International Business Daily:

Convenience is a new demand for people seeking a better life, which is also an important sign of moderate prosperity in all respects. What work has the Ministry of Commerce done to improve the circulation network and facilitate household consumption? In which areas will further efforts be made in the future? Thank you.

Wang Wentao:

Thank you for your questions. I will answer them. Circulation is connected to production at one end and consumption at the other, and it has a fundamental and leading role in the national economy. The development of China's circulation industry has been very rapid, making big steps, especially in terms of internationalization, standardization, intelligence, intensification, and informatization. It is moving relatively fast, and in some aspects, it is leading the world. Our circulation efficiency is improving while costs are gradually decreasing. In 2020, for the total logistics cost for the entire society – that means, total logistics costs as a percentage of GDP of China – dropped to 14.7%, which is a decrease of 3.3% compared with 2012. Chain operation, e-commerce, logistics and distribution, smart stores, contactless distribution, unmanned retail, and other new business formats and models continue to emerge, some of which represent forced model innovations due to the COVID-19 pandemic and other situations. Many of these innovations are ahead of the rest of the world. Circulation efficiency is as important as production efficiency, and it is an important aspect of improving the overall operating efficiency of the national economy.

The developments mentioned above are indeed good, but we will also see some problems and shortcomings during development. Although the share of total national logistics costs in China's GDP has dropped to 14.7%, it is still relatively high compared to those of developed countries. So we may encounter logistics costs that are relatively high, and that enterprises' complaints are also relatively strong. Next, we will be problem-oriented to make up for these shortcomings, strengthen the weaknesses, and make efforts in the following aspects.

First, in rural areas, we will launch county-level commercial system construction campaigns. Rural commerce still has great potential, but it is constrained due to shortcomings in circulation. For example, logistics coverage and express deliveries cover 99.7% of areas at the township level but only a little over 50% at the village level. This shortcoming restricts the further development of rural consumption. We propose to promote the construction of a rural commercial system based on the principles of "county-level overall planning, with counties as the center, towns as the focus, and villages as the foundation." Additionally, we'll encourage and promote the "three sinks" by market-based means: the sinking of the supply chain of enterprises to small-town and rural markets, which mainly encourages the marketing network of large-scale circulation enterprises to extend to the countryside and provide distribution and standardized procurement for some small merchants serving millions of households in rural areas; the sinking of logistics and distribution to small-town and rural markets, including the integration of resources in e-commerce distribution, postal services, supply and marketing, and the express delivery, as we encourage them to sink further; and the sinking of commodities and services to small-town and rural markets so that rural commodity consumption can adapt to the characteristics of rural areas. Service consumption is a shortcoming worth singling out among all the shortcomings in rural areas, and we must continue to strengthen it, including by providing better after-sales service. By encouraging the "three sinks," we realize the building of the rural commercial system, which are the sinking of the supply chain of enterprises, the sinking of logistics, and the sinking of goods and services.

Second, in terms of urban areas, in addition to building international consumer cities, business districts, pedestrian streets, and characteristic urban neighborhoods, we will also extend the "last mile to your home" development, i.e. the community, to create convenient living circles that people can reach within 15 minutes from their residence. We will accelerate the construction of wet markets, convenience stores, and comprehensive community service centers. We will accelerate the development of branding and chaining convenience stores, support enterprises in their digital transformation, innovate business models, promote convenient consumption, and push forward the construction of standardized wet markets.

Third, we will improve commercial circulation facilities. We will mainly focus on shortcomings to exert our strength. Currently, the shortcoming worth singling is cold chain logistics. The cold chain circulation rate of meat in China is only 30%, and that of fruits and vegetables is less than 20%, while that of developed countries is more than 90%. Therefore, our next step is to promote cold chain logistics for agricultural products, speed up the construction of cold chain logistics, and make up for these shortcomings.

Fourth, we will strengthen emergency guarantees. After the COVID-19 outbreak, the Ministry of Commerce, in accordance with the requirements of the central government, worked with relevant government departments, commissions, and localities to form a nine-province joint supply and guarantee mechanism to ensure the supply of daily necessities in Hubei province and Wuhan city. Recently, as we witnessed new outbreaks of the pandemic in various places, coupled with floods in some places, media outlets reported that there were some instances of panic buying and that the supply of materials encountered some difficulties. In addition, due to the pandemic prevention and control measures, logistics has not been so smooth or even blocked in some places for a short period of time, resulting in some particular supply shortages. In response, we immediately launched a joint guarantee and supply mechanism, with localities as the main body, strengthening the supply of materials in various regions. Then, things tended to return to normal quickly, ensuring that people could go on with their daily lives. Next, we will try to improve the provision of early warning predictions based on big data. If there is a shortage of goods in some places due to the supply being affected, and there is abnormal data, we must give reminders and warnings, and then we must immediately activate the joint guarantee and supply measures. We also particularly hope that media outlets will continue to strengthen supervision in this area and report relevant emerging situations in a timely manner. We will pay attention to the media reports on the one hand, and on the other hand, through our system, including the system of government functional departments and the monitoring system we have established, we can reflect on the situation and respond promptly, quickly, and accurately, making sure that no matter what happens, the basic guarantee of the people's daily necessities can be met. Thank you.