SCIO briefing on China's foreign trade and economic cooperation

Speakers:

Qian Keming, vice minister of Commerce;

Long Guoqiang, vice minister of Development Research Center of the State Council

Chairperson:

Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

Date:

July 31, 2017

SCIO holds a press conference on China's foreign trade and economic cooperation in Beijing on July 31. [Photo/China SCIO]

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we will continue to analyze China's economic performance. Present are: Mr. Qian Keming, vice minister of Commerce, and Mr. Long Guoqiang, vice minister of the Development Research Center of the State Council. They will introduce the situation in regard to China's foreign trade and economic cooperation performance in the first half of 2017, and answer some of your questions.

Now, let's welcome Mr. Qian to give his briefing.

Qian Keming:

Good morning, friends from the media. It's a pleasure for me to attend this press conference. Now, I'll give you a short briefing on China's foreign trade performance in the first half of this year.

In this period, China's foreign trade posted a good performance, with some indicators surpassing expectations. The transition from old engines of growth to new drivers has accelerated, and the overall economic structure continues to improve.

First, let's have a look at foreign trade that has achieved stable growth.

This year, the world economy has grown at a faster pace, and international trade has finally bottomed out, promoting a better global environment for China to conduct its foreign trade. We effectively implemented policies for promoting steady growth and structural adjustment in foreign trade, improved trade facilitation, and further relieved the burden on enterprises, thus helping them to grasp new opportunities to explore the global market.

The foreign trade situation has remained good so far this year. The total volume of imports and exports reached 13.14 trillion yuan, up 19.6 percent over last year, finally rebounding after a two-year decline. Specifically, exports grew by 15 percent, and imports 25.7 percent year-on-year.

Besides, we have taken measures to improve the work in five areas and promote progress in three areas. Specifically, improvement has been achieved in the global market arrangement, domestic market division, product mix for foreign trade, composition of business providers, and trading methods; meanwhile, progress has been made in accelerating the development of demonstration centers for transforming and upgrading foreign trade, trade platforms and the global marketing network.

Generally speaking, the adjustment of the foreign trade structure and the transformation of growth drivers have gathered pace and achieved good results.

China's import and export trade with countries along the Belt and Road have enjoyed comparatively faster growth, among which, an increase of 21.9 percent was recorded with the Association of Southeast Asian Nations (ASEAN), 30.4 percent with India and 33.1 percent with Russia. Domestically, foreign trade increased by 26.8 percent in the central area, 25.7 percent in the western area and 18.5 percent in the eastern area; thus, the central and western areas showed faster growth than the eastern area. In regard to the product structure, exports of mechanical and electrical products grew faster than traditional labor-intensive products. Export of automobiles and ships increased by 32.7 percent and 25.1 percent respectively. General trade imports and exports grew by 20.5 percent, higher than the processing trade, where the growth rate was 16.1 percent. In terms of the management structure, imports and exports handled by private enterprises grew by 20.4 percent, resulting in a moderate rise in their proportion of total foreign trade.

In addition, new modes of foreign trade have grown rapidly, with the import and export of cross-border e-commerce increasing by a staggering 66.7 percent. Market procurement exports grew by 27.8 percent, with pilot foreign trade comprehensive service business continuing to advance steadily. We have actively conducted a pilot program of innovation and development in the service sector, with imports and exports in services increasing by 9.2 percent in the first five months.

Second, the volume of foreign capital remains stable. Currently the international competition of attracting investment is very fierce, we have implemented a series of approaches issued by the State Council such as expanding opening up and actively using foreign capital to improve the business environment and stabilize the volume of foreign capital. In the first half of this year, the total volume of foreign capital reached 441.5 billion yuan, dropping by 0.1 percent year on year, remaining stable.

Working with relevant departments, we have amended and issued the Industries Guidance Catalogue for Foreign Investment, The Superior Industries Catalogue For Foreign Investment In Middle And Western Areas, and The Negative List For Foreign Investment In Pilot Free Trade Zone. A greater amount of foreign capital was further allowed while foreign enterprises' confidence in China's development was further reinforced.

The industrial structure of foreign investment have also seen positive changes, among which, foreign investment in the manufacturing industry increased by 3 percent with the beverage production and the cultural, educational and sports items manufacturing industries growing relatively fast.

The service industry saw a 0.3 percent reduction in foreign investment, but the leasing and environmental services, which are new in the service industry, witnessed a large increase in foreign investment.

Foreign investment into central China has increased by 42.1 percent. The total value of foreign investment remains stable and the structure is further optimized. We implemented the Party Central Committee and the State Council's directives for building pilot free trade zones with high-level and high-standards with deepening the reform and opening up of the Shanghai Pilot Free Trade Zone, summarizing the reform experiences of pilot free trade zones in Guangdong, Tianjin, and Fujian , speeding up the construction of 7 new pilot free trade zones in Liaoning and other areas as well as promoting the construction of platforms for national economic development zones, border economic cooperation zones, and cross border economic cooperation zones to achieve new efficiencies.

Third, Chinese companies have become more rational in making outbound investments. Last year, some companies made irrational investments abroad. Taking this into account, we checked authenticity and compliance together with relevant authorities and gave these companies guidance to increase their awareness of risk precaution and promote healthy and standardized outbound investment.

China's foreign direct investment for the first half of this year reached 331.1 billion yuan, down by 42.9 percent, with irrational outbound investment being effectively contained. As for investment into specific countries, the investment of Chinese companies to Belt and Road countries decreased by only 3.6 percent, much less than the 42.9 percent drop of the aggregate outbound investment. Companies have paid more attention to physical investment, and the investment in overseas manufacturing decreased less than that in the real estate industry as well as culture, sports and the entertainment industry. A number of merger and acquisition projects have been carried out smoothly, especially the big ones. In addition, the turnover of our contracted projects in other countries reached 462.2 billion yuan, an increase of 7.2 percent.

