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Read in Chinese

Speakers:

Li Xiaopeng, minister of transport

Liu Xiaoming, vice minister of transport

Chairperson:

Hu Kaihong, spokesperson for the State Council Information Office of China

Date:

Feb. 28, 2019

   

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. The development of transport has received a lot of attention in our society, and has improved people's sense of fulfillment and happiness. To help you better understand the issues concerning transport development, today we are delighted to welcome Mr. Li Xiaopeng, the minister of transport, to explain the planning and progress of supply-side structural reform and the development of high-quality transport. He will also answer your questions. We also have with us Mr. Liu Xiaoming, the vice minister of transport. At this time, I'll give the floor to Mr. Li.

Li Xiaopeng:

Thank you, Mr. Hu. Ladies and gentlemen, members of news outlets, good morning to you all. I am very happy to be here today. Mr. Liu Xiaoming and several of my colleagues will join with me today to introduce the development of China's transportation and answer any of your questions.

In 2018, China's transportation industry was proactively implementing the decisions and deployment made by the CPC Central Committee and the State Council, from the perspective of serving the public, overall situation, and the grassroots community. It should be said that we have made significant progress.

First, the infrastructure has been improved. Last year, the fixed-asset investment in transportation amounted to about 3.2 trillion yuan, of which 800 billion yuan was in railways, 2.3 trillion yuan in roads and water transportations, and 80 billion yuan in civil aviation. More than 2,600 kilometers of high-speed railways and 5,000 kilometers of newly-built highways have been put into operation. Second, logistics costs are further reduced. We have taken a series of measures to reduce logistics costs by 98.1 billion yuan in 2018. Third, the transportation structure has been adjusted. The focus has been shifted from large-scale, long-distance cargo to rail transport. The volume of rail transport increased by about 350 million tons last year. Fourth, both the capacity and service of the transportation systems have been improved. Last year, the number of passengers nationwide reached 17.9 billion, the volume of cargo reached 50.6 billion tons, and the volume of express delivery reached 50.7 billion. Fifth, the business environment has been improved. Last year, a total of five administrative examination and approval items were canceled, and another 20 administrative approval items were made possible to be reported online. Sixth, there has been an increase in the modes of transport that are on offer. Ride-hailing services and shared bicycles have been standardized, with an average of 20 million people using ride-hailing services and about 10 million people using shared bicycles on a daily basis.

Li Xiaopeng:

In 2019, we will focus our work on promoting the high-quality development of transport and the supply-side structural reform of the transport industry. We will implement the eight-character policy of "consolidation, improvement, enhancement and facilitation". We will consolidate the achievements in improving weak links and lowering costs, and we will also expand the achievements. We will improve the operating environment and services, enhance the innovative growth and the momentum of growth, and facilitate national economic development through further raising efficiency and integration. We will lay stress on six principle points in this year's work – improving efficiency, lowering costs, ensuring safety, deepening reform; expanding openness; and promoting innovation.

We will follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implement the decisions made by the 19th National Congress of the Communist Party of China (CPC), the second plenary session of the 19th CPC Central Committee and the third plenary session of the 19th CPC Central Committee. We will follow the Party's line, principles and policies and ensure the decisions and plans of the Party and the State Council are fully implemented.

We need to seize opportunities, make progress while maintaining stability, and remove obstacles so that we can forge ahead. We will work hard in close collaboration to meet the increasing demands of the people for better lives and for better transportation facilities. We are doing our best to make our transport system more convenient and smoother. We are looking forward to celebrating the 70th anniversary of the founding of the People's Republic of China with our outstanding achievements.

Thanks for listening to my briefing. Now, Mr. Liu Xiaoming and I would like to take your questions. Thank you.

Hu Kaihong:

Thank you Mr. Li. Now, the floor is open to questions. Please identify your media organizations before asking questions.

CCTV:

I would like to ask Minister Li, as this year is also the fifth anniversary of General Secretary Xi Jinping's important directives known as the "Sihao Rural Roads" ["Four Good Principles on Rural Roads"]. As an important emerging force for rural revitalization, what kind of welfare does the transportation industry bring to the people in rural areas?

Li Xiaopeng:

Thank you for your question. The "Sihao" of "Sihao Rural Roads" refers to four elements essential to rural roads: good construction, good management, good maintenance and good operation. This "Sihao," also known as "four good principles," was summarized and proposed by General Secretary Xi Jinping himself, in order to lead a project that will win people over, benefit their livelihood, and be generously administered. The first time the general secretary gave instructions on the "Sihao Rural Roads" was in March 2014. It has been five years since that, and in that five years, the Ministry of Transport has implemented the important instructions of the general secretary, and worked with related departments and provinces, autonomous regions and municipalities to promote the construction of the "Sihao Rural Roads" according to the "four good principles."

To review the achievements of the past five years, we can say three sentences to conclude: First, the scale of the rural road networks has expanded; second, a structure for joint construction and joint administration has been formed; third, the service level has been steadily improved. In terms of the scale of road networks, in the past five years we have built and renovated 1.392 million kilometers of rural roads. By the end of last year, the total mileage of rural roads reached 4.05 million kilometers, and 99.64 percent of towns have hard-surfaced road access, while 99.47 percent of the administrative villages have hard-surfaced roads installed. In terms of the administration structure, 31 provinces, autonomous regions and municipalities have attached great importance to the implementation of the "Sihao Rural Roads," issuing instructions on how to construct and implement them, or incorporating this work into the government assessment system. The pattern of joint construction and joint administration has taken initial shape. In terms of transportation services, when the roads open, the traffic should also be there. By the end of last year, 99.1 percent of the townships and 96.5 percent of the administrative villages had buses services. Once they have buses, farmers can step onto the paved roads and hardened roads, and board the buses. They can get around more conveniently. 

Of course, even as we celebrate the achievements, we must also be aware of the problems and weaknesses. The first is that the demands for construction are still huge. Everyone may ask, you just said that more than 99 percent of the towns and villages have paved the hardened road, so then how can you still need a large scale of construction? But our country is too big, even 0.1 percentage points represents a big number, and there are still many rural areas that have no hard-surfaced roads. Second, the issue of maintenance is still outstanding. After a road is built, how to maintain it, how to manage it? Although there is a preliminary institutional mechanism, it is still not perfect. Third, there have been some phenomena, such as asphalt roads turning back into sand, or "good roads going bad" due to lack of maintenance, because the standards of early construction are not high; or due to other problems, the roads that once were smooth now became less clear. Fourth, the laws and regulations as well as systems and standards are still not perfect. Finally, the accountability system is not yet fully established. All these issues must be given full attention and resolved in seriousness.

We'll better implementation of rural road construction in the next stage according to the "four good principles." There are generally three points related to our efforts. First, we need to increase involvement, accelerate construction and overcome obstacles. Second, we need to improve our planning and our polices, laws, regulations and standards. We are drafting "Opinions on how to Press Ahead with Quality Development of Rural Roads by the Four Good Principles." 

Regarding legal aspects, we have drafted "Rural Road Regulations" after soliciting public opinions, based on which we are rectifying the legal items. We'll do our best to carry this out as soon as the legislative procedure allows. 

Third, we need to strengthen our implementation. As with any task, we need to implement construction of rural roads soundly, specifying in detail the measures and approaches in different locations and regions, with regard to grass-roots communities in particular. There are designated personnel to take charge of each road and they ought to be motivated to ensure the smooth operation of roads in line with the "four good principles." We expect their experiences to be shared. We'll also move forward with the selection of model counties that excel in the construction and operation of rural roads according to the "four good principles" in all ways, making them locomotives to lead the rest of the regions in their construction of rural roads.

All in all, the construction of rural roads is important to help farmers rise out of poverty and enable them to lead decent lives. It also serves as a key strategy to fulfill rural rejuvenation and has a major impact on agricultural and rural modernization. The Ministry of Transport will, therefore, work hard on the instructions of President Xi Jinping, with all involved departments and regions making a concerted effort to push this construction forward. Thank you.

Xinhua News Agency:

A dozen cities, including Beijing, Shanghai, Guangzhou and Shenzhen, have rolled out some policies concerning the road test for automatic driving, Has the Ministry of Transport granted any policy support this development?

Li Xiaopeng:

Thank you for your question.

Since automatic driving is a cutting-edge technology in the area of transportation, we pay close attention to research and development into self-driving technologies. In last April, the Ministry of Transportation, the Ministry of Industry and Information Technology and the Ministry of Public Security jointly issued a pilot regulation for the road testing of intelligent connected vehicles, marking the first time a national guideline on road testing for self-driving vehicles has been issued. Last July, the Ministry of Transportation issued provisional measures for the construction of closed test sites for automatic driving, which will serve as a guide for the construction of closed test sites across the country. At present, we have authorized three such units, one each in Beijing, Chongqing and Xi'an.

All of these moves demonstrate our emphasis on the technology, especially in regard to its application. The development of automatic driving is of great significance for ensuring safety, enhancing efficiency, improving services and promoting industry growth. Our principle is to encourage exploration, tolerate failures, ensure security and oppose monopoly. Next, we will undertake the following work.

First, we should strengthen inter-ministerial coordination, and establish a cross-departmental coordinative working mechanism with relevant ministries, to develop a guidance system for the development of autonomous driving. Secondly, we should strengthen R&D and test verification of key technologies and equipment to achieve synergy between automatic driving and road improvements, and promote the formulation and revision of the relevant standards. Third, we should speed up research, formulation and promulgation of relevant laws and regulations in the field of automatic driving. Fourth, the pilot projects of application and commercialization should be carried out in a steady and prudent way. We have already established pilot projects in some localities. For instance, we have selected some areas in Zhejiang province, Xiamen and Xiongan New District as pilot demonstration areas. Fifth, we should strengthen international cooperation on self-driving technologies with other countries.

Self-driving is a new and vibrant technology. It requires time to put the technology into full use. We need to work together to make it safe and promote its application as well as related services. 

Legal Evening News:

A multi-department group including supervisors from the Ministry of Transport began their in-house safety inspection at China's ride-hailing firms last September. What progress has been made in ensuring these platforms' compliance with regulations? What measures will be introduced to tighten supervision over them? Thank you.

Li Xiaopeng:

Thank you. Mr. Liu will answer your question.

Liu Xiaoming:

Thank you for your question. As you know, transport is at the forefront of the internet economy, and the development of mobile internet has led to a marked rise in new forms of transport business. As one of the new forms, ride-hailing is an innovative transport service offering better travel experience, and also a more convenient way of commuting. However, this new business also faces many problems, including excessive growth, unhealthy competition and safety loopholes. 

In recent years, a series of regulatory measures have been introduced at the national level, gradually putting ride-hailing services on track toward orderly development. Of course, intensified efforts are still needed to make further progress.

To address the safety concerns of ride-hailing and car-pooling services, on Sept. 5, 2018, an in-house joint inspection, by the relevant departments of the inter-ministerial joint conference on coordinated oversight on new forms of transport, as well as the Department of Emergency Management, launched an investigation to detect safety loopholes and problems involving eight major entities in the industry, including Didi Chuxing, Shouqi Yueche, Shenzhou Zhuanche, Caocao Zhuanche, Yidao Yongche, Meituan Chuxing, Dida Chuxing and AutoNavi. The inspection groups pointed out various problems they identified in regard to safety and the services being offered, and gave each of those involved relevant rectification requirements. To date, all of the eight entities platforms have produced their respective rectification plans and published them on the website to solicit for public opinions. The rectification work is now underway.

The General Office of State Council issued a guideline in July 2016 to actively and steadily promote the reform of the taxi industry. Seven ministries, including the Ministry of Transport, also released a joint order to strengthen the management of online taxi booking services. A series of support measures were drafted to guide local governments to extend reform of the taxi industry, improve the management of online ride booking services, reinforce joint supervision, and particularly to speed up compliance from online taxi booking companies.

The online taxi booking industry has now stepped onto the path of standardized development. About 247 cities across the country have taken specific measures to regulate online ride hailing services. Internet enterprises, regular taxi companies, car rental companies and vehicle manufacturers will all participate in the taxi industry actively and lawfully, making people's transport options more diversified and convenient. So far, over 110 online taxi booking platforms have obtained management permits; about 680,000 drivers and 450,000 vehicles have been given certificates to provide online ride booking services. Despite the smooth progress, we also acknowledge that there are various problems and contradictions interwoven, and that deepening the reform of the taxi industry is a highly complicated and systemic task. The Ministry of Transport will urge local authorities to fulfill their responsibilities and implement related policies. We will do more research and evaluate the implementation of policies in due time. We will also gradually establish a more diversified system to promote the taxi industry's sound and sustainable development to better facilitate transportation.

Yicai.com:

Another question about the ride-hailing industry. Many of the involved companies felt a burden amid the downward economic pressure since last year. Recently, Didi Chuxing said it would be cutting jobs. Moreover, drivers and suppliers have complained about overdue payments from Yidao Yongche around the Spring Festival. What will the ministry do to deal with such problems?

Liu Xiaoming:

Thank you. I think the general public are also extremely concerned about these questions. Transport, both the traditional and new forms, are involved in the transportation of tangible goods and providing service. Despite the development of the ride-hailing industry and other new business forms, the nature of transport won't change. Commercial capital investment and the internet may help some new business forms grow rapidly at first, when enterprises seek growth through single-minded pursuit of traffic flow and added value. As a result, they fail to establish a successful business mode featuring both profit pursuit and sustainable growth. Seeking unchecked growth also creates management loopholes such as high safety risks, lack of strict verification for drivers and vehicles, and information security vulnerabilities, all of them of great public concern. The Ministry of Transport has been promoting the development of new business forms based on the principle of putting passengers first, encouraging innovation, never crossing a certain line, seeking benefit and avoiding harm, seeking orderly development, and conducting regulation in a tolerant and prudent way.

It seems the unhealthy growth of new business forms isn't going to last for long. Through a comprehensive in-house inspection launched by the ministry last year, some ride-hailing platforms came to recognize that passenger safety is their main responsibility, obligation, and the only foundation for further development. All the platforms calmed down and considered whether they could upgrade their systems and overcome their shortcomings, striving to find a development mode more sustainable and acceptable to the public. We heard the news that Didi would cut jobs after the Spring Festival; meanwhile, the company announced it would hire employees possibly more than it would cut to further enhance security systems and improve services. There are some other enterprises facing financial difficulty due to a money-burning subsidy strategy generated by the single-minded pursuit of traffic flow. We pay close attention to the development of the industry, urging the platforms to protect the legitimate interests of both the passengers and drivers, so as to promote rectification and healthy development of enterprises. We will keep track of the development of ride-hailing platforms in the future, in order to defend the rights and interests of both passengers and drivers. Thank you.

Li Xiaopeng:

Just now, two journalists asked questions about online car-hailing, and there may be others interested in issues related to new forms of transportation. We all know  that transportation is a traditional industry; yet, combined with computers, cloud computing, big data and the internet, new types of business will emerge, such as online car-hailing and bike sharing. Vice Minister Liu Xiaoming has alreadyoffered his perspective on this topic, I completely agree with that, and now I'd like to give my comments.

Firstly, integrating with new technology allows a traditional industry like transportation to create new types of business. Thanks to more convenient service, these new forms have become popular. Our attitudes towards them are active support, better assistance and fully cooperation. 

Secondly, like all new things, such businesses are less than perfect and probably bring with them new problems, requiring new ideas in management and supervision. In regard to these new problems and requirements, our attitude can be summed up as inclusive encouragement, prudent management, and regulated development.

Thirdly, both the traditional industry and new types of business are directly serving the people, and are closely connected to people's life and the safety of their property. Transportation concerns everyone's health, property and life. Therefore, all practitioners, no matter whether in the traditional industry or new types of business, have to give top priority to the related safety aspects. Safety is the unchallenged bottom line, so the focus of our supervision of these new types of business is also safety.

Fourthly, new forms of transportation havesignificance in regard to economic development, employment opportunities and sci-tech innovation. In order to provide the best possible management and services for better development and application, governments, enterprises and all walks of life should make joint efforts. Thank you.

Guangming Daily:

What are the achievements we have made in shaping the comprehensive transport system for reinforcing the integration of Beijing, Tianjin and Hebei province and facilitating the construction of Xiong'an New Area?

Li Xiaopeng:

Thank you. The question concerns the integration of Beijing, Tianjin and Hebei province and the construction of Xiong'an New Area. The coordinated development and integration of Beijing, Tianjin and Hebei province is a major strategic deployment of the CPC Central Committee with Comrade Xi Jinping at the core. At the same time, the historic construction of Xiong'an New Area stems from President Xi's initiative, decision and promotion. Last year, the ministry worked in the following aspects, focusing on the two undertakings.

First, we have reinforced top design aspects. We have issued numerous plans and measures to enhance this, such as, "The Implementation Opinions on the Construction of Comprehensive Transport System in Hebei Xiong'an New Area with the Support of the Ministry of Transport (2018-2020)" and the "Three-year Action Plan for the Integration of the Transport System Involving Beijing, Tianjin and Hebei Province and the Comprehensive Transport System of Xiong'an New Area (2018-2020)."

Second, we have facilitated the construction of arterial roads connecting Xiong'an New Area and surrounding areas, started construction of the Beijing-Xiong'an Intercity Railway and accelerated work on a number of construction projects exemplified by the Tianjin-Shijiazhuang [capital of Hebei province] Superhighway.

Third, we have pressed ahead with coordinated development for the integration of Beijing, Tianjin and Hebei province, completing a beltway connecting Tongzhou and Daxing district, around the southeast to southern areas of Beijing. The construction of Beijing Daxing International Airport is now nearing completion and projects linked to the Winter Olympics, such as, the Beijing-Zhangjiakou high-speed railway and Yanqing-Chongli Superhighway are progressing smoothly. 

Besides, we have restructured the transport system to further promote integration.

In 2019, we'll improve our work in the following aspects: First, we'll continue to accelerate the construction of the major traffic system comprising the Beijing-Xiong'an Intercity Railway, the Tianjin-Shijiazhuang Superhighway and the Beijing-Xiong'an and Xiong'an-Shangqiu sections of the Beijing-Hongkong-Taiwan High Speed Railway. Second, we will accelerate work on the Beijing section of the Beijing-Shenyang [capital of Liaoning province] High Speed Railway, Datong-Zhangjiakou High Speed Railway and the Zunhua-Qinhuangdao [Hebei province] of the Beijing-Qinhuangdao Superhighway. We will also accelerate the construction of green ports, in Tianjin and Hebei province, as well as coordinated development of various airports in the region. Third, we will speed up transport system restructuring, directing long-distance and bulky commodities transportation to choose railways or waterways to alleviate the pressure on the roads. 

Fourth, we will speed up Winter Olympics-related construction. Fifth, we will endeavor to provide a good transport service to ensure this year's Beijing World Horticultural Exposition is run successfully. Thanks.

CRI:

We notice that converting the expressway manned  toll booths for mobile payment is on the ministry's 12 things-to-do list in 2019. How is the work progressing now? And what has still to be done? Thank you. 

Li Xiaopeng: 

Thank you for your question. Mobile payment is very convenient and popular. So far, among the 29 provinces forming the country's expressway toll network, 14 have introduced mobile payments at the toll booths, and the other 15 are speeding up their efforts to meet this goal. All the work is expected to be completed by the end of 2019, with mobile payment covering all the manned toll lanes.

However, we still suggest people use the electronic toll collection (ETC) system which is more convenient and environmentally friendly. 

Thank you.

Phoenix TV:

This is a question on the Guangdong-Hong Kong-Macao Greater Bay Area. The area is an important strategic deployment of the country. As the Greater Bay Area aims to integrate its transport systems, what infrastructural development plans does the Ministry of Transport have for the Greater Bay Area?

Li Xiaopeng:

Thanks for the question on the Guangdong-Hong Kong-Macao Greater Bay Area. It is fair to say that transport infrastructural facilities are of great importance for the development of the Greater Bay Area. As of now, the Greater Bay Area has relatively good transport infrastructure facilities; in the future, it needs to be further improved and developed. On Feb. 28, the CPC Central Committee and the State Council published the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area. According to the central authority's deployment, the Ministry of Transport is working on the Guideline Opinions on the Greater Bay Area Transport Development. It lays out some key tasks, which may be of interest to you. 

There are seven aspects. The first aspect is to promote comprehensive foreign-bound transportation aisle construction. The second aspect is to construct rapid transportation networks in the Greater Bay Area. The third aspect is to improve the international competitiveness of the port cluster in the Pearl River Delta. There are many ports in the Pearl River Delta, and the ports' development level is comparatively high. The next step is to improve its international competitiveness. The fourth aspect is to build a world-class airport cluster. There are many airports in the Guangdong-Hong Kong-Macao Greater Bay Area. The next task is to coordinate these airports to help them play more significant roles by improving the efficiency and raising their service levels. The fifth aspect is to enhance the service for both travelers and cargo. After the roads are built, ports are upgraded, and airports are developed, the service level for transport of goods and travelers should be further improved. The sixth aspect is to improve the ability of transport science and technology innovation. The seventh is to build a green ecological transport system. We need to ensure the safety, convenience, and efficiency of the transport of travelers and goods. Moreover, the transport infrastructural facilities and the transport itself should be energy-saving and environmentally friendly.

Next, we will act in accordance with the CPC Central Committee and the State Council's decision and deployment to implement the development plan. We will give full support for the Guangdong-Hong Kong-Macao Greater Bay Area to accelerate the construction of a modern comprehensive transport system with global competitiveness and influence, and promote the development of the Greater Bay Area. Thank you.

Hu Kaihong:

We will hold a press conference on the Guangdong-Hong Kong-Macao Greater Bay Area this afternoon. You are welcome to attend the meeting and raise questions on this topic.

China Daily:

Good morning, Mr. Li. Just now, you spoke of new forms of transport. Here I would like to ask one more question about bike sharing. We all know that the bike sharing company Ofo has stalled on its deposit refunds in the last several months. Currently, there are still more than 10 million online applications for deposit refunds. So, how will the Ministry of Transport respond to the recent problems of the developing bike sharing industry, M. Li?

Li Xiaopeng:

Thank you. Mr. Liu will take your question.

Liu Xiaoming:

Thank you for your question. Bike sharing is a new form of transport, combining the mobile internet and bike rental, which has enjoyed a very rapid development in recent years. It has provided a new convenient choice for people to travel short-distances, playing a very important role in building a green urban travel system.

However, like any other new business form, there are various problems with the developing bike sharing industry: some enterprises have failed to fulfill their due responsibilities, some are involved in vicious competition, shared bikes are messily parked everywhere, and users' rights and interests have not been fully guaranteed.

In August 2017, ten departments jointly issued guidelines on encouraging and regulating online bicycle rental, in which they clearly stated the requirements for user deposit management. However, the guidelines fail to be well implemented in some bike-sharing enterprises. As a result, deposit security and stability risk has become quite a prominent issue. In some cases, enterprises embezzled deposits and could not refund deposits to users. This has aroused widespread concern from the society and also caused many adverse effects.

We have attached great importance to the issue and have taken the following corresponding measures.

First, we have worked with the member units of the inter-ministerial joint conference on coordinated oversight regarding new forms of transport to conduct careful analysis and judgment.

Second, we have guided local transportation departments to make appropriate plans to deal with the problem in accordance with law and fulfill their due responsibilities under the leadership of local government.

Third, we have urged related bike-sharing platforms and enterprises to provide easy and quick access for users to get back their deposits, so as to protect the legitimate rights and interests of users.

Fourth, we are working to strengthen the management of deposits and establish a long-term management system. The Ministry of Transport, the People's Bank of China and other related departments are working together to make relevant measures for the management of user's funds in new forms of transport, including their deposits.

The relevant requirements set out in the instructions from the 10 departments in 2017 are very clear. The first is to encourage enterprises to waive deposits and provide services through credit. The second is to provide services in the form of rent-and-deposit and rent-and-refund. The third is to provide service by means of a deposit with the consent of the user. However, the instructions are also clear that to collect user deposits, the operating company must assume the main responsibility and be strict in the use and management of the deposits. If a user applies for a refund of the deposit, the enterprise must return it in a timely and unconditional manner.

Next, we and the People's Bank of China and related departments need to accelerate the promulgation of measures of deposit management. At the same time, we must work with departments to strengthen the management of deposits, to ensure that deposits go into specific funds, are earmarked for particular use, and cannot be misappropriated. Everyone knows very well that the new modes of transportation are crossover services and crossover operations. The corresponding supervision work requires multi-sector cooperation. With the approval of the State Council, there is now a joint meeting mechanism for the coordination of new modes of transportation. The mechanism will create better conditions for the development of our new modes, and at the same time, we can better strengthen supervision, provide better travel services for the people, and safeguard their interests. Thank you.

Li Xiaopeng:

I think Vice Minister Liu Xiaoming responded in a very clear way to your question. However, I still feel it's worth adding a few more words on this subject. First, bicycle-sharing emerged as a new transportation form offering convenience for people. We encourage and support the operation. Second, the developing bicycle sharing industry is facing a host of problems which have drawn our great concern, such as, parking issues and the guarantee deposit system. We hope it can be addressed with the joint efforts of the different parties. Enterprises, society and governments should make concerted efforts to create a good environment and address emergent problems, ensuring the shared bicycle network can better serve the people. Third, regarding the guarantee deposit aspect, Mr. Liu has made clear we intend to make sure people can enjoy it freely. If the companies insist on some advance payment , they should work out standardized management according to relevant laws. They should strictly follow every regulation stipulating the ways of renting, charging and refunding, adopting specialized and standardized management approaches. Customers are entitled to retrieve the deposit quickly as required. We will enhance our supervision and push relevant regional administrations to address the needs of bicycle sharing in an appropriate way. Those are a few of extra points that I would like to share with you. Thank you.

China News Service:

How does the building of Beijing Daxing International Airport go? When will it come into service? What are the respective tasks for Beijing's two international airports? What are their specific positions? Thank you.

Li Xiaopeng:

Thanks for your question. Building Beijing Daxing International Airport on the border of Beijing's Daxing district and Hebei province's Langfang city is an important national project. It is of great significance for Beijing to optimize its functions and industries. It is also very important for Beijing-Tianjin-Hebei transport integration and the building of the Xiongan New Area.

Started at the end of 2014, construction work has basically finished. Four runways have been connected; the terminal is being equipped and decorated; roof sealing of the five function areas in the bases of China Eastern Airlines and China Southern Airlines has been completed. The western control tower has been capped; air control facilities are being deployed, and the aviation fuel pipeline will soon be connected. Thus, the building of the airport has entered the home stretch. 

The airport conducted its first test flight on Jan. 22 and completed all flight checks on Feb. 24, 19 days earlier than expected. We are shifting our focus from construction to preparing for its opening. We aim to finish all the construction work by June 30 and put it into operation by Sept. 30. Related departments are exerting every effort to achieve this schedule. 

Your question pertains to the functions and positions of the two airports. Some time ago, the Civil Aviation Administration of China issued a document defining the positions of the two airports. 

Beijing Daxing International Airport is positioned as a large international aviation and transportation hub in the Beijing-Tianjin-Hebei region to bolster the construction of the Xiongan New Area and serve as the new engine of national development. Largely relying on the bases of China Eastern Airlines and China Southern Airlines, the new airport will build a well-functioning airline network. The airport will be able to handle 45 million passengers by 2021 and 72 million passengers by 2025.

Beijing Capital International Airport is also positioned as a large international aviation hub, and as a complex hub in the Asia-Pacific region, supporting the core functions of the capital. Serving as the base for Air China, Beijing Capital International Airport will restructure its flight routes, strengthen its transit capacity and increase its international competitiveness. The airport has set out goals for 2020 and 2025 to boost its capacity and services. 

The two airports will coordinate and compete with each other to move toward the goal of building themselves into "double hubs" and help form a world-class airport cluster in the Beijing-Tianjin-Hebei region. Thank you.

Hu Kaihong:

Given our tight schedule, we will now take the final question.

Workers' Daily:

My question is, what has the transportation industry done to support the Yangtze River Economic Belt strategy, and what is the work plan for the next stage? Thanks.

Liu Xiaoming:

Let me take the question from Workers' Daily. The Ministry of Transport carefully studied and implemented the spirit of the important speech of General Secretary Xi Jinping of the Communist Party of China Central Committee last year, and we highlighted key tasks and made significant achievements related to the Yangtze River Economic Belt comprehensive transportation corridor construction. First, the development of green transport was deepened, and the emissions control zone was expanded to include key coastal waters and the main line of the Yangtze River. A total of 1,361 illegal ports along the Yangtze River were renovated, while 556 cases of illegal sand excavation were cracked.

Second, the functions of the golden waterway have been further improved. The 12.5-meter deep channel of the Yangtze River downstream from Nanjing, Jiangsu province, was finished half a year in advance, and was put into trial operation. The northeast channel and the second stage of the Anqing project, along with other key projects, were completed. Meanwhile, several projects were begun, including the 6-meter deep channel from Wuhan to Anqing, the first stage of Yangtze River southern delta flume channel renovation, the Yangtze River-Huaihe River water transfer shipping project, and the Hangzhou section of the Beijing-Hangzhou Canal. The channel network is gradually taking shape, with increasingly more branch channels being linked to the main channels.

Third, comprehensive transportation infrastructure recorded remarkable achievements. The Hangzhou-Ruili high-speed road was opened to traffic. A total of 13,700 kilometers of rural roads in the middle and upper regions of the Yangtze River were built or renovated. About 2,500 more villages were connected by roads. The construction of the Chengdu-Chongqing-Shanghai high-speed railway along the Yangtze River has been planned, and preliminary work has started simultaneously in different sections. Airport projects in Yueyang, Hunan province, and Bazhou, Sichuan province, were finished and opened for use.

Fourth, the organization of transportation is continually being optimized. The first 20,000-ton Yangtze River-sea bulk cargo ship, a 1,140-container river-sea ship and a 124-container river-sea ship were all put into service.

The ministry will continue to extend ecological preservation through intensive and economical utilization of shoreline resources, as well as standardization of ship type and promotion of clean energy, all under the concept of "joint protection, no excessive development." The ministry will actively deploy the Central Economic Work Conference and carry out its work plan regarding the construction of a comprehensive transportation system in the Yangtze River Economic Belt. According to the requirements of integrated design, works will highlight the respective advantages of railway, road and water transport, in order to form an efficient, intensive and green comprehensive transportation system.

The three key jobs now are as follows: First, we will continue to improve the Yangtze River golden waterway's functionality, and carry out a series of large-scale projects such as the 6-meter deep channel from Wuhan to Anqing, and advance work related to new channels of the Three Gorges hub. Second, we will advance the planning and construction of a high-speed railway along the Yangtze River, optimize and improve the regional road network, and advance the construction of a world-class airport cluster in the Yangtze River Delta. Finally, we will continuously optimize the management of transportation, strive to develop river-sea, main line-branch line and multimodal transportation, and carry out other related projects. Thank you.

Li Xiaopeng:

The Ministry of Transport has faithfully implemented the instructions given by General Secretary Xi on developing the Yangtze River Economic Belt and has carried out a series of projects in 2018, including golden watercourse construction, works on energy conservation, environmental protection, and ecological improvement, as well as adjustment of the transportation structure. And those works have seen some effective outcomes. In the next stage, we will, in line with the decisions and plans of the Party Central Committee and the State Council, focus on building an integrated, multidimensional transportation corridor, step up on advancing the golden watercourse, promote energy conservation and environmental protection, and boost efforts to adjust the transport structure, so as to make the Yangtze River an energy-saving and environmentally friendly golden watercourse. Thank you.

Hu Kaihong:

That's all for today's press conference. Thank you, Mr. Li and Mr. Liu. And thanks to everyone here today.

.

Read in Chinese

Speakers:

Han Changfu, deputy head of the Central Rural Work Leading Group, director of the Office of the Central Rural Work Leading Group, and minister of agriculture and rural affairs

Wu Hongyao, a member of the CPC Leading Group of the Ministry of Agriculture and Rural Affairs and director of the Secretariat of the Office of the Central Rural Work Leading Group

Chairperson:

Hu Kaihong, spokesperson for the State Council Information Office of China

Date:

Feb. 20, 2019

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference. This year's "No. 1 Central Document" entitled "Several Opinions of the CPC Central Committee and the State Council on Prioritizing the Development of Agriculture and Rural Areas to Address the Issues Relating to Agriculture, Rural Areas and Rural People" was released yesterday. Today, we are delighted to welcome Mr. Han Changfu, deputy head of the Central Rural Work Leading Group, director of the Office of the Central Rural Work Leading Group, and minister of agriculture and rural affairs, to introduce this document and answer your questions. We also have with us Mr. Wu Hongyao, a member of the CPC Leading Group of the Ministry of Agriculture and Rural Affairs and director of the Secretariat of the Office of the Central Rural Work Leading Group. Now, I'll give the floor to Mr. Han.

Han Changfu:

Ladies and Gentlemen, and friends from the press, good afternoon! Yesterday was the start of the "Rain Water" period, one of the 24 divisions of the solar year in the traditional Chinese calendar. 

This was also the day when Xinhua News Agency released the "No.1 Central Document" of 2019, entitled "Several Opinions of the CPC Central Committee and the State Council on Prioritizing the Development of Agriculture and Rural Areas to Address the Issues Relating to Agriculture, Rural Areas and Rural People." Now, I would like to give you a briefing about it.

The CPC Central Committee with President Xi Jinping at its core has always been highly committed to the work on agriculture, the rural areas and rural people (known in Chinese under the name of "San Nong" work), and given top priority to these aspects in the Party agenda. 

Last September, President Xi delivered an important instruction on advancing the "San Nong" work in 2019 and 2020 and on the drafting of the "No.1 Central Document" for this year. He stressed the importance to the master plan covering tasks essential to the building of a moderately prosperous society in all respects. 

Late last year, President Xi also issued an important written instruction to the Central Rural Work Conference. He acknowledged the achievements made in agricultural and rural development in 2018, highlighted the deep significance of the "San Nong" work, and identified the priorities forming the focus for 2019. His instruction set the tone and provided guidance for drafting the 2019 "No.1 Central Document" and the related work in 2019 and 2020. Premier Li Keqiang has also issued clear requirements for its successful performance.

In 2018, China recorded new achievements in agriculture and rural development, took firm steps to further advance poverty alleviation, and got off to a good start in implementing the Rural Revitalization Strategy.

Once again it was a bumper harvest year. Grain output reached 657.9 million tons, registering the seventh straight year above the 600 million ton-level. Sufficient supply of other important produce, including meat, eggs, milk, fruits, vegetables and fish, was also achieved

Farmers saw a steady income rise. The per capita annual disposable income of the rural population was 14,617 yuan, a gain of 6.6 percent in real terms after allowing for the price factor. This represented a higher growth rate than that achieved by the urban population.

Rural development took on a new look. The Three-Year Action Plan for Improving the Rural Living Environment is underway, and the first Chinese Farmers' Harvest Festival was successfully held.

All in all, there was steady progress in agriculture and rural development, delivering staunch support to the overall goal of sustainable and sound socioeconomic growth.

The year 2019 marks the 70th anniversary of the founding of the People's Republic of China. It is a critical year to achieve the First Centenary Goal of securing a decisive victory in building a moderately prosperous society in all respects, and a historic juncture in finally winning battle of poverty alleviation and rolling out the Rural Revitalization Strategy. So, it is of particular significance to do well in the work related to agriculture, rural areas and farmers.

Amid an increase in downward economic pressures, and faced with a rapidly changing external environment and growing risks and challenges, we must hold firm to the strategic status of agriculture, the rural areas in general, and farmers, and enable all three to play a strong stabilizing role for further growth.

However, agriculture and the countryside in general still pose a daunting and demanding challenge in the drive to make China a moderately prosperous society in all respects. Efforts and resources must be pooled to make breakthroughs that ensure the commitments on rural reform and development goals are met. We also need to take preemptive actions to address risks and challenges, so as to lay the foundation for sustained, healthy economic growth and social stability, and realize the First Centenary Goal as planned.

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the "No. 1 Central Document" follows through on decisions made by the 19th National Congress of the CPC, the second and third plenary sessions of the 19th CPC Central Committee, and the annual Central Economic Work Conference. It focuses on the rural revitalization strategy, identifies a must-do list in regard to the work on agriculture, the rural areas and rural people to achieve a moderately prosperous society in all respects, and also puts forward new requirements for rural reform and development reflecting the evolving situation at home and abroad. 

The "No. 1 Central Document" is designed as a master plan on how to do well in regard to the work on agriculture, the rural areas and rural people, addressing priorities, weakness and essential points. This overall arrangement can be summarized in six aspects. 

First, underlining the need for pursuing progress while ensuring stability. 

For ensuring a stable market and sufficient supply, it seeks to strengthen the various policies and measures for developing agriculture especially grain production, and clearly specifies ways to stabilize the grain acreage and overall output. For achieving stable employment and increased farmers' income, it stresses the need to support rural industry, tap the employment potential of rural areas, and create more opportunities for rural residents to continue to work locally. For ensuring continued social stability and harmony, it emphasizes the need to increase welfare provisions for rural people, and strive to foster a healthy atmosphere of integrity, harmony and stability in the countryside.

Second, prioritizing implementation of the rural revitalization strategy. 

Based on the timetable, roadmap and assignment book forming the backbone of the strategy, the document determines the annual and phased measures in implementing it in 2019, so as to promote fresh progress continuing in each succeeding year and increase the sense of happiness and gains for the rural population.

Third, emphasizing the accomplishment of critical tasks. 

It once again underlines and sets priorities for winning the battle against poverty, ensuring food security and improving the rural living environment. In this regard, it details the measures and enhances accountability guiding all the efforts, investment and policy implementation to focus on must-do tasks to ensure all are completed on schedule.

Fourth, it highlights agricultural supply-side structural reform. In light of the guideline of consolidation, enhancement, improvement and unblocking, it lays out a clear plan for adjusting and optimizing the overall agricultural structure, developing rural specialty industries and promoting integrated development of the primary, second and tertiary industries. There is a strong focus on promoting reform in regard to supply-side agricultural restructuring for further advancement and deeper penetration.

Fifth, it highlights the critical role of rural Party branches. The Document underlines the need for further development and enhancement of rural community organizations across the board, and sets out the overall requirements, key tasks and safeguard measures for building strong and reliable community-level Party organizations throughout the rural areas.

Sixth, it highlights the policy orientation of prioritizing agricultural and rural development. It specifies in detail the institutional arrangement of a five-level Party secretary accountability system for rural revitalization, and stresses that implementation of the "four priorities" is of paramount importance and closely related to government performance evaluation. Finally, it further reinforces policy support. 

To sum up, this year's No.1 Central Document is a master plan essential to the task of building a moderately prosperous society in all respects and to the completion of the poverty alleviation work and implementation of the Rural Revitalization Strategy, enabling us to get off to a good start with rural reform in a new era after 40 years of reform and opening up. The No.1 Central Document features policies that are forward-looking, targeted and provide better guidance and we should fully carry it out.

The initiative of strengthening and empowering agriculture and rural areas was launched in 2019. We will resolutely implement policies concerning work related to agriculture, rural areas and farmers decided by the CPC Central Committee, and roll up our sleeves to work harder. We will make every endeavor to do well in work related to agriculture, rural areas and farmers, and maintain an encouraging momentum as paying tribute to the 70th anniversary of the founding of the People's Republic China with outstanding achievements.

Thanks for listening to my briefing. Now, I would like to take questions from the press together with my colleague Mr. Wu Hongyao, Director of the Secretariat of the Office of the Central Rural Work Leading Group.

Hu Kaihong:

Thanks to Mr. Han for his introduction. Now, the floor is open to questions. Please identify your media organization before asking questions.

CCTV:

As just mentioned, this year's "No. 1 Central Document" focuses on the implementation of tough tasks. Can you introduce what tough tasks mean and to what they specifically refer? Thank you.

Han Changfu:

This is a good question going to the heart of the document. By 2020, we will achieve our first centenary goal and complete the building of a moderately prosperous society in all respects. These are solemn commitments made by our Party to the entire population, and are tough tasks that we must accomplish within that timeframe as well. Therefore, this year's "No. 1 Central Document" focuses on the arrangements for handling these tough tasks.

In detail, the first tough task is to win the battle against poverty, which is the most important and urgent task in building a moderately prosperous society in all respects. In this year's document, it occupies a very prominent position. We should focus on solving existing gaps in providing adequate food and clothing for poverty-stricken people and ensuring their access to compulsory education, basic medical services and housing. Secondly, we need to step up efforts to lift people out of poverty in areas suffering from this in a deep-rooted way, which is a very tough nut to crack. Thirdly, we are determined to prevent people from falling back into poverty, and connect our poverty alleviation work with the revitalization of rural areas. It is of the greatest importance to alleviate poverty through promoting industrial growth that can provide job opportunities and broaden the available channels for increased levels of income, and also directly and effectively link the poverty alleviation work with rural revitalization. Thus, promoting industrial growth in the countryside is an important measure in overall poverty alleviation.

Second, we will further promote grain production. This is always a top priority and the primary task in regard to agriculture and rural affairs. Sufficient food supply may serve as the ballast stone to cope with mounting economic downward pressure and increasing uncertainties and risks. This year's "No. 1 Central Document" specially emphasizes strengthening agriculture and promoting food production. The detailed requirements include maintaining the policies and measures that support grain production, ensuring a sown area of 1.65 billion mu (110 million hectares) for grain, and so maintaining stable grain output. We must ensure China's arable land area remains above the red line of 1.8 billion mu. We need to comprehensively implement the policies providing special protection for the designated permanent basic cropland, and continuously increase the grain production capacity. Moreover, the document stresses the goal of developing 800 million mu of high-standard farmland. This means that grain production continues to be regarded as a tough task.

Third, we will increase the income of farmers. By 2020, the annual per capita income of rural residents must be double that of 2010. That is one of the indexes signaling completion of the work for building a moderately prosperous society in all respects. In recent years, the income of rural residents has been growing rapidly, and actually at a faster rate than that of urban residents for nine consecutive years. We must keep the trend of increasing income for rural residents in the coming two years. The document lays out detailed arrangements to foster the development of rural industries and diversify channels to increase the income of farmers. 

Fourth, we will improve rural living environment. This is one of the key tasks during implementation of the rural vitalization strategy. We will do a good job in carrying out the Three-Year Action Plan for Improving Rural Living Environment so that the rural living environment can be markedly improved by the end of 2020. In this regard, we will thoroughly learn from Zhejiang that has done a good job in its village environment demonstration and improvement initiative. This focuses on waste and sewage treatment, a toilet revolution and a village facelift. Since villages across China differ in many ways, our efforts will proceed from reality and adapt to local conditions, and our guidance should be differentiated. We also have to carry out the task gradually and don't go beyond our abilities. We will ensure our efforts not only match the level of local economic development, but are also in line with local culture and customs. 

Fifth, it is necessary to shore up the weakness in rural infrastructure and public services. Backward infrastructure and public services constitute the most visible sign of the urban-rural gap, and also one of the livelihood issues about which rural people most strongly complain. Therefore, in order to improve lives in the countryside, we should address the weakness as soon as possible. To this end, the document includes a village infrastructure development project expected to improve infrastructure in areas like drinking water, roads, power supply, housing, logistics and a modern information network. We will provide better public services such as education, medical care, sanitation, social security, culture and sport. We will strengthen pollution treatment and ecological conservation and promote green agricultural and rural development with a view to making China's villages highly livable, with picturesque scenery, blue skies and green spaces.

We also have tough tasks in other aspects that require more awareness of deadlines, better planning and coordination, detailed measures, and a strictly-observed accountability system for people at different levels, to ensure fulfillment on time and with the desired results. 

I should say there are many tasks concerning agriculture, rural areas and rural people, but these are the critical ones. In light of China's goal to complete the building of a moderately prosperous society in all respects, poverty alleviation is the most important element. It must be fully accomplished on time and with the desired results. Food security is our primary task, and we will guard the bottom line of keeping grain production from falling. The rural vitalization strategy is the overarching scheme under which we will keep on going in an all-round way with unremitting efforts. I think these are all things we will do vigorously and fulfill comprehensively this year and next. Thank you.

China News Agency:

I have two questions. First, more than a year has passed since the Rural Revitalization Strategy was rolled out. Can you elaborate on what progress has been made, what problems have been encountered in the implementation process, and how will you complete the key tasks in the start-up period? Second, for 16 consecutive years in the new century, the CPC central committee has focused on the issue of the work related to agriculture, the rural areas and the farmers in its No. 1 Central Document. Why should the central government continue to focus on this issue? What is the significance? Thank you.

Han Changfu:

The Rural Revitalization Strategy was a major strategy proposed at the 19th CPC National Congress, and was approved for inclusion in the Party Constitution. Over the past year, all localities have conscientiously implemented the central government's decision-making and arrangements in this regard, and worked hard to promote implementation with carefully-organized plans. Local governments have studied and formulated policy opinions for such implementation, and introduced their own plans accordingly. As we all know, in the second half of last year, the National Rural Revitalization Strategic Plan was released. In September, there was also a press release issued in this very place, detailing how all localities basically had formulated their supporting plans. It should be said that the mainframe for the implementation of the Rural Revitalization Strategy is basically established, and the timetable and tasks for promoting the strategy made clear. At the same time, in regard to the key areas and the key links, both central and local governments have developed a number of implementation plans, and set up a number of major projects and actions. Fresh progress has been made in such tasks as the development of rural industries and the renovation of human settlements. It can be said that the implementation of the Rural Revitalization Strategy has made a good start.

However, in regard to what you have asked, there are a number of problems still to be addressed. The development of agriculture and rural areas is obviously insufficient and imbalanced, and we need to address certain difficulties and problems during implementation of the rural vitalization strategy .

For example, cities and counties need to attach greater importance to rural vitalization, while the shortage of people, land and money should be fundamentally resolved. At the same time, while improving local infrastructure and people's livelihood, rural areas are incurring increasing debt. More to the point, a certain number of farmers remain less motivated.

Our next step must focus on the key tasks of implementing the rural vitalization strategy, ensuring they are better supported with resources and institutions. A great many measures have been specified in this year's "No. 1 Central Document" and the country's plan on its rural vitalization strategy issued last year. So far as I am concerned, there are four key aspects. First, we should carefully study President Xi's important remarks regarding agriculture, rural areas and rural people, with the theories as a guideline for us to implement the rural vitalization strategy in a concerted way.

Second, we will enhance the institutional support to ensure the five-level Party secretaries have their duties closely aligned with rural vitalization. Taking clear cut responsibilities, all officials involved will be evaluated, and the results of the evaluation will have a big say in deciding the overall level of official performance.

Third, we should follow the policies prioritizing development of agriculture and rural areas. We need to improve our top-level design, creating preferential policies for rural development and prioritizing the demand for competent officials, resources, funds and public services to address the shortage of people, land and money. Rural vitalization requires both strenuous efforts and great financial support.

Fourth, we should create a sufficient pool of talents dedicated to rural vitalization. Priority should be given to human resource development in rural areas, making headway in bringing talented minds together with technical and administrative support, at the same time, establishing teams constituting those expert in agriculture and passionate about rural areas and rural people.

The aforementioned are highlighted as our assignments in the next stage.

As to the second question, the "No. 1 Central Document" has focused on the work related to agriculture, rural areas and farmers for the 16th consecutive year. I think this sends out two messages. First, the CPC Central Committee has been attaching great importance to the work and showing great care for rural people, prioritizing the work on its agenda. Second, this year and the next form a decisive period for completing the building of a moderately prosperous society in all respects, and quite a few tough tasks must be fulfilled on regard to our work, especially issues relating to the poor regions. So, this year's "No. 1 Central Document" is of particular significance for the building of a moderately prosperous society in all respects and the achievement of the First Centenary Goal. Thank you.

Reuters:

I have two questions. First, the market is concerned about the plan to boost soybean planting and output mentioned in the "No.1 Document". Would you please detail this plan, for example, the targets of increasing soybean planting area and output? My second question is about the Sino-U.S. trade war. Since its inception, China has approved grain imports from new exporters. Will this diversification of imports continue after the Sino-U.S. negotiations are completed?

Han Changfu:

In regard to this question about soybean production and trade, I'd like to give the floor to Director Wu Hongyao.

Wu Hongyao:

The plan to boost soybean planting and output is an important measure to readjust agricultural supply-side structural reform, in particular the planting industry. We will enhance our efforts in following areas: first, to shore up the soybean planting area, and encourage farmers mainly in Northeast China and the North China Plain to get involved. Second, to accelerate scientific research into the development and selection of high-quality and high-yield varieties to tackle the key issues of improving soybean adaptability, output and quality. Third, to cultivate some new soybean production companies and new cooperative organizations through collaboration with the further development of the processing industry, and to deepen specialization in the soybean production and trade. The plan will mainly provide support in regard to technologies, structure and policy.

As to your second question about the soybean trade, China is a major importer of American soybeans, with the latter occupying about one-third of its total imports. The volume fell last year as a result of the trade friction. As was mentioned, China consumes around 110 million tons of soybeans each year, while its annual production is only 16 million tons. This means about 90% of its soybean needs rely on imports. We will open wider to the world, including increasing the openness of the agricultural sector to make good use of both domestic and foreign markets and resources. China's soybean market will remain open. We will allow the market and businesses get involved to decide the source of imports, and follow the general rules of economics. Our market is also open to the U.S.

Han Changfu:

I would like to add three points. First, China is a soybean producer with its own features and strengths. So, we will appropriately develop our own soybean industry based on our resource advantages and consumer needs. Second, China's reliance on soybean imports will remain despite the development of its own soybean production. As Mr. Wu has mentioned, China produces about 16 million tons of soybeans each year, but annual consumption amounts to 110 million tons, creating an import demand of around 90 million tons. Third, we will continue our soybean trade with other countries and diversify the sources of soybean imports. I believe China and the U.S. will continue to be important soybean trading partners. Thank you.

Farmers' Daily:

The No.1 Document of 2019 is entitled "Prioritizing the Development of Agriculture and Rural areas to Address the Issues Relating to Agriculture, Rural Areas and Rural People". And one of the six characteristics mentioned in Mr. Han's introduction highlights the policy orientation of prioritizing agricultural and rural development. Are there any specific requirements with regard to this aspect? Thanks.

Han Changfu:

The proposition of prioritizing agricultural and rural development is raised to meet the needs of overall development of the Party and the country, as well as to address the development gap between urban and rural areas, where inadequate development is apparent. It is a major policy that needs to be upheld for long-term. Hence, the Document puts forward requirements to master the policy orientation. As you have noted, the document is entitled "Several Opinions on Prioritizing the Development of Agriculture and Rural areas to Address the Issues Relating to Agriculture, Rural Areas and Rural People". Specifically, it emphasizes the "four priorities" put forward by President Xi Jinping.

First, priority in building a team of outstanding cadres. The excellent officials should be put on the front of the work related to agriculture, rural development and farmers' wellbeing, also known as "San Nong" work. Talented ones should work in the front line, while cadres who are familiar with the "San Nong" work over a long period should be included in local leadership development. We need to improve the system of training and managing cadres, in a bid to build a core team with deep knowledge of agriculture, and love for the rural areas and rural people.

Second, priority must be given to optimizing factors allocation. We need to break down barriers harmful to the population flow between urban and rural areas, and an equal exchange system. We should reverse the one-way flow of resources allocation. All kinds of factors, including land, talents, funding, technology and science should be led to flow into agriculture and rural areas, enabling them to give full play to their potential and vitality.

Third, priority has to be given to ensuring investment. We need to make sure that agriculture and rural areas are two priority aspects in fiscal and financial support. Efforts should be made to facilitate access to publicly-funded support, and to ensure that more revenues from sales of land rights are invested in agriculture and rural areas. In the past, we often took money from the rural areas to be used in urban areas. In future, emphasis should be given to investment and efforts focused on agriculture and rural areas.

Fourth, priority must be given to public services. We need to unify the standards and systems of basic public services provided in urban and rural areas. This means we should ensure that there is true fairness in this regard, so that the rural population can have access to public services at the same level as those in the urban areas. 

Opinions on prioritizing the Development of Agriculture and Rural areas should be fully implemented in the "San Nong" work. We need to take the responsibilities of rural revitalization and "four priorities" on our shoulders and regard "San Nong" work as outstanding achievements in an official career. The implementation of the policies on modernization of agriculture and rural areas, as well as the "four priorities" should be made to ensure the "San Nong" work is fully guaranteed. Thanks.

China Daily:

This year marks the beginning of a new round of reform of rural affairs. And the land reform is a highlight of it. What are the key points and direction of the land reform in the future? 

Han Changfu:

This year does indeed mark the start of a new round of reform of rural affairs. The No. 1 Central Document has arranged for its implementation. Handling relations between farmers and land remains the mainline of deepening rural reform. The land institutional reform should be used as a pivot to advance the rural reform. Generally speaking, the most important aspects are as follows.

First, the land contract relations should be stable and long-lasting. We should properly complete the land contract confirmation and registrations, grant the land contract certificates, and appropriately handle and resolve historical problems to place the land contract certificates in farmers' hands. Farmers' minds will be put to rest once these undisputable certificates are awarded. This work has been ongoing for five years since the 18th National Congress of the Communist Party of China, and is nearly completed. We should accomplish the finishing touches this year. Meanwhile, research is underway to roll out supporting policies to extend the land contract rights for another 30 years after the second round of land contracts expires, which President Xi Jinping, also general secretary of the CPC Central Committee, announced in his report to the Party's 19th National Congress. We must act according to the central authority's requirements, and formulate supporting policies so as to ensure the new policies align with the old ones, achieving a smooth transition.

Second, we will continue to deepen rural land reforms in three aspects: land acquisition, market entrance of collectively-owned commercial land, and homestead institutional reform. The reform has been piloted for four years. We will review the sum of the pilot experience, and consolidate and expand reform achievements. As for those that have been successfully piloted, for instance the rural land appropriation and the market entrance of collectively-owned commercial construction land, we will improve the supporting policies after relevant laws are amended and promote the reform nationwide, in order to expedite the formation of a unified urban and rural construction land market.

We will continue to advance the reforms prudently, expand pilot reforms and enrich some reforms that have proven immature, such as the homestead institutional reform. For instance, we must explore effective ways to loosen control over rights to homestead and farmers' houses, so as to make better use of the homesteads and farmers' houses that have been left unused, thus attempting to increase farmers' income. We need to find methods to make that happen, as it is said there are many "hollow villages" with large numbers of unused homesteads and empty houses. Before that, we need to do some groundwork, for instance, organize investigation of homesteads and farmers' houses in these village to assess the basic information nationwide. We strive to finish this important work — the confirmation, registration and certification of usage rights for homesteads in village — by 2020.

Third, we must create new modes of business operations. We need to improve the legal, regulatory and policy systems to ensure the separation of the "three rights" regarding contracted land, and to cultivate two types of new agricultural business entities — the family farm and farmers' cooperative. We need to put policies in place to help the development of small farming households, to foster various kinds of social service organizations and to enhance the efficiency and improve the level of agricultural operations. 

Of course, there are other tasks to be completed in the institutional reform of rural land. This reform is a sizeable process, so it must be advanced steadily and prudently. The No. 1 Central Document also stresses that the reform must defend the baseline, which means the rural land, which is collectively owned, should not be privatized; rural land should always be used for agriculture and farmers' interests, rather than for non-agricultural purposes; farmers' rights and interests over their land must be guaranteed, and giving up their contracted land and homesteads should not be made conditions for their becoming urban citizens. These baselines must be held. In brief, the new round of rural reform should be advanced with the deepening of land institutional reform, which can further release village's vitality. Thank you.

Phoenix:

We note that the document proposes to promote standardized operation of the transfer of various rural property rights. What specific measures will the Ministry of Agriculture and Rural Affairs take in 2019? Thank you.

Han Changfu:

Reform of the rural property rights system is an important part of overall rural reform, which requires us to fulfill two tasks. First, that means making an inventory of assets, or, in other words, figuring out how many collective assets there are, including operational assets and non-operational ones. This work should be basically finished by the end of this year. The second aspect is pushing forward the pilot reform of the joint-stock cooperative system and establishing joint-stock cooperative organizations in rural areas. We need to figure out who owns these assets and how to manage and operate them, and establish a set of effective mechanisms featuring clear property rights and ownership. Th pilot reform program is expanding currently with a growing number of counties and cities across the country engaged. The reform also involves many policy-related factors. Now, urbanization and industrialization are accelerating, and a large number of farmers, namely members of collective economic organizations, are leaving the rural areas to work and carry on business, and even settle down in the cities. Great changes have taken place in rural areas, as well as among members of collective economic organizations. Therefore, the amount and ownership of collective assets has to be figured out. Moreover, the rural revitalization strategy is currently underway to increase farmers' income from property, and the reforms should also be promoted to revitalize rural resources. With the documents on the reform issued by the Central Committee, progress is being made in an orderly manner in fulfilling these two key tasks. We believe that, with gradual progress of reform, the vitality of rural areas will be further unleashed. Thank you.

Guangming Daily:

Rural governance is essential to the implementation of the rural revitalization strategy. Two parts of the five-point general requirement, namely social etiquette and civility and effective governance, are related to rural governance. My question is for Mr. Han. What policies does this year's "No.1 Central Document" offer to strengthen and improve rural governance? Thank you.

Han Changfu:

Thank you for your question. You are a very good learner. Effective governance is an important part of the five-point general requirement for rural revitalization. This is not only about boosting economic growth, but also promoting the all-round development of rural areas. Rural governance is critical to rural revitalization, as it concerns farmers' sense of happiness and security, law and order, as well as the foundation of Party's governance in rural areas. At present, there are still many problems in rural governance, especially at community-level. For example, in terms of social etiquette and civility, there has been a resurgence of bad marriage and funeral traditions, and a refusal to fulfill the requirements of filial piety; in some places, rural gangs are undermining farmers' sense of security and happiness; some community-level Party organizations in rural areas are weak, with lax discipline and being unqualified to serve and mobilize farmers; some farmers' self-governance organizations are also failing to play their due roles. Therefore, major policies have been formulated in this year's "No.1 Central Document" to improve the overall level of rural governance.

The first is to improve governance mechanisms in rural areas. We need to optimize the Party organization-led leadership institutions and working mechanisms that integrate self-governance, rule of law and rule of virtue, improve village-level consultation systems, and ensure that the people play the principal role in governance, so that rural areas can enjoy great vitality, harmony and good governance. Following the requirements made by the CPC Central Committee, we drafted policies to strengthen and improve rural governance to reinforce guidance in this key task.

The second is to strengthen the rural spiritual civilization construction. It is absolutely necessary to guard the rural ideological and cultural fronts, guide farmers to practice socialist core values, tap the excellent traditional culture of the countryside, refine rural concepts and customs through village rules and regulations, and replace old stereotypes with civilized rural customs.

The third is to build a peaceful village. It is necessary to further advance the special campaign against evils, resolutely investigating and dealing with harmful practices and corruption in rural areas, improve the mechanism for mediating and resolving disputes, and investigating and controlling hidden dangers to rural public security, so as to foster a healthy atmosphere of integrity, harmony and stability.

The fourth is to do a good job in building community-level Party organizations in rural areas. A solid foundation is the premise for future work. It is necessary to rectify resolutely any weakness and laxity in community-level Party organizations, select right leaders for them, strengthen and improve the leadership of the community-level Party organization for various organizations at village level, and strengthen the service functions. At the same time, it is very important to improve the funding mechanism for operation of village-level organizations, which is a key policy highlighted in the document. It is necessary to develop and strengthen the collective economy according to local conditions. Through these measures, we can give play to the critical role of rural Party branches, and improve rural governance capabilities and the supporting systems. It should be said that such tasks are still very arduous. Implementing the document can ensure that rural governance plays a key role in rural revitalization. Thank you.

CRI:

At the end of last year, the central economic work conference put forward the principles for supply-side structural reform. Are there any important measures in the No. 1 Central Document concerning supply-side structural reform in the agricultural sector? Thank you.

Han Changfu:

In order to deepen supply-side structural reform in general and also in the agricultural sector, the central economic work conference set the following principles: Previous structural adjustments for cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness, should all be reinforced; micro market entities will be further motivated and energized; the levels of industrial chains will be improved; and the national economic cycle should be further facilitated. In the past two years, there was remarkable progress in supply-side structural reform in the agricultural sector. The mismatch between the supply and demand of agricultural products has improved substantially. For example, major progress can be seen in the reduction of the corn inventory, there has been a significant increase in green development and product quality. However, the main problem in agriculture still remains on the supply side, requiring further reform efforts. The No. 1 Central Document stresses the abovementioned principles. We must stick to the supply-side structural reform in line with the principles of promoting greener agriculture with better quality, and improve the branding of agricultural products as well as their uniqueness and specialty. We intend to deepen supply-side structural reform in greater detail so as to further promote high-quality agricultural development.

First, we will continue to improve various aspects of the agricultural structure. We will reinforce the corn structural adjustment by reducing excess inventory, lowering costs and strengthening areas of weakness. We will maintain a well-balanced pace of work to reduce the corn inventory, step up our efforts in reducing the rice stockpile, implement the plan to boost soybean planting and output, increase the supply of rare, green and quality agricultural products, adjust the product mix of basic food, cash, and fodder crops, raise the quality and performance of the livestock industry and promote the transformation and upgrading of the fisheries sector. 

Second, we will make efforts to advance green development by promoting green and recycling production modes and launching campaigns to reduce use of fertilizers and pesticides. Last year, China achieved negative growth in use of both fertilizers and pesticides. We will continue to seek advances in this regard. Moreover, we will promote the recycling of agricultural waste. And we will also expand trials in using systems of crop rotation and fallow land. 

Third, we will take strong measures to facilitate standardized production, brand building, and closer supervision of food safety. We will work to ensure the quality and safety of agricultural products and improve the supervisory mechanism, monitoring and traceability systems. In this way, we can promote an agricultural development pattern where the superior will be selected and the inferior eliminated, and the quality and branding will propel and bolster agricultural growth.

These are the major measures we will undertake to adjust the agricultural structure. We believe that, with stable total output and improving structure, the agricultural sector can achieve better quality, performance and greater competitiveness. Thank you.

China Co-operation Times:

The No.1 Central Document stresses the regulation of farmers' cooperatives and puts forward the establishment of a system to improve and support the development of farmers' cooperatives. Progress on developing cooperation among production, supply and marketing and credit cooperatives has been achieved in Zhejiang province. So, what's the next step in promoting such cooperation? And what kind of policies will be taken to support the development and regulation of farmers' cooperatives? Thanks.

Wu Hongyao:

To foster new types of agribusiness, we place importance on two aspects: farmers' cooperatives and family farms. The No.1 Central Document covers both, with stepped-up efforts to develop family farms, while regulating the development of farmers' cooperatives.

Farmers' cooperatives have achieved great progress and played a vital role in the economy. However, problems are emerging at the same time. According to the No.1 Central Document, farmers' cooperatives will pursue further development, while seeking to improve their regulation, so as to address such issues as "zombie cooperatives."

The supply and marketing cooperatives in Zhejiang province you mentioned form an important part in the farmers' cooperative movement, and development of the cooperative economy, which is highly valued by the CPC Central Committee and the State Council. The central leadership has released opinions on deepening reform on supply and marketing cooperatives, now being implemented across the country. The complex cooperatives (including production cooperatives, supply and marketing cooperatives, as well as credit cooperatives) in Zhejiang province started quite early and have made positive progress. The complex cooperatives can be seen as a new direction nationwide. Exploration on how to develop them further is underway in different places. Besides the cooperatives in Zhejiang province, Shandong province is placing farmland under trusteeship, which is also an effective way forward.

To develop supply and marketing cooperatives, first, we need to focus on strengthening primary branches and guide them to focus on their original functions, inviting more individual farmers to participate. Second, we need to expand the business scope. The credit cooperatives can also be developed to promote cooperation on distribution and processing of agricultural products.

In a word, the development of cooperatives needs both support and regulation in order to give full play to their role in future. Thanks.

Han Changfu:

I agree with what Mr. Wu Hongyao has said in regard to your question. However, there is still one further point I would like to share with you. We have an important policy orientation to support and direct the development of farmers' cooperatives during the reform and revitalization of our countryside. We are a country where smallholder farming is in the majority, and if we want to have a market-based agriculture, we need to group smallholders together for them to venture in the market. Besides, modern agriculture needs to achieve economies of scale and this also makes it necessary for farmers to stick together and be well organized to achieve common prosperity. Therefore, our work in 2019 will also focus on the farmers' cooperatives in various forms, ensuring their sustainable development. Thank you.

Hu Kaihong:

That's all for today's press conference. Thank you, Mr. Han and Mr. Wu and thanks to everyone here today.

.

Read in Chinese

Speaker:
Ning Jizhe, head of the National Bureau of Statistics

Chairperson:
Hu Kaihong, spokesperson for the State Council Information Office of China

Date:
Jan. 21, 2019

   

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Mr. Ning Jizhe, head of the National Bureau of Statistics (NBS), to introduce China's economic performance in 2018, and answer your questions. Now, I'll give the floor to Mr. Ning.

Ning Jizhe:

Good morning, chairperson, friends from the press. In 2018, China's economy operated within a reasonable range and our main social and economic development targets were realized. This is because all localities and departments stuck to the overall tone of making progress while maintaining stability in their work. They embraced new development philosophies, sought high-quality development, and pressed ahead with supply-side structural reform. As a result, the supply-side structural reform has gone deeper, reform and opening-up efforts have been intensified, living standards have been improved, the economy has remained in a reasonable range and the trend of achieving progress while maintaining stability has continued. We are continuing to make progress toward building a moderately prosperous society.

According to preliminary calculations, China's GDP in 2018 hit 90.03 trillion yuan, up 6.6 percent from the previous year, realizing the goal of 6.5 percent growth. The four quarters saw growth rates of 6.8 percent, 6.7 percent, 6.5 percent, and 6.4 percent, respectively. The value added of industries were 6.47 trillion yuan, 36.60 trillion yuan, and 46.96 trillion for the primary, secondary and tertiary industries, respectively, with growth rates of 3.5 percent, 5.8 percent, and 7.6 percent.

1. Grain production enjoyed a high yield, and production of animal husbandry was generally stable.

Last year's total grain output was 657.89 million tons, down by 0.6 percent from the previous year. Regardless, this was still a year of bumper harvest and we've maintained an output of over 650 million tons for four consecutive years. The output of summer grain, early rice and autumn grain was 138.78 million tons, 28.59 million tons and 490.52 million tons respectively. The total output of cotton was 6.10 million tons, up by 7.8 percent from the previous year. The planting structure continues to improve as the land used to grow high-quality rice, soybeans, cotton, sugar crops and Chinese medicinal herbs increased, while the land allocated to maize growth decreased.

The total output of pork, beef, mutton and poultry was 85.17 million tons, down by 0.3 percent over last year. The total output of pork was 54.04 million tons, down by 0.9 percent; output of beef was 6.44 million tons, up by 1.5 percent; the output of mutton was 4.75 million tons, up by 0.8 percent; the output of poultry was 19.94 million tons, up by 0.6 percent. The number of live pigs was 428.17 million, down by 3 percent from the previous year; the amount of pigs slaughtered was 693.82 million, down by 1.2 percent.

