trade, including circulation, consumption and development of FTAs, have attracted wide attention at home and abroad. Today, we are honored to have Minister of Commerce Gao Hucheng here to share with you information on these particular aspects and take your questions. I know there are a lot of foreign press here today so we have simultaneous interpreting. When you raise questions, we will also have them interpreted. I now give the floor to Minister Gao.

Gao Hucheng:

Mr. Guo, dear friends from the press, good morning! It gives me great pleasure to meet you just after the Lantern Festival. On behalf of the Ministry of Commerce, I would like to extend my sincere thanks to all of you for your interest and support for our work and your timely reports of commerce-related news. In light of the overall development of commerce development in 2015, I would like to make a few points before having an exchange of views with you.

As you know, in 2015, we faced very complicated domestic and international situations. However, we stuck to the main theme of seeking progress while maintaining stability as required by the CPC central committee and the State Council. We actively adapted to the new normal of economic development, and properly responded to major risks and challenges. On the whole, we have maintained stability and made improvements within a medium-high growth rate, with all indicators ranked among the world's top, a hard-earn performance indeed.

Commerce development is given the task of expanding consumption, foreign trade and international investment. In 2015, China's imports and exports of goods continued to lead the world; since 2013, we have been the world's No. 1 in goods trade for three consecutive years. China's online retail sales continue to top the world, while total sales of consumer goods, import and export of trade services ranked second. China's FDI continued to lead developing countries for 24 years in a row, and its ODI ranked third in the world. It's fair to say that we have delivered a satisfactory report sheet on China's growth and international economic impetus. The main characteristics are as follows.

First, growth has many high points. In terms of consumption, in 2015, total retail sales of consumer goods stood at 30.1 trillion yuan (US$4.62 trillion), up 10.7 percent year on year. Consumption contributed 66.4 percent to economic growth, up 15.4 percentage points from the previous year. In other words, China has successfully made the major transformation from an economy whose growth was mainly driven by investment and foreign trade to one powered by internal demand, especially consumption. As to imports and exports, global trade sustained double-digit negative growth last year, although the decline in China's imports and exports was far lower than other major economies in the world. China's share of global trade was expected to jump from 12.2 percent to 13 percent, a rise of nearly one percentage point, which was the fastest growth rate in years.

Last year, China's trading surplus in goods hit US$593 billion, playing a major role in preserving national financial security. Services trade stood at US$713 billion, up 14.6 percent, a "double lift" in its share of global and China's trade. I wish to add that trade in services used to be known as a "short board" in China. However, it's actually developing very fast.

The United States was No. 1 in trade in services last year; the value reached around US$1.06 trillion, accounting for 31 percent of its total trade volume. China ranked second at US$731 billion yuan, or 18 percent of total trade volume. In terms of international investment, last year China's ODI excluding financial investment was US$118.02 billion, up 14.7 percent in yet another year of continuously rapid growth; and China's FDI stood at US$126.27 billion, up 5.6 percent, still top among developing countries.

Second, we have been able to achieve good structural results. The circulation structure was further optimized. Online sales of physical goods stood at 3.2 trillion yuan (US$491 billion), up 31.6 percent year on year, making China the country with the largest and fastest growing sector of online sales of physical goods. That accounted for around 11 percent of total retail goods sales. Now, we have a new landscape combining online and offline, spot goods and futures, wholesale and retail, as well as joint development of urban and rural circulation markets.

Third, both domestic and foreign trade have made huge contributions to economic growth. It's fair to say that these efforts have made positive contributions to stabilizing China's growth, restructuring the economy, benefitting people's livelihood and preventing risks. Despite a very difficult situation, foreign trade still contributed 18 percent of national tax revenues. In 2015, the Chinese economy contributed more than 25 percent to overall world economic growth. Amid continuously gloomy predictions on global trade, China's imports and exports still far outperformed other major economies, and that itself was a huge contribution to international trade and even to global economic development.

We can sum up our work in 2015 with three key phrases. First, we have been seeking development while maintaining stability. We mainly improved the foreign trade development environment, innovated the development mode for foreign trade, boosted trade in services and the outsourcing of services.