Fourth, China has made positive progress in international economic and trade relations. China has successfully hosted the first Belt and Road Forum for International Cooperation. At the opening ceremony, President Xi Jinping in his speech announced to launch the initiative on promoting unimpeded trade cooperation along the Belt and Road, to host the China International Import Expo, and to implement major foreign aid measures, receiving vigorous praise and positive responses from Belt and Road countries and international organizations.

There are 83 countries and international organizations from five continents participating in the initiative on promoting unimpeded trade cooperation along the Belt and Road, which shows broad representation. In fact, more countries and international organizations joined this initiative after the forum. The 100-Day Action Plan of the US-China Comprehensive Economic Dialogue has also yielded significant and balanced results. The US began to lower the barriers in its policy in terms of liquefied natural gas (LNG) exports to China, and China's exports of cooked poultry to the US and related financial applications are also under the way. China has approved the application of five biotechnology products of the US and lifted the ban on imports of U.S. beef. We have been actively promoting trade and investment liberalization and facilitation, and signed free trade agreement with Georgia. We have been maintaining the multilateral trading system, and urging the WTO members to fulfill the obligations as specified in the Article 15 of the Protocol on the Accession of the People's Republic of China.

In the second half of this year, the domestic and international environment is generally favorable for China to develop its foreign trade, but at the same time, there are still unstable and uncertain factors around. We will follow the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council, make progress on the basis of stable development, firmly uphold and implement the new concepts of development, and try our best to stabilize growth, promote the reform, adjust the structure, benefit the people, and prevent the risks in commercial fields. We will dedicate ourselves to creating a favorable environment for the 19th National Congress of the Communist Party of China, and ensure the completion of goals and tasks for this year. Thank you all.

Xi Yanchun:

Thank you very much for your introduction. Now let us invite Mr. Long Guoqiang.

Long Guoqiang:

I would like to complement Mr. Qian's introduction.

I've summarized the world trade environment and China's foreign trade into the following categories.

First, the world economy and trade is recovering while protectionism is rising. As global economic growth accelerates, international organizations, such as the IMF, have revised upwards their forecasts for global growth. Primary commodity prices have seen a marked year-on-year increase and the growth rate of world commodity trade is increasing. We must admit that the improving world economic environment has strongly driven China's foreign trade.

However, at the same time, some major economies, which have long advocated free trade, are attributing problems, such as inequality, to economic globalization. Therefore, there is a policy shift in those economies with trade protectionism gaining popularity. These changes will have a deep influence on globalization and the trend of the future world economy.

Second, the growth is increasing in China's foreign trade but there is a decreasing amount of cross-border investment. In the first half of this year, China's foreign trade reached a fast growth rate of 19.6 percent. The growth rate of exports to emerging markets outpaced that to traditional ones, and the growth rate of mechanical and electrical products was higher than that of labor-intensive products. New foreign trade models are outpacing the traditional ones.

Meanwhile, cross-border investment declined while foreign investment remained stable though there was a 0.1 percent decrease if calculated in RMB. Outbound investment decreased by 42.9 percent, with some irrational investments being reined in.

Third, China's opening-up policy has spread pervasively while foreign-funded enterprises are lagging behind. The Chinese government insists on the basic state policy of opening-up and issued a series of policies focusing on improving the business climate.

On July 17, 2017, President Xi Jinping presided over a central finance leading group meeting on improving the business climate and expanding the scope of opening-up. In January, the State Council promulgated the Notice on Several Measures to Expand Opening-up and Make Active Use of Foreign Investments, also known as the Twenty Articles to Attract Foreign Investment.

On July 28, the State Council issued several specific measures to deploy more efforts for introducing foreign investments and create a more open environment. Meanwhile, China has been promoting the market conditions with equal treatment of domestic and foreign investments and fair play. China's efforts to further open up have been highly praised at home and abroad, especially positively praised by many foreign-funded enterprises.

However, my study on a large number of foreign-funded enterprises shows that some of them lack a thorough knowledge of the great developments in the policy of China expanding its opening-up to better utilize foreign investment. Moreover, large enterprises take time to make decisions, that's why some foreign-funded enterprises lagged behind in response in the first half of this year.

We need to make improve policy interpretation to encourage their confidence. However, it must be noted that China is one of the most important investment destinations for foreign-funded enterprises. As shown in various surveys including the white papers by the American Chamber of Commerce and the European Union Chamber of Commerce, a large number of multi-national enterprises have regarded China as one of their most important investment destinations for the future.

China will continue to open further to the outside world. From the 2016 G20 Hangzhou summit to the Belt and Road Forum for International Cooperation; from the keynote speech by President Xi Jinping at the 2017 World Economic Forum to the keynote speech made by Premier Li Keqiang at the Summer Davos Forum; all demonstrate China's policy and wisdom in supporting global economic development and improving the global economic governance system.

On policymaking, China puts building an international and market-oriented business environment governed by law as the priority. We will expand market access for foreign investors and push forward the Belt and Road construction, and the negotiations of free trade zone and bilateral investment treaty, in a bid to further liberalize and facilitate trade and investment.

As to policy implementation, China will maintain a steady growth in foreign trade and continue to optimize the structure in the second half of the year. Cross-border investment will be continuing on a large scale. China will still be the most important host country and source of cross-border investment.

That's all, thank you. We're pleased to take your questions, thanks.

Xi Yanchun:

Thanks to Mr. Long for his introduction. Now we'll open the floor to your questions. We kindly remind you to identify your media organizations before raising questions.