2. Industrial production increased steadily, and new industries grew rapidly.

The value added of industrial enterprises with an annual revenue at or above 20 million yuan from their main operations increased by 6.2 percent in 2018 over the previous year, with a moderate and stable growth rate. In terms of different types of organizations, the value added of state-holding enterprises increased by 6.2 percent, that of collective enterprises decreased by 1.2 percent, that of joint-stock enterprises went up 6.6 percent, and that of enterprises with foreign, Hong Kong, Macao and Taiwan investors grew by 4.8 percent. In terms of different industries, the value added of mining increased 2.3 percent, that of manufacturing was up 6.5 percent, and that of producing and supplying electricity, heat, gas and water grew by 9.9 percent. The value added of high-tech manufacturing rose by 11.7 percent, strategic emerging industries by 8.9 percent and equipment manufacturing by 8.1 percent over the previous year, a growth 5.5, 2.7 and 1.9 percent faster, respectively, than of industrial enterprises over the designated revenue of 20 million yuan. The output of emerging industrial products increased rapidly, with passenger trains rising 183.0 percent, microwave terminals 104.5 percent, new energy vehicles 40.1 percent, bio-based chemical fibers 23.5 percent, smart televisions 18.7 percent, lithium-ion batteries 12.9 percent and integrated circuits by 9.7 percent. In December, the value added of industrial enterprises with an annual revenue of 20 million yuan or more from their main business operations increased by 5.7 percent year over year, 0.3 percentage point higher than the growth rate in November.

From January to November, the total profit of industrial enterprises with an annual revenue of 20 million yuan or more from their main business operations reached 6.1169 trillion yuan, up 11.8 percent year on year. The profit margin of this same subset of industrial enterprises was 6.48 percent, 0.16 percentage point higher than the same period last year.

3. The service sector maintained fast growth, and the business activity indexes remained within the range of expansion.

In 2018, the Index for Service Industry Production maintained rapid growth, increasing by 7.7 percent over the previous year. Among sectors, information transmission, software and information technology services, leasing and business services grew by 37.0 percent and 10.1 percent respectively. In December, the Index for Service Industry Production increased by 7.3 percent year over year, 0.1 percentage points higher than the previous month. From January to November, the business revenue of service enterprises above designated size increased by 11.5 percent year over year. In particular, the business revenue of strategic emerging services, science and technology and high-tech services increased by 14.9, 15.0 and 13.4 percent year over year, respectively. The operating profit of service enterprises above designated size increased by 5.7 percent.

In December, the Index for Service Industry Business Activity stood at 52.3 percent, which was within the expansion range. Specifically, the figures for railways, telecommunications, radio and satellite transmission services, monetary and financial services, insurance and other financial industries were all in a higher expansion range above 60.0 percent. In terms of market expectations, the Index for Service Industry Business Activity Expectation reached 60.2 percent, an increase of 0.6 percentage points over the previous month.

4. Market sales grew steadily and rapidly, and the proportion of online retail sales increased significantly.

The total annual retail sales of consumer goods reached 38.10 trillion yuan, an increase of 9 percent over the previous year, which reflects relatively rapid growth. Specifically, the retail sales of consumer goods by enterprises above the designated size stood at 14.53 trillion yuan, an increase of 5.7 percent. If we categorize them according to the business location, the retail sales in urban areas reached 32.56 trillion yuan, up 8.8 percent, while the retail sales in rural areas reached 5.54 trillion yuan, up 10.1 percent.

According to the type of consumption, catering income was 4.27 trillion yuan, an increase of 9.5 percent and the retail sales of goods were 33.83 trillion yuan, an increase of 8.9 percent. The upgraded consumption goods have seen relatively rapid growth. The growth rates of retail sales in three categories, namely of cosmetics, of household appliances and audio-visual equipment, and of communication equipment, were 3.9, 3.2 and 1.4 percentage points higher than the overall growth rate of retail sales of consumer goods by enterprises above the designated size. In December, total retail sales of consumer goods increased by 8.2 percent year over year, or 0.55 percent month-on-month.

The annual online retail sales nationwide reached 9.01 trillion yuan, an increase of 23.9 percent over the previous year. Specifically, the online retail sales of physical goods reached 7.02 trillion yuan, up 25.4 percent, accounting for 18.4 percent of the total retail sales of consumer goods, or 3.4 percentage points higher than the previous year; the online retail sales of non-physical goods were 1.99 trillion yuan, up 18.7 percent.

5. Investment growth overall slowed down and stabilized; however, investments in the manufacturing industry and private investment increased at a faster rate.

National fixed-asset investment (excluding rural households) totaled 63.5636 trillion yuan, up 5.9 percent year over year, or 0.5 percentage point higher than the growth rate achieved in the first three quarters. Private investment reached 39.4051 trillion yuan, an increase of 8.7 percent year over year and 2.7 percentage points higher than the same period of the previous year. In regard to specific industries, primary sector investment increased 12.9 percent, up 1.1 percentage points from the same period of previous year. Secondary industry investment rose 6.2 percent, or 3.0 percentage points higher, of which that by the manufacturing industry increased 9.5 percent, which was a gain of 4.7 percentage points. Tertiary industry investment rose 5.5 percent, including a 3.8 percent increase in infrastructure. Investment in high-tech manufacturing and equipment manufacturing increased 16.1 percent and 11.1 percent respectively on an annual basis, or 6.6 and 1.6 percentage points higher than the growth of overall manufacturing investment. In December, fixed asset investment increased by 0.42 percent from the previous month. Last year, total investment in real estate development was 12.0264 trillion yuan, up 9.5 percent year over year. The total floor space of commercial buildings sold was 1.71654 billion square meters, up 1.3 percent year over year, of that of residential buildings sold grew by 2.2 percent. The total sales of commercial buildings reached 14.9973 trillion yuan, up 12.2 percent year over year, including a 14.7-percent growth in sales of residential buildings.

6. Imports and exports reached a record high, with the structure of trade continuing to improve.

China's imports and exports last year reached 30.51 trillion yuan, up 9.7 percent year-on-year. This was the first time the figure exceeded 30 trillion yuan. Foreign trade maintained growth with structural optimization, ensuring a steady and sound momentum for both imports and exports to exceed expectations. Exports rose 7.1 percent year on year to 16.42 trillion yuan, while imports grew 12.9 percent to 14.09 trillion yuan. This produced a trade surplus of 2.33 trillion yuan, a drop of 18.3 percent from the previous year. General trade accounted for 57.8 percent of all activity, up 1.4 percentage points from the previous year. Electromechanical exports, constituting 58.8 percent of total exports, grew by 7.9 percent, or 0.4 percentage points higher than the previous year. Imports and exports with major trading partners, – including the European Union, the United States and the Association of Southeast Asian Nations (ASEAN) countries, achieved overall growth, the figures being 7.9 percent, 5.7 percent and 11.2 percent respectively. Trade with countries along the Belt and Road Initiative continued their upswing, growth reaching an aggregated 13.3 percent year-on-year, which was 3.6 percentage points higher than the improvement achieved in overall imports and exports. The export delivery value of industrial enterprises above designated scale reached 12.39 trillion yuan, up 8.5 percent year-on-year.

7. Consumer price saw a mild surge and the growth of industrial producer's price fell.

Annual consumer prices grew by 2.1 percent year over year, which reflects a mild increase, lower than the projected target of 3 percent. Within this category, urban consumer price increased 2.1 percent, and rural 2.1 percent. The price of food, tobacco and wine increased 1.9 percent, clothing 1.2 percent, residence 2.4 percent, articles of daily use and services 1.6 percent, traffic and communication 1.7 percent, education, culture and entertainment 2.2 percent, medical care 4.3 percent, and other articles for use and services 1.2 percent. Within the price of food, tobacco and wine, the price of grain rose 0.8 percent, pork fell 8.1 percent, and fresh vegetables went up 7.1 percent. The core CPI, with food and energy prices deducted, increased 1.9 percent, 0.3 percentage point lower than the previous year. In December, consumer prices increased by 1.9 percent year over year, the same as November's rate. The annual factory prices from industrial producers went up 3.5 percent year over year, down 2.8 percentage points from the previous year. The industrial producer factory price increased 0.9 percent year over year in December, 1.0 percent lower than that of November. The annual industrial producer purchase price increased 4.1 percent year over year; within that, in December the industrial producer purchase price rose by 1.6 percent year over year, or 0.9 percent lower than November's figure.

8. Employment remained stable and urban surveyed unemployment declined.

The number of new jobs was 13.61 million last year, 100,000 more than the previous year and 123.7 percent of the annual target. The number of annually increased jobs has remained above 13 million for six years consecutively. In December, the national urban surveyed unemployment rate was 4.9 percent, 0.1 percentage point lower than the same month of the previous year. Last year, the urban surveyed unemployment rate remained between 4.8 percent and 5.1 percent, realizing the target of keeping it below 5.5 percent. In December, the surveyed unemployment rate in 31 major cities was 4.7 percent, 0.2 percentage point lower than the same month of the previous year. The surveyed unemployment rate of the main employment population between 25 years old and 59 years old was 4.4 percent, remaining the same as the previous month. By the end of the year, the number of employed persons nationwide was 775.86 million, of which the urban employed population was 434.19 million. The number of migrant workers hit 288.36 million last year, 1.84 million more than the previous year, up 0.6 percent year over year. Of these, the number of migrant workers working at or near their hometowns was 115.7 million, up 0.9 percent, and the number of migrant workers working far from their hometowns was 172.66 million, up 0.5 percent. The average monthly income for migrant workers was 3,721 yuan, up 6.8 percent year over year.

9. The income and consumption expenditure of residents increased steadily, and growth in rural areas was faster than in urban ones.

In 2018, the nationwide per capita disposable income of residents was 28,228 yuan, a nominal growth of 8.7 percent over the previous year, or a real increase of 6.5 percent after deducting price factors, exceeding the growth of per capita GDP and essentially keeping up with economic growth. In terms of permanent residence, the per capita disposable income of urban households was 39,251 yuan, a nominal growth of 7.8 percent over the previous year, or a real growth of 5.6 percent after deducting price factors. The per capita disposable income of rural households was 14,617 yuan, a nominal growth of 8.8 percent over the previous year, or 6.6 percent in real terms after deducting price factors. The per capita income of urban households was 2.69 times that of rural households, 0.02 less than the previous year. The median of the nationwide per capita disposable income was 24,336 yuan, a nominal increase of 8.6 percent. Taking the per capita disposable income of nationwide households by income quintiles, that of the low-income group reached 6,440 yuan, the lower-middle-income group 14,361 yuan, the middle-income group 23,189 yuan, the upper-middle-income group 36,471 yuan, and the high-income group 70,640 yuan.

In 2018, the nationwide per capita consumption expenditure was 19,853 yuan, a nominal increase of 8.4 percent, 1.3 percentage points higher than the previous year, or a real increase of 6.2 percent after deducting price factors, 0.8 percentage point higher than the previous year. The per capita consumption expenditure of urban households was 26,112 yuan, a nominal growth of 6.8 percent, 0.9 percentage point more than the previous year. The per capita consumption expenditure of rural households was 12,124 yuan, a nominal increase of 10.7 percent, 2.6 percentage points more than the previous year.

10. Supply-side structural reform has gone deeper; and the trend of economic transformation and upgrading has continued.

2018 has seen substantive progress in fulfilling the five priority tasks of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening points of weakness. In terms of cutting overcapacity, the tasks for iron, steel and coal were completed ahead of schedule. Nationally, the rate of industrial capacity utilization was 76.5 percent. The rate for ferrous metal melting and rolling was 78 percent and that for coal mining and washing was 70.6 percent, up 2.2 and 2.4 percentage points, respectively, from a year ago. In terms of deleveraging, the corporate asset-liability ratio went down. At the end of November, the ratio for industrial enterprises above the designated size was 56.8 percent, down 0.4 percentage point year over year. Among these enterprises, state-holding ones had a ratio of 59.1 percent, down by 1.6 percentage points. In terms of reducing excess inventory, China's housing for sale totaled 524.14 million square meters at the end of 2018, representing a fall of 11 percent. In terms of lowering cost, corporate costs continued to decline. From January to November, industrial enterprises above the designated size saw their costs fall by 0.21 yuan to 84.19 yuan for each one hundred yuan they made from their core businesses. In terms of strengthening points of weakness, investment in points of weakness saw fast expansion. Namely, investment in ecological protection and environmental improvement expanded by 43 percent and agricultural investment by 15.4 percent, up 37.1 and 9.5 percentage points respectively.

Economic structure continued to improve. The value added from the tertiary industry accounted for 52.2 percent of the GDP, up 0.3 percentage point year over year. This was 11.5 percentage points higher than contributions from the secondary industry, which increased by 0.1 percentage point to 59.7 percent. Consumption's role as a main driver for economic growth became stronger, with final consumption expenditure contributing 76.2 percent to GDP growth, up 18.6 percentage points year over year and 43.8 percent higher than the contribution of gross capital formation. Household consumption saw an advancement toward higher quality. The national Engel coefficient was 28.4 percent, down by 0.9 percentage point from last year. Of the total household consumption per capita, 44.2 percent was on services, up 1.6 percentage points year over year. Green development also made solid progress. Energy consumption per 10,000 yuan of GDP dropped by 3.1 percent, meeting the goal of falling by at least 3 percent. The proportions of energy consumption continued to improve. Clean energy, such as natural gas, hydropower, nuclear power and wind power, saw a higher ratio of total energy consumption, up by about 1.3 percentage points from the previous year.

11. China's population grew steadily, and the urbanization rate continued to rise.

By the end of 2018, the mainland population (including populations of 31 provinces, autonomous regions, municipalities directly under the central government, and PLA personnel, excluding populations of Hong Kong Special Administrative Region, Macao Special Administrative Region, Taiwan Province and overseas Chinese) stood at 1.39538 billion, an increase of 5.3 million from the year before. There were a total of 15.23 million births and 9.93 million deaths reported in 2018, and the birth and death rates reached 10.94 and 7.13 per 1,000, respectively. In terms of gender structure, there were 713.51 million males and 681.87 million females, putting a gender ratio at 104.64. The working-age population (people aged from 16 to 59) stood at 897.29 million, representing 64.3 percent of the total population. About 249.49 million people were registered as being 60 or older, accounting for 17.9 percent of the population; 166.58 million were 65 or older, or 11.9 percent of the population. There were 831.37 million urban residents, a 17.9 million increase from the previous year. The rural population fell 12.6 million to a total of 564.01 million. The urbanization rate was 59.58 percent, 1.06 percentage points higher than the previous year. About 286 million people resided places for over six months away from their places of residential registration, 4.5 million less than the previous year. Specifically, the floating population was 241 million, 3.78 million less than the previous year.

Generally speaking, the national economy in 2018 performed within a reasonable range. It maintained sound and steady growth. At the same time, we have noticed that there are still some changes in the economic operation that are a cause of some concern. We are also facing a complex and serious external environment, accompanied by downward pressure on overall economic growth. All such problems need to be resolved in a targeted manner. In 2019, we will continue to take advantage of the important period of strategic opportunities for development, adhere to the policy of making progress while pursuing stability, commit ourselves to the new development philosophy, seek high-quality development, and pursue supply-side structural reform as the main task. We will stimulate market vitality, demand potential and the driving force of growth, and take comprehensive steps to stabilize growth, facilitate reform, adjust various structures, improve people's livelihood and prevent risks. At the same time, we should also improve the counter-cyclical adjustment of macro policies, enhance structural policies in regard to institutional development, ensure we can continue to provide the basic needs in regard to social policies, and maintain continuous and healthy economic development and social stability, so as to lay a key foundation for building a moderately prosperous society in all aspects. Thank you.

Hu Kaigong:

Now let's move on to questions. Please identify your media organization before asking questions.

.

CCTV:

Mr. Ning has presented in his speech just now that the economy maintained a steady growth in 2018, while we previously heard the central government used expressions like "worrisome developments amid generally steady economic operation" when analyzing the economic situation. Mr. Ning, can you please share with us your views on this expression? What do the "developments" refer to? Where do such worries come from? Which direction is the economy heading? Thank you.

Ning Jizhe:

In 2018, against the backdrop of a complicated international and domestic environment, China's national economy maintained stable and sound development momentum. The main expected goals of economic and social development were achieved, summed up in the following six aspects:

First, the economic operation was kept within a reasonable range, with the macro-control objectives all achieved. The economy maintained medium-to-high-speed growth, with total economic output reaching a new level. GDP grew by 6.6 percent over the previous year, achieving the growth target of around 6.5 percent. The growth rate ranked first among the world's top five economies. China is the largest contributor to world economic growth at nearly 30 percent. In 2018, GDP exceeded 90 trillion yuan, an increase of nearly 8 trillion yuan over the previous year. Converted using an average exchange rate, total economic output reached US$13.6 trillion, second in the world.

Price increases proved to be lower than expected, with a moderate rise in consumer prices. The CPI rose by 2.1 percent from the previous year, lower than the approximate 3 percent that had been expected.

Urban employment continued to expand, and new employment increased substantially. In 2018, the number of new urban jobs stood at 13.61 million; the urban surveyed unemployment rate remained at around 5 percent for the whole year and, in fact, was less than 5 percent in the later months of the year, achieving the target of keeping the figure below 5.5 percent that had been proposed in early 2018. Imports and exports maintained stable growth momentum, with a basic balance being achieved in international payments. For the first time, the total volume of imports and exports exceeded 30 trillion yuan, and the scale of trade in goods reached a new high, ranking first in the world. The trade structure continued to be optimized, the proportion of general trade imports and exports increased, the proportion of exports of mechanical and electrical products increased, and the foreign exchange reserves remained above US$3 trillion. The RMB exchange rate was basically stable.

Second, the three tough battles got off to a good start, and identified weak links significantly strengthened. The macro leverage ratio began to stabilize. In 2018, M2 growth was lower than nominal GDP growth. The ratio of M2 to GDP was 202.9 percent, down 3 percentage points from the previous year. At the end of November 2018, the local government debt balance was 18.29 trillion yuan, falling within designated limits approved by the National People's Congress.

We made notable progress in poverty alleviation. In 2018, the number of rural poor population in the country was reduced by more than 10 million, and 2.8 million people were relocated due to poor local conditions. We estimate about 280 poverty-stricken counties overall will have escaped from poverty.

We also made positive progress in energy conservation, emission reduction and pollution prevention and control. The energy consumption intensity continued to decline. The energy consumption for every 10,000 yuan of GDP fell by 3.1 percent year-over-year, and the proportion of clean energy consumption increased. 338 major Chinese cities saw 79.3 percent of days with fairly good air quality in 2018, 1.3 percentage points higher than 2017. The density of PM2.5 particulate matter was 39 micrograms per cubic meter last year, a decrease of 9.3 percent.

Third, supply-side structural reform further advanced. The task of reducing excessive capacity was completed ahead of schedule. We have been adhering to the market-oriented and law-based approach to reduce excessive capacity, leading to over fulfillment in the targeted reduction of steel production capacity by more than 30 million metric tons, and the removal of the coal production capacity by more than 150 million metric tons.

Deleveraging was steadily promoted, and the macro leverage ratio remained stable. The micro leverage ratio, measured by the asset-liability ratio of industrial enterprises above designated size, was down 0.4 percentage point year-over-year at the end of November 2018.

The drive for destocking proved effective. At the end of 2018, the areas of commercial housing for sale fell by 65.1 million square meters from the end of the previous year. In the past two years, a total of 180 million square meters of commercial housing stock has been cut.

Cost reduction continued to be effective. Costs in every 100 yuan of income earned from the main business of industrial enterprises above designated size continued to decline. The total scale of national enterprises and individuals' burden reduction exceeded the estimated 1.1 trillion yuan at the beginning of the year, and now it has reached more than 1.3 trillion yuan.

Much work was also undertaken to bolster weak spots. Investments in eco-environment protection, agriculture and social sectors saw accelerated growth.

The overall profitability of enterprises was on the rise. From January to November, the total profit of industrial enterprises above designated size increased by 11.8 percent year-over-year.

Fourth, the economic structure is being adjusted and optimized as the new driving force for development becomes stronger. First, the structure of demand was adjusted and optimized, and the proportion between investment and consumption witnessed rational changes. People care about consumption's contribution rate to economic growth, which was 76.2 percent last year, 18.6 percentage points higher than the previous year and 43.8 percentage points higher than the gross capital formation. The internal structure of investment is also being optimized. Private investment and investment in manufacturing both increased rapidly. Second, the industrial structure was continually upgraded, and the service industries assumed the role of "stabilizer." In terms of gross volume, the tertiary industry accounts for 52.2 percent of GDP. In terms of increment, the tertiary industry's growth is 1.8 percentage points higher than that of the secondary industry. In terms of internal structure, the industries' evolution to medium- and higher-end took speed. The value added of the high-tech industries last year increased 11.7 percent year over year, accounting for 13.9 percent of that of the industrial enterprises above a designated scale. And the share is even higher in some coastal regions. The value added of equipment manufacturing industries was faster than the growth of industries of the enterprises above a designated scale. As for agriculture, the plantation structure was optimized and adjusted, and the output of grains remained generally stable. Third, emerging industries, new products, new commercial activities and new modes continuously grew up. The emerging manufacturing industries of strategic importance and the merging service industries of strategic importance have kept comparatively fast growth. The outputs of new energy vehicles, optical fiber and smart television have increased by a large margin. The online retail sales volume has increased by more than 20 percent. Fourth, important science and technology achievements are available. The Beidou 3 satellite was successfully deployed and came into operation; the first earthquake monitoring satellite was launched; the Hong Kong-Zhuhai-Macao Bridge opened to traffic last year. Science and technology are increasingly fueling development. Earlier this year, the Chang'e 4 probe landed successfully on the far side of the moon.

Fifth, reform was deepened and opening-up was expanded, injecting new vitality into development. First, in some key fields, reforms were carried out at a deeper level. The reforms -- featuring streamlining governance and delegating power, integrating power delegation and strengthening management, and optimizing services — have yielded obvious effects. According to the World Bank's Doing Business Report 2018, China's ranking has soared 32 places from last year among 190 economies. Second, the number of market subjects increased by a large margin. Last year, the number of newly registered enterprises nationwide was up 10.3 percent year over year, and about 18,400 enterprises were registered each day on average. The National Bureau of Statistics has finished the fourth national economic census, and is now engaged in a household survey. The results of the survey indicate that the number and vitality of legal entities and industrial unity are higher than expected. Third, the finance and taxation system reform unfolded nationwide. The reforms of state-owned enterprises and state-owned assets, price reform, and reform of investment administrative mechanisms were carried forward steadily. The property ownership protection system was constantly improved. The opening-up level was continuously enhanced. The momentum of attracting foreign investment was good. Against the backdrop of the notable decline of global cross-border investment, China used $135 billion last year, up 3 percent year over year. The investment used by manufacturing industries increased by 20 percent, accounting for 30 percent of overall growth. China's foreign investment grew continuously; its economic and trade exchanges with countries along the routes of the Belt and Road were expanded. Its import and export volume with these countries, and its nonfinancial investment in these countries, both grew faster than the overall growth of imports and exports and overall foreign-bound investment.

Sixth, residents' income and spending increased rapidly, and people's livelihood steadily improved. First, residents' income grew on pace with the economy. Last year, national per capita disposable income grew 6.5 percent, higher than the 6.1 percent growth of GDP. Rural residents' income grew faster than that of their urban counterparts. According to the National Bureau of Statistics, the middle-income population in China has exceeded 400 million. Since the 18th National Congress of the Communist Party of China in 2012, the scale of the middle-income group has continuously expanded. Second, residents' spending grew quickly. Last year, the personal expenditure grew 6.2 percent, 0.8 percentage points higher than the previous year. The actual growth of the rural residents' personal consumption was 8.4 percent, faster than that of urban residents. Third, the structure of consumption was constantly upgraded. Last year, the Engel Coefficient of the national residents was 28.4 percent, down 0.9 percentage points from the previous year. The standard of the OECD countries, or developed economies, was below 30 percent. We reached the level in terms of the Engel Coefficient. Service consumption continuously improved as well. Last year, the number of domestic tourists and the revenue from domestic tourism both grew by more than 10 percent, and total box office revenue of the film industry reached 60 billion yuan, up nearly 10 percent.

At the same time, the economic performance, amid overall stability, presents aspects that arouse people's concern. The major reason firstly stems from the external environment. We are all very concerned about the way the international situation is trending, full of variable and uncertain factors. The past year witnessed ups and downs in the world economy, such as the financial market and prices of large quantities of commodities fluctuating sharply, along with a drastic fall in global investment and the prevalence of global trade protectionism and unilateralism. All these developments in the international situation impacted on China – the second largest economy in the world with its import and export volumes accounting for one-third of total GDP.

Other factors came from internal environment. Structural issues piling up over a long period are still the main aspect of all contradictions in China's development. Currently the economy is in a transition stage, during which the throes of the reform process are unavoidable, with a constantly changing situation. There are inevitably various contradictions, challenges and difficulties in such a transition period. In particular, the economy faces significant downward pressures. It should be noted that the economic growth rate dropped slightly, as was expected, of course.

Overall, in such a complex internal and external environment, it is not easy for the economy to perform within a reasonable range. Achievements have not come easily; hence, we will attach greater importance to the various problems.

Bloomberg:

I have two questions. First, in terms of the "worrisome developments" mentioned just now, what were the sources of these worries? How much came from the trade war with the U.S.? Second, it was just mentioned that the unemployment rate was 4.9 percent at the end of last year. We have read many media reports on large-scale dismissals before the New Year like those of Foxconn. The National Development and Reform Commission attributed it to migrant workers' earlier return home for the Spring Festival. Can the unemployment rate of 4.9 percent accurately describe China's situation? Thank you.

Ning Jizhe:

On your first question, how much of the worry stems from China-U.S. trade friction? This began to emerge from the second quarter of last year. In these circumstances, the Chinese government promptly adopted a policy of stabilizing employment, finance, foreign trade, foreign capital, investment and expectations. The trade friction does affect China's economic operation, but the effect is controllable overall. The data on imports and exports released some days ago also demonstrated this point, and judging from the data on China's economic performance, it is generally believed the international situation had a greater impact on China's economy in the fourth quarter. Here, I would like to share the data in December with you again.

In the past two months, some major economic indicators have risen while others have fallen, but the economy still registered a slower, but stable performance. For example, in December, major indicators on investment, consumption, performance of the industrial and service sectors were either flat or slightly up, but generally stable. Fixed asset investment from January to December rose 5.9 percent year over year. In December, retail sales of consumer goods rose 8.2 percent year over year, 0.1 percentage point higher than the growth rate in November. The added value of industrial enterprises with an annual revenue of 20 million yuan or more derived from their main business operations increased 5.7 percent year over year, 0.3 percentage point higher than that in November. The Index for Service Industry Production rose 7.3 percent year over year, 0.1 percentage point faster than November. Despite the decline of the Purchase Management Index of the manufacturing industry, the Index for Non-manufacturing Industry Business Activity increased, the service sector maintained its boom, and the Index for the Construction Industry rose sharply.

Trade friction affects not only the economies of China and the U.S., but also the global economy. In general, we are overcoming it and moving forward. Cooperation brings benefits for both countries, while confrontation brings mutual suffering. Cooperation brings gains to all countries, while confrontation brings losses to many. Working groups of the two countries maintained close communication and conducted many talks to implement the outcome of the meeting in Argentina on Dec.1 of their leaders, and achieved positive progress. It was important news for both countries and the global economy in general. I have personally noticed that the stock market or the tweets from the other side of the ocean had some positive effects on the talks. Economic globalization remains a long-term trend, and the Chinese economy is now deeply integrated into the world economy. The trade in goods between China and the U.S. exceeds US$ 630 billion. Mutually-beneficial win-win cooperation remains unchanged, and there is huge demand and potential for cooperation. Meanwhile, it should be noted that, in general, China's economic growth is led by domestic demand. In 2018, the contribution rate of consumption growth and investment growth combined surpassed 100 percent, while that of net exports was negative. Moreover, there is plenty of room for expansion in China's domestic market. Trade friction has not changed, and will not change the fundamentals of China's economic development. The country's resilience in withstanding pressure and coping with shocks, and China's overall economic growth amid stability, will remain unchanged.

Your second question is about the unemployment rate. We used the registered urban unemployment rate based on registrations with the labor authority; however, the National Bureau of Statistics began to release the surveyed urban unemployment rate last year. The latter had already been trialed internally for five years, and is considered more representative, as its system, approach and sample distribution all conform to the standards of International Labor Organization (ILO). As the ILO was most influenced by Europe, we adopted the same system and approach of surveyed unemployment rate as the European countries. In comparison, the statistical scope of the U.S. might be narrower. China's surveyed urban unemployment rate was 4.9 percent in December, while that of the U.S. was 3.9 percent. The annualized growth rate of the U.S. economy in the third quarter was 3.4 percent, while China's economy grew 6.6 percent in 2018. The surveyed unemployment rate in European countries was around 8 percent on average, but in some of the countries the figure was above 10 percent; the economic growth rate was around 2 percent. Japan's economy grew about 1 percent. Due to a labor shortage, Japan's surveyed unemployment rate was the lowest among major developed economies. The whole picture becomes clear by making a comparison of the surveyed unemployment rates of countries around the world.

There are individual cases like the one that just mentioned; in the meantime, new companies, including those worth tens of billions of yuan, are entering China, in both the service and manufacturing sectors. It is normal for foreign investment to come and go. Multinational enterprises are making readjustments globally, creating transfer employment and re-employment of some workers. Meanwhile, there is a shortage of technicians, skilled workers, and new-type talents in some companies in the coastal areas and in central and western China. Therefore, there is still a significant structural contradiction in employment. We will pay attention to the phenomena you just mentioned, promote implementation of policies giving priority to employment, so that people have jobs and lead an increasingly better-off life. Thank you for your questions.

China News Service:

According to the general market forecast, the external environment will possibly be more challenging in 2019, and several international institutions have downgraded their expectations on China's economic growth. Therefore, Mr. Ning, what will be the economic trajectory in 2019, and is it possible there will be a crescendo by the end of the year following moderating or even slow growth at the beginning?

Ning Jizhe:

The economic future of China and, indeed, the world, has drawn immense concern since 2019 arrived. Certainly, we have noted the fact of international institutions lowering their expectations for the global economy, including China as well as developed countries.

Regarding China's economy, the external environment is becoming more complex and challenging, filled with instabilities and uncertainties. Trade protectionism is still prevailing, along with unilateral protectionism and populism. More to the point, the structural problems are still prominent. However, despite various disputes, troubles, problems, challenges and even outright crises, there remain hope, opportunities and the conviction of a bright future. In 2019, we have got to be aware that opportunities form a symbiosis with challenges, especially as the economy is still forging ahead with moderate growth. Therefore, given its fundamental nature and conditions, we are convinced the economy can still perform within a reasonable range to secure constant and sound development. Amid a flagging global economy, China remains the biggest contributor to economic growth. Therefore, the fluctuations, either monthly or quarterly, are nothing abnormal and we should not be overly concerned. Our attention should be focused on key factors, such as yearly performance, the movement and tendencies in the global tide. On the whole, the world is still dominated by economic globalization, digitalized social networks, multilateral politics and cultural diversity. We have reached consensus that multilateralism, peace, development and cooperation remain mainstream conceptions globally.

As for China, the country is still and will continue to be in an important period of strategic opportunity for development. The economic fundamentals sustaining sound development remain unchanged, and will never change. The fact that China remains in the primary stage of socialism has not changed, and its international status as the largest developing country in the world is also, by no means, going to change. This means we still have an advantage of backwardness and substantial potential. In particular, the 19th National Congress of the Communist Party of China made a major decision to resolve the issue of imbalanced and inadequate development. The decision will certainly promote the country's high-quality development and ensure the economy maintains a medium-high growth rate.

There are many favorable conditions. First, tremendous changes in the world and a new development pattern emerging in China have brought about significant opportunities. There is enormous space for China to enhance openness towards and cooperation with other countries, and to participate in the reform of the global economic governance system. Meanwhile, we are speeding up economic structural upgrading, improving technological and innovation capacities, furthering reforms and opening wider to the outside world, as well as accelerating green development. All those efforts mean fresh development opportunities.

Second, China is among the most promising markets in the world. As was mentioned just now, our population is approaching 1.4 billion. China has the world's largest and fastest-growing middle-income population. According to internal measurement by the NBS, China had more than 400 million middle-income earners in 2017, and the measurement for 2018 is expected to see a higher number. There is a standard for the middle-income group. China has about 140 million households with an annual income of 100,000 to 500,000 yuan. Those 400 million people can afford cars, housing, tourism and entertainment. Therefore, consumption offers strong support for China's sustained and steady economic growth. Apart from the 400 million middle-income group, we have a large number of people in other income groups, including the high-income and the lower-middle-income. By increasing residents' income, improving the consumption environment and product quality, China is going to create a stronger domestic market and further unlock the huge consumption potential.

Third, China boasts substantial material and talent bases. After more than four decades of reform and opening up, China has established a relatively complete and comprehensive industrial system, and has been constantly improving its infrastructure, thus laying a sound material and technological foundation for economic growth. A great deal of attention is now being paid to labor, an active factor of production. China has a labor force of nearly 900 million, of which 700 million are employed people and 170 million are high-quality talents who have received higher or vocational education. More than 8 million students graduate from universities each year. With a huge population and labor force, China will continue to benefit from the demographic dividend, a rising labor participation rate and the emerging talent dividend. All those factors provide intellectual support for promoting high-quality development and opening up new growth horizons.

Fourth, the release of the reform dividend accelerated. Last year marked the 40th anniversary of reform and opening up policy; this year sees the 70th anniversary of the founding of New China. Thus, the reform was, is and will continue to be a strong driving force for China's economic development.

Fifth, macro policy has large room for maneuver and gained sufficient experience. At present, the inflation level and fiscal deficit rate are relatively low even by international standards, the foreign exchange reserves are sufficient, and macroeconomic policy has great room for a continued good operation. In this regard, we should strengthen countercyclical adjustment and implement active fiscal policies and prudent monetary policies. Active fiscal policies should be strengthened to achieve greater effect, and sound monetary policies should be maintained at a certain moderate level, coordinated with the implementation of other policies. We have enough adjustment tools and available approaches, and we have a wealth of experience. You can look back at how we responded to the Asian financial crisis 20 years ago. You can also look back at how we responded to the international financial crisis 10 years ago. Despite the challenges and changes taking place in the world, we have hard-working and intelligent people, we have strong leaders, and we have rich and diverse experience, so we will be able to turn crises into opportunities, seize opportunities, overcome challenges, reverse downward pressure to lifting force, promote economic to advance in stability, and strive for high-quality development.

CGTN:

We noticed a steady increase of consumption in 2018. However, there are concerns about consumption downgrade. What are your thought on this matter? We also noticed the newly released data showing that consumption fell from 78 percent of GDP growth in the first three quarters to 76.2 percent. What's your understanding of this fluctuation?

Ning Jizhe:

The contribution rate of consumption to economic growth in 2018 is higher than the previous year. The slight decrease you mentioned does not reveal anything serious. Generally speaking, the consumption structure is upgrading as people's income raises. Our Engel's Coefficient has been decreasing in recent years, which means people's non-material expenditure has been rising. And we all know that the data on people's income and expenditure are acquired through household surveys, in which electronic accounting is promoted. About 60 percent of those surveyed now use electronic accounting which is internationally comparable.

Another important point is that high-quality consumption is trending. Cheap and fine goods have a market, but the ones of higher quality and higher price are being embraced by the middle- and upper-income families. I think we all have an impression that the rate of service consumption is rising. Domestic tourists are increasing at double-digit growth, and a huge number of tourists are making overseas trips. Globalization comes with a spillover effect in consumption, which will be good for other countries. We also see rapid growth in consumption of culture, information, education and training, and health.

So far there is no effective method of measurement in this regard, and following the instruction of the State Council, the National Bureau of Statistics is trying to expand the total retail sales of consumer goods to cover service consumption. Service consumption in the fields of tourism, culture and health haven't been included in the total retail sales of consumer goods. But we still see a 9 percent increase, which is worth noting. Shifting from high-speed growth to medium-to-high-speed growth, we need to upgrade our thought patterns to realize a reasonable economic performance and achieve high-quality growth. To embrace the upgrading of consumption, we will improve our production structure, adjust our industrial and investment structures, and boost our consumption infrastructure. We will work hard to facilitate consumption's fundamental role in economic development.

Thank you.

Market News International:

Last year's market price was lower than expected and the CPI (consumer price index) as well as the PPI (producer price index) were also weakening in December. How do you expect the CPI and PPI will go this year? What are the risks of deflation? You said the country should enhance through counter-cyclical adjustments to its macro policies, could you discuss some of the factors in macro policies that are worthy of attention?

Ning Jizhe:

The CPI growth last December was below 2 percent and the PPI growth also fell month over month. Last year, the CPI and PPI grew moderately at 2.1 percent and 3.5 percent respectively, which was as expected by the Chinese people. There are many factors affecting CPI growth, the most important of which is the relationship between supply and demand, including that of manufactured consumer goods and agricultural products. We have sufficient and diversified supply of agricultural products, stable grain output, and a portfolio of business models. The supply and demand of manufactured consumer goods is generally stable, with the supply of most of the goods being higher than demand. Now manufacturing needs to improve standards and quality for higher consumption demand. The relationship between supply and demand influences pricing. We can analyze these two in relationship with each other to grasp the trend of price changes. Of course, PPI is not only affected by domestic supply and demand but also by the changes in the price of global commodities. Domestically, supply-side structural reform helped to solve the troubles of traditional industries like excess production and subsequently low prices. Internationally, the drop in global commodity prices, especially of energy products, in Q4 also affected PPI growth, as China is already a key importer and exporter of capital goods. There are still some uncertainties ahead in 2019. Macro-economic research as well as research on market prices, should take domestic and international factors into account.

As for the potential "deflation" risk of some media concern, China has not seen overall deflation in the past 10 years, but there were some kinds of structural deflation factors in certain years. It is inappropriate to say that China faces the risk of deflation this year. Given the economic climate and other background factors, we expect that prices will see a moderate rise this year. Pricing changes are affected by the relationship between market supply and demand, and this leads to your second question on counter-cyclical adjustments to macro policies. Macro policies should not only deal with structural problems, key problems and key elements, but also take the balance of supply and demand into consideration. Counter-cyclical adjustments help reduce downward pressure of economic growth, while supply-side structural reform helps improve the relationship between supply and demand, as well as promote overcapacity reduction and structural deleveraging. At the same time, we should take stable overall demand into consideration. The government policy is very clear now that it will implement a proactive fiscal policy and prudent monetary policy. The proactive fiscal policy is to increase efficiency through bolder and more effective measures while the prudent monetary policy is to be "neither too tight nor too loose." The former involves cutting taxes and fees on a larger scale, substantially increasing the issuance of special-purpose local government bonds, and raising investment within the central government budget to channel more energy into weaker areas. Moreover, the finance department has made arrangements to improve efficiency in asset allocation and to enhance performance. The monetary policy should be "prudent," which implies that it should be "neither too tight nor too loose," and should maintain market liquidity at a reasonably ample level; keep proper increases for the scale of currency, credit and social financing; improve financing and credit structures by following the requirements of deepening supply-side structural reform; increase financial support for private enterprises; and smooth out the monetary policy transmission mechanism to increase direct financing to the brick-and-mortar businesses and small- and medium-sized enterprises, for the purpose of better serving the real economy. Therefore, the policy orientation is very clear.

Thank you.

Phoenix TV:

Our question concerns the total population. The number of births has been shrinking for the second consecutive year, with the birth rate and the natural population growth rate reaching new lows. What do you think of this situation? Does the gradual decline in population growth rate mean the demographic dividend of China's economic growth is disappearing ahead of schedule?

Ning Jizhe:

Recently, people are very concerned about the population data. Some research articles suggest the population will see so-called negative growth. The data released by the National Bureau of Statistics (NBS) has clearly shown that, in 2018, China's population is not only growing, but also the number of births, 15.23 million, is relatively large. This figure is still very impressive. As for the decline in the population growth rate and birth rate, you mustn't concentrate on the one-year data. We need to undertake long-term observation on this point. We have had population peaks in our history, and, now, the structural changes in population occur naturally; so, we shouldn't over-interpret it.

The demographic structure changes with economic and social development. As mentioned earlier, the demographic dividend still exists. China has labor resources of nearly 900 million people. This scale is huge, despite some fluctuations. The labor participation rate is not low in global terms. More than 700 million out of 900 million people are employed, and there is still room for growth. The quantity of labor itself presents a great potential. Everyone notices that there are still 288 million migrant workers, which is a very large pool of available labor. Although the population who reside in areas other than that of their household registration has declined, the number is still very large. The reason for the decline is that 100 million workers have been employed in cities, being transformed from farmers into urban residents. Now, with the development of the central and western regions, foreign companies and domestic companies in coastal areas have invested more there. With the improvement of transportation and infrastructure in these areas, and the implementation of various regional development strategies, migrant workers have returned to their hometowns, many finding jobs in secondary and tertiary industries nearby, creating a new trend. The quality of the labor force is improving constantly; coupled with the fact appearance of eight million college graduates each year, their contribution to industrial upgrading and talent bonuses will become even more prominent. We attach more importance to the talent bonus, and, along with the fact that China still has a demographic dividend, it can be said that the factors supporting the medium and long-term positive trend of the national economy have not changed.

Yicai TV:

Statistics for the full year of 2018 indicated a further pickup in the investment expansion rate from the first three quarters. My question is, will infrastructure investment have a bigger impact on, or a bigger contribution to economic growth in 2019? What will be the points of weakness to be strengthened this year?

Ning Jizhe:

Investment indicators have underperformed compared to consumption indicators these past few years. We have quite a few points of weakness that need to be strengthened. Although we are already an upper-middle income country overall, and the world's second largest economy, we still have the problem of very unbalanced development. Levels of infrastructure facilities vary greatly between localities, so infrastructure development remains a major area of weakness to be strengthened. Since October, as our efforts to address points of weakness intensified, the expansion rate of fixed asset investment rebounded. Investment primarily covers three types: manufacturing, infrastructure and real estate. Infrastructure investment growth was weaker than that of manufacturing. In short, infrastructure development, especially for improving the consumption environment and for implementing the rural revitalization and regional development strategies, remains a weak point. Compared with developed countries, we have a relatively new expressway network and the world's longest total length of high-speed railways. However, when measured on a per capita basis, our operational infrastructure amount is remarkably lower. For example, we are low on airport coverage, compared with Europe and America. The task to accelerate infrastructure development for the direct benefit of people's livelihood in both urban and rural areas is still heavy.

Besides, houses built for people relocated from inhospitable areas need to be complete with supporting infrastructure facilities. In terms of government-subsidized housing, we will intensify efforts to rebuild shantytowns and supply public rental housing. Of course, agriculture and water conservancy are also areas with big room for improvement. We need to implement the rural revitalization strategy. There are also major water conservancy projects and major 13th Five-Year Plan projects still under construction. In terms of transportation, urban public transportation and transportation between city clusters need improvement, renovation and upgrading. I said a moment ago that we have an urbanization rate of nearly 60 percent. However, even with the fast railway construction, we still cannot fully satisfy people's needs. These are all weak points that are closely related to people's livelihood that need strengthening. It can be expected that, policies will continue to be put in place and take effect this year, resulting in stronger data than last year. Thanks.

Hu Kaihong:

That's all for today's press conference. Thank you, Mr. Ning. Thank you, everyone.

.

Read in Chinese

Speaker:
Li Kuiwen, spokesperson of the General Administration of Customs and director general of the Department of Statistics & Analysis of the General Administration of Customs

Chairperson:
Hu Kaihong, spokesperson for the State Council Information Office of China

Date:
Jan. 14, 2019

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this SCIO briefing. Starting today, we will hold a series of briefings to introduce the statistical data of China's economic performance for the full year of 2018. Today, we are delighted to invite Mr. Li Kuiwen, spokesperson of the General Administration of Customs and director general of its Department of Statistics & Analysis, to talk about the state of China's imports and exports in 2018. He will also answer questions of interest to you. 

Now, I will give the floor to Mr. Li.

Li Kuiwen:

Before taking your questions, I would like to give you a brief introduction of the general situation with China's foreign trade imports and exports in 2018.

In 2018, under the leadership of the CPC Central Committee and the State Council, all localities and departments actively implemented a series of policies and measures to promote the stable growth of foreign trade, effectively responding to the profound changes in the external environment. During the year, foreign trade remained stable overall and saw steady growth, with the import and export scale reaching a record high. Therefore, China is expected to maintain its position as the world's largest trader in goods. According to customs statistics, the total value of China's foreign trade, imports and exports together, was 30.51 trillion yuan in 2018, an increase of 9.7 percent from 2017. Of that, exports grew 7.1 percent to 16.42 trillion yuan, while imports went up 12.9 percent to 14.09 trillion yuan, and the foreign trade surplus shrank 18.3 percent to 2.33 trillion yuan. Priced in terms of U.S. dollars, China's total foreign trade value was US$4.62 trillion in 2018, up 12.6 percent. Exports amounted to US$2.48 trillion of that, up 9.9 percent, and imports were US$2.14 trillion, up 15.8 percent from the previous year. The foreign trade surplus stood at US$351.76 billion, shrinking 16.2 percent. Specifically, the foreign trade situation presents the following characteristics.

First, imports and exports have seen a steady upswing, reaching a combined value of 10 trillion yuan for the first time in 2005, then 20 trillion yuan in 2010. In 2018, the volume hit a new height by exceeding 30 trillion yuan, 2.7 trillion yuan more than the previous year.

Second, imports and exports of general trade grew rapidly as well, representing an increased proportion. The volume reached 17.64 trillion yuan last year, a growth of 12.5 percent year over year. This constituted 57.8 percent of the country's entire imports and exports, 1.4 percentage points higher than the ratio in 2017, indicating an improvement of trade structures.

Third, China's imports and exports with major trade partners secured overall growth. China maintains good cooperative momentum with countries along the Belt and Road. Trade with China's top three partners, namely the European Union, the United States and the Association of Southeast Asian Nations (ASEAN), increased by 7.9 percent, 5.7 percent and 11.2 percent respectively in 2018. In combination, these accounted for 41.2 percent of China's total imports and exports. At the same time, trade with the countries along the Belt and Road reached 8.37 trillion yuan in aggregation, up 13.3 percent year over year and 3.6 percentage points higher than the country's holistic trade growth. The potential of trade partnerships between China and countries along the Belt and Road has continued to evolve, forming a new driving force behind the country's foreign trade as a whole. Specifically, imports and exports to Russia, Saudi Arabia and Greece increased by 24 percent, 23.2 percent and 33 percent, respectively. 

Fourth, the import and export of private enterprises have increased, and their proportion of China's total imports and exports has also grown. In 2018, the import and export of private enterprises in China was 12.1 trillion yuan, an increase of 12.9 percent compared to 2017. Private enterprises accounted for 39.7 percent of China's total imports and export value, an increase of 1.1 percentage points over 2017. Exports were valued 7.87 trillion yuan, an increase of 10.4 percent. Private sector exports continued to dominate the Chinese export market, accounting for 48 percent of the total export market, an increase of 1.4 percentage points over 2017. Meanwhile, imports reached 4.23 trillion yuan, an increase of 18.1 percent. In 2018, the contribution of private enterprises in China to the growth of foreign trade imports and exports exceeded 50 percent, which became a highlight of China's foreign trade development. During the same period, the import and export of foreign-invested enterprises were 12.99 trillion yuan, an increase of 4.3 percent, accounting for 42.6 percent of China's total imports and exports. The import and export of state-owned enterprises were 5.3 trillion yuan, an increase of 16.8 percent, accounting for 17.4 percent of China's total imports and exports.

Fifth, the growth rate of imports and exports in the central, western, and the northeastern regions was higher than the overall national growth rate, and regional development was more coordinated. In 2018, the growth rate of foreign trade in the 12 provinces and cities in the west registered at 16.1 percent, exceeding the national growth rate by 6.4 percentage points. The growth rate of foreign trade in the six provinces and cities in the central region was 11.4 percent, exceeding the national growth rate by 1.7 percentage points. The growth rate of foreign trade in the three northeastern provinces was 14.8 percent, exceeding the national growth rate by 5.1 percentage points. Finally, the growth rate of foreign trade in the 10 eastern provinces and cities stood at 8.8 percent.

Sixth, mechanical and electrical products took a larger share of China's exports, and the export commodity structure has been further optimized. In 2018, exports of mechanical and electrical products amounted to 9.65 trillion yuan, an increase of 7.9 percent, accounting for 58.8 percent of China's total exports. And this percentage grew by 0.4 percentage points from 2017. China's automotive exports grew by 8.3 percent and cellular phone exports by 9.8 percent. Toys, garments and five additional labor-intensive products exported by China in 2018 reached a combined total of 3.12 trillion yuan, which is 1.2 percent more than last year, accounting for19 percent of the total.

Seventh, both the import price and volume of oil, gas, copper and other commodities are on the rise, while the import volume of iron ore and soybean have fallen. China's import of crude oil amounted to 462 million tons, gas 90.39 million tons, refined oil products33.48 million tons and copper 5.3 million tons, up 10.1, 31.9, 13 and 12.9 percent from last year, respectively. On the other hand, the import of iron ore fell by 1 percent to 1.064 billion tons and soybeans fell by 7.9 percent to 88.03 million tons. Preliminary estimates indicate that the China's import prices on the whole increased by 6.1 percent in 2018, and that the import price of oil grew by 30 percent, refined oil products by 20 percent, gas by 22.9 percent and copper by 3.2 percent.

In 2019, the General Administration of Customs will be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 19th CPC National Congress and the second and third plenary sessions of the 19th CPC Central Committee and commit to the arrangements of the Central Economic Work Conference. Sticking to an overall tone of making progress while maintaining stability, we will work to stabilize employment, the financial sector, foreign trade, foreign and domestic investments, and expectations, and promote various customs reforms with a focus on optimizing the business environment at ports and promoting higher quality while maintaining stability in foreign trade to better serve the socioeconomic development of the nation.

Now, I'm ready to take your questions.

Hu Kaihong:

Thank you, Mr. Li. Now, the floor is open. Please identify the media outlet you represent before raising questions.

CCTV:

Director Li, can you summarize China's foreign trade performance in 2018? What do you think are the new features and highlights of China's foreign trade development during the past year? Thank you.

Li Kuiwen:

Thank you for your question. China's foreign trade achieved steady growth in 2018; the scale of imports and exports reached a new historical high; and quality and efficiency were further improved.

The achievements were hard-won and based on the following five aspects:

First, the business environment is friendly. Last year, China introduced a series of policies and measures to reduce taxes and optimize the business environment at ports; therefore the level of foreign trade facilitation has significantly improved. According to the "Doing Business 2019" report released by the World Bank, China has advanced 32 ranks in business environment, and the cross-border trade made a progress from the 97th position to the 65th position, also 32 advancing ranks. In addition, China increased its export tax rebate rate of some commodities two times last year, and lowered import tariffs on medicines, automobiles and accessories, daily consumer goods; thus promoting the increase of exports and imports.

Second, there has been an increase in foreign trade enterprises. The Chinese economy maintained a steady growth in 2018 and operated within its proper range; this provided a good environment for foreign trade development. According to our statistics, the number of enterprises with actual import and export performances has increased from 436,000 in 2017 to 470,000 now.

Third, the wide range of trade partners. In 2018, China's foreign trade market became more diversified. In the process of maintaining growth with traditional trade partners, China also proactively encouraged exchanges with other countries and regions. In 2018, the import and export growth rate with countries along the Belt and Road routes, Africa and Latin America, was respectively 3.6, 6.7 and 6 percentage points higher than the total imports and exports growth rate. 

Four, the growth momentum has been strong. In terms of quantity and price factors, import and export growth was strong in 2018. According to estimates by the General Administration of Customs, China's import quantity index was 106.4 and the export quantity index was 103.6. The contribution rate of import and export both exceeded 50 percent, and the growth momentum became more solid.

Five, high quality and efficiency. China's import and export proceeded in a more balanced way with more coordinated regional development and improved product structure. From the perspective of products, the export of some mechanical and electrical products and equipment manufacturing products maintained great growth momentum. For example, the export of metal processing machines grew by 19.2 percent; mobile phones grew by 9.8 percent and automobiles increased by 8.3 percent. The import of equipment, key parts and components of high-quality consumer goods also grew rapidly. For example, integrated circuits increased by 16.9 percent; consumer goods increased by 10.9 percent, and aquatic and marine products increased by 39.9 percent respectively. The quality and efficiency of both imports and exports improved to a great extent.

That's all of my opinions regarding China's foreign trade situation in 2018.

Economic Daily:

We have noticed import growth slowed down slightly in the fourth quarter; so, what was the main reason for that? Besides, the annual central economic work conference pointed out that there are new and worrisome developments amid the generally steady economic operation. How do these new development features reflect foreign trade in general? And what is your expectation for general foreign trade in 2019? Thank you. 

Li Kuiwen:

Thank you. Let me start by answering your first question about imports and exports in the fourth quarter.

In the fourth quarter of 2018, imports and exports registered year-on-year growth of 8.8 percent. The growth rate was slower than that of the third quarter. I think that was due to the following reasons:

First, the volume of imports and exports increased quarter by quarter. [These] reached 6.76 trillion yuan, 7.36 trillion yuan, 8.18 trillion yuan and 8.21 trillion yuan during the four quarters of last year respectively, with figures exceeding 8 trillion yuan in both the third and fourth quarters, a high level. 

Second, the growth rate of imports and exports still remains within its proper range. The main reason for the subdued growth rate in the fourth quarter are attributed to last year's large base figure. The base figure of the fourth quarter was five percent larger than that of the third quarter. However, compared to the third quarter, imports and exports increased by 0.3 percent in the fourth quarter. 

In regard to the situation you just mentioned, that the growth rate of imports and exports slightly slowed down in the fourth quarter, we consider such fluctuations as normal, and related to many factors including the domestic and international economic situation, commodity prices and the plans of foreign trade enterprises. In our opinion, such fluctuations will weaken over a longer period. 

Regarding the second question you raised about hidden concerns in China's foreign trade, we believe that the biggest worry about the development of China's foreign trade in 2019 is that the external environment is complex and harsh, and there are many uncertainties. In some countries, protectionism and unilateralism are on the rise, and world economic growth may slow down, affecting cross-border trade and investment. At present, major international organizations have already lowered their expectations for growth of the global economy and trade. For example, the World Bank recently lowered its forecast of global economic growth in 2019 from 3 percent to 2.9 percent, reflecting concerns about the current trends in international trade.

Your third question is about the general trends of China's imports and exports in 2019. In general, China will keep its economic development on a stable and healthy track. The central government has successively issued a series of policy measures to stabilize foreign investment. And the effect is showing, laying a solid foundation through policy for the advancement of foreign trade this year. At the same time, the external environment is still complicated and severe. There are still many uncertain and unstable factors, and objective factors such as last year's large base figure, all of which may slow the growth rate of foreign trade. 

We believe that with further opening up and the further advancement of supply-side structural reforms, China's foreign trade development this year is expected to stabilize and improve in terms of both quality and efficiency. Thank you.

TASS:

According to the statistics of the Ministry of Commerce, as of December 2018, the trade volume between China and Russia has exceeded US$100 billion. What kind of expectations does the General Administration of Customs have on the economic and trade cooperation between the two sides in 2019?

Li Kuiwen:

Thank you for the question. In 2018, against the background of frequent high-level visits and all-round cooperation between China and Russia, the two countries' economic and trade relationship continued to increase, and Sino-Russian economic and trade cooperation has maintained a good momentum of development. According to customs statistics, China's imports and exports to Russia in 2018 were 707.55 billion yuan, a year-on-year increase of 24 percent, accounting for 2.3 percent of China's total import and export value during the same period. Among them, exports to Russia reached 316.65 billion yuan, an increase of 9.1 percent, and imports from Russia reached 390.9 billion yuan, an increase of 39.4 percent. If denominated in U.S. dollars, the bilateral trade volume between China and Russia reached US$107.06 billion in 2018, surpassing US$100 billion for the first time, a record high, with an increase of 27 percent. The growth rate ranked first among China's top ten trading partners. In terms of main import and export commodities, exports to Russia were mainly mechanical and electrical products, while imports from Russia were mainly energy resource products such as crude oil, coal and sawn timber.

This year marks the 70th anniversary of the establishment of diplomatic relations between China and Russia. Both countries will work together to further strengthen strategic cooperation, promote cooperation in all fields, and promote China-Russia's comprehensive strategic partnership of coordination to achieve more fruitful results and better benefit the two peoples. It is expected that there will be new developments in Sino-Russian economic and trade relations this year. Thank you.

Reuters: 

I'd like to ask how the import and export figures with the U.S. in 2018 compared with 2017? And what's your projection for the year to come? Thank you.

Li Kuiwen: 

Thanks for your questions. Now I'd like to inform you of some figures regarding the Sino-U.S. trade due to the wide concerns in this regard. Data from the General Administration of Customs show that, in 2018, the volume of our trade with the U.S. was 4.18 trillion yuan, 5.7 percent up year-on-year. Our exports to the U.S. hit 3.16 trillion yuan, a gain of 8.6 percent. Our imports from the U.S. fell 2.3 percent to 1.02 trillion yuan. This means our trade surplus in 2018 was 2.14 trillion yuan, up 14.7 percent year-on-year. Priced in dollars, the total value of the imports and exports between China and the U.S. reached US$633.52 billion, 8.5 percent up year-on-year. The total value of bilateral exports hit US$478.42 billion, 11.3 percent up year-on-year, and the total value of bilateral imports was US$155.1 billion, a 0.7 percent gain. We see China's trade surplus with the U.S. rising to US$323.32 billion, 17.2 percent up year-on-year. China's 2018 trade surplus with the U.S. somewhat widened compared with 2017, which we think demonstrates the complementarities between the two economies in different stages of development.

Phoenix TV:

China's foreign trade performed well in 2018. However, both the General Administration of Customs and the National Bureau of Statistics said that the performance was partly attributable to declarations in advance of the tariffs. Do you think the export demand for 2019 has been overdrawn? Does it mean weaker external demand in 2019? Thank you.

Li Kuiwen:

I have introduced the overall trend in China's foreign trade. We believe that this year's overall trend in foreign trade, on the basis of last year will see an improved quality at a steady pace. Despite concerns over the trade development caused by external uncertainties, we believe that China's foreign trade will see improved quality and performance while maintaining steady growth this year. A reporter from CCTV asked a similar question just now, and I have given my answers. Thank you.

China News Service:

We notice the imports and exports of Chinese private companies provide an increased proportion of the overall trade last year. Could you introduce some of the key features in their growth? How does the General Administration of Customs support their trade growth? Thank you.

Li Kuiwen:

I just introduced some general information about the imports and exports of Chinese private companies, which has grown rapidly and assumed a rising proportion in the overall trade. Now, I would like to share some of the other salient features.

First, imports and exports of private companies have achieved greater dynamism. In 2018, around 372,000 private companies participated in foreign trade, an increase of 10.7 percent year-on-year. They contributed more than half of the foreign trade growth in 2018, thus playing a more important role in overall trade development.

Second, different regions were at different echelons of growth in terms of import and export volume by private enterprises. The central, western, and northwestern regions recorded a growth rate of 20.3 percent, 18.9 percent and 16.7 percent respectively, all higher than the eastern region, which achieved a 12.1 percent gain last year.

Third, the trade structure of private companies continued to upgrade. Mechanical and electrical products accounted for over 40 percent of both their import and export value. The export of integrated circuit, mobile phones and LCD panels increased by 51 percent, 16.8 percent and 34.1 percent respectively, while the import of integrated circuit, agricultural products and plastics in primary forms grew by 35.3 percent, 11 percent and 27.5 percent.

In support of private enterprises, GAC is putting into practice the principles drawn from General Secretary Xi Jinping's addresses at a symposium on private enterprises held on Nov. 1, and has also introduced a series of measures to support private enterprises to reduce their financial burdens and increase efficiency. I'll introduce the situation in three aspects:

First, we have launched pilot programs for tariff guarantee insurance. We expanded the existing guarantee method by introducing insurance companies into customs tax guarantee system to ease the enterprise burden, especially for small and medium-sized enterprises. We also encouraged SME innovation by exempting the tax on imported products related to scientific research and technological development for qualified SME public service demonstration platforms.

Second, we have promoted integration reforms, so that import and export-oriented enterprises can directly use the national enterprise credit information publicity system to deliver their annual reports, and no longer need to report separately to different departments. Among those qualified, more than 60 percent are private enterprises. The number of the annual report items has been reduced to around 40 from more than 120, a reduction of 70 percent.

Third, we have helped private enterprises "go global." The General Administration of Customs has promoted mutual recognition of the Authorized Economic Operators (AEO) with 36 countries and regions, and helped private enterprises to enjoy the various conveniences provided by local customs. Thank you.

CCTV:

Mr. Li, we know that in early December the cross-border e-commerce policy was further clarified through the press conference, which not only expanded the scope of the tax items, but also expanded the quota for individual transaction limits. Is there any substantial increase in annual data on retail imports and exports of cross-border e-commerce, particularly in December? Thank you.

Li Kuiwen:

Thank you for your attention. Cross-border e-commerce has always been an important area under customs supervision. China's e-commerce law took effect on Jan. 1, 2019, providing legal support for cross-border e-commerce customs supervision, protection of consumer rights and intellectual property rights. The General Administration of Customs actively cooperated with the Ministry of Commerce to study and formulate a new overall supervision plan for cross-border e-commerce after the transition period, and accordingly issued the "Announcement on Matters concerning the Supervision of Retail Imports and Exports in Cross-Border E-commerce", clarifying the scope of cross-border e-commerce supervision and the responsibility of participating subjects. This includes adding a series of new regulatory service measures; and further standardizing and strengthening the supervision of cross-border e-commerce.

There is a piece of data I would like to share with you. In 2018, the total volume of retail import and export commodities through the customs cross-border e-commerce management platform was 134.7 billion yuan, an increase of 50 percent; of which exports were 56.12 billion yuan, an increase of 67 percent; and imports were 78.58 billion yuan, an increase of 39.8 percent. 

In the next step, the General Administration of Customs will further improve the information system for cross-border e-commerce retail imports and exports; improve and upgrade tax administration, quota control, and declaration management; and further meet the needs of cross-border e-commerce customs supervisions. This will also better serve internet users. Thank you.

Die Welt:

Would you like to provide us the import and export data on China's trade with Europe, Germany and the Democratic People's Republic of Korea?

Li Kuiwen:

Thank you for your question. Let me first introduce the data on China-EU. Statistics from customs show that China's trade with Europe in 2018 amounted to 4.5 trillion yuan, a year-on-year growth of 7.9 percent. China's exports to the EU totaled 2.7 trillion yuan, a 7 percent increase from last year, while imports from the EU reached 1.8 trillion yuan, up 9.2 percent from the previous year. EU remains China's largest trade partner and the biggest source of imports. China and Europe are important partners in trade. Specific data on China-Germany trade will be released on the customs website, to which you are welcome to refer. Regarding China's trade with the DPRK, I can provide certain data here. According to the customs, China-DPRK overall imports and exports value totaled 16.09 billion yuan, a decrease of 52.4 percent from last year. China's exports to the DPRK reached 14.67 billion yuan, which fell by 33.3 percent, and imports totaled 1.42 billion yuan, an 88 percent drop. The trade surplus expanded 29.9 percent to 13.26 billion yuan. For China-DPRK trade, China customs have always adopted the resolutions of UN Security Council in a comprehensive and strict way. Thank you.

China Business Network (CBN):

How would you define characteristics of the imports in 2018? How will the policies, implemented recently to expand domestic demand and consumption, influence imports this year?

Li Kuiwen:

Thanks for your questions. However, I prefer to respond in view of both imports and exports. Regarding imports, we adopted a string of policies to sustain sound development of foreign trade, expanding import capacity proactively. Throughout 2018, imports increased by 12.9 percent from the previous year and maintained good growth momentum, which shows in a number of respects, as follows:

First, quantity has played an increasingly important role in adding import value. The Import Quantum Index reached 106.4 in 2018, up 6.4 percent year over year. The expansion of import quantity contributed 51.2 percent to the growth of total import values in our country. At the same time, the Import Price Index reached 106.1, up 6.1 percent year over year. 

Second, import tax rebate policies on certain products resulted in rapid growth. In 2018, cosmetics imports grew by 67.5 percent to 65.7 billion yuan, while aquatic products rose 39.9 percent to 79.4 billion yuan, with both of these being higher than the overall import growth. 

Third, micro market entities' import businesses showed vitality. In 2018, 211,000 enterprises had import records, 6,300 more than a year before. Among them, 57,000 enterprises accessed new import business, or 26.8 percent of the total figure. All the figures well defined the effectiveness of policies, such as proactive import expansion, adopted to boost imports among domestic enterprises.

Regarding exports, the two-time export tax rebates in 2018 helped a number of products to go global. On Sept. 15 of last year, China raised tax rebates on the first batch of 397 export commodities, including electromechanical and cultural products. In 2018, the combined value of the first batch of products enjoying the increased rebate totaled 745.1 billion yuan, up 8 percent year over year, and 0.9 percentage point higher than export growth as a whole. On Nov. 1 of last year, the tax rebate covered 1,172 products, valued at 1.53 trillion yuan, up 7.5 percent year over year, and 0.4 percentage point higher than the overall export growth. The growth of exports accelerated particularly rapidly in November and December, increasing by 13.3 percent, 7.1 percentage points higher than in the first 10 months combined. Those statistics are for reference. Thank you.

Economic Herald:

What's your projection for China's efforts in expanding imports? Thank you.

Li Kuiwei:

We have touched upon the issue of expanding imports in a couple of questions. I think the first China International Import Expo held last year sent a strong message that China would further expand its imports. Generally speaking, we will exert more effort to realize trade balance, boost the domestic economy, and import scarce key components and consumer goods this year. Particularly, the second China International Import Expo will be held, with the country pushing forward its all-round opening up policy. The General Administration of Customs will take more measures to support the move and improve trade facilitation. 

Thank you.

Hu Kaihong: 

I'm afraid today's press conference has reached its conclusion. Thank you, Mr. Li. Thank you, everyone. 

Read in Chinese

Speakers:

Xie Zhenhua, China's Special Representative on Climate Change

Li Gao, Director-General of Climate Change in the Ministry of Ecology and Environment

Chairperson:

Xi Yanchun, spokeswoman of the State Council Information Office

Date:

Nov. 26, 2018

Xi Yanchun:

Good morning, Ladies and Gentleman. Welcome to this press conference. The 2018 United Nations Climate Change Conference will soon open in Poland. Today, the document on "China's Policies and Actions for Addressing Climate Change (2018)" was officially published. To help you gain a better understanding of the related situation, we are pleased to have Mr. Xie Zhenhua, China's Special Representative on Climate Change, here to introduce the report and answer your questions. We also have with us Mr. Li Gao, Director-General of Climate Change in the Ministry of Ecology and Environment. Now, I give the floor to Mr. Xie.

Xie Zhenhua:

Welcome to the press conference on China's Policies and Actions for Addressing Climate Change (2018). It is customary to hold such a press conference every year before the Climate Change Conference, in which we report to the public, especially the international community, on the annual progress, achievements and problems of China's policies and actions for addressing climate change. It demonstrates that China's policies and actions are completely open and transparent in this field.

This year's Conference of the Parties to the United Nations Framework Convention on Climate Change will be held in Katowice, Poland. It is the 24th COP and is internationally known as Katowice Climate Change Conference. Today's briefing will focus on the latest progress and major achievements of our country's response to climate change since 2017. These include climate change mitigation and adaptation, local action, broad societal participation, institutional development, improvements of basic capabilities, active participation in international negotiations and strengthening of international exchanges and cooperation. We will demonstrate the policies, actions and results of our country's response to climate change in various sectors, localities and fields.

As we all know, the Chinese government attaches great importance to tackling climate change, and regards the promotion of green and low-carbon development as an important part of the construction of an ecological civilization and a major opportunity to accelerate the transformation of economic development and adjust the existing economic structure. Since 2017, China has made positive progress in mitigating climate change, adapting to climate change, improving institutions, strengthening capacity building, encouraging local action, and raising public awareness.