Second, we sought intensified reforms. We moved forward to work on the pilot FTZs, expanded the Shanghai FTZ and newly established three others. We also advanced reform and institutional innovation on domestic trade circulation, released opinions for promoting a law-based business environment for modern circulation processes, and carried out comprehensive trial reforms on domestic trade circulation in nine cities including Shanghai. We strengthened market supervision with a series of reform measures for streamlining governance and decentralizing powers.

Third, we deepened opening-up in 2015, following the lead of the "Belt and Road" Initiative. We focused on the "two markets," "two resources" and "two rules" at home and abroad, making progress in improving the overall layout. Specifically, 1) we opened new areas, we worked with other departments, revised and published the 2015 edition of the "Catalogue of Industries for Foreign Investment," and expanded the comprehensive piloting work for service industries in Beijing. 2) We achieved fresh progress in regional opening-up. We implemented innovative development projects in national economic development zones, such as supporting Beijing-Tianjin-Hebei cooperation and the Yangtze River Economic Belt. 3) We saw many highlights in bilateral and multilateral regional cooperation. As you know, the China-ASEAN Free Trade Area (CAFTA) was upgraded, the negotiations for Regional Comprehensive Economic Partnership (RCEP) made solid progress in that East Asian leaders agreed that the talks for RCEP should be completed by the end of this year.

As of now, China has signed trade pacts with 22 partners, accounting for 38 percent of our total trade volume. We facilitated deals and achieved consensus at the WTO Ministerial Meeting. Negotiations for China-U.S. and China-E.U. bilateral investment deals made a breakthrough, and the Chinese mainland signed the CEPA service trade deals with Hong Kong and Macao.

The above basically sums up of the work of the Ministry of Commerce in 2015. Now, I'd like to take questions from friends from the press, and communicate with you all.

Guo Weiming:

Thank you, Minister Gao. Now let's open the floor for questions. Please identify the media organization you represent before asking questions. Interpretation is available.


Despite weak investment and exports last year, consumption in China remains strong. During the Spring Festival this year, the national consumer market saw a rise of 11.2 percent, especially due to a surge in the catering and box office. However, Chinese visitors went on buying sprees overseas. How do you view this phenomenon? What do you think about China's consumption situation in 2016? What measures will the Ministry of Commerce take to promote consumption?

Gao Hucheng:

Thank you for your question. In my earlier briefing on the main work of the Ministry of Commerce in 2015, I mentioned the role of consumption in economic growth last year. In 2015, final consumption contributed 66.4 percent to economic growth, becoming its main driving force. There are many reasons. Firstly, as we can see, since the 18th National Congress of the Communist Party of China, the income growth of China's urban and rural residents has been faster than the GDP for three consecutive years and the consumption capacity has been expanding. Secondly, China's social security system has been improving gradually. The health and pension insurance systems have been improved and the social security system has become sounder, encouraging people with extra money to consume. Thirdly, consumption conditions have improved. The supply side has been adapted to the market in recent years. For example, the health, travel and entertainment consumptions have seen such growth. Therefore, the consumption growth in 2015 was a sustainable growth based on that in 2014. Personally, I believe the trend will continue in 2016, which is also a general judgment shared by related authorities.

In 2015, a very important factor to which I would like to draw your attention is public entrepreneurship, innovation and the high rate of employment. By last September, China had achieved the year's goal of creating 11 million new jobs. Jobs mean income, and from that comes consumption. This is the basis for consumption growth. Another phenomenon we have to note is that a medium-and-high-income community is forming in China. Some say the community has 90 million people, and others say the number has exceeded 100 million, where different calculation standards may be employed. Consumption levels vary among cities. A uniform standard for calculation is probably one-sided. But it is undeniable that a medium-and-high-income community is forming. This community has some dissatisfaction with public consumption, however; that is, the medium-and-low-end commodities and services can hardly meet their consumption needs. As far as China's outbound shopping is concerned, our available data show the oversea visits in 2015 reached 120 million and consumption abroad, including travel fees, accommodation and shopping expenses totaled 1.5 trillion yuan (US$229.8 billion), among which at least 700-800 billion yuan (US$ 107.3-122.6 billion) was spent on shopping. A large proportion of the shopping involved the medium-and-high-income community, and moreover, their shopping list has mainly turned to daily consumer goods with high-quality and better cost from the past desire for luxury brands. Therefore, business work is a focal point for playing the role of supply side. That is, how to meet the personalized and differentiated consumption needs of the medium-and-high-income community and their needs for more varieties of safer commodities with better quality in a more comfortable shopping environment.

