CCTV:
The fifth plenary session of the 19th CPC Central Committee proposed that the modern circulation system be improved during the 14th Five-Year Plan period to reduce enterprises' circulation costs. This was reiterated at the recent meeting of the Central Committee for deepening overall reform. What are MOFCOM's considerations regarding specific implementation measures? How can we develop a modern trade circulation system? Thank you.
Wang Wentao:
As we all know, circulation connects production and consumption. Since the 18th CPC National Congress, commercial and trade circulation have developed rapidly in China, and an open and competitive pattern with diverse actors and models has basically taken shape. However, there are also some shortcomings in circulation. For example, China's national logistics costs as a percentage of GDP in 2020, often viewed and compared internationally, stood at around 14.7%, roughly 6 percentage points higher than that of developed countries. The cost of logistics in China is relatively high. Another indicator is cold chain logistics, which is China's weakest point. The loss rate of agricultural products during transport in developed countries is less than 10%, while in China it is about 12%, with fruit and vegetables even higher, registering around 18% — although some studies suggest it is over 20%. This indicates that we still have many shortcomings in terms of logistics and China's circulation companies are less competitive internationally.
General Secretary Xi Jinping has stressed that an efficient modern circulation system is essential for both domestic and international circulations. MOFCOM's considerations mainly focus on making improvements in six areas with a problem-oriented approach to develop a modern circulation system.
First, we will improve the circulation network layout. If the circulation network is compared to the human cardiovascular system, the backbone network is just like the main arteries. So, we must first develop a sound backbone network before ensuring the smooth flow of basic network, and open up the "capillaries" to have a sound network system. As such, we need to focus our efforts on the backbone network by making a proper plan for commodity distribution centers, comprehensive logistics parks and public distribution centers among others. With a sound backbone network, we will then be able to ensure the last-mile "capillaries" of the network.
Second, we will improve the circulation infrastructure, which is still left behind when compared with developed countries. At present, the main shortcoming is the "last mile." Just now I talked about the establishment of a "backbone" network. Next, we need to open up the "capillaries," especially with regards to the last mile. The important thing is that the work should reach down to all levels. How can this be done in urban areas? We should ensure residents have access to convenience stores, vegetable markets and community centers, that is, we should focus on making them available within 15-minutes of people's homes. How can it be done in the countryside? In rural areas, we should focus on improving the commercial system, transforming the three-level commercial and trade circulation network of counties, townships and villages, improving the logistics distribution network, and unblocking the flow of industrial products to the countryside and agricultural products to cities. We have set a goal that by 2025, every county should have chain stores and logistics distribution centers, every town should have business centers, and every village should have express delivery. We should focus on reaching all levels in urban and rural areas to solve the last mile problem.
Third, we will enhance the competitiveness of the main circulation. As I said, compared with developed countries and large international circulation enterprises, our circulation enterprises still have many shortcomings. Now, however, new technology applications such as 5G, the Internet of Things, big data, cloud computing and artificial intelligence, have given circulation enterprises a good opportunity to catch up quickly. We are encouraging and guiding circulation enterprises to seize this opportunity and make great strides in digital, network and smart technologies to improve circulation.
Fourth, we will improve the circulation development model. There are shopping malls, supermarkets and retail outlets all over urban and rural areas. We should encourage and guide innovation and transformation. Innovation and transformation are based on digitization, intelligent transformation and cross-border integration. In some grassroots areas, retail outlets are not only outlets for consumption, but also logistics end-points. They have already started cross-border integration, selling things, receiving goods and sending express mail. At the same time, we should also develop green circulation.
Fifth, we should improve the level of supply chain modernization. We will focus on the creation of supply chain innovation and application demonstration, and promote the deep integration of circulation innovation and industrial change.
Sixth, we should enhance the integration of domestic and foreign trade. We will break through the blockage points in domestic and foreign trade circulation, and build a smooth channel for domestic and international markets. The key is to promote the connection of domestic and foreign trade in laws and regulations, regulatory systems, quality standards, certification and other aspects. At present, they are not connected closely enough, and the flow of domestic and foreign trade is not smooth enough. Investigations show that only about 10% of domestic and foreign trade can be connected in some places. Going forward, we need to expand the convergence of laws and regulations, regulatory systems, quality standards, certification and accreditation. We have long been promoting this work. This year, we will increase efforts to enhance the degree of integration of domestic and foreign trade.
Together, these six aspects form the answer to your question. Thank you.