In accordance with the Chinese government's work plans and specific measures for institutional reform this year, the responsibilities for addressing climate change and emission reduction have been transferred to the newly-established Ministry of Ecology and Environment. During the National Conference on Ecological and Environmental Protection held in May this year, President Xi Jinping stressed that we will implement a national strategy for actively addressing climate change. This will include advancing and guiding the establishment of a global climate governance system featuring fairness, rationality and win-win cooperation. We will also honor the image of China as a responsible country, and endorse the building of a community with a shared future for mankind. We will act with firm resolve to implement President Xi's instructions, fully enacting the national strategy for addressing climate change. China will proactively participate and take the lead in global climate governance, and play a greater role in dealing with climate change in high-quality development, promoting ecological progress, and tackling environmental pollution. 

The Chinese government has always proactively and constructively participated in international negotiations on climate change, and adheres to the principles of the UNFCCC. China upholds the principles of common but differentiated responsibilities and respective capabilities, and works with all parties to promote global climate governance. We have continuously strengthened dialogues and exchanges with various parties and carried out pragmatic cooperation on climate change. While promoting South-South cooperation on climate change, we have provided vigorous support to developing countries in enhancing their capability to adapt to climate change. Our efforts and approaches have been highly praised by the international community and are widely welcomed by developing countries.

This week's United Nations Climate Change Conference in Katowice, Poland, signifies a critical juncture in the global climate governance process. We hope that the General Assembly will complete the negotiations on the implementation of the Paris Agreement as scheduled. We must properly address the financial problems, and send a positive message to the international community to implement the Paris Agreement, promote green and low-carbon industrial development, and build a community with a shared future for mankind. We will continue to play an active and constructive role in working with all parties to promote the success of the conference in Katowice.

Today we are here to announce the release of this report. Now let's get to the Q&A session, in which Mr. Li Gao and I would like to take your questions. Thank you.

Xi Yanchun:

Thank you, Mr. Xie. Now, the floor is open to questions. Please identify your media outlet before raising questions.

CCTV:

What are China's expectations for the upcoming Climate Change Conference in Poland? Thank you.

Xie Zhenhua:

We have the same expectations as the international community in general for the upcoming conference, and these can be summarized in three aspects.

First, the Paris Agreement adopted in 2015 has taken effect. Now, the main task is to finish the negotiations on implementation guidelines so they can be adopted at the annual climate change conference in Katowice, Poland. Hopefully, we will establish a mechanism to ensure continuity in implementation of the Agreement.

Second, in accordance with the Agreement and the decisions taken at last year's conference, we will have a Talanoa Dialogue at this conference. Initially called a "facilitative dialogue", this gets its name from the Fijian language as it was proposed at the meeting last year in Fiji. During the dialogue, all parties should introduce the best practices they have been able to adopt to address climate change, and discuss their efforts and difficulties in implementation, so as to enhance understanding and strengthen cooperation among all parties concerned. The ultimate purpose of the dialogue is for countries to share their successful experiences to promote accelerated transformation in line with the green and low-carbon development mode.

Third, we must review the implementation of the pre-2020 commitments through the dialogue. For example, this entails examining what each country has done and how effective the measures are, and if the decisions adopted at the conference of all parties have been universally implemented. Another issue is that of capital accumulation. During the Copenhagen conference, developed countries pledged to provide US$100 billion per year to support climate action in developing countries by 2020. We hope the developed countries will take the lead in reducing emissions and that the Doha Amendment to the Kyoto Protocol will take effect. Meanwhile, we will review if developed countries have honored their commitments regarding that figure of US$100 billion in annual aid, so as to lay a foundation for further implementation of the Paris Agreement beyond 2020 and achievement of the long-term goal of addressing climate change.

Thank you.

CNN:

As you said in an interview with me before the 2015 Climate Conference in Paris, the international community does not need to worry about China's resolve and policies on climate change, but of those of the United States. You said back then the U.S. might change its policies if a Republican president was elected in the 2016 election. Unfortunately, you called it right. My question, then, is after the Trump administration announced withdrawal from the Paris Agreement, what changes have occurred to China's performance on the global issue? Will China play a greater role? Some people worry that the Chinese government will loosen its environmental protection measures on greenhouse gas emission reduction. What's your comment on that?

Xie Zhenhua:

In international conferences, there are often some people raising this question. First of all, the U.S. is a very important country in the field of climate change. It is fair to say that the cooperation between China and the U.S. made a very important contribution to the forming, signing and putting the agreement into effect. However, President Donald Trump decided to leave the accord after assuming his post. Originally, the international situation regarding the fight against climate change, through win-win, multilateral cooperation, was very good. However, the political influence of the American withdrawal was quite big. At least, it affected the resolve and confidence of some other countries to some extent at first. However, that influence soon dissipated. It is known that China and the U.S. play important roles in responding to the climate issue. So, President Xi Jinping said twice at the U.N. headquarters in Geneva and at an international conference that China would resolutely carry out the Paris Agreement, and not give up the hard-won achievements of the accord. China will firmly carry out the Paris Agreement and take proactive measures. Particularly, China has clearly announced that it will completely fulfill its promises. China has sent out such a strong political signal, which helps stabilize the international efforts to cope with climate change. I attend all kinds of international meetings in the field of climate change, and all countries express their resolve to carry out the Paris Agreement, and all of them promise to implement the agreement earnestly. So, the withdrawal of the U.S. from the agreement had some influence at first, but that influence has since become weaker.

The United States has an important role in reducing emissions, and had promised to provide US$3 billion in finance for the Green Climate Fund (GCF). Therefore, the rest of the world is deeply concerned about its withdrawal, which creates a massive void up front, including a huge funding gap . However, in September, I visited California as a co-chairman of The Global Climate Action Summit (GCA) and was encouraged that at least 17 American states pledging to follow the previous commitments made by the U.S. government, and all have already taken positive actions. There are also some philanthropists who have announced willingness to make up the amount if the U.S. government refuses to pay what it pledged. It should be said there are still positive factors in American society in dealing with climate change. This year, we have seen that extreme weather does not only affect developing countries, but also developed countries, exemplified by the forest fires that recently engulfed California. There has, already, been an enormous impact, with substantial losses. Therefore, I believe that, in dealing with climate change, all countries are showing a willingness to work together, help each other, and do their utmost in accordance with the principle of common but differentiated duties. It can be said that the entire process is still relatively stable. Why is that? It is because in dealing with climate change, humanity has recognized it must transform and innovate the existing growth models and embrace a low-carbon approach – a tendency of which we are all increasingly aware. So I believe this trend is unstoppable.

On the role of China, President Xi Jinping has publicly pledged that we will deliver 100 percent of our commitments. It is not just a matter of honoring our commitments, President Xi's active response to climate change is not a thing that the others have asked us to do, but is out of our own motivations. This is an inherent requirement for China's sustainable development. It is also our responsibility, as a major developing country, to protect humanity and the earth. In this sense, China will remain resolute and proactive in combating climate change and carrying out the Paris Agreement, regardless of the position and attitudes of other countries. Many have asked about the progress that China has made in combating climate change. The following are some figures. China had pledged that by 2020, it would cut its carbon intensity by 40 to 45 percent from 2005 levels. China also pledged to increase the share of non-fossil fuels in primary energy consumption to around 15 percent and increase its forest reserves by 1.3 billion cubic meters. By the end of 2017, China's carbon intensity had already fallen by 46 percent, meaning that it has achieved its goal three years ahead of schedule. Renewable energy already accounts for 13.8 percent of primary energy consumption and will surely meet the goal of 15 percent by 2020. Our forest reserves have increased by 2.1 billion cubic meters, exceeding our targets for 2020. The realization of these targets has laid a very solid foundation for achieving peak carbon dioxide emissions in 2030. I am confident that we will fully live up to our commitments and strive to do even better. The difficulties and challenges encountered will not change our goals and determination.

In addition, the action that China has taken to address climate change has also promoted high-quality development. I have mentioned several figures that can demonstrate its intensity and share internationally. We set up goals on energy conservation and emission reduction to reduce carbon intensity. According to figures released by the World Bank, China has contributed to over 50 percent of the conserved energy globally since 2005. Renewable energy in China has the largest scale in the world with the installed capacity totaling 0.65 GW, accounting for 28 percent of the global total. Over the last five to six years, China has led the world in investments in renewable resources resulting in the lowering of the cost of photovoltaic and wind power generation, which is a great contribution to the world.

In addition, regarding forestation. China has the largest plantation area and a forest coverage rate reaching 22 percent. We have already reached the goal of forest stock for the year of 2020.

China has launched a national carbon trading market, maybe the world's largest, with the amount of carbon emissions totaling 3 billion tons. In comparison, the EU has achieved a market of only 1.7 billion tons, although it has been engaged in work on a carbon market for many years.

As President Xi Jinping has announced, China has established the South-South Climate Cooperation Fund to promote cooperation among developing countries.

So far, China has signed memoranda of cooperation with 34 countries, presenting them goods and materials to cope with climate change. We have trained nearly 1,000 officials and researchers from over 100 developing countries to improve their abilities in raising capital and combating climate change.

China has embarked on a road pursuing low-carbon development. The international community agrees that China's progress in combating climate change has great reference significance for other countries.

All the above aspects I have mentioned are China's policies, actions and progress for addressing climate change, and showing it is playing an important role on the global stage. Thank you.

Reuters:

I wanted to ask whether there is any possibility that China will consider increasing its target of emissions reduction. So, low emissions reduction by 2020, or 2030, as you said earlier, China is on the target to meet the 2020 suggested amount agreed at Paris, but increasingly given new reports like the IPCC 1.5℃ report and pressure growing on the European Union to consider reducing its target, I wonder whether China is also considering that, under what conditions it might reduce its emissions target. Thank you.

Xie Zhenhua:

The IPCC recently made a special report on the impacts of global warming of 1.5 °C above pre-industrial levels. This report shows that the dangers and impacts of climate change have already happened, and the response to climate change is becoming more and more urgent. It gives us such a clear signal and offers various options. Therefore, Chinese scientists have made great contributions in this regard.

The report put forward that measures must be taken with intensified efforts to limit warming to below 2 °C or 1.5°C above pre-industrial levels. And the time is running out. For China, we should accomplish the goals we have already made and strive to do better. For example, as I said just now, two of our 2020 goals have been achieved, and we will continue to work tirelessly to improve this aspect and do a good job. Because doing a good job aims not only to deal with climate change, but also provide an incentive to promote the high-quality development of our domestic economy and society. Therefore, the international community does not need to doubt this, and we will do it seriously.

We hope that developed countries will earnestly honor their commitments. The Paris Agreement enshrines the principle that actions and support must be matched. Actions refer to both mitigation actions and adaptation actions, while support refers to the financial and technical support provided to developing countries by developed countries. As long as the developing countries are provided with financial and technical support to improve their capabilities in all aspects, it is possible for them to take proactive measures. In this sense, therefore, we hope that during the implementation of the Paris Agreement, in the negotiation process of the implementation rules, and in the process of mapping out the future institutional arrangements, the provisions of the Paris Agreement should be seriously implemented, so that all countries in the world can truly establish political mutual trust and take active action to achieve the goals through international cooperation while addressing climate change at different stages. Thank you.

China Daily:

Could you please give us an introduction to the overall construction progress of the national carbon emissions trading market and the plan for the follow-up work? Thank you.

Xie Zhenhua:

This work is organized and promoted by the Climate Change Department, the Ministry of Ecology and Environment. I would like to invite Mr. Li to give you some information on that.

Li Gao:

Thank you. It is a major institutional innovation to establish a nationwide carbon emissions trading market in a bid to control greenhouse gas emissions through the market mechanism. It is also an extremely complicated and systemic-based project. We have set up carbon trading pilot schemes in seven provinces and cities since 2011, analyzing relevant experiences as part of the groundwork for establishing a nationwide and integrated carbon emissions trading market. Generally speaking, these pilot schemes have made good progress since trading began in June 2013, with total transactions reaching 270 million tons of carbon dioxide and the trading volume surpassing 6 billion RMB. In the regions that have introduced pilot schemes, the total amount of carbon emissions as well as carbon intensity have both decreased. Thus, the carbon emissions trading market has indeed been significant for meeting our target of controlling greenhouse gas emissions and promoting regional low-carbon development.

On the other hand, we are still learning from the developed countries. As Mr. Xie has mentioned, China is not the first country to establish a carbon emissions trading market. Over the past few years, we have proactively learnt from and drawn on the lessons of the experiences of the E.U. as well as the state of California, making them an important reference in the design of our carbon emissions trading market. We released "The Development Plan of the National Carbon Emissions Trading System (Power Generation Sector)" at the end of 2017, which marked the launch of the carbon emissions trading system (ETS). After that, we have carried out a series of activities and kept advancing the work in regard to reporting, examining and checking carbon emissions in 2016 and 2017. We have made significant progress by proposing an initial design plan for the registration and trading systems, both of which are crucial for development of the ETS. We have also carried out a lot of work in the power generation sector, the first to implement carbon emissions trading, such as the design of carbon quota distribution and the compilation of training materials. In September, the Ministry of Ecology and Environment held a mobilization meeting and carried out large-scale training to ensure the preparation of the power generation sector as the first to join the national carbon ETS. We will continue to advance the relevant work by firmly upholding the principle of considering the carbon ETS as our policy tool in controlling greenhouse gas emissions. It is an important original intention to establish the carbon ETS.

We will steadily advance the phased building of the carbon trading market. After the power generation industry, we will gradually involve more industries and various related parties in carbon emission rights trading and enrich the trading category. During this process, we will be cautious to avoid adverse speculation and over-financialization. We also seek to prevent financial risks and make full use of the carbon market to both reduce greenhouse gas emissions and save related costs.

We will step up the building of the carbon trading market in the following four aspects: First, issuing regulations and supporting rules. Together with relevant departments, we will further advance the adoption of the temporary regulation on the carbon emission rights trading, fundamental to market operation. We will later issue some supporting rules, all of which are currently in the drafting process.

Second, we will boost necessary infrastructure development. So far, the enterprise direct reporting system has taken shape, but needs improvement. We have formed preliminary plans for the registration and trading systems, and we intend to waste no time in their argumentation and optimization.

Third, better managing the work related to quota allocation and verification of the carbon emission reports of key emitters. Next year, we will verify the reports submitted in 2018. Besides, we will exert more efforts in nourishing third party verification agencies. As for the power generation industry, we will issue a guidebook on its quota allocations and encourage spreadsheet making with the guidebook in enterprises. This will enhance the statistical foundation and ensure the quota allocation plan better matches practice.

Fourth, strengthening capability building. Ecological authorities and other related government agencies and organizations should all acquire necessary capacities. Local ecology authorities will have a role to play in managing the carbon trading market, and they need to do more in personnel training and capability building. We have been proactively pushing ahead with technique preparations since the nation launched the carbon trading system in late 2017.We will work harder and try to realize trading as soon as possible. Thank you.

Associated Press:

I would like to ask about China's policy in terms of climate change in the context of the Belt and Road Initiative project. Chinese institutions have been investing heavily in coal projects overseas, and this has raised concern among environmentalists in particular for the Belt and Road project. So, I was wondering if there might be any measures to compensate for the carbon emissions that might increase due to these projects for the Belt and Road.

Xie Zhenhua:

A large part of the Belt and Road cooperation is infrastructure development, which features a lock-in effect, meaning that long-term carbon emissions are mostly determined by the technologies, materials and standards the project adopted at its initiation. When proceeding with the Belt and Road development, the Chinese central government has been very clear that all the construction projects should be green and follows a low carbon path. Therefore, all the projects will adopt the latest technologies, save resources and energy as much as possible, and ensure the best performance in emissions reduction. Our existing standards on energy conservation and climate change reduction should also be adopted for both industrial and non-industrial programs. Moreover, the programs can also use as reference world-leading standards on climate change adaption in order to promote local development and cut emissions at the same time.

We have arranged several "South-South Cooperation" programs with countries along the Belt and Road to help increase their capacity to cope with climate change and also initiated some public welfare programs to help protect the local environment. When proceeding with Belt and Road development, we will strive to ensure the way forward is green and follows a low carbon path.

Both developed and developing countries are now wondering if their measures to cope with climate change will affect the local economy and employment. However, based on Chinese practices in tackling climate change, those worries might be unnecessary. I will give you some figures to showcase how China is following a transformative path in tackling climate change.

From 2005 to 2017, the GDP grew 1.8-fold, during which time the country lifted 170 million people out of poverty. Measures for energy conservation, emissions reduction and environmental protection have also created new employment opportunities and new industries. During the period, we have created over 30 million jobs. Those measures have also improved national performance in dealing with environmental pollution, which is beneficial to public health. Therefore, the measures have promoted high quality economic growth, improved people's wellbeing, and protected their health. Our green and low carbon practices will also be introduced to the Belt and Road countries, seeking to avoid the old development pattern of "pollution first, treatment afterwards" that developed countries followed in their industrialization. We have suffered losses in that process and do not want to see countries along the Belt and Road facing the same consequences. Therefore, we will strive to follow a low carbon path and build a green Belt and Road. Thank you.

Guangming Daily:

How will China push forward with its efforts to address climate change after the government institutional reform? What will be the focus? Thank you.

Xie Zhenhua:

Mr. Li has first-hand knowledge, since he was transferred from the National Development and Reform Commission (NDRC) to the Ministry of Ecology and Environment. I'll give the floor to him.

Li Gao:

In this round of government institutional reform, the function of addressing climate change was transferred to the newly-established Ministry of Ecology and Environment. This is a major institutional arrangement made by the CPC Central Committee and the State Council to address climate change and prevent and control pollution in a more coordinated way, as well as pursue ecological and environmental protection more holistically. We will advance China's efforts to address climate change under new circumstances. President Xi Jinping delivered an important speech at a national conference on environmental protection in May, which Mr. Xie also mentioned just now. We will ensure the full implementation of the requirements made by President Xi. Addressing climate change, which involves various fields, is beyond the capabilities of one single institution. This function was transferred from the NDRC to the Ministry of Ecology and Environment. But it does not mean that all the duties for addressing climate change were or are assumed by the NDRC or the Ministry of Ecology and Environment. The structure of the national leading group on climate change can serve to illustrate the point. Headed by the Chinese premier, the group has members from almost all the institutions. It enables all the institutions to perform their duties and play their roles in a more coordinated way, thus enhancing the effect of related policies.

We have an important task recently to establish a new departmental coordination mechanism under the leadership of the leading group to further coordinate the work between the departments. Through long-term practice, China has formed a working pattern in the field of addressing climate change: the leading group exercises unified leadership over the work, the competent department of climate change (now the Ministry of Ecology and Environment) is responsible for the coordination, all the relevant departments cooperate and support each other, and local departments and various industries fully participate in the field of addressing climate change. Next, we will make such a work pattern play a better role. In addition to maintaining the coordination mechanism at the departmental level, we also need to promote the establishment of provincial-level leading groups and related coordination mechanisms to give impetus to local work, in accordance with the requirements of the State Council after the transfer of local institutions has been completed.

I mentioned earlier that under the new situation it is important to integrate and synergize the work of tackling climate change with environmental pollution prevention and treatment and ecological protection. So next, we will accordingly focus on the better coordination and synergy in addressing climate change and ecological environment protection. In the future, from monitoring to target setting, policy and plan formulating, then to related supervision and implementation in tackling climate change, we should better coordinate our work with environmental pollution control and ecological protection. China has set a medium and long-term goal in addressing climate change, and there is a very practical supervision and implementation mechanism in the field of ecological environment protection. Therefore, how to use such a good mechanism to serve the national goals will be the next focus for the Ministry of Ecology and Environment in addressing climate change.

Of course, tackling climate change involves both international and domestic aspects. At the international level, Xie Zhenhua, special representative for climate change affairs of China, has just introduced that we will continue to work with all parties in a positive and constructive manner to foster a global governance system that is fair, reasonable, and focused on win-win cooperation, unswervingly promote the multilateral system for addressing climate change, and unswervingly promote the full and effective implementation of the United Nations Framework Convention on Climate Change (UNFCCC）and the Paris Agreement. This year's negotiations are very important. We will spare no effort in working with all parties to ensure advances in the development of the Paris Agreement implementation rules, so as to lay a good institutional foundation for post-2020 global cooperation in tackling climate change. We will also demonstrate the effectiveness of the multilateral system in addressing the challenges of global climate change through such an outcome.

There are also some other tasks. Since we have put forward the nationally determined action objectives on climate change by 2020 and 2030, we will advance implementation of our enhanced actions and promote some key areas and industries to independently roll out their own plans and roadmaps in view of nationally determined contributions and exert more efforts to ensure achieving the national targets . At the same time, we should take into account the specific conditions beyond 2030, the actual conditions of our national development, the needs to address climate change, and the two-stage development plan for building China into a great modern socialist country put forward at the Nineteenth National Congress of the Communist Party of China, so as to further determine the long-term objectives and tasks of tackling climate change. These are all very important tasks for us in the next stage.

In addition, there is another very important task in the field of climate change. Just now, I have answered the reporter's question on it, that is, to speed up the construction of the national carbon emission trading market. Thank you.

China Review News:

In the upcoming G20 summit to be held in Argentina, what suggestions will China put forward on climate change? Thanks.

Xie Zhenhua:

The framework convention on climate change plays a fundamental role in the international response to the problem. Prior to the Katowice Climate Change Conference, world major economies are to gather in Buenos Aires, Argentina, for the G2O summit [opening this Friday]. The attending countries and international organizations have important influence in both economic development and climate change. So, we hope that they will send out a clear message on implementation of the Paris Agreement and the U.N. 2030 Agenda for Sustainable Development, which will provide more impetus to the Katowice Climate Change Conference. Argentina has always played an active part in tackling climate change, as do the most of the countries attending the summit. So, I believe that there will be more actions on combating climate change, as well as a successful holding of the Climate Change Conference at the end of this year.

Xi Yanchun:

Thanks for Mr. Xie and Mr. Li. Thank you all. That marks the end of the press conference.

Read in Chinese

Date:

Oct. 19, 2018

Hu Kaihong: 

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we have invited Mr. Mao Shengyong, spokesperson of the National Bureau of Statistics, to introduce China's economic performance of the first three quarters of 2018. He will also answer some of your questions.  

Now, Mr. Mao will give you a brief introduction. 

Mao Shengyong:

The Chinese economy has, on the whole, maintained stable in the first three quarters with deepened transformation and upgraded development.

During the first three quarters, the country was confronted with a rather complex international situation as well as formidable tasks of domestic reform and development. Under the strong leadership of the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core, all regions and departments implemented the decisions and arrangements made by the CPC Central Committee and the State Council, firmly adopted a new development philosophy, actively worked in line with the standards and requirements for high quality growth through deepened supply-side structural reform, and strived for coordination in maintaining stable growth, advancing reform, promoting structural adjustment, improving people's well-being, and guarding against risks. As a result, the national economy has maintained generally stable while achieving steady progress. The economic structure has continued to be upgraded; old growth drivers have been constantly replaced by new ones; the development quality and performance has steadily improved, and high quality growth has been achieved.

According to preliminary statistics, GDP in the first three quarters was 65.09 trillion yuan (US$9.38 trillion), up 6.7 percent year on year in comparable prices. On a quarterly basis, the year-on-year increase was 6.8 percent, 6.7 percent and 6.5 percent respectively. In regard to the different industrial sectors, the added value of the primary, secondary and tertiary industries reached 4.22 trillion yuan, 26.30 trillion yuan and 34.58 trillion yuan respectively, up 3.4 percent, 5.8 percent and 7.7 percent year on year.

1. The agricultural sector posted stable performance with an improved planting structure.

The total output of summer grain was 138.72 million metric tons, a drop of 3.06 million metric tons, or a year-on-year decrease of 2.2 percent. The total output of early rice was 28.59 million metric tons, down 1.28 million metric tons, or 4.3 percent year on year. We expect a bumper yield in Autumn grain. With an upgraded structure, planting areas for quality rice, soybeans, cotton and sugar increased, while the corn planting area decreased. In the first three quarters, the total output of pork, beef, mutton and poultry reached 60.07 million metric tons, up 0.2 percent year on year, among which the figure for pork was 38.43 million metric tons, up 0.3 percent. There were 428.87 million live pigs, a year-on-year decrease of 2.3 percent, while 495.79 million pigs were slaughtered, a year-on-year increase of 0.1 percent.

Mao Shengyong:

2. Production in both the industrial and service sectors is generally stable, and corporate profits registered relatively fast growth. 

In the first three quarters, the added value of industrial enterprises above designated size increased by 6.4 percent year-on-year, although this was down 0.3 percentage points from the level recorded in the first half of the year. In terms of economic types, the added value of State-owned enterprise increased by 7 percent year-on-year, that of collectively owned enterprises decreased by 1.4 percent, that of joint-stock enterprises rose by 6.6 percent and that of foreign-invested companies and Hong Kong-, Macao- and Taiwan-invested companies grew by 5.7 percent.

In the three major categories, the added value achieved by the mining industry increased by 1.8 percent year-on-year, that of the manufacturing industry increased by 6.7 percent, while that in the sectors of electricity, heat, gas and water production and supply grew by 10.3 percent. In September, the added value of industrial enterprises above designated size rose 5.8 percent year-on-year. In the first three quarters, the index of services production increased by 7.8 percent year-on-year, 0.2 percentage points lower compared to the level achieved in the January-June period, with information transmission, software and information technology services, and leasing and business services growing by 37.5 percent and 10.8 percent, respectively. 

In September, the index of services production grew by 7.3 percent year-on-year. During the January-August period, the combined profits of industrial enterprises above designated size stood at 4.42 trillion yuan, a year-on-year increase of 16.2 percent; the profit margin in regard to the main business income of industrial enterprises above designated size was 6.43 percent, up 0.35 percentage points year-on-year. During the January-August period, the operating revenues and operating profits of service sector enterprises above designated size respectively rose by 12 percent and 15.5 percent year-on-year.

3. Market sales kept increasing, while consumer spending increased at a faster speed.

In the first three quarters, total retail sales of consumer goods reached 27.4299 trillion yuan, a year-on-year increase of 9.3 percent. This was 0.1 percentage point lower than the figure for the first half of this year. Specifically, retail sales in urban areas reached 23.4717 trillion yuan, up 9.1 percent, while sales in rural areas totaled 3.9582 trillion yuan, up 10.4 percent.

Grouped by consumption patterns, revenue from the catering sector totaled 2.9763 trillion yuan, up 9.8 percent, while revenue from commodities rose 9.2 percent to 24.4536 trillion yuan. Sales of goods for a consumption upgrade grew at a faster rate. Of commodities above the limitation unit, the total retail sales of gasoline and related products rose 14.4 percent, and that of communication products rose 10.7 percent. This represented gains of 5.4 percentage points and 1.4 percentage points respectively from the same period of last year. 

In September, the total retail sales of consumer goods increased by 9.2 percent year-on-year, 0.2 percentage point faster than the previous month. In the first three quarters, residents' per-capita consumption spending was 14,281 yuan, representing nominal growth of 8.5 percent year-on-year, 1.0 percentage point faster than the same period of last year, and an actual growth of 6.3 percent, 0.4 percentage point faster year-on-year after adjusting for inflation. Specifically, urban residents' per-capita consumption spending was nominally up by 6.5 percent, 0.3 percentage point higher year-on-year. For rural residents, there was a nominal gain of 12.0 percent, 3.4 percentage points higher than last year. 

Mao Shengyong:

4. Investment on fixed assets slowed and became more stable; private and manufacturing investment achieved an apparent increase.

During the first three quarters, nationwide fixed assets investment (except for peasant households) totaled 48.34 trillion yuan, up 5.4 percent year on year, the growth rate being 0.6 percentage points lower than in the first half of the year, but 0.1 percentage points higher when considered from January to August. Among the relevant figures, private investment reached 30.17 trillion yuan, up 8.7 percent year on year, with the growth rate 0.3 percentage points higher than in the first half year and 2.7 percentage points higher than the same period of last year. Viewed from an industrial sector perspective, investment in primary and secondary industries increased 11.7 percent and 5.2 percent respectively. Manufacturing investment grew 8.7 percent, 1.9 percentage points higher than in the first half of the year, and the increasing momentum has been maintained for the past six months. Investment in the tertiary sector increased 5.3 percent, while that for infrastructure grew 3.3 percent. During the same period, investment for real estate development totaled 8.87 trillion yuan, up 9.9 percent year on year. The area involved in commercial housing sales totaled 1.19 billion square meters, up 2.9 percent year on year and the sales volume reached 10.41 trillion yuan, a year-on-year gain of 13.3 percent. 

Mao Shengyong:

5. Export growth rate accelerated and imports increased remarkedly.

In the first three quarters, imports and exports of goods totaled 22.28 trillion yuan, a year-on-year increase of 9.9 percent. The growth rate was 2.1 percentage points higher than in the first half of the year. Breaking the figures down, Chinese exports reached 11.86 trillion yuan, a year-on-year gain of 6.5 percent, the rate being 1.8 percentage points higher than that in the first half of the year. Meanwhile, imports increased 14.1 percent to 10.43 trillion yuan, 2.5 percentage points higher than in the first half. The foreign trade surplus shrank 28.3 percent year-on-year to 1.43 trillion yuan. Imports and exports involving our major trade partners have all seen increases, being up 7.3 percent, 6.5 percent and 12.6 percent respectively to the EU, the United States and the ASEAN. In addition, exports to and imports from some key countries involved in the Belt and Road Initiative maintained sound growth momentum, with increases of 19.4 percent, 11.9 percent and 11.8 percent respectively to Russia, Poland and Kazakhstan. In September, the total volume of imports and exports reached 2.89 trillion yuan, up 17.2 percent year-on-year. Exports increased 17.0 percent to 1.55 trillion yuan while imports increased 17.4 percent to 1.34 trillion yuan. In the first three quarters, the delivery value of exports of industrial enterprises above designated size reached 8.97 trillion yuan, up 8.1 percent year-on-year. The September figure was 1.18 trillion yuan, up 11.7 percent year-on-year.

Mao Shengyong:

6. The Consumer Price Index (CPI) saw mild growth, the Producer Price Index (PPI) rose steadily.

In the first three quarters, the national CPI rose 2.1 percent year-on-year, 0.1 percentage point higher than in the first half of the year. By category year-on-year, food, tobacco and liquor prices rose 1.6 percent, clothing prices 1.2 percent, residences 2.4 percent, household facilities, articles and services 1.6 percent, transport and communications 1.7 percent, education, culture and entertainment 2.2 percent, health care 5.0 percent, and other goods and services 1.1 percent. In September, the national CPI rose by 2.5 percent year-on-year, an increase of 0.2 percentage point over August, while the figure was up 0.7 percent month-on-month.

In the first three quarters, the national PPI rose 4.0 percent year-on-year, 0.1 percentage point higher the growth rate witnessed in the first half of the year. The national purchasing prices for industrial producers grew 4.5 percent year-on-year. In September, the PPI rose 3.6 percent year-on-year, 0.5 percentage point lower than the figure for August and the index rose 0.6 percent month-on-month. The national purchasing prices for industrial producers rose 4.2 percent year-on-year and 0.6 percent month-on-month.

Mao Shengyong:

7. The employment situation remained stable, with the surveyed urban unemployment rate declining.

The surveyed urban unemployment rate was 4.9 percent in September, 0.1 percentage point lower than both in August and in the same period of last year. The surveyed urban unemployment rate in 31 large cities was 4.7 percent in September, 0.2 percentage point and 0.1 percentage point lower than in August and the same period last year respectively. The surveyed unemployment rate for the major workforce aged 25 to 59 was 4.3 percent, unchanged from the previous month. By the end of the third quarter, the number of rural laborers forming the migrant work force had reached 181.35 million, 1.66 million more than the same period last year, for a gain of 0.9 percent. The average monthly income of migrant workers was 3,710 yuan, up 7.3 percent year-on-year.

8. The increase in personal income kept pace with economic growth, while the ratio of urban to rural income decreased.

In the first three quarters, personal per capita disposable income totaled 21,035 yuan, an increase of 8.8 percent year-on-year in nominal terms, and 6.6 percent in real terms taking price factors into account. The real increase remained the same as that in the first half of this year, keeping pace with economic growth. Factoring for permanent residence, urban and rural per capita disposable income totaled 29,599 and 10,645 yuan respectively, with the nominal growth rates reaching 7.9 percent and 8.9 percent respectively, while real growth was 5.7 percent and 6.8 percent respectively after taking account of price factors. The ratio of urban to rural per capita disposable income was 2.78, a reduction of 0.03 compared to the same period of the previous year. The median figure for national per capita disposable income was 18,236 yuan, an increase of 8.7 percent year-on-year in nominal terms.

9. The industrial structure has been further improved and the fundamental role of consumption has been continuously enhanced.

The upgrading of industries has continued to progress. In the first three quarters, the value-added growth rate of the tertiary industry was 1.9 percentage points faster than that of secondary industry. It accounted for 53.1 percent of the GDP, an increase of 0.3 percentage point compared to the same period last year, and 12.7 percentage points higher than the secondary industry. 

The fundamental role of consumption has been continuously strengthened. In the first three quarters, the contribution rate of final consumption spending to economic growth was 78.0 percent, 46.2 percentage points higher than the contribution from gross capital formation. 

The proportion of service consumption continued to increase. In the third quarter, service consumption accounted for 52.6 percent of the national residents' consumption spending, an increase of 0.2 percentage point year-on-year.

The investment structure has achieved continuous optimization. In the first three quarters, investments in the high-tech manufacturing industry increased 14.9 percent on a yearly basis. The growth rate was 9.5 percentage points higher than overall investment.

The trade structure has been further improved. In the first three quarters, the general trade of imports and exports increased by 13.5 percent, accounting for 58.4 percent of the overall total, up 1.9 percentage points year-on-year. The export of mechanical and electrical products increased by 7.8 percent, or 58.3 percent of total exports.

10. The effects of supply-side structural reform have continuously showed and new drivers of growth have developed fast.

The industrial capacity utilization rate has remained stable. In the first three quarters, the national industrial capacity utilization rate was 76.6 percent, identical with last year. In the third quarter, the capacity utilization rates of the ferrous metal smelting and rolling processing industry and the coal mining and washing industry reached 78.7 percent and 70.1 percent respectively, 2.0 and 1.1 percentage points higher year-on-year.

Enterprise operational costs and their leverage ratio have dropped. From January to August, the cost per 100-yuan of main business revenue of industrial enterprises above designated size was 84.39 yuan, 0.35 yuan less than last year. At the end of August, the liability-asset ratio of industrial enterprises above designated size was 56.6 percent, down 0.5 percentage point year-on-year. 

The stocks of commercial buildings for sale have continued to decrease. At the end of September, the total floor space of commercial buildings for sale dropped by 13.0 percent year-on-year.

More investments have been made in key industries to address inadequacies. In the first three quarters, the investment in ecological preservation and environmental treatment and agriculture grew year-on-year by 33.7 percent and 12.4 percent respectively, 28.3 and 7.0 percentage points faster than the average growth of total investments in all fields respectively.

Green development has advanced steadily. In the first three quarters, the energy consumption per unit of gross domestic product dropped by 3.1 percent year-on-year.

New industries have enjoyed comparatively fast growth. In the first three quarters, the added value of high-tech manufacturing and equipment manufacturing industries increased year-on-year by 11.8 percent and 8.6 percent respectively, 5.4 and 2.2 percentage points faster than industrial enterprises above designated size. The added value of emerging strategic industries increased by 8.8 percent year-on-year, 2.4 percentage points faster than that of industrial enterprises above designated size.

New products have continued to be developed rapidly. For example, in the first three quarters, the output of new energy vehicles increased by 54.8 percent year-on-year and that of integrated circuits 11.7 percent.

New forms of businesses have developed vigorously. In the first three quarters, online retail sales totaled 6.28 trillion yuan, an increase of 27.0 percent year-on-year. Among them, online retail sales of physical goods reached 4.79 trillion yuan, up 27.7 percent and  accounting for 17.5 percent of the total retail sales of consumer goods. This represented an increase of 3.5 percentage points over the previous year. Online retail sales of non-physical goods reached 1.48 trillion yuan, an increase of 24.8 percent.

Generally speaking, in the first three quarters, the Chinese economy operated within an appropriate range. Economic performance was stable, with improved momentum; the economic structure was further adjusted. The quality of development continued to improve. More efforts were made to promote reform and opening up, and the public enjoyed more benefits from development.

Meanwhile, there were several issues to be noted: We were confronted with more external challenges. The difficulties in adjusting the domestic economic structure remained. Despite a stable performance, the national economy was confronted with possible changes and greater downward pressures. 

As far as the next step is concerned, we will focus on promoting high-quality development and continue the reform and opening-up campaign. In the current supply side structural reform, the key task will be to address certain inadequacies. We seek to expand effective market demand. We will ensure a stable development of the job market, the financial market, the foreign trade sector, the foreign capital sector and the investment sector, and keep overall expectations stable. We will promote stable and healthy economic development. And we will be able to achieve the main economic and social development targets set for this year.

Hu Kaihong:

Thank you Mr. Mao. Now, the floor is open to questions. Please identify the media outlet you represent before asking questions.

CCTV:

As you said, the growth of GDP and some industrial indicators fell to some extent. Does it mean the economy faces many difficulties? And how would you comment on the current economic situations? Thanks. 

Mao Shenyong:

I would like to summarize the economic operation over the first three quarters into three points.

First, stability has been maintained. From the perspective of growth, over the first three quarters, GDP grew 6.7 percent year-on-year, laying a solid foundation for the realization of the objective of an annual growth rate of around 6.5 percent. From the perspective of employment, the nationally-surveyed urban unemployment rate in September was 4.9 percent, 0.1 percentage points lower than the previous month and also September 2017. More than 11 million new urban jobs were created, which means the annual job creation task has been completed a quarter in advance. From the price perspective, the CPI grew by 2.1 percent over the first three quarters, 0.1 percentage points higher than the level in the first two quarters. However, the growth of CPI over the first three quarters remained 2.0 percent, the same as the level achieved in the first half of this year, if the price rises of food and energy is not taken into account. From the perspective of residents' income, the average disposable personal income over the first three quarters increased 6.6 percent, the same figure as was established in the first half of this year, basically keeping pace with national economic growth. So, considering the indices of growth, employment, price and income, it is fair to say that the economy is operating stably in a rational zone.

Second, the momentum of progress has been maintained. The economic structure is going through a process of optimization and adjustment. As has been noted, from the perspective of industrial structure, the service sector's role as the bedrock has been consolidated. Over the first three quarters, the value-added achievements of the service industry increased by 7.7 percent, which is comparatively fast growth, contributing 60.8 percent of economic growth, 1.8 percentage points higher than the same period of last year. Over the first three quarters, the service industry's share in GDP was 53.1 percent, 0.3 percentage points higher than last year. Besides, the sector's progress to a medium- and high-level has speeded up. The changes of the structure of demand indicate that the foundational role of consumption has been continuously strengthened. Over the first three quarters, consumption contributed to 78 percent of economic growth, 14 percentage points higher year on year. The structure of investment has improved as well, with the growth of investment in manufacturing rising for six straight months, while private investment growth has remained above eight percent. Meanwhile, the quality and efficiency of the economy have also been improving. 

Third, new driving forces are becoming stronger far more quickly. The supply-side structural reform has advanced solidly; the upgraded version of mass entrepreneurship and innovation initiatives is taking shape; new driving forces are developing fast. The number of market entities has increased by a large margin. Over the first three quarters, the number of newly registered enterprises exceeded five million, which translates to more than 18,000 new businesses every day. New industries develop fast. The growth of value added of the high-tech industries, equipment manufacturing industries and emerging industries of strategic importance, among the medium- and large-scale enterprises, respectively hit 11.8 percent, 8.6 percent and 8.8 percent, markedly higher than other industries. New types of industries are obviously prospering. The value of online retail sales of physical commodities increased by 27.7 percent, for instance. The development of new driving forces has gathered momentum for the optimizing of economic structure and steady economic operation.

In brief, the economy is operating within a rational range. The long-term stable and progressive fundamentals of the economy will continue. Meanwhile, it is known that the external environment has obviously changed, and the stable economic growth has slowed down slightly. We will act according to the policies made by the central authorities to ensure stable development of the job market, financial markets, foreign trade, foreign capital sector and the investment sector, so as to ensure the stability and health of economic growth. 

Phoenix TV:

China's GDP growth in the third quarter fell to 6.5 percent, the lowest in the last nine-and-a-half years. We are concerned whether the growth rate will continue to fall? You just mentioned that the downward pressure is increasing. How much more pressure can be expected?

Mao Shengyong:

Judged by macro indicators such as the GDP growth rate, employment, commodity prices, incomes and the balance in international payments, the Chinese economy maintained stability while making steady progress in the first three quarters. However, we noticed some uncertainties concerning economic growth, such as that of the external environment. In the first three quarters, the momentum in world economic growth slowed down, as did expansion of world trade. Some new economies encountered many difficulties. Recently, we can see the international financial market has experienced obvious fluctuation. China has become the second largest economy in the world, which has become increasingly integrated with the world economy. At present, uncertainties of the world economy are increasing, and there are also uncertainties resulting from China-U.S. trade friction. As a result, the Chinese economy is facing downward pressure due to those uncertain factors.

However, there are many certain factors in China. The economy shows strong resilience and many positive fundamentals. We will continue to deepen reform and opening-up so as to continuously release dividends. All departments in all regions should strengthen their implementation of policies to ensure stable development of the job market, financial markets, foreign trade, foreign capital sector and the investment sector, so as to ensure overall expectations remain stable. The intended effect of such policies will be unleashed gradually. Therefore, although we are facing external uncertainties, we will maintain stable growth of the Chinese economy as the domestic certainties somewhat offset external uncertainties. 

Economic Daily: 

We notice the total retail sales of consumer goods increased by 9.3 percent during the January-September period, lower than the growth rate of 10.4 percent during the same period last year. It can be said that there is an obvious slowdown in consumption growth. Recently, there are also a lot of public discussion on whether China is witnessing a consumption downgrading. Mr. Mao, how would you comment on this? Thank you. 

Mao Shengyong: 

When talking about changes in consumption on a month to month basis, we usually use the total retail sales of consumer goods to measure the market consumption situation. Fluctuations in the growth rate of this indicator in the last few months have caused some public discussion. 

We can analyze consumption changes from multiple perspectives as we gather more quarterly statistics. For instance, when looking at overall volume, the total retail sales of consumer goods increased by 9.3 percent in the January-September period, with the volume in September being 0.2 percentage points higher than August. A growth rate above nine percent can be considered as relatively fast. 

In terms of per capita consumption expenditure of Chinese households, the nominal growth reached 8.5 percent in the first three quarters, up one percentage point year-on-year. 

When seeking to understand consumption in a holistic and comprehensive manner via an accounting perspective, it should be pointed out that final consumption expenditure's contribution to economic growth reached 78 percent in the first three quarters, up 14 percentage points year-on-year. 

Taking these indicators into consideration, we can see that consumption has maintained relatively fast growth and its contribution to overall economic growth keeps increasing. This momentum trend has not changed. 

Now, let's look at the statistics via several different structures. The first is the Engel Coefficient, which shows the proportion of food expenditure in total household spending. In 2017, China's Engel Coefficient dropped to 29.3 percent, below the usual benchmark of 30 percent for the first time. It was 28.5 percent in the first three quarters of this year, down a further 0.7 percentage points year-on-year. 

In terms of the consumption of services, this accounted for 48.2 percent of Chinese residents' total consumption in 2017, up 5.2 percentage points compared to 2012. It means that the proportion of service consumption in the total increased by an average of 1.04 percentage points annually over the past five years. In the third quarter of this year, its proportion reached 52.6 percent, up 0.2 percentage points year-on-year. 

In terms of physical goods consumption, sales of some products taken to indicate consumption upgrading, such as cosmetic products and smart home appliances, have maintained relatively fast growth. Auto sales overall did slow down; however, the percentage of SUV sales in the total keeps increasing. 

In terms of the urban and rural structure, in the first three quarters, the nominal growth of rural residents' consumption increased by 12 percent, much higher than that in the urban areas. Rural residents' spending on education, culture and entertainment is growing at a relatively fast pace. 

As a result of studying such factors, we can see that the public consumption structure has maintained a rapid trend of upgrading.

To sum up, the trend continues as China's consumption maintains relatively fast growth, the consumption market is expanding, the contribution of consumption to economic growth continues to increase and consumption structure is constantly upgrading. In the next period, consumption will play an increasingly important fundamental role in promoting China's economic growth as China enters different stages of development and transforms its economic development mode. However, we should attach importance to various factors that constrain consumption growth. On the one hand, we should take various measures and work harder to increase incomes, improve income distribution and the social security system, and thus raise residents' consumption capacities. On the other hand, we need to deepen the supply-side structural reform and improve the quality of supply, so as to continuously satisfy the needs of consumption upgrading. 

China Business Network:

Statistics show that, overall, investment in the first three quarters slowed down, with the growth rate of infrastructure investment only 3.3 percent. Will the low speed of increase become the new normal in infrastructure investment? How to analyze this trend? In addition, private investment has maintained good momentum, but we notice the contradiction in private financing is aggravated this year. Will this affect the overall growth rate of private investment in the future?

Mao Shengyong:

You have asked two questions. The first is about infrastructure investment. During the first three quarters, the growth rate of fixed assets investment was 0.1 percentage points higher than the level achieved from January to August. As for its structure, the growth rate of manufacturing investment is accelerating and that in the real estate sector has become a bit slower, yet is still around 10 percent. The increase rate of infrastructure investment fell further to 3.3 percent; however, if we view it consecutively, the range of falls is narrowing. With the efforts made to keep employment, the financial sector, foreign trade, foreign and domestic investments and expectations stable, a larger number of key projects are advancing steadily and infrastructure investment is expected to be more stable. 

Your second question concerns the growth of private investment, which has gone generally well this year. It has witnessed a cumulative growth rate of over eight percent, a relatively high rate, as most of the private investment has flowed into manufacturing and real estate, both sectors where around 70 percent of capital comes from this source. Investment in manufacturing grew faster, while real estate saw a cumulative growth rate of about 10 percent. Therefore, private investment has been able to maintain good momentum. 

Market News International:

Some investors believe China will face greater downward economic pressures next year, considering the negative impact of the China-U.S. trade war, such as falls in the job market and investment, and influences on imports and exports are yet to be fully revealed. So, what is your expectation of next year?

Mao Shengyong: 

According to the statistics of the first three quarters, the national economic performance remained stable. We have certainly noticed growing uncertainties caused by changes in the external environment, but how the current trade friction between China and the United States will develop is unpredictable to some extent. These factors may exert some influence on the Chinese economy and pose some challenges to us. 

Yet, the statistics of the first three quarters show that the factors you just mentioned, such as the job market, the urban unemployment rate and the number of new urban job openings, remained stable. We have conducted investigations on enterprises with high reliance on foreign trade and on export-oriented enterprises in coastal areas. Their employment has  remained generally stable. This means the overall job market is stable. There are some structural conflicts in the job sector. However, we need to wait to see what affects will be produced by the changes in the external environment. 

Regarding influences on investment, presently, as noted, investment is stable. In the first three quarters, foreign direct investment and the inflow of overseas capital increased at a fast speed. The Chinese market is a big one, with great potential; so, it is still attractive to investors.

Regarding imports and exports, the growth rate in the first three quarters was satisfactory. The third quarter in particular saw very fast development. In the period of July, August and September, both the total volume and the growth rate of imports and exports increased each month. This was caused by several factors. For one thing, some enterprises actively changed their operations mode and rhythm to cope with changes in the general environment. For another, a series of foreign trade policies, including the policies and measures to facilitate trade, provided effective support. Besides, many enterprises have adopted a diversified trade strategy. So, when we take a closer look at foreign trade, we find that the growth rate of trade with countries along the routes of the Belt and Road is much higher than the overall figure.

Generally, we are confident of achieving the 6.5 percent economic growth rate set for this year. We will face uncertainties next year; however, the Chinese economy is resilient, and many factors are predictable. Therefore, we hope we can utilize the resilience and our overall strengths to handle external pressures. As long as we focus on our own issues, our economic performance will be stable next year. 

China National Radio:

Recently, the Central Bank revealed that, in order to resolve structural problems in the domestic economy, China is considering the treatment of State-owned enterprises on the principle of “competitive neutrality”. Does this mean State-owned enterprises will be exempted from their policy burden, and that all businesses will compete on a level playing field? In addition, how to achieve this kind of competitive neutrality in the future? What changes will this produce in regard to China's economic structural problems? Thank you.

Mao Shengyong:

Your questions are very academic. This point was raised by the Governor of the People's Bank of China Yi Gang only a few days ago. Competitive neutrality, from an academic viewpoint, means that, under the conditions of a market economy, countries treat different types of enterprises equally. We call this kind of technical methodology as the principle of competitive neutrality. In other words, as long as it is a market entity, regardless of its identity, it is treated equally, and enjoys fair treatment in terms of market access and resources. The principle of competitive neutrality can help promote development of the private economy, thus boosting private investment. It is also conducive to the reform and development of State-owned enterprises.

Reuters:

I notice the contribution rate of imports and exports to economic growth was negative in the first three quarters. Does it mean that, although the indicators relating to exports were positive, the trade friction between China and the U.S. has already impacted the Chinese economy? What is your opinion on the impact of the friction in regard to the financial market, including exchange rates? Will it influence the real economy? Thank you.

Mao Shengyong:

As I mentioned just now, from the expenditure accounts, the contribution rate of final consumption expenditure to economic growth was 78 percent in the first three quarters, an increase of 14 percentage points over the same period last year. Net exports of both goods and services contributed minus 9.8 percent to economic growth, while the relevant figure for the same period last year was 1.3 percent. Does it mean the export performance exerted a negative impact on economic growth in the midst of the trade friction? I don't think so. Actually, both imports and exports maintained faster-than-anticipated growth in the first three quarters, with the growth rates increased month by month in the third quarter. Why was the contribution rate of net exports negative? I think the following explanation can account for it.

First, in measuring imports and exports, apart from trade in goods calculated by customs, we should also take into consideration the trade in services. Although China enjoys surplus in goods trade, it still faces a services trade deficit. We need to consider the two parts together. 

Second, we need to adjust the value of imports and exports according to international accounting principles, for example, using CIF to calculate import prices, and FOB for export prices.

Third, when talking about the speed of growth, we need to take into consideration both current and the constant prices. The price factors of services and goods imports and exports should be deducted and then the constant price can be computed. The figure differs from that released by Customs, as the statistical caliber is different. Another important factor is the base quota of the previous year. As imports and exports during the first three quarters of last year performed much better, so the growth rate was even higher than now.

With all those factors combined, though the contribution rate of imports and exports to economic growth this year is negative, the general foreign trade performance is within expectations, or even better than expected. The impact of China-U.S. trade friction on the import and export situation is not so apparent.

The second question is about the exchange rate. During the first three quarters, due to factors of the Fed raising interest rates and shrinking its balance sheet as well as the rising dollar index, major currencies all depreciated against the U.S. dollar, and those in some developing countries depreciated sharply. Against such a backdrop, the exchange rate of RMB against the dollar is relatively stable and performed better compared with other major currencies. In addition, the Chinese economy is running smoothly at present, and the momentum can be well maintained in the near future. The goods and services imports and exports continue to run smoothly and the balance of international payments is stable, therefore the exchange rate can also generally be kept stable.

Hu Kaihong:

Now, the news conference concludes. Thank you all. Thank you, Director Mao.

By Li Xiaohua, Chen Xia, Huang Shan, Guo Yiming, Zhang Junmian, Mi Xingang, Li Huiru, Zhang Liying, Li Jingrong, Li Yang, Wang Qian, Wang Wei, Yuan Fang, Geoffrey Murray

.

Read in Chinese

Speakers:

Liu Liehong, deputy director of the Cyberspace Administration of China; 

Ge Huijun, president of the Zhejiang Provincial Committee of the Chinese People's Political Consultative Conference and director of the Publicity Department of the CPC Zhejiang Provincial Committee; 

Sheng Yongjun, secretary of the CPC Tongxiang Municipal Committee

Chairperson:

Xi Yanchun, spokeswoman of the State Council Information Office of China

Date:

Sept. 28, 2018

   

Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to this press conference. The Fifth World Internet Conference will be held from Nov. 7 to 9 in Wuzhen, Zhejiang Pprovince. To help you gain a better understanding of the related situation, we have invited Mr. Liu Liehong, deputy director of the Cyberspace Administration of China, Ms. Ge Huijun, president of the Zhejiang Provincial Committee of the Chinese People's Political Consultative Conference and director of the Publicity Department of the CPC Zhejiang Provincial Committee, as well as Mr. Sheng Yongjun, secretary of the CPC Tongxiang Municipal Committee, to this press conference. They will introduce the overall situation and preparatory work for the Fifth World Internet Conference, and will answer some of your questions.

Now, I'll give the floor to Mr. Liu Liehong.

Liu Liehong:

Good afternoon. Welcome to this press conference. On behalf of the organizing committee of the Fifth World Internet Conference, now I would like to give you a brief introduction of the related situation.

The Fifth World Internet Conference, co-sponsored by the Cyberspace Administration of China and the Zhejiang Provincial People's Government, will be held in Wuzhen, Zhejiang, Nov. 7 to 9 on the theme of "Creating a Digital World for Mutual Trust and Collective Governance – Toward a Community with a Shared Future in Cyberspace." The conference will invite more than 1,500 important guests from around the world, including government and private sector leaders, representatives from international organizations, technological communities and nongovernmental organizations, to discuss and exchange insights focusing on innovative development, cyber security, cultural exchanges, people's livelihood and welfare, and international cooperation. The aim is to build a platform for China to better connect to the world, and for all countries to pursue shared governance, to promote global common prosperity, and to lift the development level so as to build a sustainable digital world.

At present, the preparatory work for the conference has been completed. Compared with previous years, the fifth conference has the following special features:

First, the theme is more focused and the design more innovative. The conference will thoroughly implement the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, especially the Four Principles for promoting reform of global internet governance, and the Five Propositions to build a community with a shared future in cyberspace laid out by President Xi. Adhering to the "1+2" functional positioning, involving forums, a world leading internet scientific and technological achievements release and an expo, the conference will have a total of 19 sessions focusing on such hot topics as artificial intelligence, 5G, big data, cyber security, digital Silk Road, etc.

Second, the fifth conference will highlight both inheritance and innovation. This year we will focus on the extraordinary journey the conference has gone through in the past five years. Focusing on the theme of "Creating a Digital World for Mutual Trust and Collective Governance – Toward a Community with a Shared Future in Cyberspace," an exhibition on the achievements over the past five years will be inaugurated. There is a special topic of "Wuzhen Roundtable: Review and Prospects," focusing on in-depth discussion on building a community with a shared future in cyberspace. At the same time, the old brands such as Minister Dialogue, Business Leaders Dialogue and International High-Level Think Tank Forum on the Internet will continue to function with new connotations. 

Third, international elements will become even more prominent. This conference will be co-organized by five international organizations such as the United Nations Department of Economic and Social Affairs and the International Telecommunication Union. Drawing on advanced experience of other international conferences, we will build a platform for China to better connect to the world. We will invite more elites and representatives from around the world, and bring together more new elements in the internet sector to ensure more people can share the benefits of its development. During the fifth conference, a New Internet Gadgets and Applications Promotion Salon will be held to encourage internet companies from around the world to launch outstanding new products and new applications. There will be also a salon for international guests to exchange ideas. 

Fourth, the results are expected to be more fruitful. The conference will publish a "Report on World Internet Development 2018,""Report on China Internet Development 2018" and "Wuzhen Outlook 2018," as well as further promoting the "Wuzhen Process." The world-leading internet scientific and technological achievements release will cover about 15 global leading scientific and technological achievements in the field this year; the Light of the Internet Expo will focus on the latest developmental trends. At the same time, a pragmatic cooperation platform will be set up to encourage all parties to publish the latest research reports, advocacy documents and cooperation results in the internet field.

Fifth, new levels of intelligence will be generated. Technical applications such as driverless sightseeing cars, VR/AR applications and highway unmanned driving will be gradually shown at the scenic spot. The conference is actively promoting the application of smart technologies such as face recognition and artificial intelligence in guest registration, conference services, and information release.

Ladies and gentlemen, the World Internet Conference has been successfully held for four times. It has received great attention and wide recognition globally. While Wuzhen is a classic ancient Chinese town, the future-oriented World Internet Conference is embracing the world. The fifth World Internet Conference is about to open in a little over a month, and we look forward to your arrival.

Thank you.

Xi Yanchun:

Thank you, Mr. Liu Liehong. Now, we give the floor to Ms. Ge Huijun.

Ge Huijun:

Good afternoon, everyone. 

In 30 days, the Fifth World Internet Conference will open in Wuzhen. Zhejiang province has been comprehensively implementing the guiding principles from Xi Jinping, general secretary of the Central Committee of the Communist Party of China (CPC), on the conference. Under the leadership of the Cyberspace Administration of China, no effort has been spared in preparing for the conference to make it better than before, and we try hard to play a good role on the home stage. With the experience learnt over the past four years, we have gradually increased our abilities and we are confident for the success of the annual conference this year.

First, conditions for holding the conference have been greatly improved. In the past five years, we have focused on the development of soft and hard infrastructure to meet international standards. While the first and second conferences were held at Wuzhen Township's crowded scenic areas, it is gratifying to note that the third and fourth ones took place in the spacious Wuzhen Internet International Conference and Exhibition Center, thus scaling new heights in infrastructure improvements every few years. This year, we are doing even better – more than 400 guest rooms have been newly added to ensure that all the 1,500 invited guests can book their accommodation and check in smoothly when the time comes.

The new banquet center, located only one street from the convention and exhibition center, will begin operating during the conference. With a construction area of 48,000 square meters, its overall appearance is integrated with elements of the internet and distinctive features of the southern region on the lower reaches of the Yangtze River, hence becoming another landmark building after the convention and exhibition center in Wuzhen. During the conference, we will display a number of high-tech products, involving 5G communications technology for commercial use in pilot areas, face recognition technology, and intelligent conference systems, as well as other relevant technologies. I am sure that all these approaches will help our guests better experience the facilities of an intelligent and smart international conference.

Second, more varied and colorful events are on offer during the conferences. In previous conferecnes, we set a small goal of launching special events to display the distinctive styles of Zhejiang province so that our guests could share and experience the pleasant life of the region south of the lower reaches of the Yangtze River during their stay in Wuzhen.

This year, in addition to major events such as the opening ceremony, forums and the "Light of Internet Expo" mentioned by Mr. Liu just now, we will also launch some new events, such as the Zhejiang special forum on "innovation and breakthrough of the industrial Internet", the "direct connection with Wuzhen," an internet innovation and entrepreneurship competition, and a "business talent show." Besides, our signature event "Dialogue Between Internet Tycoons" will continue to be held. This year, we will premiere the large multimedia symphony "Liangzhu" as a special performance. Through the excellent combination of art with high technology, and the fusion of the world and the Chinese nation, the symphony will show the audience the 5,000-year-long history of "Liangzhu" – a civilization popular in the Yangtze River Delta of southern China.

Third, the event is bringing more tangible benefits. The four previous conferences have raised Zhejiang's popularity and influence, made Wuzhen better known around the world, and brought about a series of preferential policies for Zhejiang province. For example, the government has approved the first national information economy demonstration area to be set up in the province; Zhejiang's capital Hangzhou was named as one of the national internet backbone access points; the Ministry of Industry and Information Technology and the Zhejiang provincial government have a cooperative agreement to promote industrial internet development; Wuzhen has set up a comprehensive experimental zone for internet innovation and development. These policy supports have created new opportunities for Zhejiang's digital development and its reform program to streamline administrative procedures. Last year, the provincial government established the Zhejiang Laboratory, a key scientific and technological innovation platform. In the first half of this year, core industries of the provincial digital economy recorded an added value of 234.8 billion yuan (US$ 34.14 billion), up by 16.4 percent year-on-year. I introduced the Computing Conference during the press conference for the second World Internet Conference three years ago. Back then, the event attracted 40,000 participants. This year, the number reached 120,000, coming from 81 countries and regions. This has mirrored Zhejiang's booming digital economy.

Friends of the media, the CPC Zhejiang Provincial Committee and the Zhejiang Provincial People's Government attach great importance to hosting for the World Internet Conference. We will continue to provide good service for the participants.

Finally, I would like to thank you for your support and welcome you to come to Wuzhen and have a wonderful time.

Thank you!

Xi Yanchun:

Thank you for Ms. Ge's introduction. Now the floor is open for questions. Please identify the media outlet you represent before asking your question.

CCTV:

I have a couple of questions for Mr. Liu. Just now, you introduced the theme of this World Internet Conference "Creating a Digital World of Mutual Trust and Shared Governance – Joining Hands to Build a Community of Shared Future in Cyberspace." Why was this theme specifically chosen? In addition, you said that the conference had been held for four times, this year is the fifth one. What has changed during those five years and what has not? What are the other highlights? Thanks.

Liu Liehong:

At present, global trade protectionism is gaining ground and the backlash against the globalization trend brings many challenges. We set the theme aiming to further encourage the world to establish a concept of internet development featuring mutual trust, management by all countries, free exchanges, mutual learning, cooperation and sharing to boost peace and development of global cyberspace.

This emphasis shows up in the following ways. First, the exploration and application of latest technologies will be highlighted. The expert and entrepreneur forum will be added to focus on the release of the world leading internet scientific and technological achievements. More leading technological talents and entrepreneurs can exchange views here. Second, equal importance will be attached to security and development. The conference will not only pay attention to problems facing the entire international community such as dealing with cyber terrorism and the protection of privacy, as well as focusing on internet developmental trends such as artificial intelligence and 5G. The challenges will be faced and potential solutions discussed to improve the prevention and control of risks and the promotion of digital development. Third, the internationalization will be increased. The world's Internet enterprises, international organizations and experts will get together in Wuzhen to discuss issues such as how to bridge the digital gulf between nations and international cyberspace management to further build a community of a shared future in cyberspace.

China National Radio:

Mr. Sheng, as Tongxiang has undergone a dramatic transformation since it became the permanent site of the World Internet Conference, would you please tell us in what way the county-level city will ensure a greater sense of gain for its people when seizing the opportunity to boost local economic development?

Sheng Yongjun:

Thank you so much for your question. I wish to express my great gratitude on this particular occasion to every media friend for your continuous concern and support to Wuzhen and to Tongxiang. The World Internet Conference has brought about an all-round and profound transformation to Tongxiang.

The first change is in regard to the landscape. By expanding from 67 to 110 square kilometers, Wuzhen has made notable progress in sprucing up its appearance and improving its functions, both of which have enabled the city to evolve in its nascent stage as an international place. The second is in regard to growth momentum. Tongxiang has basically achieved high-quality development with its economy and society moving in an obvious promising upswing. The third is in regard to its people. The World Internet Conference has brought about a tremendous impact on Tongxiang's residents, transforming their ways of thinking, changing their mode of production and renovating their daily lifestyle. Now, Tongxiang people are more willing to learn, accept and sharing in new things. Therefore, to better benefit from the Conference and develop the local economy to ensure local people a stronger sense of gain, keeping in mind General Secretary Xi Jinping's instructions on the Conference, Tongxiang as well as Wuzhen, we'll strive for three-pronged endeavor to make Wuzhen, Tongxiang and the lives of local people better:

First, we'll build a better Wuzhen. Tongxiang is strongly committed to staging each annual session of the Conference in an increasingly remarkable way. At the same time, we will strive to secure an advanced position of the digital industry, giving full play to the Wuzhen experimental zone of Internet innovation. 

We'll vigorously develop such industries as artificial intelligence and big data, and expand the exhibition economy, making Wuzhen a center of empowerment for the future economy. In doing so, we have designed a 10-square-kilometer zone for digital economy development, in hope that it can receive more quality resources. We will make Wuzhen a quality destination. We will, with an international view and in line with international standards, further reinforce its functions and improve its amenities with a view to enabling its tourism sector to better generate all-round development for the town. We will consolidate Wuzhen's position as a leading tourism destination that is also increasingly livable and suitable for working in.

Second, we'll develop a better Tongxiang. We think there are three effects we need to achieve to further elevate the high-quality development of Tongxiang. The first one is industrial cluster effect. We have planned an area of 125 square kilometers centered on scientific innovation in Wuzhen as a main avenue to respond to the integrated development of the Yangtze River Delta, the construction of the Zhejiang Great Bay area and the opportunities arising from the World Internet Conference. We aim for the area to make up 80 percent of Tongxiang's Gross Domestic Product (GDP) within three years. Second, radiation effect. We have set aside four major blocks with clearly defined functions: the intelligent manufacturing industry in the economic development zone, the digital industry in Wuzhen, the fashion industry in Puyuan and the back-up services in the main urban area, hoping the four blocks can respond to each other and achieve coordinated development. Third, demonstration effect. We have decided on forging a partnership with China Ping An Insurance Group Co. Ltd. to build a smart city of 3.5 square kilometers with ubiquitous Internet technologies and smart experiences, providing a showcase of future lifestyle and mode of production. 

Third, we'll ensure local people can lead better lives. The dividend brought by the Conference to Tongxiang and Wuzhen is in essence a greater sense of gain for local people. We will work to ensure that our people can get their things done more easily in terms of administrative procedures. We will continue the reform aimed at enabling people to get their things done in one go, and improve smart governance so that local people can finish all their procedures online and enterprises can benefit from improved administrative service. Additionally, we'll make local lifestyles smarter, with the promotion of smart senior care, smart health care, smart education, smart traffic and smart social governance. We'll provide more and higher-quality public services to see that our people benefit from the Internet. Besides, we'll open more channels to increase our people's incomes. Against the backdrop of rural vitalization, we'll take advantage of the Internet to increase the efficiency of our agricultural production and increase farmers' income. 

All in all, the World Internet Conference has become the largest IP of Wuzhen as well as Tongxiang. With the opportunities presented by the Conference, we'll have a great future to be embraced. Thank you all.

The Beijing News:

My question is for Mr. Liu. The guest lineup of the World Internet Conference draws great attention every year. Could you please tell us which famous enterprises and business leaders of the internet industry will be expected this year? Also, you mentioned that there will be 19 sub-forums this year. Why arranging these sub-forums? What results are they expected to achieve? Thank you. 

Liu Liehong: 

Thank you for the question. The World Internet Conference is an important global event. Top internet enterprises, including multinationals, and leading industry figures actively participate each year. Since the preparatory work of this year's conference began, all work has been carried out smoothly, with many industry heavyweights, famous global enterprises and notable domestic enterprises confirming their attendance. I'm sure this year's conference will be as excellent as before.

This year's conference is divided into five sectors with 19 sub-forums. We made this arrangement for the following three reasons. 

First, after studying and reviewing this year's hot topics worldwide, and focusing on the theme of this year's conference, we set up the five sectors -- innovative development, universal security, openness and inclusiveness, beautiful life, as well as common prosperity. Our aim is to give a full explanation to the concept of "community of shared future in cyberspace."

Second, we place equal emphasis on development and security. While paying attention to cutting-edge technologies like AI and 5G to comprehend the trend of technological development, we try to rise to the challenges posed by cyber security, which affects all countries, by enhancing the world's ability to manage risks. 

Third, we continue to promote the themes of the previous sessions, so we continue to hold the forums of minister dialogue, high-level think tank forum and business leaders dialogue. We are trying our best to consolidate and extend the influence of the conference's most eye-catching forums worldwide. 

Thank you. 

Bloomberg:

My question is for Mr. Liu. It was reported that Facebook had registered an incubator platform in Hangzhou this year; however approval was later withdrawn. Does it indicate that internet companies like Google and Facebook will be restricted by the Chinese government from expanding their non-social and non-search businesses in China? Thank you.