I'd like to point it out that the focus of our structural reform on the supply-side is to solve problems in regard to goods variety, price, quality, safety, as well as the shopping environment. Take the variety of goods as an example: Our country can provide around 200,000 or 300,000 varieties, but a well-known supermarket in developed countries can provide more than 700,000 varieties. Price is another focus involving the tax burden and high logistics cost that is distinct to China. The logistic cost in China went down slightly due to years of effort, but it is still double that in developed countries. This is what we are going to work on in terms of structural reform on the supply-side.

The big picture is income will increase based on stable employment. In 2015, China's GDP reached 67.7 trillion yuan, nearly US$11 trillion, with per capita GDP hitting US$8,000. In some coastal cities, the per capita GDP already exceeds US$10,000, or US$15,000. As the population of consumers with high-middle income increases, overseas shopping is seeing a surge. We will exert great efforts to develop cross-border electronic commerce and enable people to shop overseas while staying at home. This is also one area we would focus on this year. Thank you.

Singapore Lianhe Zaobao:

I have two questions. The first is: the total volume of China's foreign trade dropped by 9.8 percent this January, how do you see the trend of China's foreign trade in the whole year? What is the target for this year's foreign trade? The second question is about the "Belt and Road" Initiative. This year is the critical year for its comprehensive implementation. Can you tell us how the roles of this initiative will counter the United States' rebalancing strategy towards the Asia Pacific, given that the U.S. led TPP negations have already been concluded, and how the "Belt and Road" Initiative will complement the China-proposed Free Trade Area of the Asia Pacific? Thank you.

Gao Hucheng:

We saw a continued decrease in China's foreign trade this January due to factors like migrant workers returning home ahead of the Chinese traditional holidays. You may have missed the fact that major economies all saw drops in their foreign trade. I have got some figures here, but won't read it one by one. The fact is, most of them declined by over 10 percent. In the context of global foreign trade and economic growth, China's foreign trade sustained the tendency in 2015.

I would like to take this opportunity to review China's foreign trade in 2015, which will help you understand better its development in 2016. The 2015 government work report set that year's growth rate of foreign trade at around 6 percent. But the actual figure was a negative growth of 8 percent. Exports fell by 2.9 percent, imports fell by 14.1 percent, and the total volume of foreign trade stood at US$3.96 trillion. Why was there such a big deviation from our projected goal? It has caught the attention of many people recently.

Before talking about this statistical deviation, I'd like to clarify one point. Over the past 30 years'of reform and opening-up, China's foreign trade grew by an annual average of 15.3 percent. Upon China's accession to the World Trade Organization (WTO), its foreign trade was only about US$500 billion. We all noticed the big deviation between last year's projected goal and actual performance. In fact, deviations have been there over nearly 20 years, some even surpassed that in 2015. We ignored it because the economy was growing rapidly. Here are some examples. The 2003 government work report set the country's foreign trade growth rate at 7 percent, while the actual figure was 37.1 percent; In 2007, our goal was maintaining a high rate of export growth and moderately expanding imports, a general goal without specific figures. But it actually grew by 23.6 percent. In 2009, our projected goal was an 8 percent growth rate, but it actually plummeted 13.9 percent. I found out that over the past 20 years, only five years saw a close match between the projected goals and actual outcomes. Why did no one care about this situation? Because we have been so accustomed to rapid growth that whenever a negative growth was reported, we thought it was a problem. The fact is, the global trade suffered negative growth in 2015. The WTO recently published the foreign trade statistics of 71 major economies, and it showed overall exports fell by 11 percent and imports declined by 12.6 percent. I just said that China's foreign trade still delivered a satisfactory card because in the context of an overall growth in the world, China's growth rate was higher than other major economies; while the global trade declined, China declined the least. It still maintains its position as the largest trader in goods. And its share in global goods trade grows faster than previous years, up from 12.2 percent to 13 percent. Reviewing the past 20 years, a forecast of 6 percent of growth and an actual 8 percent decline is not a pronounced contrast. We need to adjust our thinking because we have come to an age when traditional industries need to improve their quality and efficiency and emerging sectors need to engage in innovation. And we should also pay attention to the gear shift, an inevitable hurdle we must cross.

Gao Hucheng:

As for the reporter's question, I'll talk about the reasons behind the situation. At the end of 2014, the prediction for the growth of imports and exports in 2015 was not groundless. Why was the target set at around 6 percent? Because foreign trade grew by 3.4 percent in 2014 and international institutions generally believed the economic situation would show a turn for the better in the following year, with an estimated growth rate of 0.2 to 0.5 percentage points. We basically agreed with that. For instance, the oil price falling to US$55 per barrel was thought to have hit bottom by everyone then. Many of the oil producing countries created financial budgets on the basis of US$60 per barrel at least. So it was believed that the price of commodities and energy products would rise gradually. However, as we know, the price of commodities plummeted last year with the oil price declining from 55 to 30 US dollars per barrel. Likewise, the price of commodities such as agricultural, minerals and energy products all fell 20-50 percent. It was a great change.

Another change, at the end of 2014 and the beginning of 2015, a series of unexpected geopolitical factors, such as turmoil in some regions, and epidemics like Ebola and Dengue fever, all had economic influences. The gradual spread of violence and terrorism in some regions also had a severe impact. As for the point, we had noted the daunting and complicated challenges and a lot of uncertainties were lying ahead but the later situation was in fact more difficult to handle than imagined. Even until now, regarding howthe issues will develop and be tackled, no one at present can give a clear answer. Some of them may get resolved effectively and some may keep simmering.

The hard-won achievements of China's foreign trade last year were attributed to several reasons. Firstly, China has a complete industrial system with long industrial chains and advanced support capacity. Secondly, China has great innovation capabilities as enterprises adjusted themselves to enhancement after the financial crisis in 2008. China has world class basic education and advanced higher education and the nation, including each family, makes a lot of investment on education. The essential innovation spirit is a strong competitive edge for China. Thirdly, the development and innovation of emerging businesses and the transition of traditional industries all have positive effects. For instance, the pilot program of cross-border e-commerce in Hangzhou brought about an increased export volume of US$10 billion last year. It is reported that the primary task this year is to promote the pilot program in 12 cities so as to highlight the achievements in innovation. Fourthly, the government is making efforts to create a convenient, efficient and legalized business environment for all enterprises. Through streamlining administration and delegating power to lower levels, sorting out taxes and fees, and improving work efficiency, the government has lowered the burden on enterprises to a great extent. Especially in helping resolve enterprise financing difficulties, all financial institutions reached out their hands to help foreign trade enterprises go global through various means. I believe all those trends will continue this year.

In the interests of time, I will stop here on this question. As the reporter has asked several questions, I'll talk about the "Belt and Road" Initiative of common concern and make an introduction on its implementation and significance.

Being a top-level design for opening-up and economic diplomacy in the new phase, the "Belt and Road" Initiative is a proposal and plan to promote global cooperation, common development and prosperity. The important cooperation initiative proposed by President Xi Jinping employs the historical notion of the "Silk Road" to promote peace, cooperation, openness, inclusiveness, learning from each other, mutual benefit and win-win development, which are the contents of the Silk Road Spirit. What is the essential basis for the initiative? Its implementation is not influenced by ideology, development route, model and level, but it aims to realize mutual benefit and win-win development through exchanges and cooperation in policy, trade, currency, infrastructure, humanity and other aspects under the principle of joint negotiation, construction and sharing. In my opinion, it differs from other proposals in that it is an open and inclusive cooperation initiative. It is set by China to promote global cooperation and win-win development.

Over the past two years, the initiative has drawn responses, keen attention and hot discussion among more and more people. Some globally renowned research institutions have taken up research on its implementation and its influences on global cooperation and development. Until now, over 60 countries have responded to take part in the joint construction. Some countries have exchanged strategies with China and put forward detailed plans. President Xi has said the the Belt and Road Initiative is not a Chinese solo, but a real chorus comprising all countries along the routes. Over the past two years, the construction has made progress with some large-scale projects launched. Western China has moved to the forefront for opening-up under the new situation. The central part of China is now accelerating opening-up and the eastern China has ushered in a new round of industrial and cooperative upgrading period.