Liu Liehong:

Thank you for your question. As far as we know, Facebook made contacts with relevant agencies in Hangzhou, but has not got the business license for its subsidiary in the city. I would like to reiterate that China is willing to share the opportunities of its internet development with the rest of the world. Foreign internet companies are welcome to develop their businesses in China as long as they abide by our laws and regulations, observe rules made by relevant agencies as well as respect China's history and culture.

Thank you.

China Radio International:

We know that the World Internet Conference has had a profound impact on Zhejiang province's economic and social development, and also played a positive role in promoting the government's digital transformation. The "One-Stop Service" reform has become a new business card of Zhejiang. What is the state of progress of the reform and what kind of benefits have people got from it?

Ge Huijun:

Thank you for your question. Here I will give you an example. Last February, a couple in Shaoxing, Zhejiang province, were arranging a transaction involving the purchase of a secondhand housing in Keqiao District of Shaoxing. They submitted the relevant document at the service window at 10:00 a.m., and then got the new property ownership certificate before 11:00 a.m. This is one of the changes brought about by the "One-Hour Handling and Conclusion" service launched this year in Keqiao district, which is also a reflection of Zhejiang's "One-Stop Service" reform.

As you said, the World Internet Conference has promoted Zhejiang's economic and social development and also contributed to the government's digital transformation. In the past, the problem that companies and the general public mentioned most was "slow, complicated and difficult procedures". One of the important reasons is that there are data barriers between government departments, and information cannot be freely exchanged and shared. 

The "One-Stop Service" reform is to comply with the concerns and expectations of enterprises and the general public. With the help of the internet, big data and other information technologies, we will vigorously promote the digital transformation of government procedures, removing information islands and data barriers. Relying on the internet, we can ensure that data will move more freely, meaning people will make fewer visits, and even won't have to visit at all. 

At present, the number of registered users of Zhejiang Government Administration Service Network (zjzwfw.gov.cn) has exceeded 18.3 million. More than 50 percent of civil matters for the public can be handled by the "One ID Having All Matters Done" system. The average start-up time of an enterprise in the province has been reduced to 5.5 working days, and the registration of residents' property ownership can be handled and completed within an average two working days. According to a third-party survey, the implementation rate and satisfaction rate for the "One-Stop Service" reform reached 88.8 percent and 94.7 percent respectively. We can say reform has given enterprises and the general public a full sense of benefit. Thank you! 

Guangming Daily:

My question is to Minister Liu. With the rapid development of the internet, web applications have penetrated every aspect of our lives. At the same time, security incidents such as cyber fraud and cyber theft are occurring now and then. What can the government do to create a more secure cyberspace? Thank you.

Liu Liehong:

Thank you for your question. As you have said, cyberspace security is closely related to national security and the public interest. Achieving and safeguarding the legitimate interests and rights for the people is the aim of our work on cyber security. In recent years, we have undertaken four tasks in terms of maintaining cyberspace security and safeguarding public security.

First, we have gradually established laws and a regulatory system for cyberspace security, and promoted cyberspace governance according to the laws and regulations. Since 2016, we have successively published the Cybersecurity Law of the People's Republic of China and Measures for the Security Examination of Network Products and Services (for Trial Implementation), as well as other regulations and measures to effectively protect and safeguard the interests of the people in cyberspace. To implement the requirements of the Cybersecurity Law, we are formulating related measures such as the Measures for Security Assessment of Cross-Border Data Transfer of Personal Information and Important Data. These provide a strong legal guarantee for regulating online behavior, maintaining network order, and purifying the network environment.

Second, we set up a China Cybersecurity Week to enhance the cyber security awareness and basic security protection skills for netizens. In the third week of September each year, we are staging this event nationwide. The main venue of the 2018 China Cybersecurity Week was held in Chengdu. We held a summit forum on cyber security, The 2018 Cyberspace Expo, as well as themed activities for promoting the concept of cyber security among the public.

Third, we have accelerated the development of the cyber security industry. Maintaining the security of cyberspace requires a strong cyber security industry to support it. In recent years, cyber security industry has grown at a compound annual growth rate of 20 percent. The cyber security industry has become as a strategic emerging industry of China, spawning many famous cyber security enterprises.

Fourth, we have cracked down on internet crimes in accordance with the law. We have continuously maintained a high-level posture on cybercrime. We have repeatedly cracked down on hacking, telecommunication fraud, and infringement of citizens' personal privacy. The cyber security order has been effectively maintained for creating a clean environment for internet users. 

Science and Technology Daily:

The world-leading internet scientific and technological achievements released at each year's WIC have drawn much public attention. What are the highlights this year? To which key areas do the achievements belong? Are there any cool emerging technologies in the lineup? Thank you.

Liu Liehong:

Thank you for your interest in the planned release. The event has been held for two years and has become a major highlight of the annual WIC. World-leading internet scientific and technological achievements, including theories, technologies, products and business patterns, are collected from all across the world every year and then selected for release through a just, fair, objective and authoritative evaluation by an expert committee. The final result will be unveiled at the WIC.

This year, we have collected many quality Internet technology achievements. We believe the list will contain important achievements for release at the WIC this year. I appreciate your continuous interest in this event. Thank you. 

Economic Daily:

My question is for Ms. Ge. You said just now that Zhejiang province has achieved great progress in developing the digital economy through holding the World Internet Conference. Could you brief us on the highlights in this regard?

Ge Huijun:

Thank you for your question. Since the first World Internet Conference, we have maintained double-digit growth in the value added component of the key industries involved in the digital economy. This sector is becoming a new engine powering our innovation-driven development. I think there are three highlights of the development of digital economy in Zhejiang.

First, the development of the digital economy started early in Zhejiang. As early as 2003, General Secretary Xi Jinping, then the Party chief of Zhejiang province, initiated the program for developing a digital-based economy. Over the past 15 years, all the provincial leaders have been consistently implementing this program. Last year, the CPC Zhejiang Provincial Committee and the Zhejiang provincial government made such development a top priority, aiming to take the program to a new level. This has increased the overall strength of the provincial digital economy.

Second, Zhejiang has created a good information infrastructure. We have been promoting the development of infrastructure for cloud computing, big data, the internet, the Internet of Things and a service interface for many years. By the end of last year, our fiber-optic broadband network covered all the buildings in urban areas and all the administrative villages in rural areas, and the people gained access to 4G mobile communications. Zhejiang leads China in rural e-commerce, with the number of "Taobao villages" accounting for more than a third of the national total. Zhejiang has also become a "province of mobile payment", with the technology being applied to almost every aspect of daily life including public services, transport and health.

Third, Zhejiang has a large number of market entities engaged in the digital economy. There are more than 480 companies involved, with a production value of over 100 million yuan and 18 companies with production value of 10 billion yuan, forming five industrial clusters with the production value of more than 100 billion yuan each. In addition, driven by the development of companies with global influence such as Alibaba, Hikvision and Dahua Technology, Zhejiang is striding towards the world stage in terms of the digital economy.

Here I would like to invite more individuals and companies to develop such businesses in Zhejiang, and to better share the opportunities presented by development of the digital economy.

Xi Yanchun: 

This is the end of today's conference. Thanks for Mr. Liu, Ms. Ge and Mr. Sheng. Thank you all.

.

Read in Chinese

Date:

Sept. 25, 2018

Guo Weimin:

Ladies and gentlemen, welcome to this press conference. Yesterday afternoon, the State Council Information Office released the white paper "The Facts and China's Position on China-U.S. Trade Friction." Today, we are holding this press conference to give you a brief introduction to the book and offer explanations to its content.

Present at this press conference are: Mr. Fu Ziying, China International Trade Representative and the vice minister of the Ministry of Commerce; Mr. Wang Shouwen, vice minister of the Ministry of Commerce and Deputy China International Trade Representative; Mr. Lian Weiliang, deputy head of the National Development and Reform Commission; Mr. Luo Wen, vice minister of the Ministry of Industry and Information Technology; Ms. Zou Jiayi, vice minister of the Ministry of Finance; Mr. He Hua, deputy head of the National Intellectual Property Administration.

I'm Guo Weimin, vice minister and spokesperson of the SCIO. I will be the host of this press conference.

First, I'd like to introduce the main contents of the white paper. Entitled "The Facts and China's Position on China-U.S. Trade Friction", it comprehensively clarifies the facts about China-U.S. trade and economic cooperation, systematically states China's stance on China-U.S. trade frictions, describes the mutually-beneficial and win-win cooperation between China and the United States in regard to trade and the economy, outlines the damage of trade protectionism and bullying practices of the U.S. administration towards the world economy, as well as China's will and determination to safeguard its national interests and the current multilateral trade system. Excluding the foreword, the 36,000-Chinese-character white paper is comprised of six parts.

The white paper points out that, since the establishment of diplomatic relations, bilateral trade and economic ties between China and the U.S. have developed steadily; a close partnership has been forged to the benefit of both countries and the rest of the world; trade and economic relations between China and the U.S. are of great significance. The Section 301 investigation produced by the U.S. administration makes a series of false accusations towards China that seriously distort the facts about China-U.S. economic and trade relations. At the same time, the U.S. has also introduced escalating tariff measures that greatly damage years of growing bilateral economic and trade relations and put at risk the multilateral trade system and free trade.

The white paper emphasizes that economic globalization is the trend of the times, and peace and development represent the shared aspirations of all peoples. China-U.S. economic and trade ties concern not only the wellbeing of the two countries, but also world peace, prosperity and stability. Cooperation is the only correct option for China and the U.S., and only a win-win approach will lead to a better future. China's position is clear, consistent and firm. China is firmly committed to safeguarding its national dignity and core interests, firmly committed to the sound development of China-U.S. economic and trade relations, firmly committed to reform and improvement of the multilateral trading system, firmly committed to protecting property rights and intellectual property rights (IPR), firmly committed to protecting the lawful rights and interests of foreign businesses in China, firmly committed to deepening reform and widening national opening-up, firmly committed to mutually beneficial cooperation with other developed and developing countries, and firmly committed to building a community with a shared future for all humanity.

"A just cause enjoys abundant support while an unjust one finds little support." In a world of increasing uncertainty, instability and insecurity, China will remain true to its original aspirations, follow the trend of the times, shoulder its responsibility for justice, and pursue the greater good. It will unswervingly safeguard the multilateral trading system, press forward with the reform of global governance, promote world peace, contribute to global development, uphold the international order, and build a community with a shared future for mankind.

The white paper is available in eight languages, namely, Chinese, English, French, Russian, German, Spanish, Arabic and Japanese. The Chinese copies are published by the People's Publishing House and the foreign language versions are published by the Foreign Languages Press, all being distributed by the Xinhua Bookstore across the country.

Now, please welcome Fu Ziying, China's international trade representative and the vice minister of the Ministry of Commerce, to give some details about the white paper.

Fu Ziying:

As we all know, China is the largest developing country in the world, and the United States is the largest developed country in the world. China-U.S. economic and trade relations are of great significance not only to the two countries themselves, but also to the stability and development of the global economy. Since the establishment of diplomatic relations between China and the United States, bilateral economic and trade relations have been deepening and interests have become highly interdependent, which has brought tangible benefits to the both peoples and benefited the whole world.

The scale of economic and trade cooperation between China and the United States is huge, yet the stages of economic development, social systems, and cultural traditions are different, so it is normal to have economic and trade frictions. The key is how to enhance mutual trust, promote cooperation, and control differences. For a long time, each government has made tremendous efforts to overcome all kinds of obstacles and move economic and trade relations forward, which has served as the ballast and propeller of the overall bilateral relationship. However, the U.S. side has recently adopted unilateralism and protectionism, adopting a series of trade restrictions on China, and continuously raising tariffs on goods imported from China. Starting from basis of safeguarding the common interests of the two countries and the world trade order, China adheres to resolving disputes through dialogue and consultation and responds to U.S. concerns with the utmost patience and sincerity. However, the U.S. side has been contradicting itself and constantly escalating the situation, which has greatly affected China-U.S. economic and trade cooperation and has also caused serious threats to the multilateral trading system and the principle of free trade.

In order to clarify the facts of China-U.S. economic and trade relations, clearly state China's policy on trade friction with the United States, and pursue reasonable solutions of the issue, the Chinese government has compiled a white paper entitled "The Facts and China's Position on China-U.S. Trade Friction."

First of all, the White Paper systematically expounds the mutually beneficial and win-win characteristics of China-U.S. economic and trade relations from various perspectives of trade in goods, trade in services, and mutual investment - pointing out that both sides have benefited a lot from it. In particular, the United States has gained extensive and enormous economic benefits in its economic and trade exchanges with China and shared the opportunities and achievements brought about by China's development. The claim that the United States is "losing" in this relationship does not stand up to scrutiny.

Since last year, the U.S. government has accused China of "economic aggression," "unfair trade," "IPR theft" and "national capitalism," which have distorted the facts of China-U.S. economic and trade relations. Based on a large amount of data and facts, the White Paper makes a detailed analysis and clarification on how to view the U.S. trade deficit with China, how to look at the issues of fair trade, technology transfer between Chinese and American companies, China's intellectual property protection, Chinese companies' "going global," and China's subsidy policies and more.

At the same time, the White Paper points out that the United States itself has a large number of restrictive policies and practices on investment and trade which distort market competition, hinder fair trade, disrupt the global industrial chain, including: discriminating foreign countries' products in violation of the principle of fair competition, abusing the "National Security Review" to hinder the normal investment activities of other countries' enterprises in the United States, as well as the provision of large subsidies that distort market competition, using large-scale non-tariff barriers, and abusing trade remedy measures.

According to the White Paper, as a major establishing force and participant in rebuilding the international economic order and multilateral trade system after World War II, the United States should have been the spearhead in following the multilateral trade rules and addressing the trade conflicts with other member countries through dispute-resolving mechanisms under the framework of the World Trade Organization (WTO). However, the unilateral emphasis of "American First" has brought American domestic issues to the international community and politicized the economic and trade problems, causing damage to the national interests of China and other countries, as well as America's own image, thereby ruining its own interests in the long run.

The White Paper reiterates that, while the global economy has just been relieved from the shadow of the global financial crisis, recovery is yet to secure sound momentum. However, the United States has insisted on imposing a slew of unilateral trade protectionist policies, which have sabotaged the international economic order, challenged the global value chain as well as the international industrial division system, interrupted market expectations, and risked the global economic recovery with the enormous uncertainties it has created.

In its final chapter, the White Paper systematically elaborates China's stance.

First, China firmly safeguards its national dignity and core interests. China does not want a trade war, but it is not afraid of one. We have the confidence, resolve and capability to meet all risks and challenges. No external factor will hold back China's development. China has kept the door to negotiations open, but negotiations can only happen when there is mutual respect, equality, good faith and deeds matching words. Negotiations cannot be conducted at the cost of China's right to development.

Second, China is firmly committed to the sound development of China-U.S. economic and trade relations. The sound and steady development of China-U.S. economic and trade relations is in the fundamental interests of the two peoples and the common interests of people across the world. China would like to work with the U.S. in the same direction, act in a spirit of mutual respect and win-win cooperation, focus on economic and trade cooperation, properly manage economic and trade differences, and make vigorous efforts to foster a new China-U.S. economic and trade order that is balanced, inclusive and mutually beneficial, so as to contribute to the well-being of the two peoples.

Third, China is firmly committed to the reform and improvement of the multilateral trading system. China resolutely abides by and upholds the WTO rules, supports an open, transparent, inclusive and non-discriminatory multilateral trading system, and supports necessary reform of the WTO. China is working to promote trade and investment liberalization and facilitation, and make economic globalization more open, inclusive, balanced and beneficial to all.

Fourth, China is firmly committed to protecting property rights and intellectual property rights (IPR). China will keep improving its laws and regulations on IPR protection, and protect the lawful IPR of Chinese and foreign businesses in strict accordance with the law. China will enhance its cooperation with all countries to protect IPR, and hopes that governments of other countries will also step up their efforts to protect Chinese IPR.

Fifth, China is firmly committed to protecting the lawful rights and interests of foreign investors in China. China is committed to building an open and transparent legal system concerning foreign affairs, improving the business environment, and providing better, higher-quality services to businesses from all countries operating and investing in China. The Chinese government pays close attention to the legitimate concerns of foreign investors, and stands ready to respond to and address their specific concerns.

Sixth, China is firmly committed to deepening reform and opening wider to the outside world. China will not reverse course, but only deepen its reform. China will not close its door to the world, but only open wider. China will unswervingly deepen reform, expand opening up, comprehensively promote the rule of law and build a socialist country under the rule of law.

Seventh, China is firmly committed to mutually beneficial cooperation with other developed and developing countries. On the basis of reciprocity, China will work with relevant economic and trade partners to expedite the negotiations on multilateral and bilateral economic and trade cooperation. China will promote deeper cooperation under the framework of the Belt and Road Initiative and create new drivers for common development.

Eighth, China is firmly committed to building a community with a shared future for mankind. China will continue to act as a responsible major country, and join every other country in building an open, inclusive, clean and beautiful world that enjoys lasting peace, universal security and common prosperity.

In short, no matter how the international situation changes, China will promote world peace, contribute to global development, and uphold international order.

Thank you everyone!

Guo Weimin:

Thank you, Mr. Fu. Now, the floor is open to questions.

CCTV:

As for bilateral trade and economic ties, the U.S. side believes the Chinese side has adopted unfair approaches causing the United States to suffer losses. What do you think of this claim? Besides, what do you think of the future of bilateral trade and economic ties between China and the United States? Thank you.

Fu Ziying:

Some people in the United States accused China of unfair competition leading to a huge U.S. trade deficit in goods with China and losses on the U.S. side. This accusation is not consistent with the facts. It doesn't have a leg to stand on, being a totally a misleading accusation.

China-U.S. economic and trade cooperation is the natural outcome of the complementarity of Chinese and American industries and the inevitable choice of the international division of labor. It is in the common interests of the two peoples. After nearly 40 years of development, the economies of China and the United States have become deeply integrated and attached to each other. The annual bilateral trade volume has reached US$700 billion, and the stock of two-way investment has exceeded US$230 billion. The annual sales revenue of American firms in China has reached US$700 billion, with profits exceeding US$50 billion. The common interests of China and the United States are far greater than their differences.

In fact, the gap in China-U.S. trade is merely gap in trade volume, not the gap in profits and losses. I used to be an accountant, so I know why. Similarly, no one knows better than the related enterprises and consumers themselves whether or not the United States has suffered losses in the bilateral trade. In terms of production, China and the United States are in different positions in the global industrial and value chains. The United States stands at the high-end, while China stands at the low-end. Chinese firms are more likely to earn processing fees, while American firms benefit enormously from design, parts supply, marketing and other links. In terms of consumers, Chinese goods of good quality and reasonable price have entered millions of American homes, enriched the American consumer market and improved American consumer welfare. On the whole, the U.S side has gained more from bilateral trade. The profits gained by U.S. enterprises in bilateral economic and trade cooperation are far greater than those gained by Chinese enterprises. It can be said that, the trade surplus is reflected in China, while the "interest surplus" is reflected in the United States.

The formation of the U.S. trade deficit with China is related to the economic structure, international division of labor, statistical divergence and other factors between the two countries. Fundamentally speaking, trade competitiveness is the competitiveness of industries, and the industries with strong competitiveness see relatively higher export volumes. The United States has maintained a big trade surplus with China in competitive industries such as automobiles, airplanes, agricultural products and services. In 2017, China imported US$13.1 billion of automobiles from the United States, while China's automobile exports to the United States only reached US$1.4 billion. The United States enjoyed a US$16.4 billion trade surplus with China in agricultural products. The U.S. trade surplus in services to China exceeded US$54 billion. The China-U.S. trade imbalance can also be attributed to American export controls to China. According to the analysis of relevant American institutions, the U.S. trade deficit with China would be reduced by as much as 35 percent if American control over high-tech products for civilian use exported to China could be relaxed. The United States doesn't want to export what China wants to import, and this situation is also a major cause of the current trade imbalance.

China is willing to work hard to push bilateral trade towards greater balance, and hopes the United States will also show a positive attitude. Currently, our planet has become a close-knit global village. The trend of economic globalization is unalterable, and the trend of China-U.S. economic cooperation is irreversible.

The Australian:

China is Australia's largest trading partner. We sell LNG and other major products [to China]. Do you say that other third countries can perhaps benefit or perhaps have opportunities to sell more to China as a result of the trade war between the U.S. and China?

Wang Shouwen:

Thank you for the question. The trade war has caused great damage to the global value chain and imposed a negative influence on normal trade activities. The United States could have been a major LNG supplier of China; however, because of its restrictive measures, we were forced to take countermeasures, and this will affect U.S. LNG producers' exports, as China is one of their important export markets. To be frank, the measures have already created some effects.

Australia is an important LNG supplier of China. The trade volume is enormous, and there is even greater potential. As Mr. Fu Ziying just said, China has a big market, and is willing to open wider. Opportunities are available to all LNG producers and supplying countries if there is no trade war.

Xinhua News Agency:

Can China's economy sustain the impacts of the economic and trade frictions with the United States? How will China respond to the downward pressure on its economy?

Lian Weiliang:

Thank you for these questions. Undoubtedly, America's punitive tariffs on US$200 billion of its imports from China will have both direct and indirect impacts on the Chinese economy, with the influence on some industries and regions being comparatively big. Yet, although the impact is unavoidable, the risks are generally controllable, and the Chinese economy has the ability to hedge through boosting domestic demand. The risks are controllable, because of support from at least three aspects: the resilience of the Chinese economy as a whole, the potential of expanded domestic demand, and the increasing competitiveness of market entities.

First, the Chinese economy has overall resilience. The size of the economy reached US$12.7 trillion last year, with exports hitting US$2.26 trillion, so that US$200 billion only accounts for 8.8 percent. If the contribution of the processing trade is considered, the influence of (the ongoing trade frictions) on added value can be reduced even further. An important characteristic with the Chinese economy is that it has a complete range of industries and multi-element components, and various parts can complement and replace each other, which means the Chinese economy can demonstrate strong resilience and tenacity while responding to any external impact.

Looking back at the development of the Chinese economy, we have actually experienced several tests, in which external demand plummeted. For instance, China's total export-import volume dropped eight percent, in dollar prices, in 2015 and 6.8 percent in 2016, which both exerted huge downward pressure on overall economic growth. However, relying on expanding domestic demand and deepening supply-side structural reforms, we maintained economic growth within a rational range. Currently, the Chinese economy is in the phase of transforming from high-speed to high-quality growth, attaching more significance to the quality of economic growth. So, its resilience and capacity to cope with any impacts are stronger.

Second, the Chinese economy has much potential in terms of domestic demand. China has nearly 1.4 billion people, which is even more than the total population of all developed economies, and annual per capita income is now nearly US$9,000, with an obvious trend of consumption upgrading. It is fair to say the domestic market has huge potential. Meanwhile, as a developing country, where regional development gaps have yet to be bridged, China still has many problems and weaknesses, so it also has huge potential in increasing investment.

All these factors have created favorable conditions for the Chinese economy to respond to external fluctuations. The economic operations in the first eight months this year proved this judgment. The additional American tariffs on US$50 billion worth of imports from China took effect in two batches on July 6 and August 23 respectively. China's industrial added value growth in August was 0.1 percentage points higher than the previous month as well as the same period of last year. The total volume of retail sales in August was 0.2 percentage points higher than July. Investment in manufacturing industries in that month was three percentage points faster than the same period of last year, and 0.2 percentage points higher than that achieved from January to July. It is noteworthy total power consumption from January to August increased by nine percent, the fastest growth since 2011.

Third, the competitiveness of market entities constantly increases. Although export-oriented enterprises meet many difficulties, their ability to adapt to market changes, expand markets and promote science and technology innovation, will enable them to withstand market tests in the process of coping with challenges arising from the decline of external demand. The Central Committee of the Communist Party of China and the State Council attach great importance to the influences of Sino-U.S. trade frictions, and have taken a series of positive measures, stressing that we must do our own business well, and focus on the necessity of keeping stability in six fields: employment, finance, foreign trade, foreign investment, investment and expectations.

In regard to dealing with the economic downturn due to China-U.S. trade friction, the following three specific measures can be adopted: first, expand domestic demand and strengthen areas of weakness more efficiently; second, take more effective steps to lighten burdens and improve the business environment, third, introduce more effective policies to boost restructuring and improve capabilities.

First, in regard to expanding domestic demand and strengthening areas of weakness more efficiently, a guideline issued by the Communist Party of China (CPC) Central Committee and the State Council recently aims to further tap the country's domestic consumption potential. The guideline outlines fifteen specific measures to upgrade consumption and tap this potential. We will focus on strengthening weaknesses in the areas of infrastructure development, people's well-being, public services, agriculture and ecological and environmental protection, while deepening supply-side structural reform in which we will ensure private investment plays an important role and improve the confidence of private investors.

Second, in taking more effective steps to lighten burdens and improve the business environment, China will further ease the burden on companies through additional cuts on taxes and fees, deepen reforms in streamlining the administration, delegate powers, and improve regulation and services to further improve China's business environment and deepen the country's opening up. All these measures are applied equally to both Chinese and foreign companies. We will continue to adhere to the socialist basic economic system while unwaveringly seeking to encourage, support and guide the development of the non-public sector to stabilize social expectations and boost development confidence.

Third, in regard to introducing more effective policies to boost restructuring and improve capabilities, we will provide more support for Chinese companies to explore international markets to strengthen win-win cooperation with the European Union, Japan, Russia, ASEAN and Africa and develop a diversified trade market based on the Belt and Road Initiative. We will also encourage Chinese companies to improve their adaptability to market changes, which requires them to optimize their product structure, to develop products that can meet diversified market needs and improve innovation capacity and core competence.

As a general comment, the Chinese economy has sufficient resilience and potential. China is fully capable of hedging the impact of China-U.S. trade friction through promoting high-quality development by expanding domestic demand, and we have full ability, confidence and conditions to keep the Chinese economy on a steady course. Thank you.

CNN:

Recently, many people have concluded from editorials and commentaries in China's official media that China's leaders and government increasingly feel that the trade war and Trump's tariff measures are not just a matter of economic and trade friction, but a strategic step for the U.S. to contain China's development and rise in an all-round way. We've heard similar voices in the U.S., and there's a growing consensus among Democrats and Republicans that China is a strategic competitor for the U.S. Under the circumstances and context, do you believe that the trade friction is a deadlock, and any economic and trade talks or negotiations would be useless or unhelpful? Thank you.

Fu Ziying:

This white paper released by the Chinese government aims to profoundly analyze the benefits that both China and the U.S. have received in their cooperation after the establishment of diplomatic relations between the two countries. Despite bumps, difficulties, twists and turns along the way, China and the U.S. both have seen remarkable progress in their gross economic products and people's welfare since the establishment of diplomatic relations between the two countries over more than 40 years ago. We can't forget that the bumpy development of China-U.S. ties over the past more than four decades has always become better and better, as people from the both countries have received benefits and welfare.

The problem right now is what do you think of China? I think there are still some misunderstandings of China in the international community. One of China's three major priorities set by the Chinese government is poverty elimination. Why? Because there we still have tens of millions of people living in poverty. It has been a common task for the world to eliminate poverty. It would be impossible for millions of people to get out of poverty if China didn't develop. In the face of the poverty issue, we all know that China must stick to the reform and opening-up so as to develop itself in economic globalization. However, the key problem is that people always focus on China's large GDP and trade volume while ignoring the average level of GDP and trade per capita, which is still very low.

Mr. Wang Shouwen and I deal with both international and domestic affairs. I've learnt a lot in the investigation and survey of some areas of central and western China. I went to a village in Guangxi Zhuang autonomous region at the beginning of 2017. I went there alone without any officials accompanying me. This randomly selected village is over 100 kilometers from Nanning, the capital city of Guangxi Zhuang autonomous region. There is a family with a veteran and his three sons. It's inconceivable to see the fact that only one son can get married. Because of poverty, there is no furniture in the room, and all the children and adults sleep on the cotton-padded mattress on the floor. Their food is corn congee directly cooked on a fire pan. I burst into tears after seeing this, and I gave them all the money in my wallet.

Should we lift people out of poverty and seek common prosperity with people in China and around the world under the circumstances of economic globalization? Or should we fight with each other and adopt containment policies to end up with the fact that the rich get richer and the poor poorer? Can we do that?

Therefore, I believe that containing China or the so-called trade war is not in line with the direction and future of human peaceful development. Throughout history, wars and trade wars have a price to pay. Who will bear the cost? It's the people. Thank you.

Phoenix TV:

It's reported China has rejected the American request for negotiations; so, what is your comment on this? In addition, under what circumstances is China willing to resume high-level trade negotiations? When is the soonest this might start? Thank you.

Wang Shouwen:

Thank you for your questions. The timing of when to resume high-level economic and trade negotiations is entirely up to the United States. China has kept the door open to negotiations to address economic and trade differences; however, negotiations can only work when there is equality and mutual respect. The United States has now imposed such large-scale trade restrictions, so, how can negotiations proceed when there is a knife being held to one's neck? That is not an equal negotiation.

Second, it requires good faith and credibility to conduct negotiations. There have been four rounds of high-level negotiations between China and the United States. The two sides reached much consensus, and even issued a joint statement. However, the United States has gone back on its words, reneged on the consensus achieved, and imposed trade restrictions, making negotiations hard to proceed. Therefore, I would like to highlight that, as long as there is good faith, equality and credibility, there will be a way out through negotiations. Thank you.

Ta Kung Wen Wei Media Center:

Do China's subsidy policies comply with the relevant provisions of the WTO? Do they create unfair competition? Thank you.

Zou Jiayi:

Thank you for your questions. Under market economic conditions, subsidies are widely used by many countries and regions, including the US and China, as one of the tools to address market failure and imbalanced economic development. However, subsidy policies should follow certain rules. As one of the WTO members, China formulates the policies of subsidies in conformity with the stipulations of the WTO, which divides subsidies into three categories: prohibited subsidies, actionable subsidies and non-actionable subsidies.

Prohibited subsidiesrefer to mainly export subsidies and import substitution subsidies. Actionable subsidies may result in trade-distortion and unfair effects on international trade, and harm the interests of members, but WTO members can recourse to the WTO dispute settlement mechanism. Non-actionable subsidies will not result in social distortions and unfair trade and are used mainly for supporting research and development, a country's undeveloped regions and support enterprises to achieve new and higher standards of ecological environment protection and so on.

Since China joined the WTO, we have actively pressed ahead with reform to ensure the compliance of domestic policies.Most of China's subsidies are non-actionable subsidies, and supplemented by actionable subsidies. Prohibited subsidies have been fully abolished. At the same time, we have earnestly implemented the agreement on subsidies and countervailing measures, which stipulate obligations such as WTO's rule of transparency on subsidies. For example, according to the WTO's transparency principle on subsidies, China strictly follows the requirements to regularly notify the WTO of the revision, adjustment and implementation of relevant laws, regulations and specific measures. Since China's WTO entry, we have submitted to the WTO over one thousand notifications. The latest one was in this July. We notified the WTO of the central and sub-national policies of subsidy policies between 2015 and 2016, covering all the provincial level administrative areas for the first time.    

Of course, I don't mean that our policies are impeccable. As a developing country, China has made continuous efforts in reforming and improving the policies of industrial subsidies and the endeavor is still underway. Based on the guideline, subsidies will mostly focus on non-actionable areas, avoiding as much as possible the adoption of actionable aspects. This is exemplified by two cases. The first involves agricultural subsidies. We have scrapped three types of subsidies, namely, direct subsidies to grain growers, comprehensive subsidies for agricultural inputs and subsidies for the seeds of high-quality crops, all of which belong to the yellow box subsidies that we previously adopted. We have replaced them with supportive policies related to the conservation of agrarian lands and appropriate operational land scale, in an attempt to secure the agricultural surroundings and facilitate sustainable development while shifting to green box subsidies. The second one is: not long ago, we undertook a round of reducing capacity among manufacturing industries. To better support this, we established a designated prize fund, primarily spent on trainings and re-employment of the people losing jobs during the process. The financial support of those enterprises is provided with non-actionable subsidies as well.

By and large, China has fulfilled its commitments to the WTO. The subsidies in both the standards and measures have in no way gone beyond the organization's regulations. Hence, we have not caused market disorder and unfair competition. At the same time, during implementation, if some local governments are found to be continuing to provide prohibited subsidies, it is our indomitable resolve to get them to stop such wrongdoing. Thank you.

Global Times:

What influences will the additional tariffs imposed by the United States on Chinese goods have on the global industrial chain? If foreign investment withdraws from China because of the tariffs, what influence will it have on China's industries and the global industrial division of labor? Thank you.

Luo Wen:

The additional U.S. tariffs on Chinese goods will cause great harm to and exert negative influences on global industrial chain, which can be shown in three aspects.

First, the tariffs will break the connection between the industries of different countries, risking fragmenting the global industrial chain. As we all know, under the conditions of economic globalization, the economies of all countries are deeply integrated into the global industrial chain. The trade between countries is no longer just simple commodity trade, but relies on global production networks to jointly complete product R&D and design, processing and manufacturing, logistics and transportation, and marketing services between countries. All countries are dependent on each other with their economies closely intertwined. We prosper and suffer together. The imposition of tariffs by the United States can be said to disrupt the normal international division of labor system, making some industries disconnected from upstream and downstream industries, meaning that the global industrial chain is facing the risk of fragmentation.

Second, the tariffs will break international economic and trade rules, leaving the global industrial chain in a state of disorder. The existing international economic and trade rules represented by the WTO regulations are the important cornerstone of global economic growth. The unilateralism and protectionism currently adopted by the United States have forced some countries to take countermeasures. By July this year, in addition to China, the other major trading partners of the United States, including the European Union, Canada and Mexico, successively launched countermeasures. . Therefore, the risk of a worldwide trade war is growing. In this situation, the international economic and trade rules may be damaged or collapse completely. Once the global industrial chain loses the fundamental support of these rules, the risk of disorder will become even greater.

Third, the tariffs will reduce the efficiency of global economic operations, leaving the global industrial chain exposed to greater risks of low efficiency. The additional tariffs of the United States have dealt a blow to normal commodity trading and resource allocation worldwide, reducing the efficiency of international economic operation. In April this year, the International Monetary Fund (IMF) released the World Economic Outlook, stressing that an increase in tariffs and nontariff trade barriers could disrupt global supply chains, and slow the spread of new technologies, reducing global productivity and investment. This will lower the overall efficiency of the global industrial chain.

This is the answer to your first question.

As to the impact of relocation of foreign companies, we believe that cross-border investment and relocation are voluntary business practices of companies to allocate resources efficiently across the globe. For any country, there are companies moving in and out every day. It is a normal and natural result of economic globalization. Up to now, the escalating trade friction provoked by the United States has had some impact on foreign companies in China. Some have decided to move to other countries in order to diversify their risks and lower costs. We should take a rational view of this issue.

First, instead of sidestepping it, we will take various measures to help companies overcome any difficulties. We will consistently deepen reform to streamline administration, delegate powers, improve regulation and strengthen services. We will cut taxes and reduce tax burden on companies and consistently improve the business environment.

Second, instead of exaggerating the issue, we should have every confidence in the potential of the Chinese market and the advantages of our industrial supporting capacity. China offers enormous market potential, a complete industrial supporting system and ample room for business development. Therefore, most of the foreign companies decide to stay for common development with the Chinese economy. There are also companies further exploring the Chinese market. For example, American electric vehicle manufacturer Tesla in July announced plans to build a super factory in Shanghai, its first outside the United States.

Third, we will open China wider to the outside world at our own pace. We will stay committed to market-oriented reform, continue opening-up, and implement all of the announced initiatives to achieve this. We are convinced that more and more foreign companies will come to invest in China, and most of the companies operating here will stay for further development. Thank you.

Bloomberg:

What expectations do you think the U.S. negotiators have for China-U.S. economic and trade frictions? What do they expect from the negotiations?

Wang Shouwen:

There have been four rounds of high-level negotiations between China and the U.S. As I have mentioned already, the two sides have reached much consensus during the negotiations, and even issued a joint statement. However, it is very regrettable that the U.S. administration has backtracked and reneged on the consensus achieved, thus escalating the trade frictions. These moves harm not only China-U.S. trade, but also the interests of American workers, farmers, herders, companies and consumers, about which other WTO members around the world are also concerned. We do not know why the U.S. has backtracked and reneged in this way. Actually, the trade war waged by the American administration has brought the U.S. no benefits. The U.S. is a major source of China's agricultural imports; however, from January to July this year, China's agricultural imports from other countries, including Brazil and Australia, increased significantly, while those from the U.S. rose only slightly. The U.S. was long the largest supplier of cars to the Chinese market; now, however, Germany has replaced the U.S. In the Chinese market, the supply of Japanese and German-made cars is growing, while that of American cars is falling. The trade measures of the U.S. have not cut its global trade deficit. Instead, its trade deficit with both China and other parts of the world are increasing. Therefore, we believe that a trade war is not in the interests of China, nor is it in the interests of the U.S. Terminating the trade war is the way out. China International Trade Representative Fu Ziying mentioned just now that the China-U.S. trade volume amounts to US$700 billion. For such a large trade volume, it is normal for there to be trade disputes between the twosides. As long as both conduct equal negotiations in a spirit of good faith and credibility, I believe that there will be a way out through negotiations. Thank you.

China News Service: 

The U.S. administration accused China of lack of IPR protection and the so-called theft of intellectual property. What's your take on this issue? What measures will China take to further enhance protection of IPR, especially IPR owned by foreign enterprises in China?

He Hua:

Thank you for your question. First of all, the recent accusations by the U.S. administration about IPR protection show total disregard for China's improvement in the system for intellectual property rights protection, the sharp increase in China's innovation capacity and the fact that China has been a major IPR nation. Thus, the accusations are totally unfounded and untenable. The Chinese government has adopted a clear stand in regard to strengthening IPR protection. In his keynote speech at the Boao Forum for Asia Annual Conference 2018, President Xi Jinping announced China would strengthen protection of intellectual property rights as one of the important new measures for further expanding reform and opening up. In his address at the opening ceremony of the Summer Davos this year, Premier Li Keqiang reaffirmed China will implement a more rigorous IPR protection system to ensure law breakers pay an insufferable price for their IPR infringements, so as to propel more domestic innovation. These statements reflect the clear stand of the Chinese government in this regard.

China has the intrinsic requirement for strengthening IPR protection. China has come to a stage when its innovation capacity is rapidly increasing and innovation-oriented entities are developing fast. According to the "Global Innovation Index 2018" released by the World Intellectual Property Organization (WIPO) and Cornell University in July, China's ranking rose from 22nd in 2016 to 17th in 2018. Thus, it has broken into the world's top 20 most-innovative economies for the first time. Over nine out of every 10 Chinese invention patent applications are from domestic applicants. China filed 51,000 international patent applications via the Patent Cooperation Treaty (PCT) in 2017, ranking second in the world. In the first half of this year, nearly 80 percent of the invention patents granted by China were from domestic applicants and and nearly 70 percent of the invention patents valid in China were from domestic applicants. Therefore, strengthening IPR protection is the intrinsic requirement of China for its own development. Meanwhile, China's achievements with regard to IPR protection are widely recognized.

China treats foreign companies the same as domestic companies in regard to IPR protection. Its achievements are gaining increasing endorsement by the international community. Here are some statistics reflecting the progress made by China on IPR protection. First, foreign invention patent applications reached 650,000 over the past five years, up by an annual average of 3.1 percent; and foreign trademark applications reached 840,000 in the same period, up by an annual average of 10.3 percent. With these statistics, China has proved itself a country with a good national IP environment. Otherwise, such a big volume of applications would be unthinkable. 

The second data group: From 2012 onwards, the National Intellectual Property Administration has commissioned a third party to conduct a series of surveys on public satisfaction with China's protection of intellectual property rights. Last year's survey produced a satisfaction rate of 76.69 points. At the same time, the satisfaction level of wholly-foreign–funded enterprises secured a score higher than the general standard with 76.94 points, and joint ventures went even higher with 80.16 points. This would suggested a high degree of satisfaction and their consent to China's endeavor in IPR protection.

The third data group: An article published this year on the U.S. website--"The Diplomat"--revealed that foreign enterprises in China could win over 80 percent of the lawsuits concerning IPR infringements in the country. China has already been a destination for the IPR prosecutions from many multinational conglomerates.

Finally, Chinese companies paid US$28.6 billion for royalties of foreign patents in 2017. Among the amount, China held the biggest deficit in IPR royalties against the U.S., reaching US$5.07 billion. Such a big volume would be unthinkable without a good national IP environment. 

We will strengthen IPR protection in a stricter, more comprehensive, efficient and equal manner. To improve the strictness of IPR protection, we are working on amending the Patent Law and the Copyright Law, and setting up systems of punitive damages for all sectors related to IPR protection. To establish a comprehensive system of IPR system, we will mainly strengthen administrative law enforcement and judicial protection in accordance with the law, and also improve arbitration and mediation. To enhance the efficiency of IPR protection, we have set up 19 IPR protection centers across China to undertake review, determination and protection of rights faster in a more coordinated way. For example, it takes no more than seven to eight working days to obtain a decision on administrative punishment. To ensure equality, we will offer equal protection measures to all companies, whether they Chinese or foreign, big or small. Thank you.

Guo Weimin:

I believe reporters here have already witnessed the efforts the Chinese government has made to protect intellectual property rights (IPR). Officers from the National Intellectual Property Administration have done lots of effective work, like at least holding one IPR Promotion Week every year and a SCIO briefing to answer questions from the press.

Please go ahead and raise your questions.

TASS:

Can China compensate for the losses caused by the U.S. trade friction through international platforms such as the BRICS and through economic cooperation with some partner countries, including Russia? Thank you.

Fu Ziying:

The comprehensive strategic partnership between China and Russia has set up a good framework for the cooperation and exchanges between the two countries.

The various dialogue mechanisms between the two sides have seen smooth and effective progress. Especially at the recent 18th SCO Qingdao Summit, the leaders of the participating countries reached a broad consensus on future development. China and Russia have solid foundation of political mutual trust and strong complementarity.

Under such circumstances, the cooperation and exchanges between the two sides serve the fundamental interests of the two peoples. Under the leadership of Chinese President Xi Jinping and Russian President Vladimir Putin, we can overcome obstacles and further develop the China-Russian relationship in a more healthy and stable way. Thank you.

Shenzhen TV:

We note that some enterprises committed to bilateral trade between China and the United States have been affected by the Sino-U.S. economic and trade frictions. For example, ZTE in Shenzhen. In view of the impact of the frictions on enterprises, I would like to ask the heads of relevant departments for some specific tips to these enterprises to help them weather the storm better? Thank you.

Wang Shouwen:

Not only Chinese enterprises don't like trade conflict, enterprises, workers, farmers and consumers in the United States do not welcome a trade friction either. Mr. Luo said that the trade friction refers to the whole industry chain. It damages enterprises both in China and in the United States, and even in other countries. Mr. Lian mentioned that the Chinese central government has already taken measures in six areas to offer a better business environment for enterprises.

Meanwhile, enterprises have to be fully prepared to respond to unavoidable risks in terms of exporting and developing international markets. Therefore, we must do the following to tide over the crisis. Firstly, the government should create a better external and internal business environment for enterprises. Secondly, the enterprises should constantly enhance their competitiveness and try hard to develop diversified markets.

Luo Wen:

I'd like to add that the China-U.S. trade friction will hamper the development of the small and medium-sized enterprises (SMEs) in both countries. The United States made an announcement to impose 10-percent additional tariffs on US$200 billion worth of Chinese products from Sept. 24. Millions of SMEs will be targeted. Objectively speaking, the China-U.S. trade friction not only damages the interests of SMEs and consumers, but also threatens the security of the global industry chain and supply chain.

As always, China develops amid obstacles and difficulties. Nothing is impossible to overcome. We have confidence and are capable of helping SMEs to get through this hard time.

Statistics in the first seven months of this year show that the performance of small and medium-sized enterprises above the designated size was generally sound. The value added was up by 7 percent year-on-year. The revenue of the principal activities was up by 9.5 percent year-on-year and the total profit was up by 11.4 percent year-on-year.

The next step:

Firstly, we will continue to expand domestic demand, give full play to the advantage of huge markets in China, and lead SMEs to develop in a professional, precise, characteristic and novel manner

Secondly, we will actively open new markets and firmly support SMEs to involve in the Belt and Road Initiative and develop the markets along the routes.

Thirdly, we will vigorously streamline administration, cut taxes and reduce administrative fees to stimulate the vitality of small and medium enterprises. Thank you.

Macao Daily News:

The United States has repeatedly accused the Chinese government of compulsory technology transfer. What is your comment? Thank you.

Wang Shouwen:

Thank you for your question. The White Paper explains this issue. I will do some more reading here. Regarding the so-called "compulsory technology transfer," we must first make it clear who is forcing who.

In all Chinese laws, regulations and policy documents, foreign enterprises are not forced to transfer any of their technology to Chinese companies. I challenge you to really find any such provisions in any documents, and if you do so, please let me know. Moreover, in order to prevent government agencies from exerting pressure on foreign enterprises and requiring them to transfer technologies to Chinese enterprises, this year, the State Council also issued a special instruction asking governments at all levels not to use administrative measures to force any such technology transfer.

When foreign companies export products to China, the Chinese door is open and there are no obstacles. If they want to sell their technologies to China, that is completely voluntary and there are no obstacles. Some companies now say that, when they want to invest in China, the Chinese government asks them to transfer technologies. Let's look more closely at this claim, and make it clear that foreign companies can invest in China and establish wholly-owned enterprises in most areas. There is no issue of technology transfer in establishing wholly-owned enterprises.

Everyone can check our negative list of foreign investment and find that fewer and fewer industries now require joint ventures. There are, indeed, only a small number of industries that require Sino-foreign joint ventures. This requirement was accepted by the U.S., Europe, Japan and other WTO members in the negotiations for China to join the WTO.

As a result of the negotiations, China has the right to require the joint venture approach for the entry of foreign capital in certain specified industries. This is recognized by everyone. It's not only China that does this; developed countries also have such requirements, and a large number of developing countries have such demands. If you want to invest here, produce products, and meet the demands of the local market, you need to make a joint venture.

Let's then take a look at the joint venture: is it asking for a compulsory technology transfer? Some companies say they have to transfer technologies when they form the joint venture, and if they don't do so, nobody will be willing to join them in a business, so this is a compulsory transfer. We say this is not the fact. When you are negotiating a joint venture, you definitely want a good price. If you have technologies, you can get a good price. If you don't have a good price, you will lose money and you will not agree to transfer the technologies.

Who are the parties negotiating this good price? They are foreign enterprises and Chinese partners. They are equal market entities. Negotiations between equal civil entities is a contract-based negotiation. It is a free choice of enterprises. It is an equal consultation and negotiation of enterprises. The government does not play any role in it. The government has no compulsory influence. In fact, many joint ventures are developing very well in China. Ford's joint ventures in China produces more cars than its American plants. Ford's profits in China exceed its profits in the United States.

The Deputy Director of the National Intellectual Property Administration, Mr. He Hua, just mentioned that China's protection of intellectual property rights is highly praised by joint ventures with their satisfaction degree in some cases being more than 80 percent; so, how can you say this is compulsory?

Some people ask, can you waive the joint venture requirements? Let me tell you, we are doing more and more to waive the joint venture requirements. This year, we have timetables for the national negative list and the negative list of the free trade pilot zone to waive requirements for the joint ventures handling the manufacture, maintenance and design of automobiles, aircraft and ships, as well as waive the joint venture requirements for finance, securities, banking, and insurance. However, as far as joint venture requirements are concerned, not only China has them, but other developed countries and developing countries have them, too. We need to negotiate within the WTO framework, and we need to resolve these issues through bilateral free trade negotiations or investment agreement negotiations. Don't use compulsory technology transfer as an excuse to initiate a trade war. This excuse is wrong.

At the same time, I would especially remind everyone that when it comes to "compulsory," some countries now engage in a so-called compulsory technology transfer ban. For example, they impose export restrictions and refuse to export some products and some technologies. This involves government orders and government laws and regulations. This is called compulsory. When enterprises want to sell products to China, or want to sell technologies to China, their government does not allow it. When Chinese companies go to invest in such country, or to acquire a company there, the company is willing to accept such a sale, but the government does not allow it, the laws do not allow it. So, I want to draw your attention to the compulsory technology transfer ban. Thank you.

China National Radio:

Regarding the China-U.S. trade frictions, is there any evaluation or estimation made by the Ministry of Commerce on their influences on China's foreign trade this year? What are the influences? Thank you.

Fu Ziying:

According to China's Customs, from January to August, the total value of China's imports and exports was US$3.02 trillion, increasing 16.1 percent. Specifically, the value of exports was US$1.6 trillion, increasing 12.2 percent; the value of imports was US$1.41 trillion, increasing 20.9 percent.

The figures show that China's import and export have remained stable with a growing momentum. The structure has further improved. The quality and performance are also good. This indicates that in the past few years, China's economic reform with its focus on the supply side, and China's active implementation of opening-up policies and measures have enhanced the competitiveness of Chinese enterprises in the world. Despite the trade frictions, the stable and growing momentum has remained.

Presently, the trade frictions are complicated and keep worsening. Foreign-invested enterprises are faced with a more adverse international environment. How to keep Chinese economy running healthily and steadily under this circumstance? The key is to keep foreign trade stable.

Not long ago, the Chinese central government pondered on a series of policies and measures to keep foreign trade stable and help enterprises to weather the storm. One thing for sure is that these policies and measures will strictly conform with WTO rules.

For instance, we may further increase the export tax rebate rates. Previously, the VAT paid by enterprises for exporting goods were not fully paid back. Now, we are considering following international convention to fully return the VAT of some. There is another example. Enterprises are usually faced with certain risks when entering emerging markets. Therefore, we will follow international conventions to provide exporting enterprises more export credit tools, thus to reduce the risks they are faced with.

These measures will be launched soon. I believe, as long as we stick to economic globalization and international trade liberalization, and we safeguard multilateral trade system and international trade orders, no one can stop the economic and trade cooperation between Chinese enterprises and all the other countries in the world. China is willing to work together with all the other countries to build a community with a shared future for mankind, and to build an open, inclusive, clean and beautiful world that enjoys lasting peace, universal security and common prosperity. Thank you.

Guo Weimin:

If you have more questions, you can contact us via fax and e-mail. We will organize more press conferences and interviews to meet your needs. Now, the press conference is over. Thank you.

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Read in Chinese

Speakers:

Ning Jizhe, vice director of the Office of the Leading Group for the Belt and Road Initiative, deputy head of the National Development and Reform Commission, head of the National Bureau of Statistics

Qian Keming, vice minister of commerce

Zhang Jun, assistant minister of foreign affairs

Chairperson:

Hu Kaihong, spokesperson for the State Council Information Office of China

Date:

Aug. 27, 2018

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference. This year marks the fifth anniversary of the Belt and Road Initiative proposed by Chinese President Xi Jinping. 

Today, we are delighted to invite Mr. Ning Jizhe, vice director of the Office of the Leading Group for the Belt and Road Initiative, deputy head of the National Development and Reform Commission and head of the National Bureau of Statistics, Mr. Qian Keming, vice minister of commerce, and Mr. Zhang Jun, assistant minister of foreign affairs to brief us on the progress made under the Belt and Road Initiative over the past five years and its outlook in the future.

Now, Mr. Ning Jizhe will give you a brief introduction.

Ning Jizhe:

Thank you all. This morning, Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, attended the symposium on the fifth anniversary of the Belt and Road Initiative, and delivered an important speech.

Over the past five years, the initiative has witnessed a warm welcome and active participation in countries all over the world. Much headway has been made in the construction of the Silk Road Economic Belt and 21st Century Maritime Silk Road, as the Belt and Road Initiative has developed from a proposal and vision, into concrete activities.

First, enhancing strategic mutual trust and building international consensus. The Belt and Road Initiative and the principle of seeking shared benefits through extensive consultation and joint contribution have been included into many documents of international organizations like the United Nations. So far, 103 countries and international organizations have signed 118 cooperation agreements with China under the framework of the Belt and Road Initiative. 

In 2017, the first session of the Belt and Road Forum for International Cooperation was held successfully in Beijing. State and government heads of 29 countries, as well as more than 1,600 representatives of over 140 countries and over 80 international organizations participated in the event. Of the 279 items on the forum's outcome list, 265 items, or 95 percent of the total, have been completed or have become routine works, while great efforts have been made to accelerate the implementation of the remaining items.

Second, actively implementing cooperation projects to create demonstration effects. Solid progress has been made in a batch of cooperation projects, such as the China-Pakistan Economic Corridor, China-Laos railway, China-Thailand railway, Hungarian-Serbian railway, Jakarta-Bandung high-speed railway, and Gwadar Port Free Zone. As of Aug. 26, 10,000 cargo train journeys have been made on the China-Europe railway lines. The lines connect China with 43 cities in 15 European countries. 

Third, promoting cooperation in the pursuit of win-win results and mutual development. By June 2018, the total volume of trade in goods between China and countries along the Belt and Road had surpassed US$5 trillion, and China's outward direct investment has surpassed US$70 billion. China's total investment in the economic and trade cooperation zones in countries along the Belt and Road has surpassed US$20 billion, creating more than 100,000 local jobs and bringing tax revenue worth billions of dollars to local governments. Currently, Chinese enterprises are exploring ways to work with enterprises from developed countries, including some multinational companies, in third-party markets under the framework of the Belt and Road Initiative. 

Fourth, improving service systems and enhancing financial support. China has endorsed the Guiding Principles on Financing the Development of the Belt and Road with 17 countries, greatly boosting the overseas development of Chinese financial institutions. So far, 11 Chinese banks have set up 71 first-class branches overseas. Joint financing services have been developed with several multilateral banks, such as the African Development Bank, Inter-American Development Bank, and European Bank for Reconstruction and Development. The control of legal risks has been tightened. The mechanisms and institutions to solve international commercial disputes under the framework of Belt and Road Initiative are being established. 

Fifth, intensifying cultural exchange under the principle of openness and inclusiveness. Cooperation has been actively promoted in education, technology, cultural and other fields. Special cooperation plans have been designed in education, technology, finance, energy, agriculture, inspection and quarantine, the connectivity of standards, amid others. The "Silk Road" scholarship, Chinese overseas education institutions and other programs have cultivated many technological and managerial professionals for countries along the Belt and Road. In 2017, more than 300,000 students from these countries studied in China, and more than 60,000 Chinese students studied in these countries. In 2020, it is estimated that China and countries along the Belt and Road will receive more than 85 million tourists from each other, with a total expected consumption value of about US$110 billion.

The development of the Belt and Road Initiative over the past five years has proved that the initiative conforms to the trend of the times and the direction of development, thus winning greater international recognition and more partners, with its influence extending far and wide. However, we should also notice that the global economy is faced with many uncertain and unstable factors. Great changes are taking place in the world. The Belt and Road Initiative is also faced with many risks. A handful of countries remain doubtful about the initiative. Chinese enterprises are also faced with difficulties in overseas investment and development. Therefore, we should have an objective and reasonable understanding of the achievements and problems. We should remain resolved, use development and cooperation to solve problems, improve the safeguard system and international cooperation mechanisms, promote further, deeper development of the Belt and Road Initiative in a stable manner.  

In view of the new situation, the Chinese government will continue to stick to the principle of seeking shared benefits through extensive consultation and joint contribution, stick to the rules of the market economy, and stick to international conventions to promote the high-quality development of the Belt and Road Initiative with high standards, thus to pursue win-win results through cooperation. 

First, we will enhance overseas coordination, build closer friendships with more countries, and turn the Belt and Road Initiative into an initiative for peace. 

Second, we should promote win-win development, intensify mutually beneficial cooperation, improve connectivity and industry development, and turn the Belt and Road Initiative into an initiative for prosperity. 

Third, we should play the leading role in pursuing open markets, boost the development of trade, improve trade and investment facilitation, and turn the Belt and Road Initiative into an initiative for openness.

Fourth, we should enhance the establishment of various mechanisms, explore more ways of reform, promote cooperation in high-tech sectors, and turn the Belt and Road Initiative into an initiative for innovation.

Fifth, we should improve cultural exchange, enhance friendly communication, build up soft power in the cultural sphere, and turn the Belt and Road Initiative into an initiative for higher civilization.

That's all. Thank you.

Hu Kaihong: 

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

Qian Keming:

Friends from the media, since the Belt and Road Initiative was proposed five years ago, the Ministry of Commerce has firmly carried out the central authorities' decisions and deployment, advanced relevant economic and trade cooperation, and achieved remarkable effects, which are mainly embodied in the following five aspects:

First, the trade volume has increased continuously. We actively promote mutual market opening-up, enhance trade facilitation, optimize trade structure and cultivate new growth points in foreign trade. We make full use of the comprehensive exhibitions' roles as platforms, and actively organized trade promotional activities. In the past five years, China's trade volume with the countries and regions along the Belt and Road exceeded US$5 trillion, up an average 1.1 percent annually. We obtained positive growth of 1.1 percent, while world trade declined and witnessed negative growth. China has become the largest trade partner to 25 countries along the Belt and Road. 

Second, investment cooperation has also deepened. We unceasingly strengthen service guarantees, and encourage Chinese enterprises to invest and develop their businesses in countries along the Belt and Road. In the past five years, China's direct investment in these countries has surpassed US$70 billion, which has increased at an average annual speed of 7.2 percent; the foreign contract amount exceeded US$500 billion, up 19.2 percent annually on average. Meanwhile, we have constantly broadened entry fields for foreign investments, aiming to build a high standard business environment and attract these countries to invest in China.

Third, big projects have taken root. We, together with relevant parties, have prompted the materialization of a batch of big projects in infrastructure construction and industrial capacity cooperation. For instance, the Mombasa-Nairobi Railway and Addis Ababa-Djibouti Railway have been completed; the China-Thailand Railway and Hungary-Serbia Railway constructions kicked off; the second phase of the construction of the Hambantota Port was finished; the Gwadar Port in Pakistan re-opened; and the transportation projects of the China-Laos Railway and China-Pakistan Economic Corridor are progressing steadily.

Fourth, the construction of economic and trade zone is steadily advancing. We actively promote the construction of economic and trade cooperation zones with countries along the Belt and Road routes. In the past five years, Chinese enterprises have built 82 such zones, with a total investment of US$28.9 billion, attracting 3,995 enterprises, which have paid US$2.01 billion in taxes to the host countries and created 244,000 jobs for local talent. 

Fifth, the free trade network is continuously expanding. We have accelerated the construction of free trade areas with countries along the Belt and Road, and signed five free trade agreements with 13 countries along the routes. A high-standard free trade network based on neighboring regions, covering the Belt and Road and facing the whole world is in progress. China has signed economic and trade cooperation agreements with the Eurasian Economic Union, and concluded the joint feasibility study of the Eurasian Economic Partnership agreement with Russia. 

It's important to note that China is actively preparing for the China International Import Expo in November, and so far, 138 countries and regions, three international organizations and more than 2,800 enterprises have confirmed their participation in the event.

Hu Kaihong: 

Thank you, Mr. Qian. Now let's invite Mr. Zhang Jun to speak more on the case.

Zhang Jun:

Hi everyone. Just now, Mr. Ning Jizhe and Mr. Qian Keming have already introduced relevant affairs. Now, I'd like to add a bit more information. 

First, looking back on the past five years and the construction of the Belt and Road, we are justifiably feel happy and proud of its achievements. The initiative proposed by President Xi Jinping has carried different peoples' wishes for common development and prosperity, conforms to the practical needs of resolving risks and challenges of the world economy; demonstrates strategic vision of leading and constructing an open world economy, as well as signifies China's constructive role as a responsible country in the world. In the past five years, the initiative has won the hearts of those involved, as well as the wide understanding, recognition, support and participation of the international community, harvesting a bigger circle of friends. Facts show that its construction has come at an opportune time, and is in line with the people's wishes and interests. It has achieved remarkable effects and proved to be the correct path not only for China, but for everyone involved.

Second, five years on, we stand on a new starting point today. We are confident about the prospects of the initiative. Our confidence comes from the correct direction of the initiative. It is in line with the times and trends of peaceful development and win-win cooperation; it upholds the concepts of collective consultation, joint participation, and shared benefits, which complies with the universal wishes of countries around the world to seek coordination and common development. Our confidence comes from the solid foundation of the initiative, which has concepts, proposals, plans, actions and mechanisms, and more importantly the wide support and participation of the international community. The Chinese economy has entered a phase of high-quality growth from its previous phase of high-speed growth. It has a strong driving force, is more open and resilient, and will inject stronger vitality to the initiative's construction.

Third, it takes concerted efforts of all parties to advance the initiative. President Xi has pointed out many times that the initiative stems from China, but belongs to the world. Facing the future, we will uphold the concepts of collective consultation, joint participation and common benefits to further advance the Belt and Road partnership. We will make the people the center, and economic cooperation the main line, focusing on the creation of more development opportunities, so as to bring more blessings to people from home and abroad. We will continue to promote synergy in policies and development plans with various parties and countries so as to achieve interconnected development and realize win-win objectives. We will adhere to opening-up and inclusiveness, welcoming any countries interested in the initiative to take part in it. We do not reject or target any other country. China will host the 2nd International Forum for Belt and Road Cooperation. We welcome all parties to actively take part in it. We will adhere to high quality and high standards, respect different countries' laws, and abide by the widely recognized international standards and market rules. We firmly support multilateralism, and safeguard the multilateral trade system based on the established rules. We are against trade protectionism. We sincerely hope the media can witness very glorious moments of the initiative's construction, tell good stories to the world and highlight the initiative's bright prospects. Thank you all. 

Hu Kaihong:

Now the floor is open. Please identify the media outlet you represent before asking the question.

China Central Television:

Mr. Ning, how can the Chinese government better share the opportunities with countries along the Belt and Road Initiative under the framework of extensive consultation, joint contribution and shared benefits? Thank you.

Ning Jizhe:

I want to answer this very important question from the following three aspects. China, as the world's second largest economy, now contributes over 30 percent to the world's economic growth. China's extensive consultation, joint contribution and shared benefits with the Belt and Road countries is conducive to creating more opportunities for mutual development.

First, in the past few years, China and the countries involved in the Belt and Road initiative have worked together to promote regional economic development and the recovery of the world economy. As you know, the impact of the global financial crisis, which broke out a decade ago, was still felt five years ago. In this economic situation, President Xi Jinping proposed the Belt and Road Initiative which has promoted economic growth and improved people's livelihood through cooperative projects with other countries. For example, countries like Kazakhstan, which champions the "Bright Road" Initiative, also seeks alignment with China's proposed Belt and Road Initiative. Over the past years, Kazakhstan's economy has picked up, Chinese enterprises have developed rapidly in Kazakhstan, and the people of the two countries have benefited from the development. This is only one example, the same is true for China and Southeast Asian countries. Under the backdrop of global economic crisis and the intensive development of the China-ASEAN Free Trade Area, bilateral cooperation between China and Southeast Asian countries achieved much progress under the framework of the Belt and Road Initiative. A large majority of the countries in the region achieved an annual growth rate of around 5 to 7 percent. It has become the region with the most dynamic growth in the world.

Second, joint contribution and shared benefits of the Belt and Road development has expanded two-way trade and investment. The two-way trade between China and the Belt and Road countries has totaled over US$5 trillion, and this rate of growth is faster than the growth rate of trade between China and other regions. Two-way investment between both sides, based on my calculation, is nearly a hundred billion US dollars, which is also growing very quickly. Development opportunities actually lie in two-way investment, trade and personnel exchanges.

Third, joint contribution and shared benefits of the Belt and Road development have also increased complementary advantages and win-win outcomes of all parties. As you know, countries along the Belt and Road, as well as other cooperation partners are mostly developing countries. There are, however, also developed countries, emerging economies and high-income oil-exporting nations. They all have their unique advantages, be it in capital, technology, management, labor, resources or market. Most importantly, the Belt and Road Initiative can utilize their complementarities and share opportunities for development among the countries.

China has long enjoyed a comparative advantage in traditional production and is also now creating new advantages in the areas of capital and management. Other developing countries boast huge markets, while developed countries have clear advantages in the areas of capital and technology. Through bilateral, trilateral and multilateral cooperation, the Belt and Road Initiative can combine all the advantages of countries along the Belt and Road to promote economic development and improve people's livelihood along the route. Thank you.

Lianhe Zaobao:

Earlier you mentioned, China's direct overseas investment for the Belt and Road countries reached over US$70 billion. Some wonder if there will be returns on that huge amount of money. How is the effectiveness and returns of these investments so far? Did it achieve the expected results? In addition, regarding the contribution of these countries along the route, we are aware that many of the Belt and Road projects are funded by loans. Some of these countries, however, seem to have no ability to pay the debt. For example, under a new administration, Malaysia's East Coast rail project has been canceled and the China-Pakistan Economic Corridor may also face uncertainties. Has China learned a lesson from those cases and will China change the way how the Belt and Road Initiative is implemented in the future? Thank you.

Qian Keming:

Your question involves many aspects.

First of all, let me talk about the debt issue. As you know, finance is the lifeblood of economic activities, especially in the initial development stage. I have read several reports on the matter, one of which is by the Asian Development Bank (ADB). It says that a total of US$1.7 trillion of infrastructure spending is needed in Asia every year through 2030. Calculated from the current investment scale, there is still a gap of over US$800 billion investment each year. Another report from the African Development Bank (AfDB) says that a total of US$130 billion to US$170 billion infrastructure investment is needed each year in Africa, and currently only less than one third of the amount is spent. That is to say, Asia is a little better off, it is receiving half of the total investment for infrastructure it needs and missing the other half. Africa is missing two thirds. As is known to all, infrastructure investment plays a very important role in promoting economic growth and increasing people's well-being.

Second, most of China's current investments in the countries under the Belt and Road Initiative are infrastructure related which include the building of railway lines and ports. I believe these infrastructure investments will have a long-term and important role in promoting the economic growth in those countries.

Third, infrastructure investment, mainly on public goods, normally takes a fairly long period of time to show returns. Moreover, after the global financial crisis, international commodity prices dropped significantly. Although they have rebounded slightly, the prices are still far below the pre-crisis level. The price of crude oil reached US$150 per barrel at its peak and then fell back to US$20, US$30 per barrel. Recently, the price rose to around US$70 per barrel, but is still half of the price at its peak. The prices for mineral products have not rebounded much, which hurt the economy in some African and Asian countries. Some of the countries have seen rising debt levels, which is a reality we must face.

Fourth, China has been trying to promote economic development in the host countries through the Belt and Road Initiative and avoid creating too much burden for them. Therefore, we have chosen some projects that can deliver both economic benefits and increase employment, taxes and exports in the countries involved in the Belt and Road Initiative. While embracing bilateral, trilateral and multilateral cooperation, as Mr. Ning mentioned just now, we also welcome involvement from developed countries and multilateral financial organizations to spend and manage the money more efficiently.

Islamic Republic News Agency (IRNA):

I have a question about the cooperation between Iran and China. Iran is one of the important countries along the Belt and Road, so how does China plan to cooperate with Iran under the framework of the Belt and Road Initiative? Thank you.

Zhang Jun:

Thank you for your question, and thank you for conveying Iran's positive attitude towards jointly promoting the Belt and Road Initiative. The Belt and Road Initiative focuses on the Eurasian continent and, at the same time, it is open to global partners as well. Historically, Iran has been an important hub along the Silk Road, making significant contributions to promoting economic and trade cooperation and cultural exchanges between China, Eurasian and European countries.

With the implementation of the Belt and Road Initiative, both China and Iran are facing important opportunities in infrastructure construction, economic and trade cooperation, and cultural exchanges. There is no doubt about this. Thanks to the joint efforts made by the leaders of the two countries, the current relationship between China and Iran has maintained a sound and steady momentum of development. Both sides have reached many important consensuses on jointly promoting the Belt and Road Initiative.