Gao Hucheng:

Positive progress has been made in the construction of economic and trade cooperative zones between China and other countries. There are many examples, such as the ones in Pakistan, Sri Lanka, Belarus, Thailand, Egypt and Kenya. We have established 75 such zones yielding substantial taxation and employment for the countries of cooperation. Statistics show taxes paid to the target countries by Chinese-invested companies hit US$100 billion in the past four years and the number of indigenous employees hired by them from the target countries approached 900,000. We believe that, as long as we adhere to the principles of mutual consultation, construction and sharing, China and other countries can definitely brainstorm with and meet each other halfway, so that "the Belt and Road" initiative will be more fruitful, benefit an increasing number of countries and their people, and contribute to the prosperity and development of the global economy.

Now let's turn to the topic of Trans-Pacific Partnership Agreement (TPP) about which you have some concern. Actually, I have responded several times to this issue. Let's recall a statement issued at the informal leadership meeting of APEC hosted by China in 2014 that pointed out both the TPP and Regional Comprehensive Economic Partnership (RCEP) are choices and paths for the promotion of the construction of a free trade zone in the Asia Pacific Region. Therefore, China has a liberal attitude towards any free trade pacts as long as they are open, inclusive and transparent. The full text of the official document of TPP was not released until the signing ceremony in Auckland, New Zealand, on February 4, this year. Now, the full text translated from English to Chinese, with main content of about 600 pages and 3,900 pages of attachments have been posted on the website of the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce. It provides reference to scholars and industrial insiders for scrupulous research and assessment. Because there are diversified levels and phases regarding the developments of different countries, the assessment will take time to finish. However, we do not believe the TPP is designed to constrain China, neither do we believe the TPP and RCEP are opposed to each other. On the contrary, they are proceeding abreast without contradiction. We'll continue to press ahead with the research launched during the 2014 informal leadership meeting of APEC on the strategic framework for the construction of a free trade zone in the Asia Pacific Region.

Last, but not least, in view of the rules of global trade and investments which have evolved to the present form, the multilateral and regional systems are running simultaneously and in a coordinated way. When multilateral cooperation goes fast, the regional system will slow, and vice versa. However, they are ultimately to be incorporated into a globally unified and regulated multilateral trade framework. Why? The answer is simple: whenever a free trade pact is enacted, regardless of its criteria and openness, its primary concern is the development of its members. However, as long as we attempt to form a universal rule globally, the major issue for us is to take the market for consideration. Whatever the criteria are, without the involvement of market factors, they are meaningless.  The RCEP has paid attention to that point as the system features the largest diversity of conditions for the layout of regional trades. The arrangement was initiated by the ASEAN (Association of Southeast Asian Nations) in 2011, as the association established free trade zones involving six countries through five agreements. It signed the pacts with Australia and New Zealand, South Korea, Japan and India. It has also upgraded its free trade zone with China this year. The RCEP generally refers to the negotiations of 10 ASEAN members plus six other countries.

Why did I say the differences are remarkable? Let's take a look at the constitution of the "10+6." Among the countries, choices for the development paths and political models vary greatly; meanwhile, the GDP per capita differs from US$1,000 in one country to US$50,000 in another. Besides, the territories of the countries differ from dozens of square kilometers to hundreds of thousands square kilometers, and in China it reaches 9.6 million square kilometers. The differences are remarkable. I also wonder why seven members of RCEP are also TPP members. Based on my study, despite the huge differences in development phases and other respects among the countries, both the TPP and RCEP are choices and paths leading to the establishment of a free trade zone in the Asia Pacific Region as long as the principles of inclusiveness, openness and transparency are upheld. Thank you!

Guo Weimin:

To offer more opportunities for other journalists, I kindly remind you of asking one question per person.

Phoenix TV:

I have one question about Hong Kong. After the Occupy Central incident, another violent episode happened in Mongkok during the Spring Festival. Under such circumstance, will there be some adjustments to free trade policies for Hong Kong? Thank you.

Gao Hucheng:

The Hong Kong Special Administrative Region is a society based on the rule of law. The central government believes in the Hong Kong government and firmly supports it to govern the area according to the laws and maintain the prosperity and stability of Hong Kong society. This will not change. The Ministry of Commerce will continue pushing forward the economic and trade exchanges and cooperation with Hong Kong, and support Hong Kong's economic development according to the principle of "one country, two systems." We are paying attention to the work in four main aspects.

First, we will implement the agreement on trade service signed between the mainland and Hong Kong under the Closer Economic Partnership Arrangement (CEPA). You may remember that the central government once promised that, by the end of the Twelfth Five-Year Plan, which was the end of 2015, the mainland would basically realize free trade in services. We would also improve the level of cooperation in the service industry between the two sides by implementing this agreement.

Second, we will support Hong Kong to give full play to its advantages in finanial and professional services and participate in the construction of "Belt and Road Initiative." At the same time, we support enterprises from both sides to work together to invest in and explore international markets. In this aspect, Hong Kong has its own soft power. For example, we have started to test it in some of our overseas projects by inviting Hong Kong personnel to provide supervisory services.

Third, we continue supporting Hong Kong to participate in international and regional economic cooperation, thereby cementing and improving its status as an international financial, trade and shipping center. The central government also actively promotes FTA negotiations between Hong Kong and the ASEAN. I can tell you the negotiation has made positive progress.

Fourth, we support Hong Kong to participate in the establishment of four trial free trade zones of mainland, especially in the construction of the China (Guangdong) Pilot Free Trade Zone. Since the Guangdong zone was set up in last April, Hong Kong has been playing an active role in finance and transportation. And in the pilot zone, there are many opening-up policies and areas that can be described as "specially designed" for further promoting the cooperation between Guangdong Province and Hong Kong. At the same time, we will continue supporting Hong Kong and let it share the policy dividend from our opening-up and reform policy even more, and we will work hard for Hong Kong's economic development. Thank you.


China is leading the arrangement of the Japan-China-South Korea Free Trade Agreement, but the level of its liberation is not very high. The negotiation has made little progress. Some people in Japan think this is because China is not willing to accept the high level of liberation. I welcome Mr. Gao's response. Thanks.

Gao Hucheng:

China has paid great attention to the negotiations with Japan and South Korea on the FTA. You all know, we have successfully signed and implemented a free trade zone agreement with South Korea and reduce tariffs twice. I recently got some statistics from the customs, and I can see the agreement has been implemented very well. The negotiation for the Japan-China-South Korea Free Trade Agreement, with efforts by all three parties, is making positive progress and we have basically reached a consensus on several aspects. We hope we can work out some leftover problems during the pattern bargaining and text negotiation and arrive at the phase of substantial negotiations. I would love to clarify some problems on standards, as the driving force of the negotiations depends on the economic complementarity among our three countries. As for the openness of the markets, as we can see from the expressed aspirations and the initial discussion during the pattern bargaining, this is a high-level free trade zone agreement. In negotiations between China and South Korea, and between China and Australia, we don't have to mention trade in goods, which is relatively easy and simple even in the aspects of investment and the trade in services, China has a high level of demand. Currently, in the negotiations between China, Japan and South Korea, no one will stand out to say whether it is high level or low level before entering substantive negotiations. There is no such point of view or a conclusion. But speaking for the Chinese side, we hope you notice that we have proposed at the Fifth Plenary Session of the 18th CPC Central Committee, that we will build a high-standard free trade zone network globally. So, the China-Japan-South Korea free trade zone agreement will follow this way to reach a comprehensive, open and high-level free trade zone agreement benefiting people's welfare in the three countries and meeting the demands of their economic and social development. Thank you.

China Review News Agency (CRNA):

Hello Mr. Gao. At a news briefing during last year's "two sessions," you mentioned the Cross-Strait Service Trade Agreement between Mainland and Taiwan. After one year, the China–South Korea Free Trade Agreement (FTA) has already been implemented, but the service trade agreement is still under preparation. What will be its impact on Taiwan's economy? What's your comment on Taiwan's supervisory regulations on cross-Strait agreements? Could you give us some information about the goods trade agreement negotiation between Mainland and Taiwan? Thank you.

Gao Hucheng:

Thanks for your question. Last year, I talked about the cross-Strait services and goods trade agreement. My opinion actually reflects the hopes and thinking of entrepreneurs of both sides. Frankly speaking, the service trade agreement between Mainland and Taiwan, featuring a high level of openness and a wide range, is rarely seen in such agreements and embodies the sincerity and friendship from the Mainland to Taiwan compatriots. However, due to certain human factors and obstacles, it has not been possible to carry out the agreement yet, and bring benefits to the people across the Strait as expected. We hope the Taiwan authority could maintain the proper political foundation and the right direction for peaceful development across the Strait, and speed up the implementation of the Cross-Strait Service Trade Agreement.