Of course, we should be fully aware of the many practical and potential challenges in implementing the specific cooperative projects. On the one hand, we will make an active effort and take solid steps towards the goal; on the other hand, the two sides will work with the international community to create a more favorable environment and conditions for jointly promoting the Sino-Iranian cooperation and the Belt and Road Initiative.

Economic Daily:

I would like to ask Mr. Ning a question. Presently, some developed countries and large multinational corporations have shown interest in participating in the Belt and Road Initiative in the form of the third-party market cooperation. What considerations does China have in this regard?

Ning Jizhe:

The tripartite cooperation is very important, so you raised a very good question

First of all, third-party market cooperation is an open, inclusive, pragmatic and effective mode for international cooperation. It also reflects the principle of the Belt and Road Initiative, namely seeking shared benefits through extensive consultation and joint contribution. This will help Chinese enterprises and enterprises in other countries, especially those of developed countries and multinational enterprises, to complement each other and jointly inject new momentum into the economic development of third countries.

Second, China has made good progress in working with relevant countries to promote third-party market cooperation and in recent years, China has actively engaged in third-party market cooperation with relevant countries. Presently, we have formally signed cooperative documents on third-party market cooperation with France, Canada, Japan, Singapore and some other countries and international organizations. We have also contributed to the establishment of third-party market cooperation funds with other countries. The following are some examples.

China's Silk Road Fund established a third-party market fund with the European Bank for Reconstruction and Development. The China Investment Corporation also established funds with relevant French financial institutions. All these are being supported and guided by the governments of both sides. Moreover, the third-party market cooperative projects between China and France have achieved early results, and the two sides will expand their cooperation to new projects in the near future. China and the European Union (EU) have also finalized specific projects for third-party market cooperation.

As you all know, during Premier Li Keqiang's visit to Japan, China's National Development and Reform Commission and Ministry of Commerce and Japan's Ministry of Foreign Affairs and Ministry of Economy, Trade and Industry (METI) reached a memorandum of understanding on the third-party market cooperation between the two sides. In order to implement the consensus and ministerial memorandum reached by the leaders of the two countries, we held a seminar on the Sino-Japanese-Thai tripartite cooperation in Thailand last month, possibly a little bit earlier, to finalize specific cooperative projects. The Eastern Economic Corridor of Thailand is led by the Chia Tai Group of Thailand and the CITIC Group of China, with enterprises from Japan participating in bidding the project.

Currently, some developed countries, such as the United Kingdom, and some emerging economies, including China, also share a sincere desire for third-party market cooperation worldwide in promoting the Belt and Road Initiative. This is not only conducive to China, the developed countries and the new economies who participate in the tripartite cooperation, but also conducive to the third country – the host country of the project.

Third, in the future, China will work with relevant countries and enterprises to expand the scope of third-party market cooperation. We will adhere to the principle of seeking shared benefits through extensive consultation and joint contribution, develop new markets for investment, production and operation, and actively innovate on models for cooperation. We will encourage enterprises to open up new markets by means of joint tendering and joint investment so as to complement each other's strengths and achieve win-win results. Thank you.

CRNTT:

I have a question for Mr. Zhang Jun. The Beijing summit of the Forum on China Africa Cooperation is about to be held. We know that the joint development of Belt and Road Initiative is an important topic for China-Africa cooperation. People have talked about Africa as a pilot region for joint efforts to build the "Belt and Road". What do you think of this? What challenges do you think China and Africa face in carrying out the "Belt and Road" cooperation? Thank you.

Zhang Jun:

The construction of the "Belt and Road" is especially targeted at the Asia-Europe-Africa continents, and African countries are one of the key areas for the joint development of the Belt and Road Initiative. As a major group of developing countries, Africa is facing the arduous task of infrastructure construction and economic and social development. Supporting and helping Africa achieve peaceful development and stability has always been one of the priorities of China's diplomacy. For a long time, we have invested a lot in the development of Africa, and have made great achievements.

In recent years, it has been an important part of the Forum on China-Africa Cooperation to inject vitality and motivation for African development through the joint construction of the Belt and Road Initiative. The Beijing Summit will be held in Beijing, with China and Africa having agreed to promote the Belt and Road cooperation in Africa, both sides should strengthen integration and docking between China's development strategy and "Belt and Road" joint contribution, and the Africa's Agenda 2063, as well as strengthening the connection and docking between the United Nations 2030 Agenda for Sustainable Development and the African development strategies. Those will be an important part of this year's Forum on China-Africa Cooperation. Both sides have great expectations for the outcome of the forum.

As far as I know, at the Beijing Summit of the forum, more than a dozen documents on cooperation between China and African countries will be signed, which will further promote and implement the cooperation between China and Africa in joint contribution for the "Belt and Road." At the same time, China-Africa cooperation also has a broader space. For example, during the meeting of the BRICS leaders not long ago, President Xi Jinping met with African leaders and reached a broad consensus on further deepening China-Africa cooperation. An important achievement of the BRICS Summit Johannesburg was the establishment of a new industrial revolution partnership. We look forward to the advancement of the BRICS Partnership on the New Industrial Revolution, which will not only enable Africa and developing countries to address the issues of food, clothing and basic needs of development, but also enable developing countries to catch up with the new industrial revolution and better seize opportunities for development from the process of scientific and technological development in the current world. Under the complex and changing economic situation, we can better meet the challenges and achieve common development with other countries in the world.

Reuters:

With concerns about the increase in debt from this project, if we can expect to see China be more cautious in choosing Belt and Road projects or providing funding for these projects? Thanks.

Qian Keming:

I have already said about the debt issue just now. We have always been paying attention to the selection of projects. The first is wide consultation, which means, the host countries and China consult with each other to propose projects. The second is joint contribution, which means they participate in construction together. The third principle is shared benefits. We have strict procedures for the evaluation of projects, banks, enterprises, including environmental protection, there are strict evaluation procedures.

In the future, we also welcome developed countries and international institutions to actively participate in and jointly select projects with us to ensure that projects are transparent, high-quality and sustainable.

China Daily:

I have a question for Mr. Zhang Jun. You mentioned that China is promoting the construction of the "Belt and Road" with a high quality approach. Some people may not understand it, or have some doubts; what is "high quality"? Can you please explain how "high quality" is reflected in the Belt and Road cooperation projects?

Zhang Jun:

I think that this issue should be viewed comprehensively. In other words, you should go beyond the quality of a particular project. I think the high quality and high standards of the Belt and Road should be demonstrated at least in the following aspects:

First, high quality drives the growth of the world economy. The world economy is facing the problem of insufficient growth momentum. Infrastructure construction is also a bottleneck problem facing the development of various countries. We are promoting the Belt and Road Initiative, in order to further improve and perfect the global supply chain, value chain and industrial chain by strengthening connectivity and interconnection among countries, so that countries in disadvantaged positions can better participate in the world's division of labor, and will benefit more from the global value chain, thereby create greater impetus for their own development and create greater impetus for world economic growth. This is actually what we often say about building an open world economy and promoting the building of a community of shared future for mankind. Is this a high standard of quality? Of course, it is so high. It is in stark contrast to the unilateralism and protectionism pursued by some countries.

Second, the high quality of the "Belt and Road" is reflected in the high quality of addressing the issues for global development. Nowadays, the world faces a problem of imbalance. We call it a development deficit and development imbalance. How to solve these problems? We adhere to the people-centered development concept for 'domestically. In the process of building the "Belt and Road", we still place the people as the center of cooperation, and we strive to improve the conditions for economic and social development through the joint contribution of the "Belt and Road," and improve people's livelihood, enhance people's welfare. We have signed a "Belt and Road" cooperation agreements with relevant UN agencies, that is, through cooperation with the United Nations, we will better align the Belt and Road Initiative with the UN 2030 Agenda for Sustainable Development and push forward the re-balancing of globalization, so that everyone can benefit from a more inclusive, balanced, universally beneficial, and win-win globalization process. This is surely high quality and high standards.

Third, to build the Belt and Road with high quality and standards, we also call for participants to abide by the laws of different countries, international rules and standards and market rules. President Xi has repeatedly stressed the building of a green Silk Road with high ethical standards. We pursue green, environmental-friendly and fiscally-sustainable development in building the Belt and Road. Through cooperation with the UN Environment, we founded the International Coalition for Green Development on the Belt and Road. We have also worked with some countries to formulate the Guiding Principles on Financing the Development of the Belt and Road. All of these provide important support for building the Belt and Road with high quality and standards.

Fourth, to build the Belt and Road with high quality and standards, we also uphold the guiding principle of seeking shared benefits through extensive consultation and joint contribution, though some countries have backed down from multilateralism. Under the guiding principle, different countries can participate in the process of building the Belt and Road and benefit from it, which is a quite advanced concept of high standards. To improve the institutional safeguards for the Belt and Road Initiative, we are working on building the Advisory Council for the Belt and Road Forum for International Cooperation. We will invite international luminaries to join the council and advise us on the initiative. Yesterday, as another sign of pursuing high quality and standards, we set up the International Commercial Expert Committee in a bid to provide legal support for building the Belt and Road.

Of course, our pursuit of high quality and standards in building the Belt and Road is also demonstrated in the building of high quality infrastructure. However, we deem it necessary to make it clear that many of the countries involved in the initiative are developing countries, which means that high-quality and high-standard construction must be in accordance with the basic national conditions and laws of these countries. So, high quality must be achieved at a reasonable price, and should be inclusive, feasible and beneficial to all. It is necessary to keep the balance between high quality and practical use. We hope that the building of the Belt and Road can be both high-standard and practical.

Ta Kung Pao & Wen Wei Po

At the beginning, you mentioned that there are a few countries which have raised questions about the Belt and Road Initiative. Recently, some foreign media reported that the initiative has brought a debt trap for relevant countries, accusing China of attempting to gain controlling interests in projects by providing loans regardless of the host countries' overall liabilities and debt-paying abilities, and thus adding to the countries' debt burden. What are your comments on this?

Ning Jizhe:

First of all, the projects of the Belt and Road Initiative have brought effective investment and valuable assets to relevant countries and contributed to their economic growth and improved livelihood, instead of causing a so-called debt trap. Projects of the Belt and Road Initiative, be they related to connectivity or production capacity cooperation, must go through a sound feasibility study and strict debt approval process. We are the witness, so we are clear on how strict it is to get bank loans. There are requirements about capital contribution, debt-to-asset ratios, and financial returns. If a project doesn't meet the requirements, it will not be allowed to pass. Of course, there are some infrastructure projects that may take a long time to get the investment returns, but the assets are there and they will appreciate in value. 

To our knowledge, the debt issues in some countries as reported by some foreign media are not necessarily connected with the Belt and Road construction and relevant projects. Some countries already have very high levels of debt for many years mainly due to their long-term borrowing from other countries as well as international financial institutions. China is a late comer. It is not the biggest creditor.

Second, for jointly built projects and investment cooperation with relevant countries, China has always attached great importance to debt management. With regard to the investment and financing of the projects under the Belt and Road Initiative, China offers loans to projects based on the conditions of their host countries to avoid increasing the countries' debt risk and fiscal burden. Before offering the loans, Chinese banks will strictly review the borrowers' overall liabilities and debt-paying abilities, and continuously monitor the sovereign risks of relevant countries after offering the loans. For example, the China Development Bank has set up the system of sovereign credit rating and national risk quota management. The Industrial and Commercial Bank of China, China Export and Credit Insurance Corporation and other financial institutions have also established relevant evaluation, monitoring and management systems.

Developing the economy and improving people's livelihood are the primary goals of developing countries. For these developing countries who are in urgent need of money, Chinese banks will also design financing structures to help them sustainably manage their debt, such as the case of the fiber optic cable projects in Cambodia, and Yamal liquefied natural gas project in Russia, of course Russia is not a developing country, but an emerging economy. In any case, all these projects are supported by a system that combines equity investment and bank loans, and have achieved good results.

I would like to answer the questions of the journalist from Singapore about the China-Pakistan Economic Corridor (CPEC). Over the past four years, since the CPEC has been put forward, it has been progressing well and has yielded many profits. In November 2017, both sides signed the Long-term Plan for the China-Pakistan Economic Corridor. Among the projects proposed at the early stage, we have already launched 18 projects, including the building of power plants, which solves the problem of energy shortages that has been plaguing Pakistan for many years. Of course, the CPEC also includes projects relating to transportation, industrial cooperation and ports. I will not list them out one by one here. The new leadership of Pakistan has clearly expressed that the CPEC is not built by any one party or people. It is instead a project that involves the cooperation between all Pakistani and Chinese people, which will definitely become a great success.

Separately, on the East Coast Rail Link project, as some of you have mentioned earlier, as you all know, the Prime Minister of Malaysia Mahathir Mohamad has just concluded his visit to China. He has clearly stressed that his support of China's Belt and Road Initiative, and welcomed Chinese enterprises to expand their investment in Malaysia. He also mentioned the financial difficulties that Malaysia is facing, and hopes that China would offer support to solve some of these issues together.

Hindustan Times:

I just want to ask you if China is willing to address India's concern with the China-Pakistan Economic Corridor (CPEC), especially on other projects which are passing through Pakistan-occupied Kashmir, because India says it violates its sovereignty. 

Zhang Jun:

I have some points to add to this: Firstly, India is an important neighbor of China. Both of them are developing countries with emerging markets. Guided by the leaders of the two countries, China-India relations have shown good momentum and entered a new stage of development. If we take a moment to recall, we can see that since April this year, in just three months, President Xi Jinping and Prime Minister Narendra Modi have held three important meetings in Wuhan, Qingdao of China and Johannesburg of South Africa to reach a broad consensus. This has injected new impetus into the development of bilateral relations.

Secondly, India is historically an important country along the ancient Silk Road. It is regarded as a natural partner to build the Belt and Road Initiative cooperation. The exchanges between the two countries through history have left many interesting tales. As developing countries and emerging markets, the two countries are facing similar developmental tasks. As such they both have a lot of room and potential for cooperation to strengthen infrastructure construction. In fact, both sides have already cooperated in numerous ways in this aspect. As you know, India is a founding member and the second largest shareholder of the Asian Infrastructure Investment Bank (AIIB). Currently, 20 percent of the investment projects of the AIIB are located in India. 

Thirdly, China has repeatedly emphasized that the CPEC is an economic cooperation project. Its implementation will not change China's long-standing position on the Kashmir dispute.

China News Service & Chinanews.com: 

There is a view that the advancement of the Belt and Road Initiative may encounter greater resistance given the current global situation which is undergoing certain changes, especially the rising trade and investment protectionism. Mr. Qian, what measures will the Ministry of Commerce take to further promote the Belt and Road Initiative in this context?

Qian Keming: 

In the next step, we will make solid efforts to promote the Belt and Road Initiative from the following five aspects.

First, making the first China International Import Expo (CIIE) a success. It is known that the expo was planned, announced and promoted by Chinese President Xi Jinping. The expo is by no means an ordinary exposition. Different from the China Import and Export Fair (Canton Fair) which is targeted at boosting the country's exports, the expo is a trade fair focusing on the importation of goods and services. In addition, the expo will be developed into an open cooperation platform for countries in the world to showcase their development achievements and carry out international trade. It will also become an international public product that helps to promote the Belt and Road Initiative and boost economic globalization.

Second, innovating trade and investment cooperation models. In this respect, we will give top priorities to cooperation on key projects and innovative areas. As for key projects, Mr. Ning said just now that we will promote the construction of some important projects along the Belt and Road routes. As for innovative areas, we know that China has been enhancing development in innovative areas such as e-commerce, big data, cloud computing and artificial intelligence in recent years. In boosting the development of the "Silk-Road E-commerce," we mean to take advantage of e-commerce, big data and the newest modern science and technologies in building the Belt and Road Initiative.

Third, accelerating the construction of platforms for opening up, including pilot free trade zones (FTZs), for example the China (Hainan) Pilot Free Frade Zone, as well as cross-border economic cooperation zones and overseas economic and trade cooperation zones.

Fourth, enhancing regional economic integration, at both regional and sub-regional levels. We are willing to work together with the Belt and Road countries and regions to build high-standard FTZs and develop a large market under the Belt and Road Initiative. 

Last, implementing important opening-up measures announced by President Xi, especially the implementation of an across-the-board management system based on pre-established national treatment plus a negative list. We will enhance intellectual property rights (IPR) protection, promote implementation of the WTO Agreement on Trade Facilitation (TFA), and deepen cooperation on achieving compatibility in customs clearance procedures along the routes.

China Arab TV:

After President Xi Jinping's visit to the United Arab Emirates (UAE), what major plans will be introduced to promote the cultural exchanges between China and the UAE as well as other Arab countries? Thank you.

Ning Jizhe:

The UAE is the first stop of President Xi Jinping's first overseas visit after the first session of the 13th National People's Congress. This demonstrates the importance of the cooperation between the two countries. The bilateral cooperation covers a wide range of areas. I have been most involved in the economic exchanges. Many Chinese people have been to Dubai. China COSCO Shipping Corporation Limited and Abu Dhabi Ports are enjoying strong cooperation on the development of Port Khalifa in Abu Dhabi. The port, under rapid construction, is expected to become one of the Chinese shipping company's pivot hubs in the Middle East. The China-UAE Industrial Capacity Cooperation Demonstration Zone is also a highlight of the bilateral economic cooperation. Under the guidance of the development and reform commissions in Jiangsu province, related Chinese companies are working well with their UAE counterparts on the demonstration zone project.

In terms of cultural and tourism cooperation, the number of Chinese tourist arrivals in the UAE has exceeded one million a year. It shows that the UAE and China maintain close people-to-people exchanges. The UAE has granted visa-free or visa-on-arrival treatment to Chinese citizens. A great number of Chinese tourists travel to Dubai during the Spring Festival holiday each year.

The UAE has also taken an active part in global cultural events. In particular, with the UAE set to host the World Expo 2020, more tourists from China and other countries are expected to travel there, thus cementing the friendship between each other. With more coordinated policies, infrastructure connectivity has been enhanced through port cooperation and bilateral ties have been facilitated by the development of industrial zones. In terms of financial integration, the UAE has considerable economic strength, so we are ready to boost trilateral cooperation with the UAE in Africa and embrace more investment from the UAE in China. In addition, the people-to-people ties have also been strengthened. So, China-UAE relationship is an embodiment of "a five-pronged approach" to building the Belt and Road. Thank you.

Zhang Jun:

President Xi Jinping's visit to the UAE, which is the first stop of his overseas trip in July, has delivered productive outcomes. President Xi received a warm welcome from people in the UAE and created an unforgettable experience with them. Both economic cooperation and cultural exchanges are important dimensions of the China-UAE relationship. I believe that the "Embrace China" Initiative launched by the UAE will play a significant role in promoting people-to-people and cultural exchanges among people from the countries along the Belt and Road. To boost such exchanges between each other, China and the UAE are negotiating about building Chinese cultural centers in Abu Dhabi. I think those measures by the two sides will improve our bilateral cooperation in all areas under the framework of the Belt and Road Initiative.

Qian Keming:

I think China and the UAE also enjoy huge potential for cooperation in innovation. I learnt during my recent visit to the UAE that the country has established foundations for innovation. In the building of one foundation, there is a 3D printed office constructed by a Chinese company. The UAE is a country of great creativity and China boasts a number of universities. Beijing Genomics Institute, a Chinese genome sequencing center, is cooperating with organizations in the UAE. So, I think China and the UAE can strengthen cooperation in innovation.

Hu Kaihong:

This concludes today's briefing. Thank you, Mr. Ning, Mr. Qian and Mr. Zhang. Thank you, friends from the press.

Read in Chinese

Speakers: 

Shen Changyu, commissioner of the State Intellectual Property Office

Yu Cike, spokesperson of the National Copyright Administration

Chairperson:

Hu Kaihong, spokesperson of the State Council Information Office of China

Date:

April 24, 2018

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. April 26 is annual World Intellectual Property Day. Since you are all very interested in the issues pertaining to this field, today we are delighted to invite Mr. Shen Changyu, commissioner of the State Intellectual Property Office, to brief you on the development of China's intellectual property rights in 2017. He will also answer some of your questions.

Also present at the press conference today is Mr. Yu Cike, spokesperson of the National Copyright Administration.

At this time, Mr. Shen will give you a brief introduction.

Shen Changyu:

Thank you, Ms. Xi. Good morning, friends from the press. Let me begin by thanking the SCIO and friends from the press for your care and support for IPR-related work. Now I would like to brief you on China's IPR development in 2017.

The CPC Central Committee and the State Council made a series of important plans on IPR-related work in 2017. In his report to the 19th CPC National Congress, General Secretary Xi Jinping emphasized that China will "foster a culture of innovation, and strengthen the creation, protection and application of intellectual property." At the first meeting of the Leading Group for Deepening Overall Reform of the 19th CPC Central Committee, Xi stressed that protecting IPRs is equivalent to protecting innovation. Local governments and related departments earnestly studied and implemented Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the spirit of the 19th CPC National Congress. They made steady efforts toward turning China into a country with strong IPRs, achieving major progress in a number of respects.

First, IPR creation has been improved in both quantity and quality. The number of patent applications over the year rose to about 1.38 million, an increase of 14.2 percent since the previous year, ranking first in the world for seven consecutive years. The number of international patent applications under PCT was 51,000, up 12.5 percent year over year, leaping to second worldwide. The number of patents per 10,000 people reached 9.8. The number of applications for trademark registration was about 5.75 million, up 55.72 percent year over year, ranking first in the world for 16 consecutive years. The number of trademarks registered in total reached 14.92 million. The number of applications for the Madrid International Registration of Marks from Chinese applicants was 4,810, ranking third in the world. The number of works and computer software copyright registered reached about 2 million and 745,400 respectively, up 25.15 percent and 82.79 percent. The number of applications for rights for new agricultural and forestry plant varieties reached 3,842 and 623 respectively. The number of products protected by geographical indications has steadily increased.

Second, China has made steady progress in enhancing its legal system for protection of intellectual property rights. The revision to the Law Against Unfair Competition was adopted at the 30th session of the NPC Standing Committee in 2017. We have seen substantive progress in revising and formulating the Patent Law, Regulations on Patent Commissioning and Regulations on Administration of Human Genetic Resources. We actively promoted the formulation and revision of Copyright Law, Regulations on the Protection of Olympic Symbols, Regulations on National Defense Patents, Regulations on the Protection of New Varieties of Plants and Regulations on Access to and Benefit-sharing of Biological Genetic Resources. We will step up our efforts to introduce the Guidelines on Anti-Monopoly Law Enforcement in the Field of Intellectual Property Rights. We will deepen research on the system for intellectual property rights protection of innovation achievements in new areas and business forms.

Third, the protection of intellectual property rights was more stringent. Administrative organs handled 67,000 cases related to patents, an increase of 36.3 percent year-on-year. They also handled 30,100 cases related to trademark, with a total worth of 333 million yuan. The copyright department investigated and dealt with more than 3,100 cases related to copyright infringement and piracy, and confiscated 6.05 million pirated products. Customs seized 19,200 batches of import or export goods that infringed on intellectual property rights. The cases involved 40.95 million goods with a total worth of 182 million yuan. Courts all over the country accepted 213,500 civil, administrative and criminal cases of first instance related to intellectual property rights. Of them, 203,000 cases were concluded. The number of cases accepted and concluded increased 40.37 percent and 38.38 percent respectively year-on-year. The procuratorial organs approved the arrest of 4,272 people involved in 2,510 intellectual property crimes. They also prosecuted 7,157 people involved in 3,880 lawsuits. The public security agencies solved 17,000 criminal cases concerning intellectual property right infringement and the production and sales of fake or inferior goods, with a total worth of 6.46 billion yuan. They also gave particular supervision over the handling of 44 major intellectual property rights infringement cases. A series of special law enforcement actions were taken. In an investigation on the public satisfaction with intellectual property rights protection, the public scored 76.69 for related works. Fourteen intellectual property rights protection centers were established. A nationwide network was established to provide legal aid concerning intellectual property rights protection and to accept tips and complaints of intellectual property rights infringement. Attempted steps have been taken to explore the establishment of a mechanism to coordinate the protection of the trademark rights of Chinese corporations overseas. The building of a long-term mechanism to promote the use of genuine software programs is in full swing. A campaign was launched to check the use of genuine software programs in 389 institutions in 16 provinces, autonomous regions and municipalities directly under the central government.

Fourth, the efficiency of utilizing intellectual property rights (IPRs) has been markedly improved. We have been improving the supporting mechanism for the transfer and commercialization of scientific and technological achievements, speeding up the implementation of the National Fund for Technology Transfer and Commercialization, and promoting the construction of demonstration zones for the transfer and commercialization of national scientific and technological achievements. The national public service platform for the operation of IPRs took shape as the pilot commercialization centers in Xi'an and Zhuhai were established and put into operation. Operation funds for IPRs in key industries have been launched in succession, and the total fund raised has exceeded 4.2 billion yuan (US$665.13 million). Trademark and brand innovation and entrepreneurship bases were built to promote regional brand building based on industrial clusters. Copyright transaction centers and copyright trade bases were actively nurtured, and 10 national copyright transaction centers have been set up nationwide. The amount of patent pledge financing reached 72 billion yuan (US$11.4 billion), an increase of 65 percent year-on-year; the amount of trademark and copyright pledge financing reached 36.9 billion yuan (US$5.84 billion) and 5.98 billion yuan (US$947.2 million) respectively. The amount of patent insurance was 9.99 billion yuan (US$1.58 billion), an increase of 170.6 percent year-on-year. The total amount of import and export of IPR royalties exceeded US$30 billion.

Fifth is about deepening the reform in key areas of intellectual property rights. We have improved the policy of tax deductions for research and development expenses, sped up the reform on the distribution of intellectual property rights and strengthened the management and classification evaluation system for intellectual property rights in the implementation of national science and technology projects.

The one-stop service involving rapid patent examination, determination and protection as well as a new model of patent pledge financing have been included in the promotion list to support innovation and reform solutions by the State Council. We have continued to promote the reform on streamlining administration, reduced or canceled patent expanses totaling 5.8 billion yuan, and reduced the submission of various kinds of materials by about 2.7 million copies.

We have deepened the reform on facilitating trademark registration and established 105 windows for handling local trademarks as well as 49 centers for handling applications for the registration of pledge of exclusive rights to use a trademark. We have continued to promote the strict system for trademark examination, and accordingly the cycle of trademark registration has been shortened from nine months to eight months. 

We have strengthened the supervision of authentication institutions for overseas copyrights and handled the re-registration of six authentication institutions for foreign copyrights. We have continued to improve national copyright demonstration work and selected 35 demonstration units and five demonstration parks (bases).

Sixth, we have deepened international cooperation and the exchange of intellectual property rights. We signed an agreement with the World Intellectual Property Organization to strengthen "Belt and Road" intellectual property cooperation and signed a memorandum of understanding for judicial exchange and cooperation. Cambodia has become the first country to recognize the results of China's patent authorization within its own borders.

We have included relevant content on strengthening intellectual property cooperation into the BRICS Leaders Xiamen Declaration, continued to boost international cooperation in the field of trademarks, and promoted the Madrid System on international trademark registration. We have hosted the 2017 Worldwide Symposium on Geographical Indications, made substantive progress in the negotiations for agreement on geographical indications between China and the EU, and signed a memorandum on the negotiations for agreement on cooperation and protection regarding geographical indications. We have promoted an early entry into force of the Beijing Treaty on Audiovisual Performances, and 19 countries have ratified or joined the treaty. 

The above is the development of China's intellectual property rights in 2017. Thank you.

Xi Yanchun:

Thank you to Mr. Shen Changyu for the introduction. The floor is now open to questions. Please identify your media outlet before asking your questions.

CCTV:

At the Boao Forum for Asia annual conference recently concluded in China, President Xi Jinping emphasized that enhancing the protection of intellectual property rights is one of the important measures for further opening up. I've got a question for Mr. Shen. What concrete measures will be taken to enhance the protection of intellectual property rights? Thank you. 

Shen Changyu:

Thank you for your question. As you mentioned just now, at the Boao Forum for Asia 2018, with a straightforward stance, General Secretary Xi Jinping reinforced the protection of intellectual property as one of the four major measures to expand openness, once again conveying to the world the firm position of the Chinese government on strictly protecting intellectual property rights by law. His speech has won wide acclaim from the international community. The State Intellectual Property Office (SIPO) has since studied and deployed the work of implementation. Focusing on realizing the spirit of General Secretary Xi's important instructions, we will coordinate the related parties to improve the protection of intellectual property rights, speed up the formation of a protection system covering aspects such as authorization and confirmation of rights, law enforcement, judicial protection, arbitration mediation, and self-discipline, so as to provide a more powerful guarantee of the rule of law for innovators and market players.

We will further strengthen the protection of intellectual property rights in the following four aspects.

The first is to take the opportunity to re-structure the SIPO to actively guide the comprehensive law enforcement of patents and trademarks and to better combat all types of infringement.

Second, we will take the opportunity to revise the Patent Law of the People's Republic of China as a way to expedite the establishment of a punitive compensation system for infringement, so as to raise the cost for IP infringement substantially and fully unlock the deterring effect of the relevant laws.

The third is to regard the construction of intellectual property protection centers as the starting point, and to reduce the time required for authorization, confirmation and protection of rights by establishing more convenient, efficient, and low-cost channels for rights protection. At present, we have established 19 such centers throughout the country. This year we will further expand the scale and improve the layout of these centers. The centers work quite well though they have been established for only a short time; this year we will further optimize the layout.

Fourth, we will take the 40th anniversary of reform and opening up as an opportunity to deepen international cooperation on intellectual property rights, to promote the building of more open, inclusive, balanced, and effective international rules regarding intellectual property rights so that China's intellectual property rights can also be well protected in foreign countries. We hope these measures can create a favorable international environment for Chinese companies "going global."

Thank you.

China Daily:

I would like to raise a question to Yu. Tencent Music and Netease Cloud Music have reached consensus on internet music copyright cooperation, authorizing music to each other. This has caught widespread attention. How will the people benefit from this cooperation? And what concrete measures have the National Copyright Administration taken to promote the development of the internet music industry ?

Yu Cike:

I appreciate your care about the copyright work. Music is one of the main media spread via the internet. The internet music industry has many customers and major influence. The two companies' cooperation is good news to music fans, who can enjoy more music on the internet. This is also good for the authorization and spread of the internet music resources. Meanwhile, it will also play a positive role in maintaining good protection for network music and building a good ecology for internet music. 

In 2015, the National Copyright Administration organized a special campaign on internet music copyright protection. Over the past few years, piracy and copyright infringement have been effectively checked, and the circumstances of network music copyright protection have improved markedly. On this basis, we are thinking about the way to promote a wider spread of works of music while strengthening the internet music copyright protection. This is a very important issue concerning whether the internet music industry can develop faster. 

To do so, the National Copyright Administration has strengthened its supervision and coordination, and has taken some additional measures. First, the administration communicated with the main internet music service providers and the music companies, urging them to promote internet music authorization and wide distribution of music, avoiding exclusive authorization. They are encouraged to explore internet music authorization and operation models that are in line with market laws and internet conventions.

Second, the administration has further strengthened its supervision of the copyright protection of internet music, demanding the music service providers and companies reinforce copyright protection of internet music resources, and actively form a good internet music copyright ecology. Third, relevant internet music service providers are asked to settle their disputes over copyright properly, and actively engage in cooperation in regards to internet music copyright.

The two companies' cooperation is the fruit of the administration's efforts to protect internet music copyrights, and also of the administration's efforts to promote the distribution of internet music. It is also an action of the internet music service providers so as to offer better services to internet users, and an active measure to maintain the healthy development of the internet music industry. There have been a few small setbacks and issues in the cooperation, but this will not influence the overall trend and direction of development.

The administration will continue to urge the relevant parties to abide by the laws and rules on copyright protection as well as market rules and international conventions, to build a developed, orderly, regulated and sustainable models for internet music authorization and operation through quality services, fair competition and differentiated development, so as to promote the prosperous and healthy development of the internet music industry. Thank you. 

People's Daily overseas edition:

The State Intellectual Property Office was restructured as part of China's deepening reform of Party and state institutions. Mr. Shen, could you inform us about the functions of the new agency and the progress of the restructuring? Thank you.

Shen Changyu:

In order to solve long-standing problems caused by the separated administration and overlapping enforcement of patents, trademarks and geographical indications, as well as improve the management mechanisms of IPRs, the CPC Central Committee decided to regroup the State Intellectual Property Office as part of the deepening reform of Party and state institutions.

The new agency has the following functions:

1.Promoting the implementation of the national intellectual property strategy, especially strengthening the creation, protection, and application of intellectual property.

2.Protecting intellectual property, facilitating the construction of an IPR protection system and offering guidance on the administrative law enforcement of patents and trademarks.

3.Conducting registration and administrative adjudication of trademarks, patents and geographical indications.

4.Coordinating foreign-related IP work and conducting foreign-related negotiations in the IP sector according to different categories.

We are making planned, progressive and disciplined efforts to advance the restructuring of the agency in accordance with the requirements of the CPC Central Committee.

Thank you.

Reuters: 

We know that IPR is a sensitive topic when it comes to foreign companies in China. Some foreign companies complain that China does not provide enough protection of IPR or that they are forced to do some related IPR transfer in order to do business in China. Do you think these complaints are reasonable? With the current trade dispute between China and the U.S., IPR is also one of the important topics of discussion. In your view, will China respond to these appeals by the U.S. through relevant negotiations between China and the U.S.? And will China make adjustments to its IPR policies ?

Shen Changyu: 

Thanks for the question, which is indeed a very important issue.

Over recent years, China has continued to strengthen its protection of intellectual property rights. Equal importance has been given to domestic and foreign enterprises. These efforts have won high praise from the international community. Last year, the Anti-Unfair Competition Law was amended, with sections on protecting business secrets further improved. Influential figures and sources in the U.S. intellectual property right industry have agreed that China's protection of intellectual property rights is now among the top-ranked of all middle-income countries. More and more foreign patent-holding entities chose to sue non-Chinese companies in China, because they believe they can receive equal treatment here. 

Additionally, China has continued to pay royalties in accordance with international trade rules. Last year, the royalties paid by Chinese entities to overseas entities reached US$28.6 billion, more than US$20 billion higher than the received. In particular, the royalties paid to U.S. entities increased 14 percent year-over-year. This shows that China has remained a strong defender, important participant and active builder of international trade rules. In recent years, tremendous progress has been made in the intellectual property rights industry, especially in the protection of IPR.

I want to stress an issue here. In the future, China will further strengthen its efforts to protect intellectual property rights. This is not only because of our need to fulfill international responsibilities, but also because of our need to promote self-development. President Xi Jinping has pointed out that China needs to strengthen the protection of intellectual property rights, as it is a requirement of both foreign enterprises and Chinese companies. As a next step, we will follow President Xi's instruction and the government work report to further improve the protection of intellectual property rights, foster a better environment for business and innovation, attract more foreign enterprises to invest in China, and open wider to the outside world.

The Sino-U.S. trade issue you just mentioned concerns intellectual property rights. To be frank, from our perspective, the so-called Section 301 investigation against China failed to see or ignored China's efforts in this field. Many influential figures in the U.S. intellectual property right industry have agreed that China has made remarkable achievements in this regard. I think our efforts have been recognized internationally. Thank you.  

Economic Daily:

I have two questions for Mr. Cui. First, what measures has the Trademark Bureau taken in respect to deepening trademark registration facilitation reform, strengthening the protection of the exclusive use of trademark and cracking down on trademark infringements? Second, this year's government work report has put forward a requirement to substantially shorten the trademark registration cycle; what measures will be taken next to implement this policy, curb malicious trademark registration and strengthen the protection of the exclusive use of trademark? Thank you.

Cui Shoudong:

The first question is about our work on facilitating and supervising trademark registration in recent years. Under trademark law, our bureau's functions include trademark registration and management. We have done a lot of work, especially since 2016, on registration facilitation. Therefore, when we summarized our work from last year, we said 2017 had witnessed our greatest efforts on reform and most effective achievements. We have introduced several documents, including those concerning the deepening reform of trademark registration facilitation, improving the efficiency of trademark examination and implementing trademark brand strategies. 

I think our efforts have generated obvious effects after one year's work.

First, we have broadened the application channels, shortened the investigation period, and optimized the investigation procedures. Currently, there are 123 counters nationwide accepting trademark applications. Almost all major cities, cities at the prefectural level and above, and county-level cities have such offices. This was a reform in 2016. Since the pilot reforms in Ya'an and Taizhou cities in May 2016, we have established 123 such counters, and 58 counters for registration of pledge. Previously, only the trademark hall accepted trademark applications. Now there are more channels, among which the counter is an important one. 

Second, we have founded trademark investigation cooperation centers outside Beijing. There are three such centers in Shanghai, Chongqing and Guangzhou. The Guangzhou center was founded prior to the ones in Shanghai and Chongqing, which has made trademark registration more convenient. We plan to found trademark investigation centers in Henan and Shandong provinces. This is an institutional reform. Furthermore, we have made the internet an important application channel. All applicants have been able to submit their trademark applications on the internet since March 10, 2017, and 23 kinds of businesses related to trademark can be directly submitted and processed via the internet. In 2017, 4.897 million trademark applications were made on the internet, 86 percent of the total, and 23 percentage points higher than five years ago.

Third, the procedures have been optimized. The investigation period of trademark has shortened from nine months in 2014, which is stipulated by the Trademark Law, to eight months due to our efforts last year, and we plan to further shorten it to six months. And it takes two months now to issue the notice of acceptance of trademark instead of six months. Over the past two years, we have unveiled important reform measures almost every one to two months. The procedures, like the international registration and geographical indication applications, have been greatly simplified. We have issued e-notices to 500 agencies and counters. This is an important reform. We issue 19,600 such e-notices every day on average, and the delivery efficiency is much higher than before. 

There is another important reform. By implementing the State Council's reform to streamline administration, delegate powers and improve regulation and services, we have reduced trademark application fees, and helped ease the applicants' financial burdens. From April 1, 2017, the trademark application fee was reduced from 600 yuan to 300 yuan, and the other fees have also been markedly lower. We have done a lot of work to facilitate trademark registration.  

In an effort to better regulate the registration of trademark, we take measures to prevent malicious registering, as well as to further facilitate the registration of trademark, which are two major parts included in the protection of intellectual property rights. During the investigation process, we mainly focus on taking strict measures to fight against trademark registration with outright malicious intentions, and those which do not align with the principles of honesty and credibility. By taking all these measures, we will crack down hard on infringement and counterfeiting. In 2017, we investigated and handled 30,000 violations of laws or regulations, with a total value of 365 million yuan. Great achievements have been made in registration and management. Firstly, we strengthened the management of major cases, accumulating the efforts to fight against trademark infringement. Secondly, we launched projects targeted at the sources of trademark infringement. Thirdly, we made more efforts to protect foreign investment companies. We also stepped up efforts to protect the legal rights of Chinese companies overseas. Fourthly, we made innovations in the method of regulation. With the help of the National Enterprise Credit Information Publicity System, we promoted our classified regulation on risk management.

Starting from April 20, the Trademark Office has been officially included in the State Intellectual Property Office. In past years, the Trademark Office stuck to a problem-oriented direction. Development will not be realized without the reform. In the future, we will deepen the reform to better facilitate trademark registration.

Recently we issued a three-year crucial plan for the reform of trademark registration facilitation. We have reported it to the State Council and also publicly published this plan. The key point of the plan is that the trademark review period has been shortened from seven months last year to six months this year; it will be shortened to five months next year and to four months by the year 2020. How do we see the four-month period? It will be the fastest among the OECD member countries at present and the fastest among countries that implement the relative grounds examination system. This is because China's trademarks application volume is so large; for example, there were 1.52 million entries in the first quarter of this year alone, an increase of more than 80 percent year-over-year. In some developed countries, their annual application volume is only 500,000 to 600,000, while we can reach more than 600,000 within a month. Some other procedures, including trademark changes, transfers, renewals and revocations, need to be simplified. We must reduce fees and charges, and greatly ease the process for applicants. You can check our three-year plan for details, which has already been made public.

With regard to supervision, through this institutional reform, under the direct leadership of the State Intellectual Property Office, we will take more stringent measures to combat infringement of intellectual property rights and counterfeits, in order to protect intellectual property rights.

Lianhe Zaobao:

I have two questions. First, the report on intellectual property rights protection in China 2017 mentioned that there was a decline in the number of intellectual property rights infringement crimes punished in China. Cases dealing with the sale and counterfeiting of registered trademarks and with the illegal manufacturing of trademarks saw year-over-year declines. It may be interpreted as a sign that the intensity of law enforcement was dwindled; what do you think about this? Second, I want to continue the question from Reuters. We have seen efforts from China toward the protection of intellectual property rights. However, by outside impressions, much remains to be done. For instance, a report from the China Chamber of Commerce in the United States mentioned that 94 percent of U.S. enterprises think their intellectual property rights have not been protected in China. How will China change this impression? You have said that Chinese enterprises also have this need, so will China enhance protections in order to serve Chinese enterprises or overseas ones ?

Shen Changyu:

Thank you for your two questions. Just now you found in the white paper that there was a year-over-year decline in the number of cases of dealing with intellectual property rights infringement crimes in China. This reflects, from one angle, that the protection of intellectual property rights has been enhanced in China. This decline gives a concrete expression. In recent years, China has dealt severely with all cases of intellectual property rights infringement, the environment has been improved, efforts have intensified and cases have seen a decline. 

Second, you mentioned intellectual property rights protection for Chinese enterprises or overseas ones. There are four key qualities of intellectual property rights protection: it should provide strict, extensive, rapid and equal protection. This means we will follow a strict system, set up a coordinated blueprint and a rapid, easy, effective and low-cost rights-defending channel especially for small, micro- and medium-sized enterprises, and treat intellectual property rights of domestic and overseas enterprises equally. These are the basic principles. We will treat private and state-owned enterprises the same, large, small and micro-enterprises the same, units and individuals the same. Therefore, intellectual property rights protection for domestic enterprises is no different than for overseas ones. Thank you.  

Nihon Keizai Shimbun:

The draft foreign investment law has been included in the State Council's legislative agenda for the year 2018. Some experts pointed out that the law contains the Regulations on Technology Import and Export Administration, and therefore, the regulations are likely to be abolished. Is this news true? Thank you.

Shen Changyu:

Thank you for your question. I think the question you raised is very important and meaningful. I suggest you contact corresponding departments to find out relevant information about the situation. At the same time, I will further size up the situation and provide feedback on the information in a timely manner. Thank you.

Reuters Video:

Thank you very much for your detailed response to my colleague's question earlier about intellectual property concerns among foreign companies. Could you put it very simply: Do you recognize any of their concerns?

Shen Changyu:

Thank you for your question. China began to establish and develop its intellectual property rights protection system during the implementation of the reform and opening up policies. In no more than four decades, much progress has been achieved in this regard. Intellectual property rights infringement can be seen worldwide, with various forms and levels of severity at different stages of evolution. However, the Chinese government has demonstrated strong resolve and taken effective measures to protect intellectual property in accordance with the law in past years. The improvement in China's environment for intellectual property protection has been widely acknowledged by the international community. In my prior report, I introduced the measures China has taken to crack down on infringement activities, including those measures in administrative law enforcement and judicial protection. I'm convinced that China's environment for intellectual property protection will become increasingly favorable in the future. Thank you. 

Xi Yanchun:

Every year in late April, Mr. Shen and other officials from the Intellectual Property Office will elaborate on the progress China has made in intellectual property protection, as well as China's determination and future plans related to intellectual property protection. We appreciate your continued attention to China's protection of intellectual property. Thanks to our spokesman, and thank you all. That's all for today's press conference.

.

Read in Chinese

Speakers:

Xing Zhihong, director general of Department of Comprehensive Statistics and spokesman of the National Bureau of Statistics

Chairperson:

Xi Yanchun, spokeswoman of the State Council Information Office

Date:

April 17, 2018

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we invited Mr. Xing Zhihong, director general of the Department of Comprehensive Statistics and spokesman of the National Bureau of Statistics, to introduce China's economic performance in the first quarter of 2018. He will also answer some of your questions.

Now, Mr. Xing will give you a brief introduction.

Xing Zhihong:

Good morning, friends from the press. Glad to meet you. As usual, I will report to you the national economic performance in the first quarter of this year and then take your questions.

The national economy saw a good start in the first quarter.

This year, under the leadership of the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core, all localities and departments strived for progress while working to keep performance stable, upheld China's new development philosophy, followed the requirements of promoting high-quality development, focused on establishing a modernized economic system, and implemented relevant policies with great effort. As a result, we maintained steady and sound economic development, promoted the transformation and upgrading of industries, improved quality and efficiency of development, and got off to a good start. 

According to preliminary estimation, the GDP in the first quarter reached 19.8783 trillion yuan, up by 6.8 percent year-on-year in comparable prices. From the perspective of industry, the added value of the primary, secondary and tertiary industries totaled 890.4 billion yuan, 7.7451 trillion yuan and 11.2428 trillion yuan respectively, up by 3.2 percent, 6.3 percent and 7.5 percent year-on-year. 

1. Agricultural production went well.

In the first quarter, the output of pork, beef, mutton and poultry was 23.16 million tons, up 1.8 percent year-on-year; the output of pork was 15.43 million tons, up 2.1 percent. The number of pigs bred was 415.23 million, down 1.2 percent year-on-year; the number of pigs slaughtered was 199.83 million, up 1.9 percent. In March, overall weather conditions in major farming areas were favorable, and sunlight and soil moisture in most of these regions were appropriate. Spring plowing and sowing have been going well. 

2. The overall industrial production was stable.

In the first quarter, the value added of industrial enterprises above the designated size actually increased by 6.8 percent year-over-year, and the growth rate fell by 0.4 percentage point compared with the growth from January to February, which was the same as the figure of the same period of last year. 

In terms of economic types, the value added of state holding enterprises increased by 7.9 percent, and the value added of collective enterprises increased by 0.1 percent, while that of share-holding enterprises rose by 7 percent and that of foreign-invested companies and Hong Kong-, Macao- and Taiwan-invested companies rose by 5.5 percent. 

Looking at the three categories, the value added of the mining industry increased by 0.9 percent year-over-year, that of the manufacturing industry increased by 7.0 percent, while electricity, heat, gas and water production and supply industries increased by 10.8 percent. New products from the new industries have developed rapidly. The value added of high-tech and equipment manufacturing increased by 11.9 percent and 8.8 percent respectively year-over-year, which was faster than that of the industries above the designated size by 5.1 and 2 percentage points, respectively. Integrated circuit production output increased by 15.2 percent year-over-year, new energy vehicles increased by 139.4 percent, and industrial robots increased by 29.6 percent. The output sales ratio of industrial enterprises above the designated size reached 97.9 percent, which was 0.3 percentage point higher than the same period of last year. 

In March, the value added of industries above the designated size increased by 6 percent from the previous year, and increased by 0.33 percent compared with the previous month. In March, the manufacturing industry's purchasing managers' index (PMI) was 51.5 percent, up 1.2 percentage points from the last month.

From January to February, national industrial enterprises above the designated size achieved a total profit of 968.9 billion yuan, a year-over-year increase of 16.1 percent. The profit margin for primary business income of industrial enterprises above the designated size was 6.1 percent, an increase of 0.33 percentage point over the same period of the previous year.

3. Services sector grew at a relatively fast pace. 

In the first quarter, the index of services production increased by 8.1 percent year-on-year, 0.1 percentage point higher than the first two months of this year and 0.2 percentage point lower than the same period last year. 

Information transmission, software and information technology services, and leasing and business services delivered a strong performance. In March, the index of services production grew by 8.3 percent year-on-year, 0.3 percentage point higher than that of the first two months, the same rate as the same period in 2017. In the first two months, the operating revenues of service sector enterprises above the designated size increased by 14.1 percent year-on-year, 0.7 percentage points higher than the same period last year. 

In March, the business activity index for services stood at 53.6 percent, 0.2 percentage points lower than the previous month but still higher than last year's average. The business activity index for sectors such as rail transport, air transport, postal and express delivery services, telecommunications, radio and television broadcasts and satellite transmission, Internet and software information technology services, monetary and financial services, capital market services and insurance stayed within the relatively prosperous range of over 55.0 percent. 

As for market expectations, the business activity expectation index for the service sector stood at 60.1 percent, higher than the 60.0percent for the last ten consecutive months.

4. Private investment increased at a faster rate.

In the first quarter, the national fixed-asset investment (excluding rural households) was 10.0763 trillion yuan, increasing 7.5 percent year-over-year, 0.4 percentage point lower than the growth rate of the first two months of the year, and 1.7 percentage points lower than the same period of last year. In particular, private investments reached 6.2386 trillion yuan, increasing 8.9 percent year-over-year, 0.8 percentage point higher than the growth rate of the first two months, and 1.2 percentage points higher than the same period of last year. 

Specifically, investments in primary industry totaled 290 billion yuan, increasing 24.2 percent. Investments in secondary industry totaled 3.5813 trillion yuan, increasing 2.0 percent. Of those, investments in the manufacturing industry increased 3.8 percent. Investments in tertiary industry totaled 6.2050 trillion yuan, increasing 10.0 percent. Of those, investment in infrastructure increased 13.0 percent. One thing to note is that investments in the high-tech manufacturing industry increased 7.9 percent yearly, 0.4 percentage point higher than the overall investment growth rate. On a monthly basis, the fixed-asset investment (excluding rural households) in March increased 0.57 percent.

5. The floor space of commercial buildings for sale continued to decrease.

In the first quarter of this year, total investment in real estate development was 2.1291 trillion yuan, a 10.4-percent growth year-on-year. The growth rate was 0.5 percentage point higher than that in January and February, exceeding that of last year's same period by 1.3 percentage points. In particular, the investment in residential buildings increased by 13.3 percent. 

The total floor space of houses newly started in the first three months was 346.15 million square meters, up by 9.7 percent year-on-year. The floor space of residential buildings newly started went up by 12.2 percent. The floor space of commercial buildings sold was 300.88 million square meters, up 3.6 percent, of which the floor space of residential buildings sold grew by 2.5 percent. The total sales of commercial buildings were 2.5597 trillion yuan, up 10.4 percent. Specifically, the sales of residential buildings rose 11.4 percent. 

The land space purchased by real estate development enterprises was 38.02 million square meters, up 0.5 percent year-on-year. By the end of March, the total floor space of commercial buildings for sale was 573.29 million square meters, 11.38 million square meters less than at the end of February. The fund in place for real estate development enterprises in the first quarter reached 3.6770 trillion yuan, up by 3.1 percent year-on-year.

6. Market sales remain active.

In the first quarter, the total retail sales of consumer goods reached 9.0275 trillion yuan, an increase of 9.8 percent year on year. The growth rate was 0.1 percentage points higher than that from January to February, and 0.2 percentage points lower than the same period of last year. Analyzed by locations for business units, the retail sales of consumer goods in urban areas reached 7.7096 trillion yuan, up by 9.7 percent, while that of consumer goods in rural areas rose 10.7 percent to 1.3179 trillion yuan. 

Grouped by consumption patterns, the revenues from the catering sector were 971.1 billion yuan, up by 10.3 percent, while commodity retail revenues were 8.0564 trillion yuan, up by 9.8 percent. The sales of goods for consumption upgrade grew faster, and cosmetics above the limitation unit, with household appliances and audio-visual equipment witnessing a year-on-year growth of 16.1 percent and 11.4 percent respectively, 6.2 and 3.4 percentage points faster than the same period of last year respectively. In march, the total retail sales of consumer goods increased 10.1 percent on a year-on-year basis, 0.4 percentage point faster than that from January to February, and up by 0.73 percent from the previous month.

In the first quarter, online retail sales rose 35.4 percent from a year earlier to 1.9318 trillion yuan, an increase of 3.3 percentage points over the same period last year. Among them, online retail sales of physical goods reached 1.4567 trillion yuan, up by 34.4 percent, accounting for 16.1 percent of the total retail sales of consumer goods, and an increase of 3.7 percentage points over the previous year. Online retail sales of non-physical goods reached 475.1 billion yuan, an increase of 38.7 percent.

7. The foreign trade surplus shrank greatly.

In the first quarter, imports and exports reached 6.7516 trillion yuan, up 9.4 percent. China's exports increased 7.4 percent to 3.5389 trillion yuan while imports increased 11.7 percent to 3.2127 trillion yuan. The foreign trade surplus shrank 21.8 percent year-on-year to 326.2 billion yuan. The trade structure has been further improved. The general trade of imports and exports increased by 13.2 percent, accounting for 58.3 percent of the total imports and exports, up 2 percentage points from the previous year. About 59.4 percent of the exports were mechanical and electrical products, with an increase of 9.5 percent. The exports and imports to the three largest trading partners of China have maintained a high growth rate, up 8.2 percent, 6.3 percent and 13.7 percent to the EU, the United States and the ASEAN respectively. In addition, China's exports and imports to some targeted countries involved in the Belt and Road Initiative maintained a sound momentum growth, with an increase of 20.5 percent, 16.6 percent and 16.2 percent to Russia, Poland and Kazakhstan respectively. The total volume of exports and imports reached 2.2453 trillion yuan in March, dropping 2.5 percent. Exports fell 9.8 percent to 1.1078 trillion yuan and imports up 5.9 percent to 1.1375 trillion yuan.

In the first quarter, the delivery value of exports of industrial enterprises above the designated size reached 2.7145 trillion yuan, increasing by 7.6 percent year on year, and it grew 4.0 percent to 1.0016 trillion yuan in March.

8. The Consumer Price Index (CPI) and the Producer Price Index (PPI) registered moderate growth.

In the first quarter of this year, China's CPI rose 2.1 percent year-on-year, 0.1 percent lower than the growth rate of the first two months and 0.7 percent higher than that of the same period last year. The figure comprised increases of 2.2 percent in urban areas and 2.0 percent in rural areas. In view of industrial categories, the price of food, cigarettes and alcohol increased by 1.9 percent year-on-year; wares by 1.2 percent; accommodations by 2.4 percent; daily necessities and services by 1.6 percent; traffic and telecommunication by 0.7 percent; education, culture and entertainment by 2.2 percent; medical and healthcare services by 6.0 percent and other services by 1.4 percent.

Amid the prices of food, cigarettes and alcohol, those of crops went up by 1.1 percent, pork went down 9.9 percent and fresh vegetables went up 6.6 percent. In March of this year, the CPI rose 2.1 percent year-on-year, 0.8 percentage points lower than the growth rate in February, and 1.1 percent lower than the growth generated the previous month.

In the first quarter of this year, the PPI rose by 3.7 percent year-on-year, 0.3 and 3.7 percentage points lower than the growth rate of the first two months of this year and the same period last year, respectively. In March, the PPI cost increased by 3.1 percent, 0.6 percentage points lower than the growth rate in February, and 0.2 percent lower than the growth generated the previous month. In the first three months this year, the purchasing price of PPI rose by 4.4 percent. In March alone, the figure went up by 3.7 percent year-on-year and was down 0.3 percent from one month ago.

9. The employment situation basically remains stable. 

The surveyed urban unemployment rate was 5.0 percent in January, 5.0 percent in February and 5.1 percent in March, 0.2 percentage points, 0.4 percentage points and 0.1 percentage points lower than the same period last year respectively. The surveyed urban unemployment rate in 31 big- and medium-sized cities was 4.9 percent in January, 4.8 percent in February and 4.9 percent in March, 0.1 percentage points, 0.2 percentage points and 0.1 percentage points lower than the same period last year respectively. 

By the end of the first quarter, the number of rural laborers, who work as migrant workers out of their hometowns, had reached 174.41 million, 1.88 million more than the same time last year, up 1.1 percent.  

10. Residents' income increases steadily.

In the first quarter, the national average per capita disposable income was 7, 815 yuan, which means a nominal growth of 8.8 percent year-on-year and an actual growth of 6.8 percent year-on-year after adjusting for inflation. Classified according to residents' permanent residence locations, over the first quarter, the urban residents' average per capita disposable income was 10,781 yuan, an actual growth of 5.7 percent after adjusting for inflation, and it was 4,226 yuan with a 6.8 percent growth rate for rural residents. The average per capita disposable income between urban and rural residents stood at 2.55:1. The income ratio was 2.57 the same period last year. The median of the national average per capita income is 6,580 yuan in the first quarter, nominally up 8.5 percent year-on-year.    

11. The effects of restructuring and upgrading are obvious.

Supply-side structural reform deepens. In the first quarter, the national industrial capacity utilization rate was 76.5 percent, 0.7 percentage points higher than the same period last year. Destocking has made concrete progress. By the end of March, the for-sale area of the commercial residential houses had dropped 16.7 percent year-on-year. The effects of the deleveraging efforts are apparent. By the end of February, the liability-asset ratio of industrial enterprises above designated size is 56.3 percent, down 0.8 percentage points year-on-year. The cost of the real economy continues to drop. The cost of per 100-yuan main business revenue of industrial enterprises above the designated size is 83.98 yuan in January and February, 0.33 yuan less than the same period last year. 

The investment in the deprived fields has increased fast. In the first quarter, the investment in ecological preservation and environmental treatment, public facilities and agriculture grew by 34.2 percent, 13.4 percent, 25.4 percent respectively year-on-year, 26.5, 5.9 and 17.9 percentage points faster respectively than the average growth of the total investment in all fields.    

The economic structure is continuously optimizing. In the first quarter, the contribution rate of the tertiary industry's added value to the growth of gross domestic product was 61.6 percent, 25.5 percentage points higher than that of the secondary industry. The contribution rate of the final consumption spending to economic growth was 77.8 percent, 46.5 percentage points higher than the contribution from gross capital formation. 

The new drivers of growth are developing fast. In the first quarter, the number of newly registered enterprises nationwide reached 1.323 million, up 5.4 percent year-on-year, which translates to 14,700 new enterprises per day on average. The added value of the emerging strategic industries increased 9.6 percent year-on-year, 2.8 percentage points faster than the average of the industrial enterprises above the designated size aforementioned. Green development advances. In the first quarter, the energy consumption per unit of gross domestic product dropped 3.2 percent year-on-year.

Generally speaking, the national economy continued its steady growth and structural optimizing in the first quarter. The favorable conditions supporting high quality growth increased, laying a good foundation for the healthy and steady development of the economy this year. But it is noteworthy that the uncertainties in the international environment increase, and the unbalanced and incomplete development at home remains outstanding, and the reform and development missions are still tough. 

In the next stage, we should follow the guidance of the Xi Jinping Thought of Socialism with Chinese Characteristics for the New Era, implement the spirit and requirements of the Communist Party of China's 19th National Congress and the Central Economic Work Conference, carry out the deployment of the Government Work Report, adhere to the principle to seek progress in stability, realize the new development concepts, deepen the supply-side structural reform, seek innovation-driven growth, further expand reform and opening-up, increase the internally generated driving forces for development, guide and stabilize people's expectations for future growth and push forward the sustainable and healthy development of the economy. 

.

CCTV:

The statistics you just released show China's economic performance in the first quarter was stable. How do you understand the situation? You just mentioned that China had made a good start. Can you explain? 

Xing Zhihong:

Thank you for the question. In the first quarter, national economic performance remained stable while making further progress with new growth momentum emerging. We have made a good start, as the transformation and upgrading of industries went further, and the quality and effect of development continued to improve. Generally speaking, national economic performance in the first quarter was stable and sound, with new growth drivers emerging and economic structure improving. 

First, the national economy ran steadily. Major macro-regulation indexes show that in the first quarter, China's economic performance remained stable. A steady rise was seen in the economy, more jobs were created, commodity prices remained basically unchanged, and a general balance was kept in international payments. 

Regarding overall economic development, in the first quarter, the national economy grew 6.8 percent, at the same rate of the fourth quarter of last year. The rate has remained between 6.7 percent and 6.9 percent for 11 consecutive quarters.

Regarding the job market, the urban unemployment rate was around 5 percent in the first three months. In particular, the unemployment rate in 31 big cities remained below 5 percent. The total number of rural workers working outside their hometowns increased 1.88 million, up by 1.1 percent year-over-year. The sound employment situation is a major indicator of stable economic performance.

Regarding commodity prices, in the first quarter, the CPI increased slightly by 2.1 percent year-on-year. Commodities were in sufficient supply, basically able to meet the market demand. Moreover, the PPI growth rate slowed down. In the first quarter, the PPI increased 3.7 percent, with the growth rate down by 3.7 percentage points year-on-year.

Regarding international payments, so far this year, China's imports and exports continued to grow rapidly. In particular, the growth rate of imports continued to outpace exports, leading to a smaller trade surplus. Imports and exports were more balanced, and foreign exchange reserves were basically unchanged.

Second, the economy is driven by new growth drivers. It is mainly reflected by innovation-driven development. Mass entrepreneurship and innovation are booming and have stimulated market vitality and social creativity. New growth drivers continue to increase. Since the beginning of this year, new market players have increased substantially. Statistics by relevant authorities show that China's newly registered enterprises in the first quarter reached 1.32 million, with a daily increase of 14,700 on average. This substantial increment illustrates that mass entrepreneurship and innovation encourage passion for business. New industries, businesses and models are thriving. In the first quarter, the added value of the strategic emerging industries grew by 9.6 percent, registering an increase higher than the average growth rate of the industrial enterprises above designated size. Meanwhile, online retail sales rose 35.4 percent, and the volume of express delivery went up more than 30 percent. Their growth rate continues to accelerate. Now, the "Internet Plus" has reached different industries and sectors and bred many new forms of industries and business models. The digital economy, platform economy and sharing economy continue to grow rapidly, injecting new vitality into China's economic development.

Third, the economic structure has been optimized and coordinated development enhanced. In terms of industrial structure, the service industry continuously played a leading role as it accounted for 56.6 percent of the economy in the first quarter, 0.3 percentage points higher year-on-year. It contributed 61.6 percent to economic growth, 25.5 percentage points higher than that of the secondary industry. The industry continues to move toward mid and high-end manufacturing as the proportions of high-tech manufacturing and equipment manufacturing were improved to 12.7 percent and 32.2 percent respectively among industrial enterprises above designated size. 

In terms of demand structure, the fundamental role of consumption has been enhanced. The final consumption expenditure contributed 77.8 percent to economic growth, 46.5 percentage points higher than that of the gross capital formation. Consumption of goods has been shifted to quality consumption; material consumption shifted to service consumption. This is the new change in terms of consumption.

In terms of investment, the investment also addressed inadequacies, shored up points of weakness and gathered momentum, thus achieving an optimized structure. This year, the investment in agricultural and social sectors both grew by over 20 percent. As for industrial investment, investments in high-tech industries have increased continuously.

The foreign trade structure has also been optimized. In terms of trade modes, the proportion of general trade was improving. In terms of trade subjects, the proportion of exports of private enterprises increased continuously. In terms of region, the imports and exports in central and western China grew remarkably faster than that of the nation as a whole. 

Four, the economic performance is good. The efficiency of enterprises were improved, household income increased, and green development was boosted. Enterprise profits enjoyed rapid growth. From January to February, profits of industrial enterprises above designated size increased by 16.1 percent year-on-year, and profits of service companies above designated size rose by 4.5 percent. It is not easy for enterprises to maintain such a growth rate considering the high profits last year, which indicates their efficiency has been improved. People's income grew 6.6 percent in real terms, still faster than the growth of GDP per capita, which indicates that the growth of household income almost synchronized with the economic growth. Green development was advanced steadily. Energy consumption per 10,000 yuan of GDP fell by 3.2 percent, the share of clean energy consumption increased, and utilization efficiency of energy and resources was improved. Continued improvement in the environment, especially air quality, was achieved.

The conclusion is that stable performance and improvement in quality and efficiency have complemented and promoted each other. Stability, harmony, inclusiveness and sustainability of the economy have been strengthened, which will lay a solid foundation for the sustainable and healthy economic growth of this year. Thank you. 

Phoenix TV:

We are concerned about the situation regarding foreign trade. Although the figures have already been announced, we would still like to ask whether there are preliminary estimates from the National Bureau of Statistics. If the international environment continues to have uncertainties, especially any potential Sino-U.S. trade friction escalation, will it impact on foreign trade in the second quarter or even the second half of the year? And how big will the impact be do you think?

Xing Zhihong:

The issues of foreign trade are everyone's significant concern. Sino-U.S. trade is not only a problem between the two countries, but also an international issue. China has never deliberately pursued a trade surplus. In the past two years, China's trade surplus has been narrowing. The reason why foreign exports continues to grow is because China has comprehensive competitive advantages. At the same time, China's imports have also increased, reflecting the strong growth in domestic demand in China. In our foreign trade, we pursue a trade balance. This kind of balance is also conducive to the development of the domestic economy.

Regarding the issue of Sino-U.S. trade, the Chinese government has already demonstrated its firm stance. The pattern of our opening up to the outside world is further expanding. When one door shuts, another opens. Our trade space is still very large. We can continue to maintain a balance of import and export as the domestic enterprises continuously enhance their competitiveness. Thank you.

China Radio International: 

Statistical indexes of export, investment and industry have gone down. Does this mean growth potential will slow down, while pressure on growth will increase? 

Xing Zhihong:

I have introduced the statistics from the first quarter to you. The operation of the economy is stable. The "slowdown" was probably caused by some indexes' fluctuation in March, which was mainly caused by factors related to the Spring Festival. It is the most important traditional festival in China. Although the statutory holiday is seven days, its influence lasts much longer than that. The Spring Festival fell in the second half of February this year, which was later than usual. March 2 was the Lantern Festival. So the festival's late arrival had obvious influence on production. In our research and investigation, some export enterprises said they would try their best to export before the festival, and increase imports first after the festival with export gradually speeding up. The trade statistics in March showed clear Spring Festival influence. Also, the number of working days in March this year was one day fewer than last year. The two factors overlapped, causing some of the indexes' fluctuations in March. But beyond seasonal factors, we've found that the trend characteristics of the market and the increase of production have remained unchanged. 

As for China's economic development trend in the next stage, it is fair to say that the favorable conditions and factors supporting high quality growth are increasing. China's economy will continue to keep a development trend that features stabilizing growth. As for the supply side, the real economy's vitality is increasing, the quality and efficiency of the supply-side system are improving and the foundation for future growth is becoming more solid. 

The situation of agricultural production is comparatively good, with the implementation of a rural rejuvenation strategy and the deepening of agricultural supply-side structural reform. The improvement of agricultural products and the rise of green agriculture have prompted the adjustment of the crop-husbandry structure, further enhancing the comprehensive benefits and competency of agriculture. The growth trend of industry is stable. The industry grew at 6.8 percent in the first quarter, up 0.6 percentage points from the fourth quarter last year. Among the 41 major industries, 37 (90 percent) saw growth, better than the last year. The industrial capacity utilization rate has increased. The advanced manufacturing industry plays an increasingly important role as a driver for the growth of the whole industry. The service industry has maintained stable and comparatively fast development momentum. The production index of the service sectors remained above 8 percent in the first quarter, reaching 8.3 percent in March, 0.3 percentage points higher than January and February and the highest over the past six months. The emerging service sectors, with the internet as a representative, have grown robustly. The development of service industries, especially those related to people's livelihoods, has sped up.

On the demand side, consumption's foundation role is strengthening. And investment's key role in promoting the optimization of supply-side structure has become increasingly outstanding. Currently, foreign and domestic demands both exert powers, pushing supply-demand relations to develop in the direction of dynamic balance and positive cycle.

On the consumption side, the momentum of final consumption's growth is stable. The upgrading of residents' consumption structure has accelerated. The growth momentum of the upgrade-type of commodities is stable. The merging of online and offline consumptions has been expedited. Not only was online retail growing fast, but also traditional commerce, for instance, department stores', supermarkets' and exclusive shop's growth in the first quarter was faster than the same period of last year, reflecting retail's new positive influence in all consumption fields. 