The Cross-Strait Goods Trade Agreement is an important follow-up single consultative agreement of the Economic Cooperation Framework Agreement (ECFA) across the Strait. Since March 2011, delegations of the two sides have already exchanged views 12 times, and fully discussed contents of the text and market opening. During the process, in line with the concepts of mutual benefit and win-win, the Mainland has made great efforts to benefit people across the Strait.

In future, the two sides will communicate further and make proper arrangements for the following negotiations. We will also inform the media at that time. Thank you.

Bloomberg News:

Minister Gao, could you comment on whether there is any need for further devaluation of RMB in order to help the beleaguered manufacturers and exporters?

Gao Hucheng:

First of all, I don't think sharp devaluation or appreciation of RMB is beneficial to importers or exporters. Nowadays with in-depth development of economic globalization, all well-known transnational enterprises and leading enterprises of various industries allocate their production factors on a global scale. Let me give you an example about a traditional Chinese industry. Recently a big clothing manufacturer in China, in cooperation with some other domestic enterprises, established a clothing industrial park in a country in South Asia with an investment of more than 13 billion yuan (about US$1.99 billion). In two or three years, the park's annual export of clothing products is expected to reach 5 billion US dollars with 200,000-300,000 people to be employed. This enterprise has precisely allocated its resources on a global scale. China's labor costs mean the traditional clothing industry is no longer competitive. However, Chinese equipment, technology, funds, management skills, raw materials and accessories in this industry do still have competitive advantages. Therefore, according to the general theory, against a background of in-depth global economic integration, currency devaluation or appreciation, if not exceeding 10 percent, will have very little impact on trade. So, I don't think some fluctuations in the central parity quotes of the RMB exchange rate we have seen recently will have a great impact on trade. Thank you.

Reporter (the media outlet unspecified):

I have a question on pilot free trade zones. So far, they have been established in Shanghai, Tianjin, Guangdong and Fujian. They have absorbed a large amount of foreign funds, but they are criticized for not being open enough. They might be doing well in the trade in goods, but some policies on the flow of funds are not fully implemented. What's your response to this? Thank you.

Gao Hucheng:

Thank you for your attention to this issue, which has also attracted the attention of many others. I think all journalists here are interested in the development of China's free trade zones. Establishing free trade zones is an important action taken by the Communist Party of China (CPC) Central Committee and the State Council with the aim of finding new approaches and accumulating new experiences in deepening reform and opening up. China first carried out the reform and opening-up policies in 1978. The valuable experience we have gained over the past 30-plus years is to be cautious in advancement. We are making tests in the pilot zones to see if we can open wider and reform deeper. The experiences we accumulate later will be promoted nationwide. The major task is to introduce innovations in mechanisms, streamline administration and delegate power, so as to remove any barriers that might prevent the market acting as the decisive force in allocating resources. Regarding the specific implementation, to be frank, the China (Shanghai) Pilot Free Trade Zone has been in operation for a short time. We have expanded the zone and built three new ones in Guangdong, Tianjin and Fujian.

The State Council issued plans for the four zones last April. Various departments under the State Council undertook 366 pilot tasks, and more than 80 percent of them have been implemented. You said that some of the pilot tasks haven't been carried out yet. There are several reasons. First, pilot tasks will be trialed for two or three years in the free trade zones, so reform measures that are highly comprehensive and cover a wide range of departments should be developed carefully and carried out steadily.

Second, some policies have been formulated, and the departments concerned are working on the implementation rules. Most such policies concern the service sector, while in the manufacturing industry, almost all policies have been implemented.

Third, some reform measures involve more than one department, and all those concerned are discussing ways of cooperation and working hard to carry out the policies jointly. The Commerce Ministry is the leading department of the joint conference on pilot free trade zones attended by various ministerial departments under the State Council. We will continue to do all we can to coordinate various departments and local governments, so as to accelerate fulfillment of the pilot tasks.  Generally speaking, the free trade zones are developing smoothly. Notable successes have been achieved in the innovation of mechanisms, streamlining administration and delegating power.

In the field of investment, pre-establishment national treatment and the negative list have been implemented for foreign investments. These measures have helped make the free trade zones popular investment spots for foreign funds. Take the Shanghai Free Trade Zone as an example. The total number of foreign-funded companies has grown by 50 percent, and the average value of foreign-funded projects has exceeded US$10 million. This is significant growth. In the other three free trade zones, no foreign-funded project so far involved less than US$6 million. In free trade zones, foreign companies in industries outside the negative list can complete all establishment procedures in three working days. In contrast, in areas outside the free trade zones, the examination and approval process takes more than ten days, or even months. Such convenience is common in free trade zones.

As for trade facilitation, free trade zones are taking bigger steps. They are the first in China to establish a "single-window" in border ports. This practice has enhanced customs clearance efficiency by 40 percent, and it is being further improved.

Regarding supervision during and after the establishment of projects, the free trade zones have taken many measures, such as establishing a supervisory platform based on big data and categorizing companies according to their credit records. All of these measures lead the way in China.

In 2014, one year after the establishment of Shanghai Free Trade Zone, 34 pilot practices from it were introduced nationwide. So far, we have accumulated other useful experiences and will promote them throughout the country. Besides, some practices are being evaluated by a third party. I hope they can be promoted elsewhere soon, so as to bring the benefits of reform to more people. Thank you.

Guo Weimin:

The last question.

China Daily:

Recently, the European Commission called for the Chinese government to cut steel production capacity and announced anti-dumping investigations into three types of Chinese steel products. What's your comment on this? Thank you.

Gao Hucheng:

In the past few years, we've seen a sluggish recovery and slow growth in the global economy as well as increasing uncertainties and destabilizing factors. Many countries are adjusting their policy orientations. Especially, early this year, there were some fluctuations in the global stock and exchange markets. However, the core issue is a major change in supply and demand, and overcapacity has become a global problem. As I mentioned earlier, many reasons, such as regional disputes and geopolitics, can account for price fluctuations in major commodities including energy, mineral and agricultural products. Yet, one undeniable factor and something that needs be confronted, is the change in supply and demand. The huge fall in commodity prices is deeply related to the supply and demand relationship. It is the same with energy products as well as in steel products and other commodities.

Second, China has been the largest country in the trade in goods from 2013. And it has faced the largest number of anti-dumping allegations for 21 consecutive years. Years ago, many people like me were arguing that we should be calm in regard to those trade remedy measures and not overreact to individual cases. According to WTO provisions for trade remedy, as long as it involves a certain scale, a company has the right to file a petition seeking anti-dumping and anti-subsidy measures. And trade remedy agencies in that country must accept its petition and launch investigations into the case.

Third, overcapacity in the steel industry is a global problem needing a global solution. We have maintained quite good communications with the United States and European countries in this regard. China has been involved in OECD discussions and dialogues on this issue for 10 years. With regard to EU's trade remedy investigations into some types of Chinese steel products, I want to highlight the following points. First, we should talk about it within a general context. China's export of steel products to EU member countries is a form of market behavior. Many people may find out that some businesses have been affected and filed petitions for trade remedy. However, we should also see that some companies and consumers have actually benefited from the imported products. The steel products were purchased by EU's importers or consumers at reasonable prices. And this is a fundamental aspect of the case. The fact that some companies have raised petitions is also a part of market behavior, and should not be misinterpreted as government or European Commission behavior. Second, we should safeguard and defend Chinese companies' lawful rights in accordance to WTO rules. Third, we should encourage dialogue and cooperation among all parties. This is an experience drawn from successful cases we have dealt with along with our major trade partners. And it especially applies to cases with the EU. Many of you may recall our successful settlement of trade friction over PV products and polysilicons with the EU. The case involved an amount totaling more than US$20 billion. In the end, thanks to cooperation among government, industries and companies, a deal was agreed that satisfied the Chinese company's quest for a share of the European market and addressed grievances of PV and polysilicon companies in Europe.

Up until now, implementation of the deal is still underway and is welcomed by the industry, companies and consumers. As for the global issue of steel production, I encourage its proper settlement through enhanced cooperation among companies, industries and the government. Thank you.

Guo Weimin:

Thank you, Minister Gao. Minister Gao has given us a relatively detailed introduction on China's foreign trade, consumption and the building of free trade zones. You can also ask questions on routine news briefings held by the Ministry of Commerce. Thank you for coming. This is the end of today's conference.

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