The consumption in the service industry is growing robustly. The box revenue grew 39.8 percent in the first quarter. The investment structure is optimizing. The most important change is that civil investment is showing stronger vitality, accounting for more than 60 percent of the total investment. The civil investment grew by 8.9 percent in the first quarter, 2.9 percentage points higher than last year. Meanwhile, the fields of civil investment have expanded further, with some key fields strengthened, which has cast positive influence on supply-side structural optimization and the enhancement of supply-side efficiency.

As for projections, the deepening of reform and opening-up, the growth of driving force generated from innovation and the release of the bonus of a series of policies will consolidate the market players' anticipation and confidence in the future. The growth of the purchasing manager index (PMI) of the manufacturing sped up in March and had expanded for 20 months consecutively. Particularly, the PMI of large-, medium- and small-sized manufacturing enterprises all expanded in March. The non-manufacturing commercial activity index has remained at 54 percent, a positive sign, for seven months continuously. The consumer confidence index reached 122.3, a comparatively high level given its history. So judging from the three aspects of supply, demand and projection, internally generated driving force is becoming stronger. This is the most important support for the sustainable and healthy development of the Chinese economy. Thank you.

Die Welt:

You just answered one question about the problems between China and the United States with the impact of trade, but how bad are you evaluating the whole impact on the Chinese economy if the frictions are going to develop to a sort of a trade war. Thank you. 

Xing Zhihong: 

The United States disregarded the rules of international trade and clung obstinately to its own course of provoking trade frictions. The international community has been worried about this classic act of trade protectionism and unilateralism and China strongly opposes such acts. Our government has responded firmly and fiercely. People are concerned about the effect on China's economy if the frictions continue. I want to say that in recent years, China's economy has seen increasingly sustained, steady, and coordinated growth, and it has strong resilience, potential and leeway. China-U.S. trade frictions won't change the positive trend of sustained and sound economic development in China.

First, China's economy is resilient and adaptable. In recent years, the supply-side structural reform and innovation have stimulated China's internal driving force and vitality for economic growth. More importantly, major changes in the structure of economy have been brought about. Since the Party's 18th National Congress, economic growth has moved out of the developmental stage of being mainly propelled by the industrial sector into the stage of being propelled by the industrial and service sectors together, out of the stage of being mainly propelled by investment into the stage of being propelled by investment and consumption together. And China has transformed from a large export country into a country placing equal stress on export and import. These structural changes have enhanced the stability and resilience of China's economy. 

Over the past few years, the global economy has undergone profound adjustments, and the external environment remains relatively complicated, but China's economy has maintained a growth at a medium-high speed, largely thanks to our economic structure that mainly relies on domestic demand. According to the statistics department, the annual contribution rate of domestic demand to China's economic growth between 2008 and 2017 reached 105.7 percent, a figure more than 100 percent. That is to say, we have been able to hedge the impact of external demand with domestic demand. Especially in 2009 when the international financial crisis hit China hardest, the contribution of domestic demand to China's economic growth exceeded 140 percent. 

Last year, the global economy showed an overall recovery, and it was the same case with the external demand. Even under these circumstances, the contribution of domestic demand to China's economic growth remained at 90.9 percent, so this structure is very critical for us to deal with external shocks. Of the domestic demand, final consumer spending is the primary driving force and the biggest engine. I mentioned just now that the contribution rate of final consumer spending, which was 58.8 percent last year, was 77.8 percent in the first quarter this year. The final consumer spending has been the primary engine of China's economic growth for five years in a row. Compared with exports and investment, the volatility of consumption is significantly smaller, and therefore, an economic structural change like this is crucial to the stability of China's economy.

Second, China's economic development has great potential. In an innovation-driven development strategy, development is the top priority, human resources are the primary resources, and innovation is the main driving force. 

The widespread entrepreneurship and innovation campaign has greatly bolstered the public's enthusiasm. Presently, more than 10,000 new businesses are established every day. Last year, annual R&D investments accounted for 2.12 percent of the national GDP, higher than the average level of 15 EU countries. Now, China's R&D investment is the second highest in the world. According to a ranking of international organizations, China's innovation index last year ranked 22nd in the world, which means China is leading all middle-income countries in terms of R&D investment. 

Because of its entrepreneurship and innovation campaign, China has shifted its reliance on demographic dividends to talent dividends. More than 170 million Chinese people have received higher education and possess specialized skills. They have great potential. This is where China's future lies. 

With technological innovation playing an increasingly significant role in promoting development, China's economy has maintained a relatively fast growth rate. Over the past years, China's economic growth rate has remained one of the fastest among major world economies. Last year, China's technological improvements contributed to 57.5 percent of national economic growth and 30 percent of world economic growth. 

China's economy has great vigor, dynamic and potential. These factors have greatly enhanced the innovative and competitive capacity of the Chinese economy, making us more capable of dealing with complex situations.

Third, we have ample room to maneuver. China is a big country. We have ample room to maneuver in terms of development, industrial systems and macro regulation. 

Regarding development, because of its large territory, China sees different development stages in different regions. Therefore, we are working to accelerate the urbanization drive, to promote coordinated development of the eastern, central, western and northeastern parts, and to foster synergy between the Three Initiatives (the Belt and Road Initiative, the coordinated development of the Beijing-Tianjin-Hebei region, and the development of the Yangtze River Economic Belt), thus to accelerate the balanced development of different regions. The potential of different regions has been further tapped, resulting in new development areas and new development platforms.

Regarding industrial systems, links to all industries can be found in China. This makes us capable of establishing a complete system of industries, promoting the application of scientific and technological advances, and fending off various risks. In this situation, even if some industries are affected, other industries can maintain growth momentum, offset the affected sectors' influence on other industries and on the larger economy, and support and promote the development of the affected sectors. This is a special characteristic of the Chinese economy.

Regarding macro regulation, we also have ample room to maneuver. Presently, China's economy has maintained steady performance; the financial and fiscal systems are running steadily; the foreign exchange reserve is the biggest in the world. As a result, we have plenty of policy tools to use, and they can be used on many occasions. 

To sum up, China is fully capable of handling trade conflicts with the United States, responding to various risks and challenges, and maintaining healthy development of its national economy. Thank you. 

CGTN:

The service industry producer index has maintained fast growth in the first quarter. And the contribution of the service industry to economic growth is bigger than that of secondary industry. What are your thoughts on the future development of the service industry? Thank you.

Xing Zhihong:

In 2012, the service industry in China surpassed the secondary industry, becoming the largest industry in China's economy. It has contributed greatly to economic development, serving as the main driving engine. Last year, the service industry accounted for 51.6 percent of China's GDP, contributing 58.8 percent to growth. And in the first quarter of 2018, it has maintained a fast growth rate, with proportion and contribution both increasing. China has entered a new phase of economic development driven by the service industry, representing the great progress China has achieved in economic transformation and upgrading. It reflects both the law of economics as well as profound adjustments to policy. The fast growth of the service industry in China is due to the following factors: 

First, the upgrading of the consumption structure provides a wider market for the development of the service industry. In accordance with international development experience and economic theory, the growth of the service industry is closely related to residents' income. Currently, China's per capita GDP in last year has reached nearly US$9,000, becoming one of the upper-middle income economies. With the growth of income, people's need for services has made an increasing impact. One of the obvious features of consumption in China is that, in addition to material goods, more and more people are spending money on services such as tourism, culture, education and health care, which injects fresh stimulus and driving force to the development of the service industry.

Second, the division of labor is deepening. The reconstruction of the supply chain, value chain and industrial chain has accelerated China's economic transformation from an industry economy to a service economy. China has now entered the middle and later stages of industrialization, heading toward the mid- and high-end markets. And during the upgrade of the value chain, the manufacturing industry itself creates much need for services with regard to research, design, marketing, management and logistics. It can also be noted from the statistics that technology, business and logistics services have produced new growth highlights.

Third, our efforts to deepen reform and opening-up have further unleashed the growth potential of the service sector. We have been continually expanding market access to the service sector. General Secretary Xi Jinping pledged in his speech at this year's Boao Forum for Asia that China would continue to increase openness, and the service sector is a focus of this endeavor. In fact, we have already set the openness of the service sector as a priority in developing pilot free trade zones. For example, we are easing the cap on foreign ownership in financial services, and the increasing foreign investment and investment from non-government sources in education and health care have given new impetus to the service sector. Additionally, private investment is booming, with a good deal flowing into the social domain.

Four, innovation has boosted the internal forces driving the development of the service sector. New forms and models of business created by the wide application of information technology have made the most salient impact on the service sector. E-health, online sharing and online education services have risen to prominence. Those new forms and models of business have played an important role in maintaining the rapid growth momentum of the service sector. Thank you.

Xi Yanchun:

Due to the time limit, please offer the last question.

Reuters:

You've just mentioned that China's average per capita disposable income grew 6.6 percent in real terms in the first quarter of 2018, lower than the growth rate of 7.3 percent in 2017. Do you think this trend will continue? What's the reason behind it? China's economy performed well in the first quarter. In your opinion, what is the top risk faced by China's economy in realizing steady, sound and high-speed development?

Xing Zhihong:

Let me talk about income first. The nominal growth rate of national resident income in the first quarter of 2018 was 8.8 percent, 0.3 percentage points higher year on year. The growth rates of nominal income for both urban and rural residents are higher than those of the same period in 2017. It shows that people's money bags are fuller this year. Why was there a slowdown in actual growth rate? It is mainly influenced by the factor of prices. In the first quarter of last year, the growth rate of commodity prices was relatively low. Actually, it is not that high this year. It is just 2.1 percent, indeed a mild increase. But compared with that of last year, it's higher and exerts some influence on actual growth of resident income. We can see that the Chinese economy is developing in a steady and sound way and more job opportunities are being created. Mass entrepreneurship and innovation are making progress and the income distribution system is improving. At the same time, our country has placed great emphasis on the growth of resident income and a series of policies have begun to take positive effect. All these will help increase resident income in step with economic growth. The actual growth rate of resident income in the first quarter was 6.6 percent, higher than that of per capita GDP. 

Specifically, the performances of enterprises have continued to improve and their operation is in good condition, which provides strong support for the growth of employees' wages. From the rural perspective, the structural reform of the agricultural supply side, the integrated development of the rural primary, secondary and tertiary industries, and the increase in the output and prices of some agricultural products in particular, have created favorable conditions for the growth of agriculture-related incomes. The land reform in rural areas is still ongoing. Farmers have gained property incomes and expanded their income sources through the transfer of the contractual right of land. Thus, the farmers' income grew faster than that of the urban residents. In the first quarter of this year, the increase of farmers' income continued to be higher than that of urban residents, and the income gap between urban and rural residents was further narrowed, which is a good change. Chinese governments at all levels have implemented the guideline of being people-centered and made more investments in people's livelihood. The social security standards have been continuously improved and the security coverage has been further expanded. Both urban and rural residents have gained more transfer incomes. Therefore, the income of citizens across the nation will continue to keep pace with the economic growth. Particularly, the goal to develop a well-off society with doubled incomes can be realized without any problem from the current point of view.

Currently, the biggest challenges facing China's economic development come down to the uncertainties of the international environment and the problems caused by unbalanced and inadequate domestic development. Rising protectionism, the adverse spillovers of major economies' changing monetary policies, and the fluctuation of the financial market may all have an impact on China's economy. 

For all the challenges, China's economy, with its strength, strong resilience, great potential and ample leeway, will continue to maintain stable performance with good momentum for growth.

Xi Yanchun:

Thank you, Mr. Xing.

Mr. Xing has no other things than a pen and a piece of paper in hand today, as he is thoroughly familiar with the statistics. And he has made a detailed and in-depth interpretation of those statistics for us.

We appreciate your continued attention on China's economic performance, and please contact the information office of the National Bureau of Statistics if you have other questions.

Thank you, Mr. Xing, and all our friends from the press. That's all for today's press conference.

Read in Chinese

Speakers:

Zhu Guangyao, vice minister of Finance

Wang Shouwen, vice minister of Commerce

Chairperson:

Hu Kaihong, spokesperson of the State Council Information Office of China

Date:

April 4, 2018

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference. The issues related to Sino-U.S. trade have captured great public attention recently. Today, we invite Mr. Zhu Guangyao, vice minister of Finance, and Mr. Wang Shouwen, vice minister of Commerce and deputy China international trade representative, to introduce relevant issues, and answer some of your questions.

Zhu Guangyao:

Good afternoon, everyone. Please allow me to brief you on the latest developments first. On April 4, the U.S. announced a proposed list of products subject to additional tariffs. It covers 1,333 Chinese export items, which are worth US$50 billion. The additional tariff rate is 25 percent. At 3:30 p.m. today, upon the approval of the State Council, the Customs Tariff Commission of the State Council unveiled a list of U.S. imports that will be subject to higher tariffs. It was decided that an additional tariff of 25 percent will be imposed on 106 items of products under 14 categories, including soy beans, automobiles and chemical products. 

Hu Kaihong:

Now the floor is open to questions. Please identify your media outlet before raising any questions.

The Wall Street Journal:

Superficially, the trade conflict between China and the United States now seems to be escalating. We would like to know if the two countries are still keeping up any communication and dialogue. What do you think is the possibility that the two sides will reach an agreement to avoid further escalation of the trade conflict? One more question: With the escalation of the trade conflict, the market is very concerned about whether China will retaliate against the United States by reducing U.S. treasuries or devaluing the RMB exchange rate. How would you respond to this issue, Mr. Zhu?

Zhu Guangyao:

Thank you for your questions. First of all, China has always stressed that China-U.S. economic relations are based on the mutually beneficial win-win principle, which is the essence of China-U.S. economic relations.

At the beginning of the establishment of diplomatic relations in 1979, the trade volume between China and the United States was only US$2.5 billion. That number hit US$580 billion in 2017, an increase of more than 232 times. Such rapid development reflects the essence of China-U.S. economic relations, that is, mutual benefit or win-win. It is the common aspiration of the peoples of China and the United States and it has brought advantages to the peoples of the two countries.

Such rapidly growing economic ties and such a large volume of trade inevitably result in trade frictions. Regarding trade frictions, we have always reiterated the principle of mutual respect and encouraged resolution through policy negotiations as well as the rules of the WTO, which is the principle that China and the U.S. should abide by as key members of the treaty. With this as the premise, our cooperation and constructive methods have successfully addressed many trade frictions in the past. Frankly speaking, the challenges facing us today are truly daunting, because we have seen such a large volume involved. Yet, China's position is very clear. We don't want a trade war, because it is doomed to produce a lose-lose outcome that will hurt both China's and the U.S.' interests, and also undermine the prospect of the world economy. In this crucial moment, we hope China and the U.S. can take a constructive, wise and mutually respectful approach to the issue and challenges, thus putting the Sino-U.S. economic relationship back on the right track. 

As for the second question, if the conflict continues to escalate, you journalists can review Chinese history since the founding of People's Republic of China in 1949, and you will find that China never succumbs to any external pressure and the pressure will only make the Chinese people become more perseverant and focused on our own economic development. It can be a kind of impetus to promote innovation and progress. 

However, we certainly hope that both sides can start from a foundation of bilateral interests and resolve problems and challenges in a constructive way, rather than treating China-U.S. economic ties, which is of vital importance to the interests of both people, in such a random and reckless way. 

Your third question concerns the issue of U.S. government bonds. I know that this issue is a concern of the international community, and the international capital market is now paying close attention to it. Here I would like to remind the reporter with the Wall Street Journal that Chinese Premier Li Keqiang expounded on this issue at the press conference held after this year's National People's Congress session concluded. Premier Li Keqiang emphasized that China makes diversified investments of its foreign exchange reserves on the basis of market principles, and China will remain a responsible long-term investor. This is the solemn announcement made by Premier Li Keqiang at the press conference following China's "two sessions."

To understand Premier Li Keqiang's expression — "a responsible investor," I would like to share with you a basic principle of the operation of China's foreign exchange reserves. First, China does have more than US$3 trillion of foreign exchange reserves, which is the assets of the people. The primary principle of the operation of China's foreign exchange reserves is security, which means to ensure the safety of our investments. The second is liquidity, and the third is modest profitability. China has operated its foreign exchange reserves in accordance with these principles over the years to secure people's property, if we see it from a domestic perspective. As for the international perspective, China is a responsible investor in the international capital market, which is shown in our respect for the rules of operation of the international capital market. We have carried out precise operations under this principle as well. I think this expression of Premier Li Keqiang is a very clear and authoritative answer to the question of the Wall Street Journal today. Thank you. 

China National Radio (CNR):

I noticed that Minister Zhu sill used the term "friction" to describe the current trade problem between China and the United States. But we know that China announced to impose tariffs on US$3 billion worth of US imports on April 2, and the Office of the U.S. Trade Representative (USTR) announced tariffs on about US$50 billion worth of Chinese goods on April 3 (EST), leading China to then unveil a list of products worth about US$50 billion imported from the U.S. that will be subject to higher tariffs today. With all those measures on both sides, does it mean that a trade war has already started between the two countries? Is it still possible to solve the problem through negotiation? Are the channels for negotiation still open? What measures do you think will be taken by both sides?

Wang Shouwen:

You have followed the trade frictions between China and the United States in great detail. Thank you for your interests in the trade issues between China and the U.S. On April 2, China announced tariffs of 15 and 25 percent on 128 items of U.S. products. This was in response to the move by the U.S. to impose import restrictions on Chinese steel and aluminum products. The measures taken by the U.S. under Section 232, citing national security concerns, are untenable and unfounded. Moreover, the restrictive measures target only a few countries while many other countries are excluded. It can be seen, therefore, that the U.S. move is not based on security  concerns and is discriminatory. This is a flagrant violation of the multilateral trading system and hurts China's interests, so China has already filed a request for consultations on the Section 232 investigation at the WTO. Meanwhile, in order to safeguard our legitimate interests, we also adopted the US$3 billion worth of countermeasures that you just mentioned on April 2. We have noticed that, in response to the Section 232 measures, the EU and other members of the WTO are also considering taking measures.

The United States announced on April 3 a proposed list of products imported from China worth US$50 billion that will be subject to additional tariffs under Section 301. We believe the move fundamentally violates the international obligations of the United States and has no factual basis at all. The move has impaired China's interests, threatened China's economic security and jeopardized the recovery and stability of the global economy. Therefore, according to international law and the Article Seven of the foreign trade law of China, if any country or region adopts discriminatory measures or other similar measures to ban or limit China in trade, we must respond with corresponding measures. So, as just mentioned by Mr. Zhu, we released our list worth nearly US$50 billion. I have to say, we refrained but were forced to make such a move. 

You also mentioned the question of a trade war. China has no intention for a "trade war," because there is no winner in a "trade war." However, we are not afraid of it. If there is someone who insists on a "trade war, " we will fight to the end. You asked if there was a channel for dialogue and communication. Our stance has always been that the door is open for resolving the problems through negotiation, dialogue and communication. If the U.S. side has the intention to hold talks, we will certainly agree to negotiate and resolve the differences on the basis of equal negotiation and mutual respect. To make it simple, if somebody wants to have a "trade war," we will not retreat, if they want to talk, the door is always open. Thank you.

CNN:

While publishing the list, the U.S. said it would minimize its influence on domestic enterprises and citizens. What are China's considerations on its list? As you said, among the more than 100 products of 14 categories, the first two are soybeans from the United States. These agricultural products are very important to the big agricultural states in the Midwest. These states are core supporters of Donald Trump in his presidential election. So my question is whether China intended to shake President Trump's political base and initiate a precise strike to force him not to start a "trade war," or to come back to the negotiation table?

Zhu Guangyao:

The CNN reporter analyses challenges in the Sino-U.S. economic relations from the angle of politics. I think business is business, and we should analyze the challenges and how to respond to them from the economic perspective. Because, as China has reiterated, the essence of Sino-U.S. ties is mutual benefit and win-win results. And Sino-U.S. economic ties are the ballast and propeller for Sino-U.S. relations. President Xi Jinping has devoted tremendous energy to maintain the healthy and stable development of China-U.S. economic relations. It is under this precondition that we have lodged serious representations to the United States, reminding it that if it uses the so-called Section 301 and national interests as an excuse to solve economic issues, it will harm its national interests, China's interests, as well as the whole world's interests. Under these circumstances, we are compelled to take the countermeasures, publishing the product list, and its content and order are all well grounded. 

Frankly speaking, China accounts for 62 percent of U.S. soybean exports. We all know that the U.S. soybean farmers hope China and the United States have sound economic ties, because they can benefit from the healthy development of the relations. The United States exported 32.854 million tons of soybeans to China last year, 34.39 percent of China's soybean imports. This size of imports is too big. Some Chinese soybean farmers have appealed to the relevant associations, saying that the U.S. government's subsidies have affected their interests. The Chinese government respects the farmers' requirements, and the policy appeals of the Chinese Soybean Association. Thus, soybean has become part of our countermeasures. But this goods list has not yet taken effect. The two sides have laid the problems open on the table. It is time for negotiation and cooperation. The precondition for negotiation and cooperation is mutual respect. No one side should enforce conditions on the other side at its will. 

We don't think that reckless and wild actions can resolve problems, and divergences can only be resolved through constructive talks and pragmatic negotiations. The preconditions for negotiation are mutual understanding and mutual accommodation, not pricing oneself out of the market. China has long-term friendly exchanges with the United States in this regard. Frankly speaking, I have engaged in works related to the United States for many years. I have had many quarrels with my U.S. colleagues. But we all know the national interests of our respective countries, and we will finally come back to the negotiation table. In accordance with the consensus reached in the two leaders' meeting in Mar-a-Lago, Hamburg and Beijing, we should resolve the trade disputes through pragmatic and constructive attitudes, and consolidate the mutual beneficial and win-win economic ties between the two countries to benefit our two peoples, including the soybean farmers in both countries. I appreciate that the U.S. soybean farmers and the American Soybean Association, for I know that they are pressing President Trump and the U.S. government to maintain the hard-won economic ties with China through various means, including paying out of their own pockets to air their voices in the U.S. media. Of course, they have benefited tremendously from the sound Sino-U.S. economic ties. Thanks.

CCTV/CGTN:

My question is, as President Trump said he hopes that China will reduce its annual trade surplus with the United States by US$100 billion. What's China's attitude on this issue?

Wang Shouwen:

Thank you for your question. First of all, we must understand how the trade surplus was formed. Trade happens between companies and consumers from two countries on a voluntary basis. Sometimes, a country wants to buy, and another country wants to sell. It is not decided by the governments, but by the economic structure and industrial competitiveness of the two countries.

Why does trade between China and the United States appear to be imbalanced? In my opinion, first of all, it is a problem with the structure of the U.S. economy. The U.S. economy is driven by over-consumption and under-saving. Its savings are less than its investments. This determines that it must have a deficit in global trade. The United States has a trade deficit not only with China but also with many other countries. Secondly, in order to maintain the status of the U.S. dollar as an international payment currency, the United States must maintain a relatively large trade deficit.

Third, an important cause of the Sino-U.S. trade imbalance is that although the United States has many advantageous industries, the U.S. government imposes many restrictions on U.S. companies, forbidding them to sell products to China. Therefore, the U.S. exports to China were affected, and the trade deficit emerged. The U.S. high-tech industry is a typical example. And there are many other U.S. industries that are highly competitive, but are not allowed to export to China. When those that can sell goods in China are not permitted to do so, it's natural that U.S. exports to China are low, and that the United States is seeing a trade deficit.

We are delighted to see that after President Trump took office, the restrictions on energy products, crude oil, liquefied natural gas and some other goods were loosened. Previously, these products were totally forbidden to be sold to China. In response, we increased the import of U.S. oil and gas substantially. These are positive measures, and can help solve the problem.

Now, let's look at the specific figures. If we take a closer look at the surplus and deficit figures, we will find the gap is not very large in actuality. Taking into account statistical variations, and the impacts of entrepot trade and service trade, China's trade surplus is only one third of the trade deficit announced by Washington. In the United States, the current account deficit was 4.9 percent of GDP during the financial crisis in 2007. Now, the figure is 2.3 percent. This means the proportion is declining. In China, the current account surplus was 9.9 percent of GDP in 2007, and the figure dropped to less than 2 percent today. Therefore, China and the United States both achieved progress in maintaining trade balance. This is a result that we are all glad to see.

You mentioned that China should reduce the US$100 billion surplus, which is absolutely unacceptable. The first reason is that we are unable to do it. As I analyzed just now, the trade surplus and deficit is determined by market forces as well as the overall economic policies and structure of the U.S., so China cannot reduce the surplus on its own. 

Second, we cannot accept it, because it requires efforts of both sides to reduce the surplus, and no one can reduce the surplus on its own. China wants to buy U.S. products, but the U.S. does not sell and even continues to restrict its exports, then how can the surplus be reduced? Therefore, we hope that the U.S. can relax its export controls of high-tech products to China, increase its domestic saving rate, and actively respond to the measures taken by the Chinese government to expand our import. For example, China will hold the China International Import Expo in Shanghai from November 5 to 10 this year, and we hope that U.S. industries and businesses can take this opportunity to display their products and services to Chinese consumers and importers. We believe that only through the joint efforts of both sides can the trade surplus or deficit be eased gradually. It is not feasible in both theory and practice to set a number and work for it through government intervention. Thank you.

NPR:

In the investigation report of Section 301 made by the United States Trade Representative, the "Made in China 2025" program seemed to be riddled with criticism. It put forward the following concerns: First, how can China acquire advanced technologies? Is it through appropriate channels? Second, "Made in China 2025" clarified that Chinese enterprises will account for a certain market share. Will excludability exist? Finally, does the fact that domestic enterprises receive a lot of funding from the government conform to international economic rules? What are your comments on these points? Will "Made in China 2025" adjust itself to conform to international economic rules more strictly?

Wang Shouwen:

Thank you for your question. You speak better Mandarin than I do. As for "Made in China 2025," China proposed it on the basis of open development and win-win cooperation. You have a clear understanding of it, as the initiative itself is open and transparent. It aims to offer some strategic guidance and information for the upgrading of Chinese manufacturing sector. It is transparent, open and does not discriminate. Both Chinese and foreign enterprises, state-owned and private ones, can all take part in it. So we welcome U.S.-funded enterprises to join it, too. In its roll out process, we made stringent examinations to guarantee that it conforms to WTO rules. The Ministry of Commerce fulfilled the duty on the basis of our commitment to the WTO to ensure that we perform our duties as a WTO member. So we maintain that "Made in China 2025" meets the obligations of the WTO framework.

If you think that "Made in China 2025" is inconsistent with WTO obligations and goes against China's commitment in any respect, we can come together to negotiate with the WTO, or we can further bring a lawsuit. But we don't want anyone to artificially create excuses and then unilaterally take steps. Perhaps we have different opinions, but we hope to solve problems in the framework of WTO international rules.

"Made in China 2025" does have some targets, and these goals are predictive, directive and not mandatory. In fact, many countries have also made similar guidance targets and guidance plans. If you don't agree with me, I look forward to receiving your comments and criticism.

The Clinton administration developed a national infrastructure plan which took the information superhighway as an important approach to revitalizing the U.S. economy. We believe that our "Made in China 2025" is similar to that. The Obama administration also launched a national plan aimed at doubling the U.S. exports in five years. That was a guidance plan, too. The European Union also made its "industrial revival" program.

So, I suggest you read the "Made in China 2025" carefully again and don't take it as a terrible thing. I would like to emphasize that it is transparent, open and non-discriminatory. Some of the targets it sets are guiding and leading ones, which only provide some guidance information rather than mandatory tasks. And this practice has been adopted by many countries, including the United States.

Zhu Guangyao:

Shouwen's response to this journalist's question is put in a historical and global perspective and is very objective. The USTR criticised "Made in China 2025," accusing China of infringing on or stealing U.S. intellectual property rights, and saying that is why China boasts such rapid growth. 

Indeed, China's per capita GNP was US$220 in 1980, and the figure surpassed US$8,820 in 2017, according to the latest statistics. This is a tremendous change. How has the unprecedented rise in China's comprehensive strength come about? I think, the underlying reason lies in reform and opening-up under the leadership of the Communist Party of China. President Xi Jinping stressed that reform and opening-up plays the decisive role in determining the destiny of contemporary China.  

As for intellectual property rights, how has China realized such fast growth? We have our recipe for success. We prioritize development, regard talent as the top resource and  see innovation as the most powerful driving force. We adopt the new concept of innovative, coordinated, green and open development that is for everyone to realize sustained growth of the national economy and continuous improvement of people's lives. At the same time, we follow the principle of mutual respect, fairness and justice, cooperation and win-win results to positively handle international relations, in which the Sino-U.S. economic relationship comes to the fore. 

At this critical moment for China-U.S. economic ties, I think the two sides should calm down and engage in consultation based on facts and in the spirit of mutual understanding and mutual respect. The at-fault party should examine its mistakes. The two countries should not criticize each other. We should not consider that the other country is developing at the expense of our own development. In a pluralistic world, the cooperation between China and the United States is crucial to world peace and development as well as the interests of the two peoples. Therefore, it is the expectation of all people around the world, not just the people of our two countries, that we can properly manage the trade friction between us. A reporter asked a question about "trade friction" and "trade war" just now. I think the two countries are putting forward requirements for each other. Based on the requirements, we'll properly settle relevant disputes through consultation on an equal footing. We'll also pay attention to the protection of intellectual property rights, which is a top priority for making China a country of innovators. Thank you.

CCTV:

In the face of such an immense trade challenge from the United States, will China have the ability to deal with it? If this continues and evolves into a trade war, will China be able to afford it, and win it?

Zhu Guangyao:

Your questions are on how to face and deal with the challenges. Regarding relations between China and the world, especially economic relations, President Xi Jinping made a very clear statement in the report at the 19th National Congress of the Communist Party of China (CPC). President Xi emphasized that China will never pursue development at the expense of others' interests, but nor will China ever give up its legitimate rights and interests. No one should expect China to swallow anything that undermines its interests. President Xi's words are a guideline for us to handle China-U.S. trade disputes and even severe trade frictions. We deal with this relationship according to President Xi's instructions. We have repeatedly communicated with them, but the U.S. side is still obstinately walking on its own path alone and has introduced a high-tariff list of items worth US$50 billion. We must act in defense of China's own interests. 

Under the circumstance that both sides have laid out their conditions, we hope that both sides can treat each other candidly and with mutual respect and conduct consultations based on the principle of cooperation and win-win. As I just said, China has never given in to external pressure since the founding of the People's Republic of China. This is the history of the development of our country and the history of the Chinese people's struggle. China will not yield to any external pressure. On the contrary, under the guidance of the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, through innovation and development, the Chinese economy will rise to a higher level, China's per capita GNP will continue increasing from the current US$8,820, and China's market will become broader and more attractive. We open up to the whole world and hope that every foreign investor can benefit from China. As we all know, State Councilor and Foreign Minister Wang Yi has already announced that President Xi Jinping will attend the Boao Forum for Asia and deliver an important speech on China's reform and opening up policy. Under President Xi's leadership, China will embark on a broader and more ambitious road that will not only benefit the Chinese people but also make our contribution to the peace and development of the world.

Phoenix TV:

Some media outlets have recently said that the current "trade war" between China and the U.S. was incited by China, because China undertook actions like forced technology transfer, which threatens the protection of intellectual property rights. How would you comment on this? 

Wang Shouwen:

Thank you for your question, Phoenix TV. I think it would be appropriate to respond to the media report you quoted with what President Trump gets used to say, that it's "fake news".

The U.S. investigated this so-called matter of "China's theft of intellectual property rights" and proposed a specific tax list yesterday based on its domestic law. First, the U.S. violates its own commitments. When the U.S. passed the WTO Agreement in 1994, the President submitted a Statement of Administrative Action to the Congress, and the U.S. promised not to decide whether other countries' practices are against the WTO rules or not unilaterally through the Section 301 Investigation. So the U.S. must handle disputes related to the WTO according to the WTO rules and the final decisions of dispute settlement bodies. Without the WTO's mandate, the U.S. government has no right to terminate its obligations under the WTO, nor can it conduct cross sector retaliation. The U.S. violated its own commitments first. Then, in 1998, the E.U. sued the U.S. for its Section 301 Investigation into the WTO. The case was called DS152. The U.S. made another international commitment to the process of the litigation, saying that it would handle relevant trade disputes in strict accordance with WTO dispute settlement procedures, rather than adopting the Section 301 Investigation and its conclusions unilaterally. Therefore, the U.S. has violated its commitments to its domestic law and international law, so who would you say has incited this "war"?

Second, the U.S. accused China of its "forced technology transfer" in the Section 301 Investigation, which was completely baseless because China has no law stating that foreign companies must transfer their technology to their Chinese partners. There is no law making such requirements either. There are certain industries in China where joint ventures are required for foreign investment, which is in line with WTO rules. As a developing country, China hopes that foreign investment and Chinese companies can make joint ventures, which is completely in line with WTO rules as well. So in this circumstance, it is baseless for the U.S. to say that the Chinese government has forced technology transfer. Technology transfer between companies is completely based on contracts. One company is willing to transfer, and another is willing to accept and pay an appropriate amount, which is a voluntary action that the government should not intervene in. In fact, some U.S. companies have realized huge gains in China by means of joint ventures. For example, a well-known American automobile company established a joint venture in China, and now the automobile production of the company in China is more than its automobile production in any other place in the world, including the U.S. The profits the joint venture obtained exceed those obtained in the U.S. or any other country in the world. These are the benefits of joint ventures, which benefit both China and the U.S. How could such practices be regarded as forced technology transfer?

Third, China is committed to the protection of intellectual property. General Secretary Xi put forward a new development philosophy in his report delivered at the 19th CPC National Congress. The first principle of which is development driven by innovation. Without the protection of intellectual property, there is no space for innovation-driven development. We have improved the IP protection system through legislation and established a series of mechanisms for administrative enforcement and judiciary. We have set up trans-provincial IP courts. An American transnational corporation told me that one of its companies in China won 28 out of 31 cases here. You can search for the judgments of IP disputes. More than 80 percent of lawsuits filed by American clients were ruled in their favor. This shows that China's court system and administrative enforcement provide strong protection for IP rights.

China is a developing country. We are not perfect regarding IP protection. But we must admit the progress has been made in this regard. When China entered the WTO in 2001, China forked out only US$1.9 billion to foreign IP owners, but the amount had risen to $28.6 billion by 2017. Certainly, we should intensify IP protection. President Xi said property protection, especially IP protection, is important in building a good business environment. We should introduce harsher punishments for IP infringements and make the violators pay a higher price. Despite the progress we have made, we will endeavor to improve our protection of intellectual property. China cannot accept the practices of some countries that adopt discriminatory measures against China that breach the WTO commitment and its own domestic laws, based on nothing more than groundless reports, accusations and complaints from corporations. It's self-evident who started the "trade war." Thank you.   

China Radio International:

My question is for Mr. Zhu. At the G20 Meeting of Finance Ministers and Central Bank Governors recently concluded in Argentina, the U.S. representative said that China's transition to a market economy is regressing. You were at the meeting. Could you tell us how the Chinese side responded to this view at the meeting? I also heard that the Under Secretary of the Treasury of the United States said the two countries won't have any more comprehensive economic dialogue. Do you accept this view? 

Zhu Guangyao:  

The G20 Meeting of Finance Ministers and Central Bank Governors was held in Buenos Aires on March 19 and 20. Before that, a meeting of their deputies was held. It's true that the U.S. representative mentioned a regression in China's reform. He made the remark when discussing the global economic crisis. As the deputy finance minister of China, I made a speech immediately after him.

In my speech, I first made clear China's perception of the world economy. China believes that after the outbreak of the global financial crisis, the year 2018 has seen the best performance of the world economy. Therefore, it's important for the G20 countries to remain united and to coordinate their policies with each other.  

Then, I mentioned the success China has made after it adopted the reform and opening up policy. When the policy was introduced, China's per capita GNP was US$220. Last year, this figure exceeded US$8,820. The change is remarkable. This is the result of the reform and opening up policy and of the hard work of the Chinese people. When improving their life, the Chinese people have also made great contributions to the world. In the past decades, China accounts for more than 70 percent of poverty reduction worldwide. For many years, China's economic growth accounted for more than 30 percent of the world's total economic growth. These are the achievements of China's reform and opening up policy and the contributions China has made to the world. 

China is going to celebrate the 40th anniversary of the introduction of the reform and opening up policy. New reform and opening up measures will be announced. China will surely become more and more open. We want to have more policy communication with other countries. We welcome more foreign investment in China. We will also increase investment overseas. Our aim is to further integrate the Chinese economy into the world economy. In this context, it's crucial for G20 to enhance policy coordination among member countries, including China and the United States. 

This is generally what I said at the meeting.

The second question pertains to the China-U.S. comprehensive economic dialogue mechanism, which was one of the four important China-U.S. dialogue mechanisms that Chinese President Xi Jinping and his counterpart Donald Trump initiated during their meeting at Mar-a-Lago on April 6, 2017. It is actually a continuation of the China-U.S. Strategic Economic Dialogue and the China-U.S. Strategic and Economic Dialogue, but bears the hallmark of the Trump administration. The dialogue mechanism has led to very productive cooperation, including the early-stage outcomes achieved under the China-U.S. 100-day economic cooperation plan. I remember, in May last year, in this room, I answered questions from the press, including a CNN journalist. In this situation, we should cherish the cooperative relationship already established between the two countries. Coincidently, on that very day, after the press conference, the U.S. Deputy Treasury Secretary said in an email to me that it was wrong to say that China-U.S. comprehensive economic dialogue was dead and that the U.S. cherished high-level dialogue with China, referring to a report. You can verify this. Since the two parties keep close policy communication, important information may need to be exchanged at any time. I can tell you that my reply to his email was, "I also value your message and will report this message to my superiors."

The divide on China-U.S. economic ties, in my opinion, is partly a reflection of the expectation for a more open market as well as a better business environment from each other, and partly a reflection of the aspiration for cooperation in the market. Otherwise, we can just go our own way and ignore the issues on the agenda. The challenges facing us are real, but I think the two countries have the wisdom and capabilities to solve these issues, because we have shared interests that derive from one another's interests. China and the U.S. have more shared than divergent interests, and that is the reason for this. The two countries have US$580 billion worth of trade volume and 230 billion worth of direct investment, in addition to the U.S bonds held by the Chinese government (valued at US$1.1-1.2 trillion according to the U.S. Treasury) as mentioned by the Wall Street Journal. Beyond that, the two countries enjoy the friendship between their people and build up mutual trust. China and the U.S. are two great countries and the people of the two countries are great people. Win-win cooperation is what we both desire. Thank you. 

China Business Network：

I have a question for Vice Minister Wang Shouwen. WTO Director-General Roberto Azevêdo said recently that a trade war between China and the U.S. would have a grave impact on the global economy and that the WTO was facing a most difficult moment. Some other experts believe that third countries would suffer most from the trade war. Has China assessed the effects of the trade war on both itself and the world? Faced with the current external environment, will China push ahead with further opening up? Thank you.

Wang Shouwen: 

Thank you for your question. Indeed, Director-General Azevêdo's words are very reasonable. No one will emerge a winner from a trade war. This is why China, as a responsible country and WTO member, doesn't want a trade war. China is willing to discuss and settle all disputes with the U.S. based on equality, consultation and mutual respect in line with WTO rules, which are widely agreed on. However, if China's interests are hurt and its economic security is endangered, we will take all necessary measures to defend our legitimate interests in accordance with the spirit of international law and the stipulation of China's Foreign Trade Law. Of course, we hope all the so-called disputes can be settled within the WTO framework, so that we can minimize damage to the WTO system and to the interests of all parties. But if someone is determined to wage a trade war, China will not be afraid. As I mentioned just now, China will fight to the end if a trade war is initiated, while also keeping the door to dialogue and consultation open. China is willing to openly exchange views with the U.S. on handling differences within the WTO or bilateral framework for mutual benefit and win-win results. Thank you.

Reuters:

Are the U.S. trade measures beyond China's initial expectation? Will the RMB exchange rate be a topic during the negotiations between China and the U.S.? Thank you.

Zhu Guangyao:

China and the United States keep close communication; even facing severe differences, we still maintain policy communication. China has made its principle clear. The Chinese Ministry of Commerce, representing the position of the Chinese government, clearly stated that we will not negotiate under the Section 301 framework. This is a basic principle, because the U.S. action is a unilateral one. We hope that the two sides can clearly put forward their policy requirements  and seek new ways to solve the problem based on the principle of mutual respect. The most important thing is mutual respect, and then we can achieve win-win cooperation. 

Both of us have the responsibilities and obligations to manage our expectations, because China and the United States are the two largest economies in the world, and their policies not only have a major impact on their respective economies, but also have a major impact on the global economy. The global multilateral system must be maintained by all WTO members. In this process, both China and the United States have significant responsibilities. In this process, all countries must realize that hegemonism and unilateralism are unpopular. In safeguarding the multilateral system, we must work together because the United States has always played a leading role in the global economic system that has been established since World War II. China is an important participant, builder, and contributor to this system, and of course, it is also a beneficiary. We are willing to work with all of you to maintain this multilateral system through cooperation – constructive cooperation – so that our global economy can move forward and develop in a healthy and stable manner.

Regarding the exchange rate issue, the IMF recently made a very clear definition of the exchange rate, including the fundamentals of the economy, sound macroeconomic policies and sound mechanisms. Under this premise, the determination of exchange rates reflects the strength of the market. I think that China and the U.S., as important members of the International Monetary Fund and important participants and defenders of the international financial market, both shoulder common responsibilities. Cooperation in this area is conducive to the stability of the financial market, helps prevent possible systemic financial risks and contributes to the healthy and sustainable development of the world economy. Thank you.

CRNTT:

My question is for Mr. Zhu. Will this round of trade friction between China and the United States impact China's GDP growth target this year? If yes, how big will the influence be? 

Zhu Guangyao:

The Chinese economy has maintained stable growth in recent years. Both the 19th CPC National Congress and the government work report delivered by Premier Li Keqiang at this year's two sessions made clear that the Chinese economy has shifted from fast growth to high quality development. This is in accordance with the principle of pursuing progress while ensuring stability. It's very important for China to upgrade its economy, give priority to performance and therefore maintain sound and sustainable development. 

The Central Committee of the CPC and the State Council have made it clear that guided by this basic principle, we must unswervingly implement the supply-side structural reforms, focusing on the supply-side structural reform to push the three major tasks. 

The three major tasks, also tasks for the next three years, are preventing systemic financial risks, reducing poverty and controlling pollution. These three major tasks are related to the stability of our economic system and quality of our people's lives. The International Monetary Fund (IMF) has made consecutive upward revisions of its forecast for China's economic growth. The fund expects China's economy to expand by 6.6 percent this year, higher than the 6.5 percent target announced by Premier Li Keqiang during his government work report presentation at the opening meeting of the first session of the 13th National People's Congress.

The IMF had an overall assessment. According to its 6.6 percent forecast, if China maintains a three-year average growth rate of 6.3 percent in 2018, 2019, and 2020, China will double its 2010 GDP by 2020. Therefore, we are fully confident that we will achieve our goal of doubling the size of China's economy by 2020. In 2017, China's per capita GNP reached US$ 8,820. The World Bank's middle-income standard is US$12,700. We can certainly cross the middle-income line if China develops at this speed.

Therefore, we do not want China and the United States to have a "trade war," yet now we are indeed threatened by serious trade frictions. Both sides should calm down and explore a new path through cooperation and mutual respect, and we must gradually come up with a way to mitigate the imbalance in Sino-U.S. trade during the process of cooperation. China has made clear that we do not pursue a trade surplus and we hope bilateral trade will gradually come to a balance in the process of cooperation. At the same time, in a win-win situation, China and the United States can realize the harmonious coexistence of their economies, work together to improve people's well being, and jointly promote the peaceful development of the world. Thank you.

Hu Kaihong:

This concludes today's briefing. Thank you, Mr. Zhu and Mr. Wang. Thank you, friends from the press.

Read in Chinese

Speakers:

Chen Zongrong, former vice administrator of State Administration for Religious Affairs

Xiao Hong, former spokeswoman of State Administration for Religious Affairs

Chairperson:

Xi Yanchun, spokeswoman of the State Council Information Office

Date:

April 3, 2018

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, the State Council Information Office released the white paper "China's Policy and Practice in Protecting the Freedom of Religious Belief."

We are delighted to invite Mr. Chen Zongrong, former vice administrator of the State Administration for Religious Affairs, and Ms. Xiao Hong, former spokesperson of the administration, to attend this press conference. Now, I'll give a brief introduction to the white paper.

This is China's second white paper on the protection of the freedom of religious belief since 1997. It provides sufficient information and data on the efforts and progress China has made in the past four decades, especially after the 18th National Congress of the Communist Party of China. The white paper contains approximately 8,000 words. The main content is divided into five parts: I. Basic Policies in Protecting Freedom of Religious Belief; II. Legal Guarantees for Freedom of Religious Belief; III. Conducting Religious Activities in an Orderly Manner; IV. The Role of Religious Groups Has Been Fully Developed; V. Active and Healthy Religious Relations

The white paper says that religion is an integral part of human civilization. It remains a common problem for all countries of the world on how to protect the freedom of religious belief, how to properly handle the relations between different religions, how to help religions cope with changing time, and how to curb religious extremism. Based on the development of religions and on the practical works related to religions, by reviewing positive and negative experiences in China and other countries, China has found a proper way to protect the freedom of religious belief, promote harmonious development of different religions, and give full play to the role of the religious circle in compliance with law. We will continue to respect and protect the freedom of religious belief of Chinese citizens, and unite religious believers and non-believers.

The white paper is available in multiple languages, including Chinese, English, French, Russian, Spanish and Arabic. 

Now, I'll give the floor to Mr. Chen.

Chen Zongrong:

Ladies and gentlemen, friends:

Good morning!

It's a pleasure to meet you all here, and thanks for paying attention to the conditions of religion in China and China's policies for religious affairs.

The State Council Information Office published "Freedom of Religious Belief in China" in October, 1997, which introduced China's basic policies and legal guarantees for freedom of religious belief for the first time. For over 20 years, China has made great strides in policies and practices on protecting the freedom of religious belief. With all of the experiences gathered from practice, we have developed policies on protecting the freedom of religious belief with Chinese characteristics. Before answering the questions, I would like to brief you on the four aspects of the characteristics:

Firstly, freedom of religious belief in China is deeply rooted in China's long history.

China is a country with a great diversity of religious beliefs since ancient times. Besides the main religions that are well organized and systematically developed, there are also plenty of local beliefs. Religions in China, except for Taoism and local beliefs, were introduced into China from overseas. Due to the influence of Chinese traditional culture, religions in China have developed unique characteristics featuring patriotism, reason, humanism, tolerance and others, which are presented in a different way compared to the religions developed under the background of western culture. Compared to some other countries and regions in the world, there are no religious wars or chaos caused by religious problems in China's history. 

Secondly, freedom of religious belief in China benefits from legal protection.

China's policies and legal protections for religious affairs is unique in four aspects. The first word to summarize is objective. The nature of religious beliefs is fully respected. We treat religious affairs with an objective attitude and see it as a common social phenomenon. We respect and protect citizen's religious feelings and needs, instead of setting standards with one's individual will. 

The second word to summarize is fair. All religious beliefs are treated as equals in China. No religion will be given special treatment with regard to policies and law. As for people, no matter if they have a religious belief or not, they are ensured the same rights and obligations. 

The third word is balance. Chinese people have the right to have a religious belief or not, and also the rights to choose what kind of religions to believe. We protect people who don't have religious belief before and now who are choosing to have one, and also the people who have religious beliefs before and now no longer have any beliefs. We respect and protect the freedom of religious belief of people who live in the regions where most people don't have religious beliefs, and also the freedom of religious belief of people who live in the regions where most people have religious beliefs. 

The last word to describe the characteristics is comprehensive. We protect the legal religious activities and take measures to stop the illegal religious activities. We take measures against the propagation and spread of religious extremism, and crack down on crimes.  

China's policies and legal protections for religious affairs is unique in four aspects. The first word to summarize is objective. The nature of religious beliefs is fully respected. We treat religious affairs with an objective attitude and see it as a common social phenomenon. We respect and protect citizen's religious feelings and needs, instead of setting standards with one's individual will. 

The second word to summarize is fair. All religious beliefs are treated as equals in China. No religion will be given special treatment with regard to policies and law. As for people, no matter if they have a religious belief or not, they are ensured the same rights and obligations. 

The third word is balance. Chinese people have the right to have a religious belief or not, and also the rights to choose what kind of religions to believe. We protect people who don't have religious belief before and now who are choosing to have one, and also the people who have religious beliefs before and now no longer have any beliefs. We respect and protect the freedom of religious belief of people who live in the regions where most people don't have religious beliefs, and also the freedom of religious belief of people who live in the regions where most people have religious beliefs. 

The last word to describe the characteristics is comprehensive. We protect the legal religious activities and take measures to stop the illegal religious activities. We take measures against the propagation and spread of religious extremism, and crack down on crimes.  

Thirdly, freedom of religious belief in China develops from the practice of religious affairs.

The Communist Party of China (CPC) and the Chinese government attach great importance to religious affairs and see it as a significant issue facing China. In an effort to protect freedom of religious belief, China has mulled over policies, laws and regulations, and established professional institutions to properly handle religious affairs, in a bid to adapt to the times. Especially since the 18th CPC National Congress, under the leadership of the CPC Central Committee with Comrade Xi Jinping at its core, religious affairs have been put high on the agenda.

China has held the national conference on religious affairs, revised the Regulation on Religious Affairs and optimized the working system, building an orderly, free, stable and harmonious community. China will uphold the principle that religions in China must be Chinese in orientation. China will build active and healthy religious relationships, and maintain religious and social harmony. All these will lay solid foundations for handling the religious affairs and protecting the freedom of religious belief in the new era.

Fourth, China's gains in protecting freedom of religious belief are a result of the self-reflection, self-reliance and self-improvement of the religious community.

With the implementation of the policies on freedom of religious belief, China's religious community has stepped up efforts in community building, the awareness of citizenship, laws and politics among religious personages and believers have increased substantially, the self-management of religious organizations has further improved, the adaptation between religions and socialist society continues to get deeper, different religions respect and learn from each other, and a new realm of "five religions (Buddhism, Taoism, Islam, Catholicism and Protestantism) working together to achieve harmony" has taken shape. 

First, speaking overall, religions in China are turning from the pursuit of quantity to the pursuit of quality, focusing on developing in the Chinese context, and working hard to strengthen theories, culture, institutions, organizations and talent cultivation. 

Second, they serve society, engage in public welfare and charity activities, and do lots of work in helping those in need and distress, winning wide praise from society. 

Third, they assume social responsibilities, conscientiously maintain harmony among religions and society, safeguard national security and ethnic solidarity, take a clear stand and draw a line against religious extremists, fight against illegal and criminal activities under the guise of religion, and serve as an important force to promote economic and social development. 

Fourth, they carry out extensive international exchanges, take an active part in exchanges among people with different beliefs and different civilizations, promote closer ties between people, the linking up of cultures and mutual learning among civilizations, and contribute strength and wisdom to maintaining world peace and building a community with a shared future for mankind.

In short, China's policies on freedom of religious belief are sincere, conform to its national conditions and are effective. We have our own experience in protecting freedom of religious belief.

Xi Yanchun:

Thanks for the introduction of Mr. Chen. Now let's move on to the Q&A session. 

CCTV: 

What are the considerations behind the publishing of the white paper? Thank you.

Chen Zongrong:

Our first white paper on freedom of religious belief was released in October 1997, and now, over 20 years have passed. The 1997 white paper gave a comprehensive introduction to China's respect for and protection of freedom of religious belief with a large number of facts, including full and accurate data, and thus served as an authoritative source of information for the international community to know about China's religions and religious policies.

China has undergone fast and considerable changes over the past 20 years in its economic and social development and religious situation. The five main religions in China have also undergone great changes, and as I mentioned, are turning from a pursuit of quantity to a pursuit of quality. Therefore, we think it is necessary to publish another white paper to introduce the development and changes of religions in China over the past 20 years, especially to introduce the protection of freedom of religious belief, promotion of harmonious religious relationships, and self-improvement of the five main religions in recent years, and also, to elaborate some of our viewpoints. 

Publishing the white paper also shows that the Communist Party of China and the Chinese government attach great importance to protecting and promoting human rights, and that it has the sincere wish to advocate dialogue and oppose confrontation in the field of international human rights.

Thank you. 

Reuters:

My question is about the potential deal with the Vatican. There has been a lot of discussions regarding the deal over the appointment of bishops. I want to know if that's likely to be signed and released any time soon. If it isn't, what is the largest obstacle at the moment to reach such a deal? Thank you.

Chen Zongrong:

My colleague Ms. Xiao will answer this question.

Xiao Hong:

China and the Vatican have maintained contact and the two sides have actively engaged in profound discussions about certain issues. China has always been sincere in wanting to improve relations with the Vatican and has continued to make efforts. We are willing to work in the same direction with the Vatican in pushing forward constructive dialogue to improve relations with the Vatican.

People's Daily:

There have been some concern that China has been tightening its religious policy after the conference on religion in 2016. What is your response? Are there any changes in China's policy toward religion?

Chen Zongrong:

As I said earlier, the National Work Conference on Religion in 2016 is an important event on religious affairs 15 years after the 2001 meeting. While addressing the conference, Xi Jinping, general secretary of the CPC Central Committee, put forward a series of new thoughts and requirements. After the conference, we have heard some concerns questioning if China is tightening its religious policy. I would like to take this opportunity to make my points in the following two aspects.

First, China's religious policy is stable and consistent. Since the reform and opening up in 1978 when China resumed to implement its policy of freedom of religious belief, China's religious policy has been sticking to some core values as well as basic values, ideas, and principles, which is to protect people's freedom of religious belief and safeguard their rights to freedom of religious belief. The Communist Party of China (CPC) has been following this basic policy of protecting the people's rights to freedom of religious belief. The country has also included it into the Constitution, which can be seen in the 36th article. This core value, basic principle and the basic policy have been stable and consistent.

Second, China's religious policy as well as laws and regulations regarding to religious affairs is also gradually improving and innovating, which is exemplified by Xi's important speech during the 2016 conference and the revised Regulations on Religious Affairs. The revision of policies and laws regarding religious affairs is to meet new situations and address new problems. We should protect, regulate, guide and serve religious development but never aim to control it. Moreover, we should uphold the principle that religions in China must be Chinese in orientation and work to ensure that the five major religions (Buddhism, Taoism, Islam, Catholicism and Protestantism) can better adapt themselves to the socialist society.

We also aim to build a positive and healthy religious relation. The five major religions are already working in harmony, but some new situations and problems occurred under certain international and domestic contexts. 

It also mentioned that the rule of law shall be enhanced in addressing religious affairs. The newly-revised Regulations on Religious Affairs have included many parts to protect people's rights to freedom of religious belief and the lawful rights and interests of the religious circles. For example, it stipulates that governments of all levels should provide public services for religious circles including making road links, electricity, water, radio and TV broadcasting available for religious sites. 

The regulation also said that religious workers enjoy social security benefits like old-age insurance and healthcare insurance equal to other Chinese citizens. They can also enjoy subsistence allowances (if eligible).

The regulation stipulated that religious sites and institutions can obtain legal person status. In the past, the lawful rights and interests of religious sites was not well-protected and were sometimes infringed because their property could not be registered under their names without a legal person status. 

The construction of religious sites is also included into the master plan of land use in urban and rural areas. This move makes sure that the construction of religious sites will be considered during preliminary planning of land use and that religious believers can have adequate space for religious activities.

Therefore, China's religious policy is not only stable and consistent, but also keeps adjusting for new practices and requirements. In explaining its religious policies, the CPC Central Committee and the Chinese government are more explicit in attitude, more powerful in its measures, and more adapted to requirements of the new era.

Thank you.

Second German Television (ZDF):

Is it to be expected that there will be a solution on the negotiations between the Vatican and Chinese government to be more concrete on who's going to decide on the bishops and what's going to happen with the so-called "underground church"? 

Chen Zongrong:

Please let Ms. Xiao Hong answer this question for you.

Xiao Hong:

It seems that everyone is very concerned about Sino-Vatican relations. I can understand that your attention actually represents the concern of the broader audience behind you. I also thank you very much for your attention to Chinese religions and Sino-Vatican relations. However, regarding these specific aspects of the content of Sino-Vatican relations, I have nothing to add. But as you are a reporter from a German television station, I can tell you something about the exchanges between China and Germany. In 2016, we conducted a dialogue on different religions and civilizations with the German Christian community. The results were very good. We have reached an agreement that we will continue to hold such dialogues, the next of which will be in Shanghai in May this year, and we welcome you to attend. Thank you.

China News Service:

According to the white paper, there are nearly 200 million religious citizens in China, which is a great increase from the 100 million people in the 1997 white paper. Why and how did this happen? Thank you.

Chen Zongrong:

The figure of 100 million people in the 1997 white paper was actually from the estimates by the late Premier Zhou Enlai when he met with Pakistani and Indonesian Islamic delegations in the 1950s. He said at the time that there were several tens of millions of religious followers in China, and if they added those who held beliefs in their hearts instead of going to temples, all of them could make up almost 100 million people. From that time until the publication of the white paper in 1997, we all cited the saying of Premier Zhou. I want to explain two points on this issue:

First, the statement itself is an estimated statistic. It is an approximate figure. At that time, China's total population was more than 600 million. From the 1950s to the present, the total population of China has more than doubled. With more than 1.3 billion people, the population has grown substantially. For various reasons, after so many years of development, coupled with population growth, it is natural for the number of religious believers to grow.

Second, especially after reform and opening up was implemented, China has restored its policy of freedom of religion. As the breadth and depth of opening up to the outside world have been enlarging, all religions have had some growth respectively. It is very natural. Therefore, to still use the saying from the 1950s is not in line with the development in reality. Now the number of nearly 200 million people in the white paper is the number offered by the five major religions in China, which conducted statistics on their own, while we had data from the academic research institutions, statistical agencies, and sample surveys. The number was agreed on and recognized by various parties after we compared data from the two main sources (religions' own math and civil survey data). The nearly 200 million people are the number of religious followers who basically often go to religious sites and participate in religious activities.

That's all for this question. Thank you.

The Wall Street Journal:

I would like to add to the question regarding the relations between China and the Vatican. Currently, many experts have pointed out that the opportunity to solve the problem is in the hands of the Chinese side, and the Vatican is waiting for the final confirmation to be made by the Chinese side. So, why hasn't the Chinese side made a final confirmation about the settlement of the issue? And what is the reason? Thanks.

Chen Zongrong:

Ms. Xiao has been asked twice about the issue of China-Vatican relations. Here, I would like to explain it again, aiming to answer the question you have just raised.

To improve China-Vatican relations is the common aim of both sides. From the government perspective, we always maintain a sincere hope to improve bilateral relations, and the Chinese government has made specific efforts in this regard. Presently, China and the Vatican have an effective channel for dialogue, and all the issues will be negotiated and discussed through this channel.

So, here we also hope that the Vatican will be able to work together with the Chinese government to further improve bilateral relations. And this is also the point I want to stress about China-Vatican relations. Thanks.

Hong Kong Wen Wei Po:

The behavior of some Buddhists who obtain wealth by unfair means has generated negative influence. I'm wondering what measures you have taken to address the situation of the commercialization of Buddhism and Taoism. Thank you.

Chen Zongrong:

The commercialization of Buddhism and Taoism is an issue which attracts wide attention. The increasing commercialization is reflected in the following four aspects:

First, accumulating money by investing in construction of large-scale open air religious statues and temples. Second, contracting Buddhist and Taoist temples to the capital market and even planning to list them in the stock market. Third, conducting religious services in places other than Buddhist or Taoist temples in order to make money by collecting admission tickets and alms, establishing boxes of merits, and conducting unregulated activities like burning incense and freeing captive animals. Fourth, some Buddhist monks and Taoist priests have a loose sense in discipline and chase after fame and wealth under the influence of commercialization. They try to gain money through any possible means.

Criticized by the whole of society, these commercialized activities also hurt the development of religions. First, they damage the legitimate interests of Buddhism and Taoism by drawing in believers who offer alms to false monks and priests or those who make money from the temples. Second, they taint the image of the religions, because seeking fame and fortune goes against religious ethics. Third, they hinder the sound development of the religions. If such activities continue, the religions will lose believers and eventually imperil their existence and development. Therefore, to answer the calls of the religious circles as well as the whole of society, the Communist Party of China (CPC) and Chinese government have attached great importance to tackling the commercialization of Buddhism and Taoism. 

We have taken the following measures. First, the State Administration of Religious Affairs has released several documents jointly with other central departments, specifying the limits of commercialization and defining wrongdoings. Second, we have stepped up supervision. We have supervised the investigation of major cases and exposed them to the public. Also, we have cooperated with related departments to carry out inspections and ordered the violators to rectify offenses. Third, we have carried out dedicated initiatives to deal with illegal activities. For example, we have intensified efforts to tackle illegal Buddhist statues. As we know, there are many substandard Buddhist statues built without approval. They are not in accordance with religious rites and only built to make money. We have dealt with the issue of illegal merit boxes established in non-religious places. Fourth, we have published the information of Buddhist and Taoist temples on the internet. Meanwhile, registered temples will put up a sign, enabling the public to differentiate them from fake ones. We have guided believers and followers to conduct religious practices in a proper way and develop a healthy atmosphere for practicing. All those efforts have to some extent curbed the commercialization trend. However, there is still a long way to go to entirely curtail such activities, but hopefully with the cooperation of society as a whole, and media as well, we can get this work done. Thank you.

CRNTT:

According to the plan on deepening reform of Party and state institutions released by the Communist Party of China (CPC) Central Committee, the United Front Work Department of the CPC Central Committee administrates religious affairs. I would like to ask why such reforms have been made. What kind of influence will this have on the freedom of religious belief and religious activities of citizens after the reform? Thank you.

Chen Zongrong:

I am attending today's press conference as former vice administrator of the State Administration for Religious Affairs. The State Administration for Religious Affairs has been incorporated into the United Front Work Department of the CPC Central Committee. We are in a process of adjustment. Officials at the director level and above from the United Front Work Department of the CPC Central Committee, the State Administration for Religious Affairs and the Overseas Chinese Affairs Office of the State Council assembled on the morning of April 1 to announce the formation of the new department. The integration of the State Administration for Religious Affairs and the Overseas Chinese Affairs Office of the State Council into the United Front Work Department of the CPC Central Committee and the formation of the new leadership of the United Front Work Department of the CPC Central Committee mark the formation of the new department. My original title has expired, and the new title has yet to be announced. That's the reason I am attending the press conference as former vice administrator of the State Administration for Religious Affairs.

According to the institutional reform plan, the State Administration for Religious Affairs was incorporated into the United Front Work Department of the CPC Central Committee, which demonstrates the strengthening of the Party's centralized, unified leadership over religious work. The aim is to fully implement the Party's basic policy on religious affairs, uphold the principle that religions in China must be Chinese in orientation, and coordinate the United Front and religious resources. The reform will actively guide religions to adapt to China's socialist society. These words I just said are quoted from the plan on deepening reform of Party and state institutions. They are also the purpose and significance of the reform. I think this reform can produce the following benefits:

The reform is conducive to optimizing the institutional mechanisms for religious work, raising the level of religious work, and increasing the work force in religious work. Before the integration, the domain of the functions of the United Front Work Department of the CPC Central Committee overlapped with that of the State Administration for Religious Affairs. The reform will help streamline the regulatory system and better coordinate the strengths of the two. With an optimized institutional mechanism, improved governance level, and strengthened workforce of religious work, we will be able to better safeguard the legitimate rights and interests of the religious community, guarantee citizens' freedom of religious belief, standardize the management of religious affairs, and promote social and religious harmony. Therefore, the reform will only benefit religious work without affecting it.

For the Communist Party of China, advocating atheism and guaranteeing freedom of religious belief are both part of the Party's claims and work requirements. The CPC advocates atheism and advocates the promotion of atheism, but it does not mean that the freedom of religious belief of citizens cannot be guaranteed, nor does it mean that citizens' freedom of religious belief cannot be respected. The relationship between the CPC and the religious community is solidarity and cooperation on politics and mutual respect of beliefs. No matter how the religious institutions change, the CPC's policy of guaranteeing freedom of religious belief will not change. I think the reform will be more and more beneficial to religious work, and better protect the freedom of religious belief of the citizens. Thanks.

Xi Yanchun:

We moved from talking about the white paper to the China-Vatican relationship to institutional reforms. Do you have any questions about the white paper?

Hong Kong Cable Television:

The white paper has a newly added part that religions in China must be Chinese in orientation. The religious circles will make efforts to expound doctrine to conform to China's situation and times. If there are conflicts between the newly added part and doctrine, what will you do? Catholic community encourages the running of its religious work in a democratic manner. How is this done?

Chen Zongrong:

What do you mean by the conflicts you just mentioned?

Hong Kong Cable Television:

There is the explanation of being Chinese. However, many religions have their own explanation on principles. For example, Catholicism has its own doctrine for electing new bishops. What will be done in case of conflicts? 

Chen Zongrong:

Religions in China must be Chinese in orientation, which is a policy first presented by Chinese President Xi Jinping at the Central United Front Work Conference in 2015. It was further stressed at the national religious work conference in 2016 and later included in Party documents as a basic policy of the Party on religious work. Why do we specify that religions in China must be Chinese in orientation? It is the rule every religion follows that religions are adapted to context. All religions, without exception, follow this rule. If not, the religion can't live or develop. I think numerous examples have demonstrated this, whether in China or in the rest of the world.

The Party was not the first to propose that religions in China must be Chinese in orientation. Before President Xi presented this, the Catholic community had expressed that Christianity must be Chinese in orientation and made positive contributions. I was in charge of the Christian work before. The Christians held a workshop on Christianity for a Chinese context in Shanghai sometime before 2015, which produced great results. Therefore, the policy follows the objective law of religious development in line with development of the times. It has received enthusiastic response and support in religious circles. Jointly or on their own, they have hosted series of seminars and forums to explore the connotation and direction of being Chinese, with the goal of solving issues including the one you mentioned just now.

I would like to point out that we uphold the principle that religions in China must be Chinese in orientation, but this will not change the basic religious doctrine and can never conflict with it, because the policy cannot change the core religious doctrine, manner or system. On the premise that all of these core elements remain the same, the policy provides guidance to religions in adapting to the Chinese context politically, socially and culturally. In the political field, religious circles will be provided guidance to support the leadership of the Chinese Communist Party and socialist system. These are the prerequisite for building up our country with secular people and realizing the Chinese Dream of national rejuvenation. In the social field, religious circles will be provided guidance to follow and serve society and fulfill responsibilities to the society. Religions are organic parts of society, so they should serve the society and be in harmony. In the cultural field, the expression of religious thought, manner, architectural style and art should be Chinese. I think no religion is exactly the same in different countries, regions and ethnicities. They all have their own characters. This is the case in the three worldwide religions of Christianity, Islam and Buddhism. Therefore, the policy is an effective measure to provide better guidance for the adaptation of religions to a socialist society, and it is widely accepted and there is little opposition.

In addition, you mentioned that Catholic community encourages the running of its religious work in a democratic manner. This is an important aspect of Catholicism being Chinese. However, it is the tradition of Catholicism historically. It does not change the core doctrine and system, but opposes the practice of "only one man's words count," making democratic decisions through the collective. I think this is also the tradition of Catholicism in other countries and throughout its history.

This is my answer, thank you! 

China Radio International (CRI): 

Revised regulations on religious affairs went into effect in February this year. Why was the old document revised, and what are the features of the new one? Thank you.

Chen Zongrong:

The revised regulations on religious affairs were released on Sept. 7 last year. The original document was released on Nov. 30, 2004.

Since March 1, 2005 when the old regulations went in to effect, great changes have taken place in China's religious conditions as well as its international and domestic environments in over a decade. But the document was no longer in keeping with the changing situation and failed to solve new problems. For example, it didn't address online religious affairs, legal-entity status of a religious community based on its religious venue or other new issues.

In addition, since the 18th CPC National Congress, the CPC Central Committee has attached greater importance to work related to religious affairs and made new requirements based on new situations and tasks. Those new requirements and duties needed to be included in the regulations to align them with the will of our country. 

What's more, China has been advancing law-based governance, which requires sound lawmaking in all fields. Thus, the old regulations, which had some defects, needed to be revised.

The revised document has three distinct features. First, it better reflects the principle of protecting citizens' right to freedom of religious belief in accordance with law. For example, as I mentioned just now, it stipulates that governments at all levels should provide public services for religious groups and include the construction of religious sites into general plans for land utilization, as well as plans for urban and rural development. The list of such examples is long, and today I don't have time to talk more about them. You can refer to the document for more information. 

Second, the revisions better reflect the principle of promoting religious harmony as well as maintaining national security, social stability and ethnic unity. Some people in certain regions are making use of religion to undermine ethnic unity, social stability and national security. In this context, the revised document offers better approaches to promoting religious harmony. For example, it has made clear that religious affairs should be managed in compliance with the principles of "protecting the legal, stopping the illegal, containing the extreme, resisting infiltration and combating crimes." This means that we will resolutely protect legality, and take tough measures to punish those activities that undermine social stability and ethnic unity.

Third, the new regulations better reflect the principle of promoting law-based government administration and building a rule of law government. Advancing law-based governance in all fields requires building a government and a society based on the rule of law. In managing religious affairs, we also should observe the law, and must not act beyond the law and its regulations. The revised document has prescribed more appropriate measures and legal procedures in this regard, and clearly defined functions, duties, obligations and powers for relevant government institutions in managing religious affairs. 

Therefore, the revised regulations can protect a wider range of legal religious activities with more intensive efforts and stop illegal activities through more targeted and effective measures. I think this is the most prominent feature.

Phoenix Satellite Television:

My question is for Mr. Chen. We have noted the issue that for various reasons, there are some underground churches and family churches in China, and many analysts describe them as a gray elephant in Chinese religion. However, we actually haven't seen any related information in this white paper. We would like to ask about how the Chinese government considers this issue. Is there any related information? How will the issue be addressed in the future? Thanks.

Chen Zongrong:

I need to make one point clear here. There are neither underground churches nor family churches in China. My understanding is that, the family churches you spoke of refer to the venues for religious activities privately set up by the Christian churches. From this perspective, the number is not small indeed, because it is related to the characteristics of Christianity itself. 

Regarding the venues for religious activities privately set up by the Christian churches, the measures we have taken is to use the influence of a church to guide a number of nearby venues for religious activities. In this way, we can provide effective religious services and religious guidance for the people who gather in these venues to live a religious life, and thus to meet their reasonable needs for religion.

Second, Article 35 of the Regulations on Religious Affairs amended this time has made one point clear over the question of: if presently there are no conditions for the establishment of venues for religious activities while religious believers have a need for a religious life? Here is the solution. Religious believers can select representatives who will apply to the religious affairs department of the people's government at the county level for the establishment of a temporary venue for religious activities, therefore to meet these religious believers' need for a venue to live a religious life.

The Regulations also make it clear that local religious groups, such as the China Christian Council and the National Committee of the Three-Self Patriotic Movement of the Protestant Churches in China, provide all possible services for religious believers who gather in the temporary venues for religious activities.

Lianhe Zaobao:

My question is regarding the appointment of bishops. Some Catholics feel their freedom of religious belief is being hampered because the government won't allow the Pope to appoint bishops in China. What's your opinion on this view? Why does the Chinese government think that it should have the right to appoint bishops? Thank you.

Chen Zongrong:

China's Constitution has clear stipulations in this regard. China's religious organizations and affairs are not subject to any foreign domination. This means no foreign entities should interfere in China's religious affairs by any means. Chinese religious circles adhere to the principle of independence and self-management of religious affairs. I can't agree with the view you just mentioned. The freedom of religious belief is not hampered in the religious activities of Catholics in China.

Thank you.

Xi Yanchun:

Thank you all. This is the end of the press conference. 

.

Read in Chinese

Speaker:

Kong Xuanyou, vice minister of foreign affairs

Chairperson:

Hu Kaihong, spokesperson of the State Council Information Office of China

Date:

Jan. 26, 2018

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference.

Today, the State Council Information Office (SCIO) released a white paper on China's Arctic policy. We are taking this opportunity to hold a press conference to introduce the white paper's main content and China's Arctic policy.

Present at today's press conference is Mr. Kong Xuanyou, the vice minister of foreign affairs. I'm Hu Kaihong, the spokesperson of the SCIO.

Now, I'd like to make a brief introduction to the white paper. The white paper is the first one introducing China's Arctic policy, underscoring the region's significance in world affairs.

China is a major stakeholder in affairs related to the Arctic. The white paper explains our stance on this issue, and makes a thorough introduction of our policy goals, basic principles, and policies and positions on participating in Arctic affairs.

The white paper contains approximately 9,000 words, which are divided into three parts – the foreword, main content and conclusion. It advocates active participation by all relevant parties so as to promote sound governance in the Arctic.

As far as regional affairs are concerned, China has been a participant, builder and contributor. As a responsible major country, in accordance with the principle of "respect, cooperation, win-win result and sustainability," China is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region.

China would like to jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative, thus promoting the building of a community of shared future for mankind, and making a greater contribution to the peaceful, stable and sustainable development of the Arctic.

The white paper is available in eight languages, including Chinese, English, French, Russian, German, Spanish, Arabic and Japanese. The Chinese version is published by the People's Press, and the others by the Foreign Languages Press. You can find a copy in any branch of the Xinhua Bookstore nationwide.

That's all for my part. Now, I'll give the floor to Mr. Kong.

Kong Xuanyou:

First of all, welcome to today's press conference. There are so many friends from the media present here today, which is both expected and unexpected for me. I know that you must be very concerned about the publication of the white paper, because it is the Chinese government's first document on the policies on this region. But I didn't expect that that you show such great concern. Now, I would like to give a brief account of the relevant situations.

The Arctic covers both land and oceanic territories. Its special geographical location and ecological environment dictate that the Arctic has an irreplaceable role in scientific research, environmental protection, resource utilization and coping with climate change.

The issue of the Arctic not only involves the states inside the Arctic, but also has global implications and international impact. As a state outside the region, China is an active participant, builder and contributor in Arctic affairs, and is working hard to contribute its wisdom and strength to the development of the region.

The release of the white paper "The Arctic Policy of China," actually demonstrates China's standpoint and policy proposals in regard to polar affairs. It shows the country's willingness to maintain the sound, sustainable and peaceful development in the North Pole region, with concerted efforts from all parties. We hope the white paper could contribute relevant expeditions and cooperation from the various national parties on the rails, arousing local awareness of polar issues. On the other hand, we hope it will facilitate interaction between China and other international parties whose interests in the North Pole are critical. As a consequence, we anticipate a bright future for the entire Arctic region.

To better understand the white paper, I will summarize the publication as follows: defining the position, setting goals, adhering to principles and detailing proposals.

"Defining the position" means that China is a key shareholder in Arctic affairs, which constitutes the starting point for China to participate in Arctic affairs. This is demonstrated in two aspects:

First, China, as one of the countries on the Eurasia Continent, is geographically close to the North Pole, whose environment has a direct impact on the country's meteorological conditions, ecological systems as well as agricultural, forestry, fishing and ocean-based industries.

Second, China has been a participant and important player involved in the cross-regional and global issues concerning polar affairs. Its problems, particularly, climate change, ecological protection, the exploration and sustainable use of resources, peace, security and development, are challenging the future course of the world, where the efforts from foreign countries, like China, are indispensable. As a permanent member of the United Nations Security Council, a signatory of international treaties concerning the Arctic and a big country in trade and energy consumption, China will assume its responsibilities, share interests with Arctic States and a shared future with the rest of the world in the Arctic.

Policy Goals. China's policy goals on the Arctic are: to understand, protect, develop and participate in the governance of the Arctic.

The goals are interrelated to each other and should be considered as an integral whole. Understanding the Arctic provides guidance for China to carry out activities in the region. Protecting and developing the Arctic are the two main forms of China's activities in the region. Law-based governance is the major way for China to participation in the standardized management of Arctic affairs. Through all the above efforts to understand, protect, develop and participate in the governance of the Arctic, China will work with all other countries to promote the sustainable development of the region.

Basic Principles. China will participate in Arctic affairs in accordance with the basic principles of "respect, cooperation, win-win result and sustainability".

Respect should be reciprocal. It means all States should respect the sovereignty, sovereign rights, and jurisdiction enjoyed by the Arctic States in this region, respect the tradition and culture of the indigenous peoples, as well as respect the rights and freedom of non-Arctic States to carry out activities in this region in accordance with the law, and respect the overall interests of the international community in the Arctic.

Cooperation means establishing a relationship of multi-level, omni-dimensional and wide-ranging cooperation in this area.

Win-win result means all stakeholders in this area should pursue mutual benefit and common progress in all fields of activities.

Sustainability means promoting the sustainable development of the Arctic by ensuring the sustainability of environmental protection, resource utilization and human activities in the area.

"Respect, cooperation, win-win result and sustainability" are the fundamental principles guiding China's activities in the Arctic, and the specific measures concerning Arctic affairs under China's foreign policies.

Expounding China's policies and positions. China has mainly five policies and positions on its participation in Arctic affairs. First, deepening the exploration and understanding of the Arctic; second, protecting the eco-environment of the Arctic and addressing climate change in the region; third, utilizing Arctic resources in a lawful and rational manner, including participation in the development of Arctic shipping routes, the exploration for and exploitation of non-living resources, the conservation and utilization of fisheries and other living resources and the development of tourism resources; fourth, participating actively in Arctic governance and international cooperation; fifth, promoting peace and stability in the region.

The five points of policies and positions embody China's policy goals and basic principles on the Arctic and guide China in its participation in Arctic affairs in various fields.

I'd like to point out that this white paper is the Chinese government's first published document on its Arctic policies and will serve as an important policy ground for China's participation in Arctic affairs at present and in the next period to come. Going forward, as China deepens its exploration and understanding of the Arctic, it will update its policy document to make it in keeping with the times. China will strictly follow the document and make a greater contribution to the peace, stability and sustainable development of the Arctic.

Hu Kaihong:

Thank you, Mr. Kong. Now begins the Q&A session. Please identify the media organization you represent before raising your question.

China Central Television (CCTV):

I have two questions. First, as a non-Arctic country, what role would China like to play in Arctic affairs? Second, China is very concerned about Arctic affairs, so what is the ultimate goal as China is continuing to carry out the Arctic-related activities?

Kong Xuanyou:

Thanks for your questions. I mentioned just now in my introduction that China participates in Arctic affairs as an important stakeholder. Based on this basic position, two points are emphasized on the role China plays in Arctic affairs: China will not overstep or be absent.

"Not overstepping" means that China, as a non-Arctic country, will not intervene in the affairs between the Arctic countries and within the Arctic region. We will participate in Arctic affairs in accordance with international law, and guide Chinese entities and individuals to carry out Arctic activities and Arctic-related cooperation based on international law and the domestic laws of Arctic countries.

"Not being absent" means that China, as an important stakeholder in Arctic affairs, will play a constructive role in the cross-regional and global issues of the Arctic.

China's participation and contribution will bring opportunities to the development of the Arctic. We are willing to share responsibility to promote development with Arctic countries and people through mutually beneficial cooperation, and share the benefits of Arctic development.

We pay close attention to Arctic affairs and our activities in the Arctic are aimed at understanding, protecting, developing and participating in the governance of the Arctic. The ultimate goal is to achieve win-win cooperation and sustainable development in the Arctic to benefit all mankind. This is our goal. Thank you.

Nihon Keizai Shimbun:

You mentioned earlier that the Arctic should be properly used according to the law. My question is about the Arctic shipping routes. There are various opinions on its advantages and disadvantages. What expectations does China have for the Arctic routes? What role can China play in order to solve the shortcomings of the Arctic routes?

Kong Xuanyou:

As a result of global warming, Arctic shipping routes are likely to become important transport routes for international trade. As a big maritime trading nation, China also pays close attention to the development and utilization of Arctic routes. Apart from China, major trading nations, including Japan and South Korea, are also very much concerned about the utilization of Arctic shipping routes. China is willing to carry out mutually beneficial cooperation with other countries, especially Arctic countries, in the economic development of the Arctic routes, infrastructure construction and marine scientific research.

At the same time, I would like to emphasize that China respects the legislative enforcement and adjudicatory powers of the Arctic states in the waters subject to their jurisdiction. We note that the Arctic countries have made a lot of preparations in the areas of legislation, infrastructure, sea charting and oil pollution prevention and response, in order to make the waterway navigable. We hold that Arctic countries should administer the Arctic shipping routes in accordance with international law and fully guarantee the rights and freedoms of all countries to use the Arctic shipping routes.

We hope that the controversy concerning Arctic shipping routes can also be properly resolved in accordance with international law through friendly consultations among the countries concerned. Thank you.

China News Service:

What is China's attitude towards international governance in Arctic? And what is the expectation in this regard? Thanks.

Kong Xuanyou:

China has always taken the governance of Arctic issues as a major goal in participating in cooperation. In recent years, along with relevant parties, we have been exploring ways to realize win-win results through engaging in Arctic governance. There are three key words underlined with regard to international governance: protection, respect and development.

The first key word represents protecting the basic legal framework concerning international governance in regard to the Arctic. There is, as yet, no international treaty to regulate activities in arctic regions, but the UN Charter, UN Convention on the Law of the Sea and the Spitsbergen Treaty all provide a basic legal framework for international governance of the Arctic to follow; they have proved to be effective and have been accepted by relevant countries, ensuring fair and reasonable order in the Arctic region. To look ahead, international governance in the Arctic should continue to uphold the basic legal framework.

The second key word refers to respecting the cooperative mechanism regarding international governance in the Arctic. Over the years, we have seen a diversified cooperation mechanism at the global, regional and national levels with the participation of many stakeholders. The mechanism is now proceeding well in general, and has contributed significantly to Arctic cooperation in different areas. Looking ahead, international governance in Arctic should fully respect the existing cooperation mechanism, accommodate the interests of different parties in a balanced way and achieve win-win results.

The last key word means achieving orderly development of international governance in the Arctic in keeping with the times. Recently, we have seen many new rules regarding Arctic rescue, research and navigation. And negotiations on the Fishery Treaty on the High Sea of the Arctic Ocean have been completed, becoming the latest development of international governance in Arctic. We expect the relevant parties to continue upholding the spirit of mutual respect and win-win cooperation, realize steady and orderly development of international governance in the Arctic. Thanks.

CNN:

Just now, you mentioned the objectives of China's Arctic policy. However, there are also media reports on China becoming a power in the polar regions, so in international society there is question if Chinese policy carries any strategic and military intention, and if China's increased influence in some countries resulting from increased investment will eventually transform into strategic power. Could you give any direct response in this regard?

Kong Xuanyou:

China attaches great importance to the development and utilization of the Arctic, and encourages and supports its enterprises and organizations to participate in development and utilization in accordance with the following principles.

First, to carry out any utilization in strict accordance with the law. China requires its enterprises and organizations to carry out any development and utilization in strict accordance with the domestic laws of Arctic States, relevant international laws, commercial laws and labor standards, while shouldering due social responsibility and respecting the legitimate interests and concerns of the indigenous peoples.

Second, to carry out green utilization. China requires its enterprises and organizations to carry out development and utilization in strict accordance with environmental standards of Arctic States, so as to protect the unique ecological environment of the Arctic region against destructive development and ensure sustainable development.

Third, to carry out cooperative utilization. China encourages its enterprises and organizations to make use of their advantages in capital, technology and domestic market and carry out development and utilization through international cooperation.

Fourth, to carry out utilization by following commercial principles. China encourages its enterprises to participate in cooperation concerning the Arctic region, and share any dividends of Arctic economic and social development with local people based on abiding by market rules and sound business practices.

In short, the fundamental objective of our participation in the development and utilization of the Arctic is to achieve win-win results for all stakeholders and to promote sustainable regional development.

I would like to emphasize that China's participation in the development and utilization of the Arctic is designed to be a contribution to the Arctic region, which will bring about opportunities for development that benefits local people. The doubts about the intentions related to Chinese involvement in Arctic development, like exploiting resources and destroying the fragile environment, are unnecessary. Arctic countries have sound legal systems, and have set high standards for environmental protection, labor and commercial use of the Arctic. I believe we will make positive contributions to the economic development of the Arctic society and the wellbeing of Arctic residents including the indigenous peoples in accordance with relevant standards and laws. Thank you.

Rossiya Segodnya:

According to Russian statistics, the ice-breaking pilotage number for the Northern Sea Route increased by 20 percent in 2017. The issue just raised by the Japanese reporter was about the Arctic route. May I ask whether Chinese companies would cooperate with Russian counterparts, and whether they would be prepared to conduct consultations in this regard. According to the Global Times, the number of Chinese tourists in the Arctic area of Russia has increased nine-fold in the past decade. As the number of Chinese tourists increases, does China plan to establish a cooperative relationship with Russia or other relevant departments to handle this growth?

Kong Xuanyou:

Over the years, China and Russia have had very good cooperation in Arctic affairs. We know that Russia is a great Arctic country with an important influence on Arctic affairs. Therefore, we are willing to strengthen our cooperation with Russia in various fields related to Arctic affairs from the perspective of deepening the all-round strategic partnership between the two countries.

As you mentioned, the number of Chinese tourists traveling to the Arctic region is increasing. As I said just now, for us, the priority is to understand the Arctic, the other is to protect the region and ensure its sustainable development. Under this premise, in order to promote economic and social development in the Arctic, citizens are encouraged to travel and to undertake scientific expeditions in the Arctic according to the principles mentioned above. In the meantime, we will always maintain close communication and cooperation with Russia and other relevant countries in the process of implementing this cause and ensure that the goal of Arctic cooperation can be effectively achieved. Thank you.

People's Daily:

China has carried out a lot of Arctic-related activities in recent years, which have also attracted widespread attention from the international community. What are the prioritized points in China's Arctic-related activities? What new activities is China ready to carry out in the future? And what new measures will China take in this regard?

Kong Xuanyou:

Just now I have said that China's participation in Arctic affairs has a long history. Consulting historical documents, we can see that China's earliest participation in the Arctic can be traced back to 1925 when the country joined the Spitsbergen Treaty. Since the 1990s, China has taken a substantial step in participation in Arctic affairs. Presently, China has prioritized its activities in three aspects, namely in Arctic scientific research, Arctic protection and Arctic international cooperation.

First, China continues to carry out Arctic scientific research. We prioritize the exploration and understanding of the Arctic in our Arctic-related activities. In 2004, China built the Arctic Yellow River Station. Since 1990, China's research vessel Xue Long (Snow Dragon) has carried out eight scientific expeditions in the Arctic Ocean, and conducted scientific research for 14 years with the Yellow River Station as the base. China has gradually established a multi-discipline observation system covering the sea, ice and snow, atmosphere, biological, and geological system of the Arctic.

Second, China continues to strengthen the protection of the Arctic. The protection of the Arctic mainly involves coping with climate change in the Arctic, protecting its unique natural environment and ecological system, and respecting its diverse social culture and the historical traditions of the indigenous people. China conscientiously follows the principles of the Paris Agreement, takes emission reduction measures to protect the Arctic ecological system, continuously participates in the research on the migration patterns of Arctic migratory birds, and advances international cooperation in the protection of Arctic species of fauna and flora.

Third, China has been actively promoting cooperation in the Arctic. Carrying out cooperation with all relevant parties is an effective way for China to participate in Arctic affairs. The China-Nordic Arctic Cooperation Symposium, so far held five times, has become an important platform for the two sides to discuss cooperation in the Arctic. In 2013, China hosted the 5th World Reindeer Herders Congress, reflecting our close cooperation with indigenous Arctic-based organizations. China participated in Russia's Yamal LNG project, setting an example of international Arctic cooperation. Since 2016, the Trilateral High-Level Dialogue on the Arctic involving China, Japan and South Korea has facilitated exchanges and cooperation in the Arctic region among the three counties. As far as I know, the annual event will again be held this year.

Looking forward, China will pursue steady progress in Arctic-related activities in accordance with the policy goals and basic principles set out in the white paper. Our new icebreaker for scientific research is currently under construction and is scheduled to go into service in 2019. Thank you.

Die Welt:

Last year, President Xi Jinping used the term "Ice Silk Road" in his speech in Moscow. However, the "Polar Silk Road" is what mentioned in this White paper. So can you please further elaborate on the term used for the Silk Road?

Kong Xuanyou:

In 2013, President Xi Jinping proposed the building of the Belt and Road Initiative. And I believe all of you are pretty familiar with the principal of the Belt and Road Initiative, which is extensive consultation, joint contribution and shared benefits. And this is an open and inclusive initiative for development.

Currently, the Belt and Road Initiative has been making great progress in the process of international cooperation, among which is the steady development of alignment between the Belt and Road Initiative and the Eurasian Economic Union. Under the cooperation framework, China and Russia are carrying out discussions regarding the joint development and utilization of the shipping routes in the Arctic, including the building of the "Ice Silk Road" as one of the important endeavors.

China hopes to work with Russia and countries in this region to build a "Polar Silk Road" through developing the Arctic shipping routes. Thanks.

Reuters:

It's a rare opportunity to meet Mr. Kong, so I'd like to ask some questions about the situation on the Korean Peninsula. What’s your opinion of the recent development on the peninsula? Since being appointed China's new special envoy for Korean Peninsula affairs, you haven't paid a visit to North Korea. Why not? Do you have a plan to go there in the future? If not, why?

Kong Xuanyou:

China's position on the issue is consistent and clear-cut. We are committed to achieving the denuclearization of the peninsula, upholding peace and stability on the peninsula, and settling relevant issues peacefully through dialogue and consultation.

You may have noticed recently that, especially after New Year's Day, some positive changes took place on the peninsula, with the dialogue between the two sides restarted. Even though the current contact is only related to the Winter Olympics in Pyeongchang, we are confident that the resumption of dialogue will be a boon to stabilizing the regional situation.

China welcomes dialogue between the two sides. Their efforts have also been recognized and welcomed by the international community. We hope that through contact and dialogue, the two sides can enhance mutual understanding and trust. We also hope that the two countries can play a positive and constructive role in promoting peace and stability on the peninsula, and in solving regional issues through political dialogue.

The reason that I've not been to the Democratic People's Republic of Korea since being appointed China's special envoy for Korean Peninsula affairs is very complex. However, I need to stress that whether or not I go there, China's position on the issue remains unchanged, and we are working proactively to solve the issue through diplomatic means.

We hope that the current talks between the two countries can continue, and that more topics can be included in their future talks. We also hope that through the joint efforts of the two sides, the current talks can turn into political dialogue that can actually solve the problems on the peninsula.

We call on other concerned parties to give the two countries more support in this regard, and to help promote more contact between them. Nothing should be done to obstruct this process.

Macao and Asia Satellite TV:

You just mentioned that the white paper explains the important goals regarding the Arctic are to protect its resources and environment and to participate in regional governance . Can you give us a brief introduction regarding the next step China will take? Where, specifically, can China offer its wisdom?

Kong Xuanyou:

It is China's basic goal that through our participation in Arctic governance, we can understand, protect and develop the Arctic in a sustainable manner. At the same time, I would like to emphasize that Arctic protection concerns not only China. It is a common cause for all the countries concerned, and the international community in general.

China, as a major developing country, has a strong responsibility in this regard. We are close to the Arctic. Therefore, whether the region can achieve sustainable development, and whether the unique natural ecosystem there can be effectively protected, has direct bearing on our own interests and environmental protection. That's why we have already been participating in Arctic governance in a positive manner.

I believe Chinese scientists and various related parties in China has always worked in this way. I also believe in the future, they will adopt a more positive attitude to participate in the governance of the Arctic, including its protection, in strict accordance with the white paper we issued today. As for the specific programs to which China plans to offer its wisdom, I believe Chinese scientists and relevant parties have enough ability and wisdom to make their own contribution to the basic goal on participating in Arctic affairs. Thank you.

NHK:

Would you please introduce the concept and key content of the "Polar Silk Road"?

Kong Xuanyou:

As I mentioned just now, China and Russia are both willing to realize an effective alignment of the China-proposed Belt and Road Initiative and the Russia-led construction of the Eurasian Economic Union (EAEU), which involves the jointly building of a "Polar Silk Road". Now, the two sides are discussing how to realize more effective connection and give a more concrete shape to the vision, so as to accommodate each other's actual needs in development, as well as construction of the Belt and Road for the coming period. China, Russia, and other stakeholders still need further discussions to solidify their ideas.

Hu Kaihong:

Today's press conference ends here. Thanks for Mr. Kong, and thank you all.

Read in Chinese

Speakers:

Ning Jizhe, head of the National Bureau of Statistics

Xing Zhihong, spokesperson of the National Bureau of Statistics and director general of the Department of Comprehensive Statistics of the National Bureau of Statistics

Chairperson:

Hu Kaihong, spokesperson of the State Council Information Office of China

Date:

Jan. 18, 2018

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference. China's economic development has always drawn great public attention. Many people are keen to know how China's economy was last year. 

Today, we are delighted to invite Mr. Ning Jizhe, head of the National Bureau of Statistics, to introduce China's economic performance in 2017, and answer some of your questions. Also present at the conference is Mr. Xing Zhihong, spokesperson of the National Bureau of Statistics and director general of the Department of Comprehensive Statistics of the bureau.

Now, I'll give the floor to Mr. Ning.

Ning Jizhe:

Good afternoon. Now, I'll make a brief introduction of China's economic performance in 2017.

Last year, the national economy remained stable and saw a growth momentum beyond our expectations.

In 2017, under the strong leadership of the Communist Party of China (CPC) Central Committee with Comrade Xi Jinping at its core, all regions and departments implemented the decisions and arrangements made by the CPC Central Committee and the State Council, adhered to the general working guideline of making progress while maintaining stability, adopted the new development philosophy, focused on supply-side structural reform, and pushed forward works in structural optimization, the shifting of driving forces and quality improvement. 

As a result, the national economy has maintained stable and sound momentum, which exceeded our expectations. Economic development has become more dynamic, with more driving forces for growth emerging and greater growth potentials shown. Economic development has become more stable, coordinated and sustainable. A stable and healthy economic development was achieved.

According to a preliminary estimation, the gross domestic product (GDP) of China was 82.7122 trillion yuan in 2017, an increase of 6.9 percent at constant price compared with last year. In terms of quarterly data, the year-on-year growth of GDP was 6.9 percent, 6.9 percent, 6.8 percent, and 6.8 percent for the four quarters respectively. The value added of the primary industry was 6.5468 trillion yuan, up by 3.9 percent over the previous year; that of the secondary industry was 33.4623 trillion yuan, up by 6.1 percent; and that of the tertiary industry was 42.7032 trillion yuan, up by 8.0 percent.

1. Agricultural production enjoyed another harvest, and the production of animal husbandry grew stably.

The total grain output in 2017 was 617.91 million tons, an increase of 1.66 million tons compared with last year, up by 0.3 percent. The total output of summer grain was 140.31 million tons, up by 0.8 percent; the total output of early rice was 31.74 million tons, down by 3.2 percent; the total output of autumn grain was 445.85 million tons, up by 0.4 percent. The total output of cotton was 5.49 million tons, up by 2.7 percent. 

The total output of pork, beef, mutton and poultry was 84.31 million tons, up by 0.8 percent over last year, among which the total output of pork was 53.4 million tons, up by 0.8 percent; the beef 7.26 million tons, up by 1.3 percent; the mutton 4.68 million tons, up by 1.8 percent; the poultry 18.97 million tons, up by 0.5 percent. There were 433.25 million live pigs, a year-on-year decrease of 0.4 percent, while 688.61 million pigs were slaughtered, a year-on-year increase of 0.5 percent.

2. Industrial production grew faster with rising profit for enterprises.

The real growth of the total value added of industrial enterprises above the designated size in 2017 was 6.6 percent, 0.6 percentage point faster than last year. 

An analysis by types of ownership showed that the value added of the state holding enterprises was up by 6.5 percent; that of the collective enterprises, up by 0.6 percent; share-holding enterprises, up by 6.6 percent; and enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan, up by 6.9 percent. 

In terms of sectors, the value added of the mining industry dropped by 1.5 percent, manufacturing increased by 7.2 percent, and the production and supply of electricity, thermal power, gas and water increased by 8.1 percent. The value added of the high-tech industry and equipment manufacturing increased by 13.4 percent and 11.3 percent year-on-year, 6.8 percentage points and 4.7 percentage points faster than that of the industries above the designated size. 

In 2017, the sales-output ratio of the industrial enterprises above the designated size reached 98.1 percent. The export delivery value of these enterprises reached 12.323 trillion yuan, up by 10.7 percent over last year. In December, the total value added of the industrial enterprises above the designated size was up by 6.2 percent year-on-year or up by 0.52 percent month-on-month.

From January to November, the profits made by industrial enterprises above the designated size stood at 6.875 trillion yuan, up by 21.9 percent year-on-year, 12.5 percentage points faster than the same period last year. The profit rate of the principal activities of the industrial enterprises above the designated size was 6.36 percent, up by 0.54 percentage point compared with the same period last year.

3. The service sector maintained fast growth, and business activity indexes maintained within the range of expansion.

In 2017, the Index of Services Production increased by 8.2 percent over last year, 0.1 percentage point faster than last year. In December, the Index of Services Production increased by 7.9 percent year-on-year, 0.1 percentage point faster than last month. 

From January to November, the business revenue of service enterprises above the designated size increased by 13.9 percent year-on-year, 2.5 percentage points faster than the same period last year; the operating profit of service enterprises above the designated size increased by 30.4 percent, 28.2 percentage points faster; the business revenue of strategic emerging services, producer services and science and technology services increased by 18.0 percent, 15.0 percent and 15.1 percent year-on-year respectively.

In December, the Business Activity Index for services was 53.4 percent. Specifically, the Business Activity Index kept within the expansion range of 57.0 percent and above in sectors like postal services, telecommunication, broadcasting, television and satellite transmission services, internet, software and information technology services, banking and insurance. 

From the perspective of market demand, the New Order Index for the service industry was 50.9 percent, remaining within the expansion range for eight months in a row. From the perspective of market expectations, the Business Activities Expectation Index was 60.3 percent, remaining within the expansion range for seven months in a row.

4. The investment structure continued to improve, and the floor space of commercial buildings for sale decreased.

In 2017, the investment in fixed assets (hereafter excluding rural households) was 63.1684 trillion yuan, growing by 7.2 percent over last year, 0.9 percentage point slower than last year. 

Specifically, the investment by the state holding enterprises reached 23.2887 trillion yuan, a rise of 10.1 percent; private investment reached 38.1510 trillion yuan, up by 6.0 percent, 2.8 percentage points faster than last year, accounting for 60.4 percent of the total investment. 

The investment in the primary industry was 2.0892 trillion yuan, up by 11.8 percent; the secondary industry 23.5751 trillion yuan, up by 3.2 percent, among which the investment in manufacturing was 19.3616 trillion yuan, an increase of 4.8 percent; and the tertiary industry 37.5040 trillion yuan, an increase of 9.5 percent. The investment in infrastructure was 14.0005 trillion yuan, up by 19.0 percent, 1.6 percentage points faster than last year. The investment in the high-tech industry and equipment manufacturing went up by 17.0 percent and 8.6 percent year-on-year, 2.8 percentage points and 4.2 percentage points faster; the investment in energy-intensive manufacturing decreased by 1.8 percent compared with last year. 

The funds in place for investment in fixed assets in 2017 were 62.9815 trillion yuan, up by 4.8 percent compared with last year. The planned total investment in newly-started projects was 51.9093 trillion yuan, up by 6.2 percent. The year-on-year growth of investment in fixed assets from January to December was the same as that from January to November. In December, the investment in fixed assets grew by 0.53 percent month-on-month.

The total investment in real estate development in 2017 was 10.9799 trillion yuan, an increase of 7.0 percent, 0.1 percentage point faster than last year, among which the investment in residential buildings went up by 9.4 percent. New housing construction soared 7.0 percent in terms of floor space, which totaled 1.78654 billion square meters. Specifically, new housing construction soared 10.5 percent in terms of the floor space of residential buildings. 

The floor space of commercial buildings sold was 1.69408 trillion square meters, up by 7.7 percent. Specifically, the floor space of residential buildings sold was up by 5.3 percent. The total sales of commercial buildings were 13.3701 trillion yuan, up by 13.7 percent, among which the sales of residential buildings were up by 11.3 percent. 

The land space purchased for real estate development was 255.08 million square meters, up by 15.8 percent. By the end of December, the floor space of commercial buildings for sale was 589.23 million square meters, down by 15.3 percent over the end of the previous year. The funds in place for real estate development enterprises reached 15.6053 trillion yuan, up by 8.2 percent.

5. Market sales witnessed steady and comparatively fast growth, and consumption upgrade showed remarkable momentum.

In 2017, the total retail sales of consumer goods reached 36.6262 trillion yuan, up by 10.2 percent, 0.2 percentage point slower than last year. Specifically, the retail sales of consumer goods by enterprises above the designated size stood at 16.0613 trillion yuan, up by 8.1 percent. 

Analyzed by different areas, the retail sales in urban areas reached 31.4290 trillion yuan, up by 10.0 percent; the retail sales in rural areas stood at 5.1972 trillion yuan, up by 11.8 percent. 

Grouped by consumption patterns, the income of the catering industry was 3.9644 trillion yuan, up by 10.7 percent; the retail sales of goods were 32.6618 trillion yuan, up by 10.2 percent. In particular, the retail sales of the enterprises above the designated size reached 15.0861 trillion yuan, up by 8.2 percent. 

The sales of upgraded consumer goods witnessed fast growth. Specifically, the sales of telecommunication equipment, sports and recreational articles, and cosmetics increased by 11.7 percent, 15.6 percent and 13.5 percent respectively. 

In December, the growth of total retail sales of consumer goods was 9.4 percent year-on-year, or 0.7 percent month-on-month.

In 2017, online retail sales reached 7.1751 trillion yuan, an increase of 32.2 percent compared with last year, 6.0 percentage points faster than last year. Specifically, the retail sales of physical goods was 5.4806 trillion yuan, up by 28.0 percent, accounting for 15.0 percent of the total retail sales of consumer goods, or 2.4 percentage points higher than last year. The online retail sales of non-physical goods were 1.6945 trillion yuan, up by 48.1 percent.

6. Import and export further increased, and the trade structure continued to improve.

The total value of imports and exports in 2017 was 27.7921 trillion yuan, up by 14.2 percent over last year, putting an end to the continuous decrease in the past two years. The total value of exports was 15.3318 trillion yuan, up by 10.8 percent; the total value of imports was 12.4603 trillion yuan, up by 18.7 percent. The trade balance was 2.8716 trillion yuan in surplus. 

The value of general trade increased by 16.8 percent, accounting for 56.4 percent of the total value of imports and exports, 1.3 percentage points higher than last year. The export of electrical and mechanical products increased by 12.1 percent, accounting for 58.4 percent of the total value of imports and exports, 0.7 percentage point higher than last year. 

In December, the total value of imports and exports was 2.7065 trillion yuan, up by 4.5 percent year-on-year. Of this total, the value of exports was 1.5342 trillion yuan, up by 7.4 percent; and the value of imports was 1.1722 trillion yuan, up by 0.9 percent.

7. Consumer prices rose mildly and the PPI shifted from a decrease to an increase.

In 2017, consumer prices went up by 1.6 percent year-on-year, 0.4 percentage point slower than the previous year. Specifically, the price went up by 1.7 percent in urban areas and up by 1.3 percent in rural areas. Grouped by commodity categories, prices for food, tobacco and liquor went down by 0.4 percent; clothing up by 1.3 percent; residences up by 2.6 percent; household facilities, articles and services up by 1.1 percent; transportation and communications up by 1.1 percent; education, culture and recreation up by 2.4 percent; health care and medical services up by 6.0 percent; and miscellaneous goods and services up by 2.4 percent. In terms of food, tobacco and liquor prices, grain rose by 1.5 percent, pork fell by 8.8 percent and fresh vegetables fell by 8.1 percent. In December, consumer prices went up by 1.8 percent year-on-year, or up by 0.3 percent month-on-month. In 2017, the PPI went up by 6.3 percent compared with the previous year, putting an end to the five-year decrease since 2012; the year-on-year growth in December was 4.9 percent and the month-on-month growth was 0.8 percent. In 2017, the purchasing prices for industrial producers were up by 8.1 percent over the previous year and in December, it was up by 5.9 percent year-on-year and up by 0.8 percent month-on-month. 

8. The growth of resident income accelerated and the income of rural residents grew faster than that of urban ones. 

In 2017, the nationwide per capita disposable income of residents was 25,974 yuan, a nominal growth of 9 percent over the previous year, or a real increase of 7.3 percent after deducting price factors, 1 percentage point faster than the previous year. In terms of permanent residence, the per capita disposable income of urban households was 36,396 yuan, a real growth of 6.5 percent after deducting price factors. The per capita disposable income of rural households was 13,432 yuan, up by 7.3 percent in real terms after deducting price factors. The per capita income of urban households was 2.71 times that of the rural households, 0.01 less than the previous year. The median of the nationwide per capita disposable income was 22,408 yuan, a nominal increase of 7.3 percent. Taking the per capita disposable income of nationwide households by income quintiles, that of the low-income group reached 5,958 yuan, the lower-middle-income group 13,843 yuan, the middle-income group 22,495 yuan, the upper-middle-income group 34,547 yuan, and the high-income group 64,934 yuan. In 2017, the nationwide per capita consumption expenditure was 18,322 yuan, a nominal increase of 7.1 percent, or a real increase of 5.4 percent after deducting price factors. The number of rural migrant workers in 2017 totaled 286.52 million, which was 4.81 million more than the previous year, up by 1.7 percent. Specifically, the number of migrant workers working in the places where they hold household registration was 114.67 million and the number of migrant workers working in the places where they don't hold household registration was 171.85 million, up by 2 and 1.5 percent respectively. The average monthly income of migrant workers was 3,485 yuan, up by 6.4 percent over the previous year.

9. The supply-side structural reform was further pushed forward and the transformation and upgrading made new achievements.

The efforts of cutting overcapacity, reducing inventory, deleveraging, lowering costs and strengthening weak areas were enhanced firmly. The industries of steel and coal have successfully fulfilled the annual task of cutting overcapacity. The national industrial capacity utilization rate reached 77 percent, the highest over the past five years. The inventories of commercial buildings continued to decrease, and at the end of December, the floor space of commercial buildings for sale was 106.16 million square meters less than that at the end of 2016. The leverage ratio of industrial enterprises continued to decrease. At the end of November, the asset-liability ratio of industrial enterprises above the designated size was 55.8 percent, 0.5 percentage points lower than the same period of the previous year. The cost of enterprises continued to decrease. For the first eleven months, the cost for per-hundred-yuan turnover of principal activities of the industrial enterprises above the designated size was 85.26 yuan, 0.28 yuan less compared with the same period of the previous year. Investment in weak areas grew rapidly. In 2017, investment in ecological protection and treatment of environmental pollution, management of water conservancy and agriculture went up by 23.9 percent, 16.4 percent and 16.4 percent respectively over the previous year, or 16.7, 9.2 and 9.2 percentage points faster than the total investment. 

Innovation-driven development continued to gain momentum and new driving forces grew rapidly. In 2017, the number of newly registered enterprises nationwide was 6.074 million, up by 9.9 percent over the previous year, an average of 16.6 thousand each day. A number of major achievements were scored in science and technology, such as aerospace, artificial intelligence, deep sea exploration and biological medicine. New industries and products were booming. The value added of industrial strategic emerging industries grew by 11 percent compared with the previous year, 4.4 percentage points faster than the industries above the designated size; the production of industrial robots grew by 68.1 percent compared with the previous year, and that of new energy vehicles by 51.1 percent. The economic structure continued to be optimized. In 2017, the contribution of the value added of the tertiary industry to GDP accounted for 58.8 percent, 1.3 percentage points higher than the previous year. Consumption became the major driving force for economic growth. The contribution of the final consumption expenditure to GDP accounted for 58.8 percent, 26.7 percentage points higher than the gross capital formation. Green development was solidly promoted. The energy consumption per 10,000 yuan worth of GDP went down by 3.7 percent over the previous year. 

10. The population increased steadily with a continuous increase of the urbanization rate 

By the end of 2017, the total population of the Chinese mainland was 1.39008 billion (including the population of 31 provinces, autonomous regions and municipalities, and servicemen in the PLA; but not including residents in Hong Kong SAR, Macao SAR and Taiwan and overseas Chinese), an increase of 7.37 million over that at the end of 2016. In 2017, the number of births was 17.23 million and the birth rate was 12.43 in a thousand; the number of deaths was 9.86 million with a death rate of 7.11 in a thousand; the natural growth rate was 5.32 in a thousand. In terms of gender, the male population was 711.37 million, and female population was 678.71 million; the sex ratio of the total population was 104.81 (the female is 100). The population at the working age of 16-59 was 901.99 million, accounting for 64.9 percent of the total population; the population aged 60 and over was 240.90 million, which was 17.3 percent of the total population; the population aged 65 and over was 158.31 million, accounting for 11.4 percent of the total population. In terms of urban-rural structure, the permanent residents in urban areas was 813.47 million, an increase of 20.49 million over the end of the previous year; and the usual residents in rural areas was 576.61 million, a decrease of 13.12 million. The proportion of the urban population to the total population (urbanization rate) was 58.52 percent, 1.17 percentage points higher than that at the end of 2016. The population who reside in areas other than their household registration and have been away from there for over 6 months reached 291 million, which was 0.98 million less than the previous year. Specifically, the floating population was 244 million, or 0.82 million less than that at the end of 2016. At the end of 2017, the total number of employed persons was 776.40 million and the number of urban employed persons was 424.62 million.

Generally speaking, in 2017 the national economy maintained the momentum of stable and sound development and exceeded expectations with firm steps taken to secure a decisive victory in building a moderately prosperous society in all respects. We should also be aware that there are still difficulties and challenges confronting the economy, and the improvement of quality and efficiency remains a daunting task. At the next stage, we should rally closer around the CPC Central Committee with Comrade Xi Jinping at its core, take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline, deeply implement the spirit of the 19th National Congress of the Communist Party of China and the Central Economic Work Conference, adhere to the general working guideline of making progress while maintaining stability, stick to the new development philosophy and grasp the evolution of the principal contradiction facing Chinese society. We should comply with the requirements for high quality development, promote balanced economic, political, cultural, social and ecological progress, coordinate the implementation of the four-pronged comprehensive strategy, deepen the supply-side structural reform, coordinate the efforts in stabilizing growth, stimulating reform, adjusting the structure, benefiting people’s livelihood and fending off risks, take solid steps to forestall and defuse major risks, carry out targeted poverty alleviation and prevent and control pollution, and promote sustained and sound development of the economy and society.  

Thank you.

Hu Kaihong:

Now, the floor is open for questions. Please identify yourself before asking your question.

China Central Television: 

China's economy has registered a stable performance and moved in a positive direction. In which aspect is this trend reflected? How do you see the overall economic performance in 2017?

Ning Jizhe:

The economy has registered a stable performance and moved in a positive direction, which is better than expected. This can be seen in the following four aspects.

First, the economy performed within an appropriate range. Four major macroeconomic indicators remained stable with a good momentum and surpassed expectations. China's GDP in 2017 grew 6.9 percent year-on-year in real terms. More than 13 million new urban jobs were created. The National Bureau of Statistics (NBS) will officially release the surveyed urban unemployment rate later this year. By the end of December, the surveyed urban unemployment rate fell below 5 percent to 4.98 percent. China's CPI rose 1.6 percent year-on-year, also beating the expectation. By the end of 2017, China's foreign exchange reserve approached US$3.1400 trillion. 

Second, major progress was achieved in supply-side structural reform, with the five priority tasks accomplished. We have met the targets of cutting overcapacity set in the 2017 government report, namely reducing steel production capacity by around 50 million metric tons, shutting down at least 150 million metric tons of coal production facilities, and eliminating no less than 50 million kilowatts of coal-fired power generation capacity. 

In terms of deleveraging, at the end of November 2017, the debt-to-asset ratio of nationwide industrial enterprises above the designated size decreased 0.5 percentage point year-on-year. 

In terms of reducing inventory, at the end of 2017, the floor space of commercial buildings for sale was 1.1 trillion square meters less than that at the end of 2016, and 1.3 trillion square meters less than that at the end of 2015. Notable progress was also made in reducing grain inventory. 

In terms of lowering costs, taxes and fees were reduced by an additional 1 trillion yuan in 2017, the same amount as that in 2016. According to our statistics, in the first 11 months of 2017, industrial enterprises above the designated size reduced their costs by 0.28 yuan per 100 yuan of income from their main business operations. 

In terms of strengthening weak areas, investment in agriculture and water conservancy, as well as in ecological protection and pollution treatment, went up by 16.4 percent and 23.9 percent.

Third, efforts were accelerated to replace old growth drivers with new ones. New technologies, industries, forms of business, models, products and growth drivers flourished in 2017. 

New technologies -- a number of significant scientific and technological advances were achieved, including C919 large jetliner, Fuxing bullet train, quantum communications, and deep-water exploration. 

New products -- the production of robots and new energy vehicles, which are in considerable demand, grew by more than 50 percent. 

New industries -- the value added of strategic emerging industries, high-tech industries and equipment manufacturing industry all rose by more than 10 percent. 

New forms of business -- the online retail sales of physical goods went up by 28 percent; the online retail sales of non-physical goods grew even faster; and the growth of express delivery services registered at nearly 30 percent.

New models and new growth drivers -- the sharing economy, digital economy and platform economy have been developing rapidly as new growth drivers. The campaign of entrepreneurship and innovation, as well as the reform to streamline administration, delegate powers and improve regulation and services, have enhanced the motivation of enterprises and other market entities. In 2017, an average of 16,600 enterprises were registered nationwide each day, strongly bolstering employment and innovation.

Fourth, the quality and efficiency of economic growth were improved, as evidenced by the following facts. 

From January to November, the profits made by industrial enterprises above the designated size went up by 21.9 percent year-on-year, and the corporate profit of service enterprises above the designated size increased by 30.4 percent. The growth showed a recovery from the previous year. It should also be attributed to enhanced performance of these enterprises.

Fiscal revenue increased by 8 percent, faster than the goal set at early 2017. 

The quality of economic growth at the micro level, such as the quality of products, services and engineering projects, has been improving.

The quality of economic growth is not only measured by how many jobs and how much income it has created for the people, but also by how the environment has been protected. With the concerted efforts of all parties, PM2.5 density in 338 prefecture-level-and-above cities dropped, and that in Beijing decreased more significantly. In 2017, energy consumption per unit of GDP, an indicator of energy conservation and emission reductions, fell by 3.7 percent, above the target of 3.4 percent. Therefore, the quality and efficiency of economic growth have been improved.

Fifth, with the rapid growth of the Chinese economy, people's livelihoods continued to improve. China's per capita disposable income increased by 7.3 percent in real terms in 2017, exceeding the growth of per capita GDP. There was a very important change in the consumption structure, that is, the Engel coefficient dropped from 30.1 percent in 2016 to 29.3 percent in 2017, reflecting improvements in household consumption. The country funded the rebuilding of 6 million housing units in rundown urban areas, and nearly half of the resettled families received monetary housing compensation rather than housing.

In tourism, outbound visits by the Chinese nationals reached 129 million. In culture, China's culture and related industries grew by 15 percent in terms of business income, with box-office values topping 5 million yuan. In sports, the Fitness-for-All programs covered 50 percent of the total population, with marathon running becoming a popular sports event throughout the country. In education, more than 7.95 million people graduated from college in the country in 2017, and more than 20 percent of the college students all over the world studied in China. As for healthcare, China had the world's largest medical insurance network.

Compared to the previous years, another very important characteristic was that China witnessed an improved economic structure in 2017. In terms of industrial structure, China has moved from an old model of an industry-driven economy to an industry- and service-driven one. In 2017, the value added created by the service sector accounted for 51.6 percent of the country's GDP, contributing 58.8 percent to its economic growth. Hence, the service sector has become the main driving force of economic growth together with the industrial sector, making joint efforts in supporting the development of China's economy.

Sixth, from the perspective of demand structure, China has moved from its old model of an investment-driven economy to an investment- and consumption-driven one. In 2017, the final consumption expenditure contributed 58.8 percent to its economic growth, 26.7 percentage points higher than that of gross capital formation. Hence, consumption and investment have been jointly supporting China's economic development, recording a major change in 2017.

Last year also witnessed another noticeable change, that is, the country's economy has moved from its old model of export-driven growth to an export- and import-driven one. In 2017, China's exports grew by 10.8 percent, and imports by nearly 20 percent. China's development has not only benefited the Chinese people, but is also making greater contributions to the world's economic growth. According to calculations, China's contribution to world economic growth is around 30 percent. In 2017, China's economic aggregate reached 82.7 trillion yuan (US$12 trillion), with an economic increase of over 8 trillion yuan (US$1.2 trillion) in a year, equivalent to the economic aggregate of a country ranking 14th in the world's largest economies in 2016.

Bloomberg:

There were reports the Tianjin Binhai New Area had some inaccuracies in the submission of local GDP data. In addition, Inner Mongolia also provided inaccurate figures in its industry report. I would like to ask if there are any other similar incidents as this. How will China punish these local governments for not accurately reporting economic data? On the issue of local debt, what measures does the Chinese government plan to take? Thank you.

Ning Jizhe:

This issue is not only one of media concern, but also a matter of great concern to the National Bureau of Statistics. In recent years, various regions and departments have done a great deal of work in implementing the "Instructions on Deepening the Reform of Statistical Management System and Improving the Authenticity of Statistical Data" passed by the Leading Group for Deepening Overall Reform of the Central Committee of the CPC and the "Regulations for the Enforcement of Statistical Law" issued by the State Council, with emphasis on improving the quality of statistical data. I should say, the quality of Chinese statistics in general, and that of local statistics, are constantly improving. 

Of course, the specific situations you mentioned are a different issue, which have been reported by the media. China's statistical data and statistical accounting system will not be affected by the existence of some problems in data credibility in a handful of places, or in some enterprises and some institutions. 

During the 1990s, China's accounting system was transformed from the material product system (MPS) to the national account system (NAS) and accounting was done at different levels. In the process of accounting for national data by the National Bureau of Statistics, the industrial survey adopts the direct network reporting system, agricultural surveys use the sample survey, and the service industry surveys have been increasingly using e-government and e-commerce data in recent years. Meanwhile, local governments also account data according to the measures adopted by the national statistical system. 

The addition of local data exceeds the national total, which is the result of the accounting at different levels. However, after years of hard work this gap has narrowed, although there is still a gap. For example, the total local GDP in 2016 was 3.6 trillion yuan higher than the national figure. The Central Committee of the CPC and the State Council have clear minds about the important direction for the accounting system reform: to implement unified accounting of regional GDP, and they have already determined a timetable and the tasks, according to which unified accounting will be implemented by 2019. Therefore, we must redouble our efforts to complete the task of statistical accounting reform on schedule. We think the gap has narrowed in the past one or two years. What you mentioned involve local data in some places, which doesn't affect the credibility of national statistics.

On the other hand, statistics in China are conducted in accordance with laws and regulations. For local governments, enterprises and institutions that are alleged to be providing inaccurate figures, we will find out, verify and solve the problems according to laws and regulations. This also includes revision and publication of data. At the same time, for a handful of local governments, enterprises and institutions that commit fraud and other violations of statistical laws and regulations, no matter whether they drew up false statistics, or concealed data, or refused to report required data, they all must be dealt with according to laws and regulations. You mentioned some specific circumstances, and we are verifying them. The final revision and publication of the data must be conducted in accordance with the laws and regulations related to statistics. Some of the data may relate to finance, such as the local debt issue you just mentioned, and I'd suggest that you seek answers from the Ministry of Finance. Thank you.

Phoenix TV:

I would like to ask a question about the economic situation in 2018. We have noticed that some people think this year may be the beginning of a new cycle for China's economy. Others think it is a crucial period for China's economic restructuring and the economy may face some downward pressure. What are your thoughts on the overall economic situation for 2018?

Ning Jizhe:

This issue has caused heated discussion among Chinese economists in the second half of last year. It should be said that China's economy has maintained the momentum of stable and sound development. China's economy has undergone phased development, structural adjustments and cyclical changes. Therefore, we must make comprehensive judgments both in analyzing the economic situation in the past and in studying the economic situation for 2018. 

In terms of phased development, China's economy has shifted from a period of rapid growth to a period of high-quality development. The entire national economy is very large, so is the total economic output in various regions. And the economic output of several provinces and regions is now comparable with that of G20 countries. Take Guangdong and Jiangsu for example, the total economic output of each province exceeds 8 trillion yuan. We should comply with the requirements for high quality development. In order to push the economy toward high-quality development, the Central Government has also made explicit the promotion of high-quality development as a fundamental requirement in 2018, formulated a series of policies and measures, and specified this year's key tasks.

Let's talk about structural adjustments. In the past few years, historic changes have taken place in China's economic structure. This is true for both the industrial structure, the demand structure and the factors structure. The supply-side structural reforms are also fueling these changes. This year, all localities and departments should further deepen the supply-side structural reforms, adhere to efforts of cutting overcapacity, reducing inventory, deleveraging, lowering costs and strengthening weak areas. In the meantime, we must eliminate ineffective supply, increase effective supply, and reduce production and operation costs. These structural adjustments will continue to exert a positive influence.

Cyclical changes also exist to some extent. The overall situation of the world economy is positive and the three major economies are all growing. Although many uncertainties and instabilities still exist, as long as we seize the opportunity and overcome the challenges, the domestic economy will continue to maintain the momentum of stable and sound development while highly integrated with the world economy. At the same time, there are many favorable opportunities for development in our country. Therefore, the cyclical factors should also be observed in the context of phased development and structural adjustments. This will help us to make better judgments on the economic situation in 2018.

At present, the fundamentals of China's economy are good. Structural adjustment, optimization and upgrading are being carried out at an accelerated pace. The phased changes brought by quality and efficiency improvements will become more obvious.

China National Radio:

Mr. Ning, we noticed the Central Economic Work Conference proposed to accelerate the establishment of an indexing and a statistical system to promote high-quality development. What detailed plans have the statistics authority made? Will such a statistical system contribute to the fourth national economic census and the statistics of the urban unemployment rate?

Ning Jizhe:

This is exactly the main topic for discussion at the National Statistical Work Conference held by the National Bureau of Statistics (NBS) last week. The NBS will promote six systems closely related to statistical work. These are the index, policy, standards, statistical performance, and performance assessment systems, designed to promote high-quality development under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era put forward at the 19th National Congress of the Communist Party of China (CPC) and on the instruction of the Central Economic Work Conference. In the coming years, we will fulfill the following tasks to promote high-quality development.

First, establish and improve an index system endorsed by new development philosophy. Since 2016, the NBS has been working to establish a system to assess the construction of an ecological civilization with the National Development and Reform Commission, the Ministry of Environmental Protection and the Organization Department of the CPC Central Committee under the requirements of the CPC Central Committee and the State Council. We launched an index system for green development, conducted studies and measurements, and released the results for 2016 last December. Apart from green development, we will also study and work out index systems for innovative, coordinated, open and shared development. We have required some regional statistical departments to take one step ahead in this regard, and we will also come up with a preliminary plan for a comprehensive index system endorsed by new development philosophy at the national level based on in-depth study of the realities. 

Second, establish an index system and a research and assessment method to enhance quality and efficiency and promote transformation and upgrading. The NBS has carried out some basic work in the past few years, and will improve the index system in order to pursue high-quality and highly-efficient development. The Central Economic Work Conference also touched upon total factor productivity, which is something to consider in establishing the system and method. 

Third, further improve the statistical monitoring system to collect data reflecting the progress of supply-side structural reform. After the start of the reform a few years ago, we have measured the achievements of the five priority tasks on a monthly, quarterly, semi-annual and annual basis with related indexes, and will further step up the display of the achievements in deepening reform. 

Fourth, provide more data on economic changes in national economic accounting. The Third Plenary Session of the 18th CPC National Congress put forward the requirements for reforming the three major accounting methods. One is the unified accounting of regional GDP; one is national and local balance sheets, which shows the liabilities of local governments as mentioned by the Bloomberg reporter; finally, the natural resources balance sheet. 

Last year, the Central Leading Group for Comprehensively Deepening Reforms and the executive meetings of the State Council both established clear requirements for the reform. Unified accounting of regional GDP will start officially with the fourth economic census in 2019. Despite a tight schedule, this move will help dispel doubts about any inconsistency between the data of China's regional accounting and those of national accounting. The institutional change will be conducive to regional and international comparisons. 

The State Council also specified that, in documents, to start working on 2015 and 2016 national balance sheets, and this is one of our urgent tasks this year. 

The natural resources balance sheet displays the inventory of natural resources as well as profits and losses in green development. The NBS has already conducted pilot programs on this work in eight prefectures, cities and counties, and a number of cities and counties have carried out their own trials in accordance with unified requirements. We will also further promote the pilot programs this year. 

Actually, this is also an international problem. I introduced China's practices at an international conference on statistical work last year, and received wide attention. This issue also relates to the world's efforts towards the 2030 Sustainable Development Goals. 

Thus, the reform is critical to the statistical system for high-quality development.

Fifth, we should improve the unified monitoring index system according to the requirements of securing a decisive victory in building a moderately prosperous society in all respects. The system must stand the test of time, and be acknowledged by the people. We are also working on the statistics and monitoring of the development of industries boon to boosting public happiness, and have established a preliminary monitoring system.

In addition, it is critical to implement the reform to streamline administration and delegate powers and improve regulation and services, so as to improve the business environment. The World Bank has already made a comparison on the assessment of different countries' business environment. According to the requirements of the State Council, the NBS should cooperate with the National Development and Reform Commission and the Ministry of Finance in monitoring, analyzing and evaluating the business environment. The index system should be compatible with international practices and be related to Chinese reality. The central task of the statistics department this year is to implement the basic requirements for new development philosophy and high-quality development, and promote the reform by seeking for progress in stability.

CCTV and CGTN:

The economic performance in 2017 was better than expected. And the economic growth owes much to the contribution of foreign trade - the greatest contribution comparing to those in the past few years. However, as we have noted, imports and exports may encounter severer challenges in 2018, so will that put the economy under greater stress this year? And, if the impact of trade weakens, will the consumption be strong enough to sustain economic development?

Ning Jizhe:

Last year, the contribution rate of net imports and exports in regard to both commodities and services reached 9.1 percent. Even so, domestic demand remained the most powerful engine promoting the economy, contributing 91 percent to the growth. Among internal demand, consumption accounted for 60 percent, while investment also played an important role.

The world economy is indeed facing both challenges and opportunities. The Economic Work Conference of the CPC Central Committee asked for making new ground in pursuing opening up on all fronts. According to the 19th CPC National Congress, China will expand foreign trade , not only in size, but also in terms of quality, efficiency and structural improvements. Last year, exports achieved double-digit growth, which, optimistically, involved structural improvements, such as a surging proportion of electromechanical exports and an increasingly important role for high-tech exports. Therefore, in order to sustain sound trade development, China should continue to improve its trade structure so it can give full play to advantageous sectors while doing business with the rest of the world based on its win-win and mutually-benefited framework. The opening-up policies should not be restricted to commodity trade; instead, it should also work for investments and services. Just now I talked about commodity trade. The service trade in general is still in deficit, but is making big strides. Offshore investments and the use of foreign investments are integral parts of international balance of payment. In a press conference a few days ago, the Ministry of Commerce gave us a panoramic view of openness in full details. With the concerted efforts between trade in commodities and services, the openness can definitely speed up reforms, boost development and drive the China's economy with a stronger engine. They will not only benefit the Chinese people, but also bring mutual benefit and win-win results to the entire world.

Market News International:

We have noticed the recent large appreciation of RMB. The Chinese government once said that the appreciation of RMB was a double-edged sword for the economy. Do you have a new explanation (for the recent appreciation)? As China's economy is transitioning towards relying more on domestic demand, is a stronger RMB an advantage or disadvantage for economic development?

Ning Jizhe:

The basic balance of international payments, while being a trade issue, is more of an issue concerning the balance of the macroeconomy. Last year, the Chinese economy delivered a steady and sound performance and beat expectations, and this can be reflected in part by the balance of international payments. Whether international payments are balanced is an important indicator of a country's macroeconomy. Last year, China's international payments were basically balanced, and this has helped guarantee and promote economic growth. When the international payments are balanced, the RMB's exchange rate remains stable and a stable RMB not only helps trade develop steadily but also helps the macroeconomy achieve steady and sound growth. Maintaining a balance of international payments is an important responsibility of the government departments in charge of the macroeconomy. Our statistical department, as a producer of comprehensive and fundamental data, will closely follow the changes in international payments. In fact, the national economy accounting involves five tables, and the GDP table is only one of them.  The other four are the input-output table, the flows-of-funds table, the balance sheet and the balance of international payments. While the People's Bank of China takes the lead in compiling the balance of international payments, our statistical departments will also pay close attention. I believe that by following the guiding principles of the Central Economic Work Conference and with the efforts of relevant government departments, China can maintain and further improve the balance of international payments in 2018. 

Reuters:

As China may ramp up efforts to deleverage, reduce risks and prevent and control pollution in 2018, will these actions exert influences on the macroeconomy? Last year, capital formation and net exports contributed 32.1% and 9.1% to economic growth respectively, is that right?

Ning Jizhe:

Yes. The contribution of the final consumption expenditure to GDP accounted for 58.8 percent. And gross capital formation contributed 32.1 percent. The net exports of goods and service contributed 9.1 percent. As the statistical department, we will make efforts to provide statistical service for major tasks, such as forestalling and defusing major risks, carrying out targeted poverty alleviation, and preventing and controlling pollution. As for the deleveraging you mentioned, the leverage ratio of the microeconomy has seen a continued improvement for two years. As for the macroeconomy, the ratio of M2 to GDP is stable with a slight decline. The year-on-year growth of GDP is 6.9 percent, a nominal rate of 11 percent if taking the deflator into consideration. The M2 in 2017 grew by 8.2 percent from the previous year. Of course, what we mentioned is only one of the various indicators to measure the leverage ratio of the macroeconomy. In the future, we will continue to thoroughly inspect the leverage ratio of the macroeconomy as well as the microeconomy.

As the statistical department, to support the poverty alleviation department in monitoring the poor population is one of our key tasks. Under the current standards made in 2010, the national population in poverty was reduced by 12.4 million in 2016. And the statistics of 2017, through the sampling survey, will be released by the end of this month. The number of people lifted out poverty is expected to be larger than in 2016.

Last year, China's GDP growth of 6.9 percent was realized under enhancing the prevention and control of pollution. Now we pursue green development, the coordinated development of economic growth and ecological progress. The prevention and control of pollution is in accordance with law, presenting a positive influence on the adjustment of the economic structure and development. The economy has stayed within the proper range, with marked improvement not only in economic growth, but also in the employment rate, income, environment as well as stable consumer prices. That's the original intention for developing the economy.

Hu Kaihong:

Today's press conference is over. Thank you, Mr. Ning and Mr. Xing.

Ning Jizhe:

Thanks for your support. We look forward to the continued cooperation between us in the coming year. Thanks!

Read in Chinese

Speaker:

Wang Chunying, spokeswoman of State Administration of Foreign Exchange

Chairperson:

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

Date:

Jan. 18, 2018

Wang Chunying (R), spokesperson of the State Administration of Foreign Exchange (SAFE), speaks at a press conference held by the State Council Information Office of China in Beijing, capital of China, Jan. 18, 2018. [Photo/Xinhua]

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Ms. Wang Chunying, spokeswoman of the State Administration of Foreign Exchange, to introduce China's foreign exchange receipts and payments in 2017. She will also answer some of your questions.

Now, I'll give the floor to Ms. Wang.

Wang Chunying:

Good morning. Welcome to this press conference. I'll first introduce China's foreign exchange receipts and payments in 2017, and then answer some of your questions.

In 2017, amid moderate recovery of the world economy and steady performance of the global financial market, China achieved stronger momentum in its economic growth, with further progress in supply-side structural reform, improvement in the quality of economic development, and no major fluctuations in the RMB exchange rate index. 

The State Administration of Foreign Exchange has paid equal emphasis on reform and risk prevention. We have worked hard to contribute to the country's reform and opening up efforts by improving cross-border trade and investment facilitation, promoting two-way openness of the financial market, and providing better services to the real economy. We have also strengthened our works in fending off risks in the cross-border financial flow, and cracking down on law-breaking activities involving foreign exchange, thus to safeguard the country's economic and financial safety. 

Generally speaking, improvements were seen in cross-border financial flows, and overall balance was achieved between demand and supply in the foreign exchange market. 

Last year, foreign currency bought and sold by Chinese banks totaled 11.0884 trillion yuan (US$1.6441 trillion) and 11.8532 trillion yuan (US$1.7557 trillion) respectively, creating a deficit of 764.8 billion yuan (US$111.6 billion). 

Foreign-related receipts and payments by banks on behalf of clients were worth 20.2081 trillion yuan (US$2.9969 trillion) and 21.0561 trillion yuan (US$3.1213 trillion) respectively, with a deficit of 848.0 billion yuan (US$124.5 billion).

China's foreign exchange receipts and payments presented the following characteristics in 2017:

First, the deficit of foreign exchange settlement and sales by banks and that of foreign-related receipts and payments declined noticeably, and some months even came up with a surplus. 

In 2017, in dollar terms, foreign exchange settlement by banks increased by 14 percent year-on-year, and foreign exchange sales by banks decreased by 1 percent year-on-year. The deficit of foreign exchange settlement and sales stood at US$111.6 billion, down 67 percent year-on-year, and significantly, there were a surplus of foreign exchange settlement and sales in September, October and December respectively. 

Foreign-related receipts by banks on behalf of clients increased by 7 percent year-on-year, and foreign-related payments by banks on behalf of clients increased by 1 percent. The deficit of foreign-related receipts and payments by banks on behalf of clients stood at US$124.5 billion, down 59 percent year-on-year.

Second, the balance between supply and demand in the foreign exchange market tended to be more stable. 

In terms of quarterly data, the deficits of foreign exchange settlement and sales by banks were US$40.9 billion and US$53.0 billion respectively in the first quarter and in the second quarter, and the figure declined to US$19 billion in the third quarter, and turned to a surplus of US$1.2 billion in the fourth quarter. 

It is necessary to explain that foreign exchange settlement and sales by banks are the main factors affecting the supply and demand of foreign exchange in China, but not the only one. If comprehensive consideration is given to factors such as spot transactions, forward transactions, and options, the supply and demand of foreign exchange in China has turned to a state of basic balance since February 2017.

Third, the demand from market entities to purchase foreign currencies cooled down, and the financing of foreign exchange grew slightly from a sound basis. 

The ratio between forex purchased by clients from banks and their overseas expenditures, a variable that gauges the demand of forex transactions, declined nine percentage points to 65 percent year on year. On a quarterly basis, the proportion was 68 percent, 67 percent, 63 percent and 62 percent respectively. These figures indicate the waning demand of enterprises in terms of forex financing and payback. 

Meanwhile, the surplus of forex loans in the domestic market increased US$300 million in accumulation, a contrast to the cumulative decrease of US$85.8 billion by 2016. The outstanding loans in cross-border forex financing activities, such as overseas refinancing and the usance letter of credit, conducted by domestic import enterprises, rose to US$28.4 billion.

Fourth, the settlement of forex incomes from market participants showed signs of growth, and individual demand for foreign currencies abated. 

In 2017, the ratio of forex settlement, a yardstick of market demand measured between foreign currencies sold by clients to banks and the forex incomes received by clients from overseas transactions, reached 63 percent, up three percentage points year on year. On a quarterly basis, the ratio was respectively 62 percent, 63 percent, 64 percent and 62 percent, showing the stable demand of market entities. 

Besides, in 2017, personal forex deposits in China dropped by US$700 million in accumulation, while in 2016, it increased US$36.3 billion in accumulation.

Wang Chunying:

Fifth, the deficit of forward foreign exchange purchases and sales of banks generally decreased. In 2017, the contracted amount of forward foreign exchange purchases increased by 111 percent year-on-year, and that of forward foreign exchange sales rose 12 percent, recording a deficit of US$26 billion. This was 69 percent less than the figure in 2016. It shows that, in 2017, the expectations in regard to the RMB exchange rate were generally more stable.

Sixth, the foreign exchange reserves continued to rise. By the end of last December, China's foreign exchange reserves was US$3.14 trillion, or US$129.4 billion more than the end of 2016. Notably, from February to December, the reserves kept increasing for 11 consecutive months. 

That is all I want to say in this briefing. Now, I'm glad to take your questions.

Xi Yanchun:

Thank you, Ms. Wang. Now the floor is open to you journalists. As usual, we kindly remind you to identify the media outlet you represent before asking your questions. 

CCTV:

I'm concerned with the issue of cross-border capital flow you just mentioned. I would like to hear your comment on the situation in 2017 and your prediction for the new year. 

Wang Chunying:

China's cross-border capital flow showed a trend towards achieving a basic balance in 2017. I believe you have all felt the changes long since. The data released also reflect some of the changes. Since you've raised this question, I'd like to share some of my perceptions with all of you. 

First, 2017 was a turning point for China's cross-border capital flow as the country saw a change from net capital outflow to a basic balance between inflow and outflow this year. Over the past three or four years, affected by both internal and external factors, China had experienced a change from long-standing net inflow to net outflow. The net outflow had continued for a time. However, new changes have taken place since 2017 began. First, China's forex reserves reversed the falls of 2015 (512.7 billion US dollars) and 2016 (319.8 billion US dollars) and rose by 129.4 billion US dollars in 2017. Second, China has achieved a basic balance of international payments. The current account surplus remains in a reasonable range and there was the change to a net capital inflow. According to the most recent statistics, China's current account surplus was equivalent to 1.3 percent of China's GDP in the first three quarters of 2017. The ratio was 2.7 and 1.8 percent respectively in 2015 and 2016. The fall in the ratio indicates that China's current account is more balanced and this should be seen as a contribution to the rebalancing of the global economy. As for non-reserve financial accounts, they registered a deficit of 434.5 billion and 417 billion U.S. dollars respectively in 2015 and 2016, and a surplus of 112.7 billion U.S. dollars in the first three quarters of 2017. This also reflects the change from net capital outflow to net inflow. Last, expectations for RMB's exchange rates and market entities' international transactions have become more stable. In a market where RMB can both appreciate and depreciate, both enterprises and individuals prefer to diversify their international forex transactions instead of making only one-way transactions. This has contributed to a balance in the supply and demand of forex. Currently, market entities are relying more on their actual needs to make decisions on cross-border earnings and payments as well as on forex purchases and sales. In 2017, the forex surplus from trade in goods and the forex capital settlement of foreign-invested enterprises both displayed an upward trend. Cross-border financings continue to grow at steadier rates. Outbound investment and individual forex purchases both fell in an orderly way.

Wang Chunying:

Second, the market environment both at home and abroad has become more stable, pushing the supply and demand of foreign exchange in our country to a basic balance. First of all, the domestic economy has been further consolidated with a steady course of improvement. In the first three quarters of 2017, China's GDP grew by 6.9 percent year-on-year, 0.2 percentage point higher than the growth rate in 2016. The economic structure was continuously optimized, and the economic efficiency and corporate profitability continued to improve. The official purchasing managers' index (PMI) in 2017 continued to be in an expansion range, with the monthly average reaching 51.6 percent. All of these are essential and fundamental factors for stabilizing cross-border capital flows in our country. And the reform and opening up has gradually deepened. A series of policies to further improve the RMB exchange rate formation mechanism and promote the growth of foreign investment were introduced. The bond market continued to expand and Bond Connect was launched. The A shares will be included in the MSCI index. Finally, the external environment is showing signs of stabilizing. World economic growth is showing indications of snapping a two-year downtrend. The International Monetary Fund estimates that the global economic growth in 2017 was 3.6 percent, which is 0.4 percentage point higher than the global growth in 2016. International political risk eased. "Black Swan" incidents decreased remarkably. Despite the interest rate rise and portfolio drawdown by the U.S. Federal Reserve, the overall U.S. dollar index fell by 9.9 percent in 2017, and the currencies of emerging economies generally appreciated against the U.S. dollar. Thanks to a more stable market environment both at home and abroad, we can strike a balance between the supply and demand of foreign exchange in our country.

Wang Chunying:

Third, China's cross-border capital flows will remain generally stable in 2018. From a domestic perspective, economic development has entered a new era when the internal foundations will become more stable.

On the one hand, a high-quality development model helps to strengthen long-term market confidence. This year is the first for implementing the spirit of the 19th CPC National Congress. China will adhere to supply-side structural reform as the main feature of its economic roadmap, and will comprehensively push forward various tasks such as ensuring steady growth, advancing reform, making structural adjustments, improving living standards, and guarding against risks, and promoting sustained and healthy economic and social development. All of these activities will reinforce the willingness of domestic and foreign investors to invest and operate in our country on a long-term basis. 

On the other hand, a fully-opened new pattern will help the equilibrium flows of cross-border capital. This year marks the 40th anniversary of the launch of China's reform and opening up. We will attract more long-term capital inflows by further expanding the scope and level of opening up, relaxing market access in an orderly manner, continuing to improve relevant laws and regulations, and strengthening intellectual property rights protection. At the same time, we will continue guiding and supporting outbound investments, in order to form a situation where capital inflows and outflows will be more convenient and balanced. 

From an external perspective, international economic and financial operations remain stable, and the external environment will generally continue to be favorable. The global economy will continue to recover. The International Monetary Fund's forecast for global economic growth is 3.7 percent, 0.1 percentage point higher than 2017. At the same time, the normalization of monetary policies in the major economies continues moving forward steadily, which will have a relatively modest impact on the international financial market. 

Therefore, under these conditions, China's cross-border capital flows in 2018 is expected to continue steady operation.

China News Service:

What do you think about the fluctuations in the balance of foreign exchange settlement and sales by banks in recent months? Will the trend continue?

Wang Chunying:

Thank you for your question. Recent months have indeed witnessed fluctuations in the balance of foreign exchange settlement and sales by banks, but the overall scale is not large. These fluctuations indicate the minor differences between the performance of the real economy and the financial sector in different months. But they do not change the balance of China's forex supply and demand.

On the one hand, from a statistical point of view, given China's enormous scale of foreign trade, it's normal that small fluctuations in the real economy will lead to surplus or deficit in foreign exchange when there tends to be a balance between forex supply and demand. Even in the past several years, when China faced pressure on forex inflows, there were also fluctuations.

On the other hand, banks will adjust their positions independently according to the balance of foreign exchange settlement and sales. Therefore, despite minor surpluses or deficits, there has been a balance between forex supply and demand in recent months.

When we talked to the media friends a while ago, a lot of friends were concerned about the question you mentioned. I would like to take this opportunity to communicate with you on the use of the data on cross-border capital flows in China. We are monitoring three types of data: forex settlement and sales, foreign-related receipts and payments by banks on behalf of clients, and international balance of payments. The first two are released monthly, and the latter is announced quarterly. Each set of data has its own specific meaning, and we should be careful when using and assessing them. 

When Chinese enterprises and individuals and other market players receive foreign exchange funds, they can choose their own accounts according to their needs, or sell them to banks. If they sell them to banks, it will count as a foreign currency exchange, and they will be included in the statistics of foreign exchange settlement and sale. Therefore, bank purchasing and selling is the main body of foreign exchange supply and demand in China, but not all. The factors that affect the supply and demand of foreign exchange include the increase and decrease of foreign exchange positions in banks, and the sale of some overseas institutions in the foreign exchange market between domestic banks.

Wang Chunying:

The banks' foreign-related receipts and payments on behalf of clients refer to the cross-border money collection and payment that enterprises and individuals make through banks. The data cover only the clients' cross-border payments and receipts rather than the banks' foreign assets and liabilities. The Balance of Payments is a record that summarizes all transactions made between our country's residents and non-residents according to the international standard, and also a comprehensive indicator to measure our country's foreign-related transactions and cross-border capital flows. Currently, the statement is drawn up and published as per the international standard, but in a quarterly frequency instead of monthly or higher. We are making efforts to further shorten the interval. These three sets of data have different focuses and complement each other, and so should be differentiated when being put to use. 

The data of foreign exchange reserves in the statement presents changes of foreign exchange reserves after ruling out changes of the exchange rate and the price of assets, which is the optimal indicator in general for the overall supply and demand in the foreign exchange market. The foreign exchange reserves of our country have been increasing since the second quarter of 2017 after a continuous decrease of nearly three years in the past, which indicates that China's foreign exchange market has basically realized the supply-demand balance. The banks' purchase and sale of foreign exchange as well as their foreign-related receipts and payments on behalf of clients also reflect the supply and demand of foreign exchange in different terms and perspectives. The slight surplus and deficit marked by fluctuations around the balance line do not affect the perceptions on the overall supply-demand balance of foreign exchange. 

CGTN:

How do you see the change of China's outbound investment in 2017? And what's the government's attitude toward China's outbound direct investment? What kind of policies will it take as the next step?

Wang Chunying:

Thanks for your questions. Last year, the overall growth of China's outbound direct investment (ODI) is slower than before, with an improved structure and steady use of foreign exchange. On the one hand, we believe that domestic companies' ODI has returned to rationality. According to the statistics, the ODI that China's non-financial business made in 2017 dropped by 29.4 percent to US$120.1 billion, equivalent to that of 2015, demonstrating that the growth in 2016 was irrational. And it registered positive growth in November and December. The statistics also showed that ODI capital used in foreign exchange purchasing decreased 12 percent from 2016.

Furthermore, the ODI structure has further improved. According to the Ministry of Commerce, the main sectors of China's ODI were rental and commercial services, retail and sales, manufacturing and information transmission, as well as software and IT services. The proportion of ODI in these sectors was 29.1 percent, 20.8 percent, 15.9 percent and 8.6 percent. No new investment projects were made in the real estate, sports and entertainment sectors. New investments in countries along the "Belt and Road" accounted for 12 percent of the total, rising 3.5 percentage points from 2016.

In conclusion, China's investments overseas slowed with steady growth last year, and the momentum will be maintained in 2018.

Wang Chunying:

The Chinese government has a clear management principle regarding the policies of direct outbound investment. In August 2017, the National Development and Reform Commission (NDRC), the Ministry of Commerce, the People's Bank of China and the Ministry of Foreign Affairs jointly issued a Notice on Further Guidance and Regulation of Outbound Investment, clarifying the categories of outbound investments which are encouraged, restricted and banned. Last December, the NDRC released the Management Methods of Enterprises' Outbound Investments, which will come into effect in March. The institutional framework for regularized management has taken shape.

The SAFE will act in accordance with the latest policies and requirements of the authorities in charge of outbound investment to guide enterprises' "going out" in a stable and orderly manner. We remain committed to encourage enterprises to participate in international economic competition and cooperation, and integrate themselves into the global industrial and value chain. We have insisted on the principle of market-oriented operation following the international convention in which enterprises serve as the main player and government as the guide. We have continued with the reform to streamline administration, delegate powers, enhance regulation where necessary and provide better services. 

In detail, we support capable domestic enterprises to conduct authentic and qualified outbound investments, and to participate in the "Belt and Road" construction and international industrial-capacity cooperation, thus, to promote the transformation and upgrading of the domestic economy and deepen the win-win cooperation between China and other countries. In addition, we remain committed to deepening reform while guarding against risks. We have kept a close eye on irrational outbound investments in some sectors and potential risks during the investment process, urged banks to strictly follow operational principles, and strengthened the examination of investment authenticity and its compliance with relevant regulations, so as to promote the sustainable and sound development of direct outbound investment and safeguard national economic and financial security. All in all, the SAFE has worked consistently with relevant policies. 

CNR: 

In 2018, the Fed will raise interest rates and shrink its balance sheet. The United States tax reform will also be implemented. How do you think these factors will affect China's cross-border flow of funds? And how will the State Administration of Foreign Exchange respond to it?

Wang Chunying:

We have also paid close attention to this issue. In 2017, the Federal Reserve raised interest rates three times and started downsizing its balance sheet. The Trump administration passed the tax reform act. Despite this, the situation of China's cross-border capital flows improved markedly. The supply and demand of the foreign exchange market has recently been more balanced. This shows that the development and changes in cross-border capital flows in China are actually the result of a combination of factors, both external and internal. 

The external factors have many aspects. Taken together, the current external environment for cross-border capital flows in China is relatively stable. The influence of external factors, with the normalization of the monetary policy of the US Federal Reserve, are gradually weakened. Or, we may say, the market has quickly adapted to the changes. The domestic economy has stabilized steadily. The overall stability of cross-border capital flows in China is expected to remain stable. Here I would like to share with you how we look at this issue.

First, factors such as a rate hike by the Federal Reserve and tax reform by the U.S. government have not magnified the external market volatility, and the prospect of a relatively stable external environment is expected to continue. Previously, the normalization of the Fed's currency policy had led to relatively faster appreciation of the U.S. dollar and outflow of international capital from emerging economies. However, the related influences are gradually weakened with more restrictive factors. In 2017, the Federal Reserve raised interest rates three times and started downsizing its balance sheet. In theory, this helps to increase the U.S. interest rate and the exchange rate. However, in fact, the U.S. dollar index fell by 9.9 percent in 2017. The dollar index rose slightly, supported by optimism over U.S. tax reform, but fell again recently. The short-term federal funds rate increased by 75 base points year-on-year, but the long-term interest rates did not change much. 

At the end of 2017, the yield on a U.S. 10 Year Treasury Note was basically the same as that at the end of 2016. This reflects the impact of many constraints. From the United States domestic situation, the inflation rate remained low. The Core Personal Consumption Expenditure Index (core- PCE), which is the preferred measure of the Fed, dropped from 1.9 percent in early 2017 to 1.5 percent at the end of the year. Also, judging from the long-run potential growth of the United States, Fed policymakers forecasted a rate of 1.8 percent, well below the rate during the economic boom. In addition, the U.S. government has said that it does not want the U.S. dollar to be too strong. All these factors will constrain the U.S. dollar exchange rate and interest rate increases. Judging from the external situation of the United States, we can see the economic recovery of other developed economies, especially the euro area, is relatively fast. Recently, the ECB raised its forecast for economic growth in 2018 and began to reduce the scale of its quantitative easing monetary policy. The improved political stability of Europe is also good news for the euro to gain strength while putting pressure on the dollar.

Second, the sound performance of the domestic economy played a fundamental role in ensuring steady cross-border capital flows, and I'm sure it will play a bigger role in this field in the future. 

Above all, China's economic growth is faster than many other countries'. Continuous improvement has been made in industry chains and infrastructure. The domestic labor force's skills can meet the demands of enterprises. As a result, Chinese enterprises can operate smoothly and make comparatively high profits. In the first 11 months of 2017, the profits made by industrial enterprises above the designated size rose 22 percent as compared with the same period of the previous year. 

Furthermore, individual income increased continuously, and consumer spending was further upgraded. This means the domestic market has great potential, and it's very important to investors. 

Also, China has clear overall objectives and flexible mechanisms. The financial market is running smoothly with sufficient foreign exchange reserves. We are thus capable of responding to risks. 

China is working hard to open up on all fronts. The business environment has been optimized. The domestic market is becoming more open. The market-based mechanism for setting the RMB exchange rate has been continuously improved. All these factors are a boon to stabilizing market expectations and attracting foreign investments. 

China also adopted many measures to reduce taxes and fees. Given the fact that the United States and European countries have strengthened supervision to ensure investment safety, I'm sure Chinese and overseas investors will make investments in a rational and cautious manner after considering all factors. 

Regarding how to respond to the problem you mentioned, we will keep a close eye on all exterior factors, follow all changes, and make sound analyses so as to find proper solutions. 

We will improve data collection and oversight of the cross-border capital flows, make a timely analysis, and make predictions of possible changes. We will continue to carry out reforms and fend off risks. We will improve trade and investment facilitation, promote capital account convertibility at a steady pace, and provide better services to the real economy, thus making a contribution to the new opening up campaign of the country. To safeguard the country's economic and financial safety, we will fend off risks in the cross-border capital flows, improve the macroprudential regulation system and micro-regulation system, and clamp down on law-breaking activities. 

Reuters:

Since last year, the RMB has appreciated rapidly against the US dollar. Will it influence exports and the economy? Last week, media reports said that China may slow down or stop purchasing U.S. government bonds. Statistics from the U.S. Department of the Treasury last November showed that China slightly cut its holdings in U.S. treasuries. What's your comment on this? 

Wang Chunying:

I would like to first answer your questions regarding U.S. government bonds. We also learned the information from the news report. The management of foreign exchange reserves in China always holds the principle of diversification and decentralization. One of our major tasks is to ensure that foreign capital is under security, maintain and increase its value. As for the specific type, such as the U.S. government bonds you mentioned, we believe the actual performance of these foreign exchange reserves is objectively decided by the market, professionally operated in accordance with the market requirements. Those who pay attention to the global market and China's foreign exchange reserves should notice that, no matter which foreign exchange is or who the market player is, the Chinese department in charge of operating foreign exchange reserves is a quite responsible investor. The measures they took not only stabilized the international financial market, but also ensured that China's foreign exchange reserves maintain and increase their value. And as you mentioned just now, China slightly cut back on its holdings of U.S. government bonds last November. Actually, the report named other investors besides China.

With regard to the RMB exchange rate, the recent growth of it resulted from the Chinese economy achieving sustained sound growth and the depreciation of the U.S. dollar. Currently, the Chinese economy sustains a steady and robust growth rate, a balanced supply and demand, providing a very strong impetus for economic growth. All of these will keep the RMB's stable position in the global monetary system. At the same time, there still are uncertainties brought by the recovery of the world economy and the normalization of the currency policies in major economies. 

The RMB exchange rate will more likely move in both directions in the future. As for its influence on exports and the economy, the statistics I just released, as well as the data published by the Customs and Ministry of Commerce earlier will give you the detailed introduction. We believe that, acting in accordance with the decisions and plans of the 19th CPC National Congress and the Central Economic Work Conference, China will continue to deepen the reform on the market-based mechanism for setting the RMB exchange rate, improving RMB exchange rate flexibility, in a bid to maintain its general stability at an adaptive and equilibrium level.

China Daily:

Did companies make any change to manage risks after the stronger fluctuations of the RMB exchange rate in 2017? Will the State Administration of Foreign Exchange work out any plan in 2018 to guide companies to manage risk? 

Wang Chunying:

I would really like to convey more information on risk management in exchange rate to the market players through the media. Since 2017, Chinese companies have further improved their risk management to adapt to market changes. In fact, the risk tolerance of the companies is directly related with their awareness and management of the risks. After the fluctuations, we are pleased to have seen that most companies no longer simply gamble on the appreciation or depreciation of the RMB exchange rate, and there are less irrational behaviors or responses out of panic. The State Administration of Foreign Exchange has also asked the banks in many ways and channels to inform the market players and clients of the risks, and to guide the companies to establish risk-neutral awareness and sound risk management.

Risk-neutral awareness really matters, but we still see many companies not putting due risk management in place due to the following two main reasons. First, inadequate understanding towards the risks. Some companies are still used to gambling on either appreciation or depreciation of RMB, and make subjective judgments rather than proper risk management. Second, insufficient understanding towards hedging. Hedging is actually an investment to reduce risk, just like spending a little money on insurance. Some companies are unwilling to pay the money, or regard hedging as a means of speculation and ignore its essential function of offsetting the risks of uncertainty. They lack the awareness of controlling risk exposures, and even pursue profits in the risks sometimes rather than taking prudent hedging measures. Some companies may find their judgments wrong when the foreign exchange market fluctuates, but a unified adjustment of the risk exposures may lead to unbalanced supply and demand of foreign exchange, aggravate the fluctuations of the RMB exchange rate and the interest rate, and contribute to panic and chaos in the market, eventually increasing systematic risks and harming their own business.

In the future, as the mechanism for promoting the liberalization of the RMB exchange rate improves, companies must enhance serious risk-neutral awareness to manage exchange rate risks. In 2018, the State Administration of Foreign Exchange will continue to motivate companies to improve their management of foreign exchange risks and create a better environment for the reform of the mechanism. Reform must take the market into consideration, and market resilience in face of risks is often related to risk awareness and risk management of the market. If companies do not change their fixed mindset, still gambling on appreciation or depreciation instead of taking hedging moves, they may not be able to adapt themselves to even normal fluctuations, and may take irrational actions out of panic. In turn it will hinder the reform. Therefore, the State Administration of Foreign Exchange will give more guidance to the market, and I also hope you can help us with it. Meanwhile, we will urge financial institutions to continue their instructions to clients on risks, help companies enhance risk-neutral awareness and improve the management of exchange rate risks. We will also push forward reform in the foreign exchange market, diversify products, attract more market players, expand the market, open up the foreign exchange market further, and improve the infrastructure of the foreign exchange market. Through these efforts, we will improve services and increase the attractiveness and global competitiveness of our foreign exchange market, and safeguard the market players from risks more effectively. 

Financial Times:

The problems involving onshore guarantee for offshore loans drew considerable attention last year. Do you think the problem is no longer troubling, or will it affect China’s forex policies?

Wang Chunying:

The onshore guarantee for offshore loans is a practice in capital management. After the reform of cross-border guarantees in 2014, it developed rapidly, playing a positive role in lowering costs, diversifying financing channels and improving policies and environments for domestic enterprises involved in overseas financing and investment. 

However, recently, we noticed that there were subtle changes and new problems in the practice. I’ll give you some examples. First, the contract fulfillment rate is rising. Since 2016, both the amount and contract fulfillment rate of onshore guarantee for offshore loans provided by domestic banks and other financial institutions have expanded. Second, some enterprises are taking advantage of the practice to escape market supervision. Since the second half of 2016, relevant policies have been improved, but we discovered that some domestic institutions use the practice to escape domestic market supervision. Last but not least, some domestic banks didn’t have a strong sense of compliance. They did not examine carefully the authenticity of the information they were given, the prospects for contractors being able to fulfill the agreements and the financial backup that enables debtors to pay back their loans. Some banks only checked the information in a formalistic way. We have demanded they correct these wrong practices during the course of our inspections. 

In view of those problems, we have reiterated the responsibilities of the banks in handling relevant business. For example, they are required to confirm the qualifications of concerning parties, find out how the fund will be used, check the background regarding the transactions, ensure the primary source of payment, and evaluate if the contract can be fulfilled. They are also required to intensify the check of collateral, and establish a regular risk evaluation system for contract fulfillment. 

Generally speaking, we have asked the banks to be more responsible when examining the businesses concerned. However, we are not changing our policies. On the contrary, we will continue to support the practice among banks and other market entities. Thank you.

Xi Yanchun:

Thank you, Ms. Wang. That's all for today's press conference. Thank you all.

Read in Chinese

Speaker:

Mr. Huang Songping, spokesperson of the General Administration of Customs

Chairperson:

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

Date:

Jan. 12, 2018

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Mr. Huang Songping, the spokesperson for China's General Administration of Customs, to introduce China's import and export performance in 2017. He will also answer some of your questions.

Now, I will give the floor to Mr. Huang.

Huang Songping: 

Ladies and gentlemen, good morning. Welcome to this press conference. I'm glad to meet you again. First, I will make a brief introduction of China's import and export performance in 2017, and then I will answer some of your questions.

Last year, amid the moderate growth of the global economy, China witnessed stable economic growth, with a continuous rise in imports and exports. According to the Customs' statistics, last year, the import and export of the trade of goods rebounded after declining for two years, with the total volume registered at 27.79 trillion yuan, growing by 14.2 percent from the previous year. Specifically, the volume of exports and imports was respectively registered at 15.33 trillion yuan and 12.46 trillion yuan, growing by 10.8 percent and 18.7 percent from the previous year. The trade surplus was 2.87 trillion yuan, down by 14.2 percent. 

Let me explain in details. 

Huang Songping:

First, the value of China's total imports and exports has increased quarter by quarter but at a slower rate compared to last year. China's imports reached 6.17 trillion yuan, 6.91 trillion yuan, 7.17 trillion yuan and 7.54 trillion yuan during the four quarters of last year respectively, up 21.3 percent, 17.2 percent, 11.9 percent and 8.6 percent respectively. 

Second, the volume of general foreign trade grew rapidly, reaching a higher proportion of the total. In 2017, the total volume of general trade jumped to 15.66 trillion yuan, up 16.8 percent, accounting for 56.4 percent of the total, 1.3 percentage points higher than 2016. Models and structures of trade have been optimized. 

Third, China's trade with its three largest trading partners also increased, and trade with countries along the Belt and Road Initiative saw rapid growth. In 2017, China's imports and exports with the European Union, the United States and ASEAN expanded 15.5 percent, 15.2 percent and 16.6 percent, together accounting for 41.8 percent of the total volume. Trade with Russia, Poland and Kazakhstan rose by 23.9 percent, 23.4 percent and 40.7 percent, respectively, all higher than the overall growth rate.

Fourth, the volume of imports and exports of Chinese private enterprises rose, taking a larger share of total foreign trade. In 2017, the volume of foreign trade of private enterprises hit 10.7 trillion yuan, up 15.3 percent, accounting for 38.5 percent of total foreign trade, 0.4 percentage point higher than 2016. Imports reached 7.13 trillion yuan, up 12.3 percent, taking up 46.5 percent of total imports, up 0.6 percentage point. Exports of private companies expanded 22 percent to 3.57 trillion yuan. 

Fifth, the growth rates of the foreign trade of China's central and western regions as well as the three provinces in northeast China are higher than the national average level. In 2017, the foreign trade of the 12 provincial regions in western China rose by 23.4 percent, 9.2 percentage points higher than the growth rate of the country; foreign trade of the six provinces in the central regions grew by 18.4 percent, 4.2 percentage points higher than the national rate; foreign trade of three provinces in northeast China grew by 15.6 percent, 1.4 percentage points higher than the national average level; while the foreign trade of the 10 provincial regions in eastern areas jumped 13 percent. Regional development has become more coordinated. 

Sixth, electro-mechanical products and traditional labor-intensive products remain the major export goods. In 2017, exports of electro-mechanical products hit 8.95 trillion yuan, up 12.1 percent, accounting for 58.4 percent of China's total volume of exports. Exports of vehicles went up by 27.2 percent, exports of computers grew by 16.6 percent, and exports of mobile phones increased 11.3 percent. During the same period, the total volume of exports of traditional labor-intensive products added up to 3.08 trillion yuan, up 6.9 percent, taking up 20.1 percent of the total export volume. 

Seventh, both the volume and prices of iron ore, crude oil and soybeans increased. In 2017, imports of iron ore reached 1.075 billion tons, up 5 percent; crude oil 420 million tons, up 10.1 percent; soybeans 95.54 million tons, up 13.9 percent; natural gas 68.57 million tons, up 26.9 percent; refined oil 29.64 million tons, up 6.4 percent. Also, China imported 4.69 million tons of copper, down 5.2 percent. During the same period, China's import prices rose by 9.4 percent. Average import prices of iron ore jumped 28.6 percent, crude oil 29.6 percent, soybeans 5 percent, natural gas 13.9 percent, refined oil 25.3 percent and copper 28 percent. 

Eighth, China Export Leading Indicator dropped to 41.1 in December last year, down 0.7 from the previous month, which indicates that China will face export pressure in the first quarter this year. According to an online survey, the indicator for export managers was 44.2 last December, down 0.6 from the previous month; indicators for new export orders and confidence of export managers dropped to 48.3 and 50 respectively, down 0.4 and 1.2 respectively, and an indicator for the general cost of exporting enterprises rebounded to 20.5, up 0.4.

Huang Songping:

Generally speaking, in 2017, the foreign trade in our country rebounded on a steady basis and its potential was realized gradually. With the moderate resurgence of the world economy and a stable economic growth in our country, China's foreign trade may obtain a good momentum this year. However, it will also face the uncertainties and unstable factors affecting global trade and the world economy, and have to respond to the challenges of improving foreign trade quality. 

In 2018, to seek high quality performance, the Customs will ensure all reforms are implemented in due course and all foreign trade grows in full swing. Now I would like to answer your questions.

Xi Yanchun:

Thank you, Mr. Huang. Now the floor is open to the journalists. Just like before,we kindly remind you to identify the media outlets you represent before asking questions. 

CCTV:

Mr. Huang, what's your assessment of the overall development of China's foreign trade in 2017? Last year, China's foreign trade registered a double-digit growth, while in the previous two years, foreign trade had seen a year-on-year decrease. Some think the growth (of last year) was only a periodic rebound - what's your opinion?

Huang Songping:

In 2017, the world economy had a moderate recovery, and the domestic economy saw a stable growth. Several factors, such as the promotion of the Belt and Road Initiative and foreign trade policy addressing stable growth, have ensured the double-digit recovery growth of China's foreign trade. The following are the detailed reasons I want to mention. 

First, the world economy had a moderate recovery and foreign demand increased. In 2017, the world economy's performance was better than expected and the world market had a larger demand. WTO statistics showed that the exports of commodities in 70 major economies in the world increased by more than nine percent in the first three quarters, which exemplified the obvious growth of world trade.

Second, the domestic economy registered a stable growth and laid a foundation for import growth. In 2017, China's economy retained a stable growth with the deepening of supply-side structural reform. Improving real economy has driven the increase of imports. Meanwhile, China issued a series of policies and measures to expand imports, including lowering the import tariffs of some consumer goods. We also improved the fiscal and financial policies for import expansion, encouraged imports of advanced technology equipment as well as key elements and parts, and enhanced measures to facilitate trade. They all had a positive impact on increasing imports.

Third, the year-on-year increase of commodity prices drove the rapid growth of imports. In 2017, rising commodity prices drove up China's import price index to 109.4, and the prices contributed 52.6 percent of the import growth. Rising prices of imported materials cast an influence on the export of finished products. The export price index of China in 2017 was 103.9, with prices contributing 37.3 percent of export growth.

Fourth, the Belt and Road Initiative has steadily advanced, and new markets have been explored effectively. In 2017, China's import and export with the countries along the Belt and Road routes increased by 17.8 percent, 3.6 percentage points higher than the growth of the national total. In the same period, China's import and export with Latin American countries increased by 22 percent, and that with African countries by 17.3 percent. A string of policies and measures promoting foreign trade growth has taken effect. We have deepened reform to streamline administration, delegate powers and improve regulation and services, thereby reducing the burden on enterprises. Therefore, the domestic business environment has been improved, enterprises have strengthened their innovation capability and the internal forces driving the development of foreign trade have been boosted. 

In addition, low base figures of foreign trade in the previous two years also contributed to the high growth in 2017. Thank you.

China Radio International (CRI):

Mr. Huang, in particular we would like to know more about the trade development between China and countries along the Belt and Road in 2017. In addition, what new approaches will the Chinese customs authorities take in pursuing opening up the process of customs clearance on all fronts? Thank you.

Huang Songping:

According to customs statistics, in 2017, China's import from and export to countries along the Belt and Road reached 7.37 trillion yuan, a year-on-year increase of 17.8 percent, 3.6 percentage points higher than China's overall foreign trade growth rate, and accounting for 26.5 percent of the total value of China's foreign trade. Exports totaled 4.3 trillion yuan, an increase of 12.1 percent, while imports were 3.07 trillion yuan, an increase of 26.8 percent. 

The Belt and Road Initiative conforms to the trend of the times and the desire of all countries to accelerate their development. Countries along the Belt and Road are pressing ahead with the common construction of the Belt and Road so as to share the benefits of“connectivity in five areas”, namely, connectivity in policy, transportation, trade, currency and the heart of the people. We believe our trade with the countries along the Belt and Road will continue to become a new highlight and an important new area of growth in China's foreign trade.

As for the next step, Chinese customs will improve capability to better serve China's opening up on all fronts as new ground has been broken. Specifically, we will comprehensively deepen our cooperative mechanisms for achieving compatibility in customs clearance procedures with the countries along the Belt and Road, and facilitate mutual recognition of Authorized Economic Operators (AEO) in these countries. We will continue to improve customs supervision and control services, simplify customs clearance processes, and markedly improve trade facilitation. We will continue to transform and upgrade foreign trade, create new drive mechanisms forforeign trade growth, and support the development of new business forms in foreign trade. We will firmly support the hosting of the International Import Expo starting from 2018 and the Global Cross-border E-Commerce Conference, take the initiative in participating in the formulation of international trade rules, and work hard to make contributions to the development of an open economy. Thank you.

China Review News from Hong Kong:

Can you please provide us the trade statistics between the Chinese mainland and Taiwan in 2017? Can you also give us your prediction on the trade outlook between the Chinese mainland and Taiwan in 2018? Thanks.

Huang Songping:

According to the figures from China's General Administration of Customs, the bilateral trade volume between the mainland and Taiwan in 2017 reached 1.35 trillion yuan (US$207.7 billion), a year-on-year increase of 14 percent, accounting for 4.9 percent of the total foreign trade volume of the mainland in 2017. Taiwan is now the mainland's seventh largest trading partner. Last year, exports to Taiwan from the mainland were 297.9 billion yuan (US$45.83 billion), up 12.2 percent; imports from Taiwan to the mainland were 1.05 trillion yuan (US$161.53 billion), up 14.5 percent. The trade deficit reached 753.4 billion yuan (US$115.9 billion), up 15.4 percent.

Peaceful and stable cross-Strait relations are key to their trade development. We do hope that the cross-Strait trade will continue to grow. I believe that the cross-Strait trade will grow healthily in 2018 if we can remove negative influences and strengthen cooperation. 

Inter Press Service News Agency:

This year, the overall foreign trade situation remains favorable for China. However, uncertain and unstable factors still exit in the international economy and foreign trade. Would you like to give us some examples about these factors? And how do you view the influence of fluctuations in the RMB and trade conflicts between China and the United States on the exports of China in the long run?

Huang Songping:

I would like to first answer your questions about the RMB exchange rate. We believe that imports and exports will be influenced by the exchange rate, but the impact of it is limited. Firstly, a change in the exchange rate is a double-edged sword. When there is a RMB devaluation, companies will benefit from exports, but the cost of imports rises at the same time. Secondly, within the global value chain which is characterized by cross-district industrial division and intra-industry trade, the exchange rate and its impact on imports and exports in one economy will quickly transfer to another economy, which will further ease the effects.

As the global economy recovers amid uncertainties in the normalization of monetary policy; to maintain the RMB exchange rate within a reasonable range will give confidence to companies and promote the stable development of foreign trade. Therefore, the government has actively expanded cross-border and investment RMB settlements in a bid to help companies to enhance their capacity to manage risks.

Uncertain and unstable factors have been growing amidst global complexities. Overall, there are many favorable opportunities for development as well as the main constraining factors in developing foreign trade. Firstly, the global economy, faced with a series of deep-seated and structural problems, is experiencing a weak recovery. Secondly, the global manufacturing industry is witnessing increasingly intense international competition.

On the one hand, thanks to their cheap labor and land, emerging countries are pushing forward medium and low-end manufacturing development, posing challenges to our traditionally strong product exports. On the other hand, many developed countries are restructuring their economy, re-industrializing and re-shoring their manufacturing sector. Thirdly, we meet at a time of rising trade protectionism. The number and value of Chinese products under trade remedy investigations has maintained at a fairly high level in recent years. These are the unstable and uncertain factors.

The United States has become the second biggest trade partner of China. According to the statistics, bilateral trade was worth 3.95 trillion yuan in 2017, up 15.2 percent year-on-year, accounting for 14.2 percent of total foreign trade. China's exports to the United States increased 14.5 percent to reach 2.91 trillion yuan while imports surged 17.3 percent to 1.01 trillion yuan. The trade surplus with the United States rose 13 percent to 1.87 trillion yuan. Last year, Sino-U.S. trade realized rapid growth. China and the United States., as two of the world's leading economies, are expected to deepen their economic and trade cooperation, to achieve mutual benefits and to forge ahead with building a prosperous global economy. Thank you.

China News Service:

Do you think China's foreign trade saw improved quality and efficiency while maintaining rapid growth in 2017? What are your expectations for its development in 2018?

Huang Songping: 

China's foreign trade achieved rapid growth in 2017, up 14.2 percent year-on-year with enhanced quality and efficiency.

First, the capacity for independent development has been enhanced. In 2017, the import and export of general trade with long industrial chains and high added value rose by 16.8 percent year-on-year, 2.6 percentage points higher than the nation's aggregate growth, with its share in the nation's total foreign trade up 1.3 percentage points. 

Second, China's trading partners were more diversified. In 2017, the country's trade with traditional markets, including Europe, the USA and Japan, jumped by 14.8 percent, and trade with emerging markets, namely Latin America and Africa, surged by 22 percent and 17.3 percent, respectively. 

Third, market entities performed actively. The import and export for all types of enterprises realized double-digit growth in 2017. The imports and exports of private enterprises rose by 15.3 percent, making the greatest contribution to the growth of China's foreign trade with a ratio of 41.2 percent. The internal forces driving foreign trade development were strengthened.

Fourth, there was a more balanced regional development in 2017. Imports and exports of the central and western regions in China rose by 21 percent year-on-year, 6.8 percentage points higher than the nation's aggregate growth, with its share in the nation's total foreign trade up 0.8 percentage point.

Fifth, the structure of imported and exported products was optimized. Exports of certain electromechanical products with high added value and products of the equipment manufacturing industry maintained a sound growth momentum in 2017. For instance, exports of automobiles, computers and medical appliances and instruments rose by 27.2 percent, 16.6 percent and 10.3 percent, respectively. This indicates that Chinese enterprises have gradually strengthened their capacity in independent innovation and fostered new advantages for international competitiveness. From the perspective of imports, the import of energy-and-resource-based products kept a steady growth. For example, the import of crude oil, iron ore and natural gas respectively increased by 10.1 percent, 5 percent and 26.9 percent. The import of certain important equipment, key parts and components, and high-quality consumer goods saw relatively fast growth, with increases of 17.3 percent, 17.6 percent, 13.8 percent and 19.6 percent for imports of integrated circuit products, engines, computer numerical control machine tools, and aquatic and marine products. Generally speaking, China achieved positive progress in steadfastly advancing supply-side structural reform, shifting the growth model and adjusting structure of its foreign trade. The country's foreign trade is in a transition from a phase of rapid growth to a stage of high-quality development. 

As for foreign trade development in 2018, it is expected, in general, that the world economy will continue its recovery and that China's economy will maintain a steady and sound performance, which is comparatively favorable for its foreign trade. However, it is difficult to maintain a double-digit growth in foreign trade this year due to the influences from a number of factors, such as uncertainties in the international environment and the large base figure in 2017. China's foreign trade is expected to maintain growth this year with further improved quality and efficiency. 

Sydney Morning Herald:

China is an important trading partner of Australia. Do you have any updated figures on China's trade with Australia? Natural gas imports have grown substantially. What's the reason for this? Is it because of the shift in heating means from coal to gas?

Huang Songping:

Thank you for the question. Trade between China and Australia grew rapidly last year, as the bilateral free trade agreement continued to deliver benefits. In 2017, Our imports from and exports to Australia reached 923.41 billion yuan, year-on-year growth of 29.1 percent, and 14.9 percentage points higher than the growth rate of our total imports and exports. 

Specifically, exports to Australia totaled 280.56 billion yuan, an annual growth rate of 13.9 percent; imports reached 642.85 billion yuan, growing 37.2 percent. Our trade deficit with Australia was 362.29 billion yuan, a year-on-year increase of 63 percent. 

China is Australia's biggest export market. We account for over 30 percent of total Australian exports. I hope the current momentum in bilateral trade can be maintained. 

Regarding the import of natural gas, unfortunately I don't have the specific figures right now. As far as I know, there was indeed a big rise last year, and Australia was one of the major suppliers. There were many reasons for this, such as the growing domestic demand, stricter environmental protection rules, and the replacement of coal with natural gas for heating.

Thank you.

Die Welt:

I would like to know a little bit more why China is importing such an enormous amount of crude oil and iron ore. Considering China's domestic economic situation, does that mean the imports play a role in helping China enhance the quality and efficiency of its economic development?,. We know that the import prices have recently been nearly 30 percent higher, so that's not quite understandable. I have another question, that is, how reliable is the Customs data, since recently we have come across many reports questioning the authenticity of statistics released by some Chinese provincial-level regions, such as Liaoning and Inner Mongolia Autonomous Region. Many countries have such a doubt, as they think trade deficits they know are much higher than the Chinese figures. Thank you.

Huang Songping:

Thanks for your questions. The first one is about why China has been importing such large quantities of iron ore, crude oil and other bulk commodities. The reason is that China is a big manufacturing country where a substantial supply of raw materials and energy products are required. Last year, the economy achieved a stable and slightly upward curve, which fueled domestic demand and drove up the imports of bulk commodities. Besides, prices surged with the increase in demand as a result of the recovery of the global economy, not to mention the financial nature of the bulk commodities themselves. So, there are multiple reasons for the surge in bulk commodities imports and prices. This is the answer to your first question.

The second question is about the accuracy of the data released by Chinese Customs. Last year, China's foreign trade achieved double-digit growth, which brought to an end two straight years of negative growth. It should be attributed to the aforementioned global economic recovery, the increase of market demand, the surging prices of bulk commodities, the effects of policies adopted for the sustainable growth of foreign trade and the comparatively low base level, along with other positive factors. All of them contributed to the fast growth.

Take cross-border containers as an example. In 2017, Chinese customs inspected containers 109 million times, up 5.9 percent year on year, as well as 680 million tons of commodities inside the containers, a year-on-year increase of 6.1 percent. These also confirm the recovering, stable and sound momentum of China's foreign trade.

As to the specifics of your second question about the accuracy of the Customs' data, I would like to give you a concise answer. Imports and exports are essential to the compiling of China's macro-economic statistics. We have always attached great importance to the quality of these statistics and taken authenticity and accuracy as the supreme goal in our statistical work. We form statistics on the basis of data including customs declarations and follow international rules and criteria to incorporate the data of the commodities causing a rise or decrease of domestic inventories into the import and export trade statistics. Data analysis approaches are applied to screen abnormal numbers and verifications and investigations are implemented in companies whose reports arouse skepticism.

In late 2016, a total of 27 ministerial-level administration entities, including the National Development and Reform Commission, People's Bank of China and National Bureau of Statistics, jointly signed the "Memorandum of Understanding on Cooperation in Implementing Joint Punishment on Seriously Dishonest Enterprises and Individuals in Statistics Reporting". According to the document, enterprises that fabricate import and export data in their report to the customs and cause distortions of statistics will face punishment jointly carried out by these institutions to ensure authenticity of statistics.

Just now, you said that there were differences in the statistics provided by China and other countries regarding China's foreign trade. 

Currently, most countries adopt the statistical standards and methods recommended by the United Nations Statistics Division. China's Customs use the same standards and methods, too. However, there are still many factors that may lead to differences in the result.

For example, some countries use the FOB price to calculate export volume and CIF price to calculate the import volume. The choice of which price to use may lead to different results. Entrepot trade is another factor that may cause differences. For example, Chinese goods may be re-exported via the Netherlands to a third country. China regards the Netherlands as the export destination and calculates the export volume accordingly. So, the figure we work out may be different from the figure calculated by the third country. Besides, the choice of an exchange rate and even the time difference may lead to different results.

The Rules on Implementation of Statistics Law of China was enacted on May 28, 2017. In the future, we will continue to work in accordance with the law to ensure the truthfulness and accuracy of the statistics regarding imports and exports. 

Thank you.

NHK:

Could you please provide details on Sino-DPRK trade in 2017?

Huang Songping:

Thanks for your question. I will brief you on the latest trade data between China and the DPRK. According to the figures from China's General Administration of Customs, the Sino-DPRK trade volume reached US$5.06 billion in 2017, a year-on-year drop of 10.5 percent. Specifically, exports were US$3.34 billion, up 8.3 percent; while imports stood at US$1.72 billion, down 33 percent. The trade surplus was US$1.62 billion, increasing by a factor of 2.2. In December, the Sino-DPRK trade volume was US$310 million, down 50.6 percent. Specifically, exports were US$260 million, down 23.4 percent; and imports were US$54.342 million, down 81.6 percent. Thank you.

Xi Yanchun:

This is the end of today's press conference. Thank you, Mr. Huang. Thank you everyone.

Speakers:
Mr. Ren Xianliang, vice minister of the Cyberspace Administration of China

Ms. Ge Huijun, member of the Standing Committee of the Zhejiang Provincial Committee of the Communist Party of China (CPC) and head of the Publicity Department of the CPC Zhejiang Provincial Committee

Mr. Sheng Yongjun, Secretary of the CPC Tongxiang Municipal Committee in Zhejiang Province

Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office of China

Date:
Nov. 16, 2017

Hu Kaihong:

Ladies and gentlemen, good afternoon. Welcome to this press conference. As the Fourth World Internet Conference is approaching, we invited Mr. Ren Xianliang, vice minister of the Cyberspace Administration of China, Ms. Ge Huijun, member of the Standing Committee of the CPC Zhejiang Provincial Committee and head of the Publicity Department of the CPC Zhejiang Provincial Committee, as well as Mr. Sheng Yongjun, secretary of the CPC Tongxiang Municipal Committee in Zhejiang Province, to introduce the preparatory work of the conference. They will also answer some of your questions.

Ren Xianliang:

Ladies and gentlemen, good afternoon. Welcome to this press conference. Now, I'd like to make an introduction of the work related to the Fourth World Internet Conference.

The conference will be held from Dec. 3 to 5 in Wuzhen, Zhejiang Province. The Chinese government has attached great importance to it. Senior officials will be present and deliver speeches. Currently, the preparatory work is almost finished. Compared with the previous sessions, this year's conference has the following highlights.

First, this year's conference features a prominent theme and a clear-cut direction. The theme is, "Developing the Digital Economy for Openness and Shared Benefits – Building a Cyberspace Community of a Common Future." Xi Jinping, general secretary of the CPC Central Committee, reiterated his proposal of building a community involving a shared future for humanity in his report at the 19th CPC National Congress last month. As an important international event being held in China so soon after the CPC National Congress, the conference will thoroughly implement Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era and firmly reflect his proposal on the governance of cyberspace. We will focus on the digital economy and highlight the importance of openness and shared benefits. We will exert great efforts to build a platform for enhancing interconnectivity between China and other countries and for the achievement of a global internet that will be shared and governed by all. We hope such efforts will help to narrow the digital gap between developing and developed countries, and make contribution to governance of the global internet through China's solution of "jointly building a community of a shared future in cyberspace."

Second, this year's conference is highly informative with several new topics to be discussed. It will give full play to functions of the three major sections: forums, release of advanced technological achievements around the world and the "Light of the Internet Expo," as well as publicizing important development initiatives, such as the national cyber development strategy, the Belt and Road Initiative and the "Internet Plus" action plan. Focusing on the five sectors of the digital economy, cutting-edge technology, the internet and society, cyberspace governance, and exchange and cooperation, the conference will feature a total of 20 sub-forums focusing on various topics such as a sharing economy, artificial Intelligence, internet-driven poverty alleviation, online protection of underage users, and international cooperation along the "Digital Silk Road." The "Light of the Internet Expo" will gather more than 400 renowned internet enterprises and innovative companies to demonstrate trends in the global internet and advanced technologies. A number of the most advanced technological achievements this year will be unveiled. Different activities, including welcome banquets, memorial tree planting, special art performances and the "Wuzhen Gathering" will also be staged.

Third, the conference involves synergic efforts of the entire country and pools wisdom from across the world. Profundity and inclusiveness will be further explored with the support of an open policy. In doing so, we have extended our invitations to the United Nations Department of Economic and Social Affairs, the International Telecommunications Union (ITU), the World Intellectual Property Organization (WIPO), the World Economic Forum (WEF), and the Global System for Mobile Communications Association (GSMA) to become our partners. We have also invited 32 international organizations, national ministries, industrial guilds and renowned enterprises to jointly host the event. A total of 26 institutes, universities and enterprises will join us in fostering the preparatory work for the conference, which is expected to attract 1,500 guests, including executives of international organizations, leaders and celebrities from the internet sector as well as experts and scholars worldwide.

Fourth, we are expecting fruitful achievements through age-old Chinese wisdom and the solutions China is offering. For the first time, we will publish two blue books, namely, "World Internet Development Report 2017" and "China Internet Development Report 2017," in an effort to offer a panoramic and objective view of internet capacity and the distinctive features among different countries as well as the present state and future course of China's internet development. Conclusive documents issued during the conference this year will contribute Chinese wisdom to global Internet governance and foresee the development in coming years. What we will publish simultaneously is a casebook of the best practices in global Internet developments, summarizing and referring to various international experiences. The conference will also press ahead with a slew of cooperative agreements between governments, social organizations and enterprises.

Fifth, we'll facilitate the conference proceedings with smarter software and hardware to ensure it can run smoothly. With another year-long preparation, the area of Wuzhen has been expanded, the ecological surroundings have been much improved and more infrastructures have been installed or revamped. We have introduced dozens of smart programs to upgrade the first-hand conference experience. The APP being launched this time can provide a variety of digital services. Besides, the cognitive technologies adopted for the recognition of car plates and faces will be available and individual cell phones can be used to summon a sightseeing bus simply by sweeping a two-dimensional code. Our 1,000 volunteers are expected to offer meticulous and considerate services. I believe some of you have already attended the previous three sessions as journalists, and your arrival this time will be a refreshing experience with the new look of Wuzhen.

The World Internet Conference has been successfully held for three consecutive years, having drawn immense attention and achieving broad consensus. Wuzhen has created an outstanding monument in the history of global Internet evolution. The curtain of the Fourth World Internet Conference will rise in less than 20 days and we expect to welcome you with the splendid sceneries of Wuzhen and the outstanding performance of the conference. Thank you.

Hu Kaihong:

Thank you, Mr. Ren. Now the floor is open to Ms. Ge.

Ge Huijun:

Good afternoon, everyone. The World Internet Conference is scheduled to kick off again for its annual meeting in Wuzhen. We always keep in mind General Secretary Xi Jinping's sincere concern and ardent expectations in Zhejiang Province and Wuzhen as well as his ideas for internet governance. We spare no efforts in making preparations for the conference and strive to fulfill the promise to make it better than before. Here, I'd like to invite you to Wuzhen to feel the changes the conference has brought to Zhejiang. I will introduce three new aspects.

First, to experience the evolvements of a millennium-old town. Over the past four years, every day in the water town of Wuzhen is a new day. This year, as a result of urban planning and renovation efforts, the newly developed downtown area accounts for nearly three-fifths of the previous total. Its picturesque scenery and the Wuzhen International Theatre Festival attract attention from all over the world. The town's vitality is stimulated by several internet projects, such as Wuzhen Comprehensive Experimental Zone for the Internet Innovation and Development, Wuzhen Big Data High-tech Industrial Park and Wuzhen Internet Featured Town which have all been approved, as well as a series of high-quality projects with a total investment of over one billion yuan. Wuzhen has become a smart town as a group of smart programs, including the Wuzhen intelligent old-age care system and the Wuzhen internet hospital, bring convenience and happiness to local life. The ancient town is even more charming thanks to the conference.

Second, to experience the latest achievements of smart technology. This year's conference will give more attention to displaying the world's top internet technologies. During the conference, Alibaba, Baidu, Huawei, SAP of Germany, Kaspersky Lab and other well-known domestic and overseas internet brands will unveil a batch of the latest cutting-edge achievements. We will also exhibit dozens of projects offering smart user experiences, such as Alibaba's unmanned supermarket, iFLYTEK translator machine,Utry smart robot and display of achievements in quantum communications. The information management and service level of the conference will be further enhanced. I believe we will have a cooler, more dazzling sensory experience.

Third, to experience the highlights of the conference agenda. Apart from major events such as the opening ceremony, forums, the Light of the Internet Expo and the Release Ceremony of World Leading Internet Scientific and Technological Achievements, this year our signature event "Dialogues Between Internet Tycoons" will continue to be held at more than 20 venues in Wucun Village where relevant facilities have been further improved, providing a good platform for exchange and cooperation within the internet industry. In addition, the folk dance performance "Hua Mulan" choreographed by the China National Opera House and the Ningbo Song and Dance Theater will be staged, which perfectly combines traditional Chinese culture with modern technology.

Friends of the media, the CPC Zhejiang Provincial Committee and the Zhejiang Provincial People's Government attach great importance to the preparatory work for the World Internet Conference and the preparations are currently in full swing. At present, arrangements for major events are basically finished, and special events are under careful preparation. Conference-related services such as the press conference center, foreign participant reception and volunteer training are being advanced in an orderly way. As the host, we have set high standards for ourselves in order to deliver high-quality work and to entertain our guests with a more exciting and globally influential conference.

Here I would like to take the opportunity to express our gratitude to our friends in the media for your long-term concern and support for Zhejiang Province. At the same time, I would also like to extend our invitation to old and new friends to visit Wuzhen to attend the World Internet Conference and to renew our friendship. Thank you.

Hu Kaihong:

Now, let's move on to the question-and-answer session. Please identify the media outlet you represent before raising your question.

CCTV:

The theme of the conference is "Developing the Digital Economy for Openness and Shared Benefits." I would like to know why the host decided on such a theme. And can you brief us on the development of China's digital economy? Based on the theme, will there be any different contents we can expect to see in this year's conference? Are there any new cooperative projects? Thank you.

Ren Xianliang:

Let me answer your questions. The G20 Digital Economy Development and Cooperation Initiative, initiated by China at last year's G20 summit, was the first digital economy policy document ever endorsed by the G20 leaders. It has aroused great attention from the international community. At the Second World Internet Conference, President Xi put forward "four principles" and "five proposals", calling for building a community of a shared future in cyberspace.

Over the past two decades since China first fully gained access to the internet in 1994, it has become a giant in the field, developing a brilliant digital economy. The digital economy has emerged as a leader in driving innovative development of the national economy. In 2016, China's digital economic aggregate reached 22.4 trillion yuan, accounting for 30.1 percent of GDP. The volume of e-commerce transactions reached 26 trillion yuan. Online retail business has seen average annual growth of 30 percent. The number of Chinese netizens has reached 750 million. Alibaba and JD.com both reported new records in Singles' Day sales last weekend. Trade on Alibaba's Tmall platform hit 168.2 billion yuan during this particular shopping spree, and that at JD.com was 127.1 billion yuan. These are world-leading performances.

The highlights of this year's conference can be described as follows. First, highlighting innovation. At the session on cutting-edge technology, which is new this year, attendees can discuss such topics as artificial intelligence and shared economy, addressing the future trend of the global internet. Second, highlighting shared benefits. At the session on the internet and society, we will, following the 2030 Agenda for Sustainable Development, discuss the roles the internet plays in poverty alleviation and disaster reduction as well as the issue of cultural protection. Third, highlighting the expected international impact. This year, we will co-organize some events with the GSM Association and the World Intellectual Property Organization so as to expand international engagement. I think you should pay special attention to the release of the advanced technological achievements at the conference. Last year, we made the first release. This year, we have received many applications for release from innovative companies around the world. Now, we have collected nearly 1,000 advanced technological achievements for shortlisting, and will announce the most innovative, cutting-edge ones at the conference.

Phoenix TV:

Can you tell us which world-famous internet firms will attend the conference? And how has the international community responded to the Chinese approach to internet development? Is there a timetable for companies like Google to come back to China and firms like Facebook to make an entry? Thanks.

Ren Xianliang:

Thank you. The Chinese internet firms Alibaba, Tencent, JD and Baidu-- which are among the top ten internet firms across the globe -- will attend the conference with their respective CEOs, namely, Jack Ma, Ma Huateng (Pony Ma), Robin Li and so on. Foreign firms, like Microsoft, Cisco, Oracle, Qualcomm, Intel, IBM, Bloomberg, Dell and SAP also take the conference very seriously and will send their executives to attend.

As for Google and Facebook, (you can refer to) General Secretary Xi Jinping's pledge at the press conference after the 19th National Congress of the CPC that China would unswervingly open up further. In addition, he also promised to build a cyberspace community of a common future at the Second World Internet Conference. You can see that we are wide open to the world, including the internet sector. We have always been open to foreign internet firms which come to China to share the rewards of China's development and the achievement of China's reform. Of course, we also require and hope that these firms abide by China's rules and regulations, and we will protect their rights accordingly. That's all. Thank you.

Zhejiang Daily:

We know that the World Internet Conference has been hosted in Zhejiang three times and has become an influential meeting both in China and abroad. What benefits will such a high-level and large-scale meeting bring to the local people in the province?

Ge Huijun:

You have raised a very good question. The conference has become an important meeting for the global internet sector and has drawn global attention to Wuzhen and Zhejiang, unleashing an increased spill-over effect. The conference has brought more opportunities to the development of Zhejiang and great benefits to the local people. I want to amplify this point by sharing the benefits of the "Internet Plus" project with you.

The "internet plus life" project allows people to enjoy the convenience brought by the internet. In Zhejiang, cellphone use has made everyday life more convenient. Using apps makes public transport, dining, entertainment and shopping much easier. From large shopping malls to street hawkers, payments can be made just by scanning a QR code.

The "internet plus medical care" project can offer local residents medical services at home. The medical care appointment platform in Zhejiang has developed rapidly as it serves more than 8 million registered users with access to 300 hospitals. Local people can make an appointment at home. In addition to the Wuzhen Internet Hospital, many other hospitals have developed their online medical care. For instance, Zhoushan, an island in Zhejiang, has an online hospital by which local people can be given high-quality medical care through online interviews and diagnosis without leaving home.

"Internet plus judicature" refers to the resolution of online disputes. China established its first internet court in Hangzhou, in east China's Zhejiang Province, on Aug. 18 this year. Up to Nov. 7, the court had received 5,753 cases, of which 3,592 have been officially filed. These realized online trial and judgment, offering results through the internet.

"Internet plus government service" enhances government efficiency and ensures that people gain a greater sense of gains. Based on promoting information-sharing, this reform enables the public to enjoy one-stop services and creates a new dimension of government administration. By the end of September, a total of 773 of 797 identified items had achieved such reform, representing 96.99 percent of the total. This was well ahead of the scheduled target of 80 percent.

These aspects I have mentioned are just a few of those being undertaken to improve people's sense of gains, and new stories of the "Internet Plus" in the current Internet Era are being created every day. In Zhejiang Province, the "Internet of Everything" is certainly happening.

Thank you.

Kyodo News:

My question is about the "digital economy", a keyword of the theme of the conference. Foreign-funded enterprises are concerned about China's request that they should keep the computer towers they use to collect big data within China. Could you tell us about big data and foreign-funded enterprises?

Ren Xianliang:

Thank you for your question. Clear-cut policies on big data and foreign-funded enterprises have been made in China's Cybersecurity Law. It stipulates that personal information and important data collected and generated in the People's Republic of China must be stored within its borders. If they are to be stored or transferred overseas, they must undergo security assessment processes. I would like to explain this stipulation. First, it is imposed exclusively on key information infrastructure operators, not all the network operators. Second, it applies only to personal information and important data, not all the data. The importance of the data is measured relative to the country, not any enterprise or individual. Third, the law allows for an institutional arrangement if the data needs to be transferred overseas. If they are proved to be non-harmful to national security and the public interest in the arranged assessment, they are allowed to be transferred overseas. Fourth, personal information can be transferred overseas if permitted by its subjects. The transfer of the personal information generated in international calls, emails and cross-border online shopping is considered to have been permitted by its subjects, thus not being restricted by the stipulation.

People.com.cn:

Wuzhen is famous for being a "water resort south of the Yangtze River." And the internet has also left an indelible mark through it becoming home to the World Internet Conference. I wonder how has Tongxiang City (where Wuzhen is a subordinate county) positioned and planned Wuzhen in terms of tourism and the internet and in expanding the role of the two sectors?

Sheng Yongjun:

Good afternoon, and thanks for the question. As Wuzhen was chosen to be the permanent site of the World Internet Conference [in 2014], we in Tongxiang take great pride in this. It is a key development opportunity for us, as well as a duty and responsibility looking to the future. Regarding Wuzhen, we will preserve its legacy and keep on showcasing the essence of Chinese civilization and the culture specific to areas south of the Yangtze River. Meanwhile, as it is home to the World Internet Conference, we will also make sure Wuzhen demonstrate its "newness." We will let the virtual world of the internet converge with the real world of Wuzhen to provide the ancient town with ever-growing vitality that keeps pace with the times.

We have a very clear plan for developing the tourism industry in Wuzhen. First, raising the quality, namely, we will keep on providing tourism products that feature rich culture, vitality and innovation. Second, expansion. In other words, we will stick to an all-encompassing approach to build a greater Wuzhen scenic area. Third, extension. We will develop other big tourist attractions in Tongxiang to enable interaction between them and Wuzhen. Fourth, spillover effect. We will ensure Tongxiang benefits from the spillover effect of Wuzhen's tourism industry so as to ensure its development as a large scenic area.

As the permanent site of the World Internet Conference, we will promote Wuzhen's development from three perspectives.

First, we will make it a site showcasing the internet development history of China and the world. The town is a witness to the internet revolution and also a promoter of internet culture. We will make the town a place where people can experience the internet's past and present and anticipate its future.

Second, we will make Wuzhen a site that displays the latest internet technologies. We will do our best to facilitate the emergence and application of cutting-edge technology. In this town, one will feel the World Internet Conference's influence on technological progress anytime and anywhere.

Third, we will make Wuzhen an incubator of high-end industries. We will pool all resources to build a complete industrial chain to attract more people and more high-end programs. We want the town to be a place where people can pursue their dreams.

In conclusion, we will seize the chance provided by the World Internet Conference and make Wuzhen the most attractive town in the world. Thank you.

Guangming Daily:

We have noted that one of this year's sub-forums is about "Safeguarding the Future: Online Protection of Underage Users". Would you please tell us the reason for establishing such a sub-forum and what has been taken into consideration?

Ren Xianliang:

Thank you for your concern for minors, which has always been a focal point of concern by Guangming Daily. Minors are the main force of the future of the internet, and teenagers are also described as its "original inhabitants". The development of the internet has profoundly and comprehensively affected the development of our economy and society. As there is a tremendous amount of information available on the Internet, sometimes it is hard to avoid a mingling of good and bad, which can possibly affect teenage physical and mental health.

China attaches great importance to the protection of minors amid the development of the internet, and we have also enacted relevant laws and regulations. By establishing such a sub-forum in the forthcoming World Internet Conference in Wuzhen, we will work together with other countries to deal with common challenges created by the development of the internet, better protect minors, and build a community of shared future in cyberspace. To ensure clean cyberspace, the participating countries will learn from each other, communicate with each other and draw on each other's experiences. Thank you.

Reuters:

Recently, a U.S. NGO put out a report ranking China's internet the least free internet in the world. I am considering a large part of the conference will have to do with the national governance of the internet. How do you view these ideas, and how do you feel about reconciling them with Chinese ideas?

Ren Xianliang:

Thank you for your question. The internet has blazed a development path with Chinese characteristics in China. Fairly speaking, for the past 20-plus years, the internet development in China has proved that China has successful experience in its governance. While we are advocating the free flow of internet information, we are requiring order. We not only let it flow freely, but also in an orderly way. Just as the journalist with the Guangming Daily mentioned just now, we should protect individual information like protecting teenagers. National internet safety is a shared topic for the U.S. and European countries, just as the governance of the rampancy of fake news and rumors is a common issue facing all of us. On the one hand, we should allow information flow freely on the internet, but on the other hand, we need to discuss how to make information flow more orderly. Thank you.

CGTN:

It has been one year since Zhejiang received approval to establish the country's first information economy demonstration area, which has been jointly authorized by the Cyberspace Administration of China and the National Development and Reform Commission during the Third World Internet Conference. What progress has been made in the demonstration area and what are the next steps? Thank you.

Ge Huijun:

Thank you for your question and your attention to the development of the national information economy demonstration area in Zhejiang. Last year, the Cyberspace Administration of China (CAV), together with the National Development and Reform Commission (SDPC), approved the establishment of China's first national information economy demonstration area in Zhejiang, which has brought wonderful opportunities for Zhejiang's information economic development. The Zhejiang Provincial Committee of the CPC and Zhejiang provincial government attach immense importance to the information economy and reckon it as the top among its "Eight Trillion-Level Industries" and has introduced related policies and set the stage to boost its development over the year. A lot of progress has been made since then. I will brief you on a collection of data to illustrate this.

In the first three quarters of this year, GDP growth hit 8.1 percent in Zhejiang. The value-added contribution of core industries in the information economy exceeded 345.4 billion yuan (US$52 billion), growing by 15.9 percent, accounting for 9.35 percent of Zhejiang's GDP. The information economy has become the pillar industry of the province. We have to pay attention to and promote the following aspects.

First, Zhejiang is striving to become a front-runner in the "Internet Plus" technological innovation program. Last September, the provincial government united with Alibaba to set up the "Zhejiang Lab," aiming to attract more high-end corporations and talent to the province to promote the new economy.

Second, we attach great importance to cloud technology. There are many corporations engaged in this area, including HIK Vision, H3C Technologies and NetEase. At present, the province is accelerating the construction of the platforms of "Digital Zhejiang" and "Zhejiang in the Cloud."

Third, Zhejiang is expediting promotion of the new economy, new businesses and new models. Here are two examples: One is the two-year-old "Dream Town." There are more than 10,000 entities and more than 2,000 startup projects with combined capital of 168 billion yuan. The other is Yunqi, where the annual Yunqi conference is held. It has become a magnet for global internet and technology participants.

Information economy has become a new driver in the province's economic growth. It is also the main field for innovation and startup projects. We sincerely hope that, through the platforms provided by the World Internet Conference, and the national demonstration zone of the information economy, an ever-increasing number of corporations will move to Zhejiang and to Wuzhen to achieve fruitful results. Thank you.

ZJSTV.com:

The World Internet Conference has been successfully held three times, which were greatly supported by the Tongxiang government. With great changes brought by the conference, people are looking forward to better benefits from it. So what kind of benefits has the World Internet Conference brought to Tongxiang and the town of Wuzhen? Thanks.

Sheng Yongjun:

Thanks for your questions, as well as the attention from the media all the time. The benefits that the World Internet Conference has brought to Tongxiang and the town of Wuzhen could be summarized from three perspectives.

Firstly, we enhanced industrial competitiveness. With the conference as the platform for bringing together all the factors and players to converge to make a real difference, Tongxiang has further adjusted its industrial structure, improved its quality, and enhanced competiveness. In 2017, Tongxiang ranked 27th on the list of the top 100 counties in the country. The convergence of internet and third-tier and fourth-tier industries has been deepened over the past three years. Emerging industries such as smart agriculture, smart manufacturing, the integration of information technology and industrialization, and smart tourism gave a fresh impetus to the traditional industries. Over 200 internet projects such as driverless vehicles, 5G networking, and digital science have been launched in the town of Wuzhen, representing a fusion of West and East. The internet industry, with its imagination, has bred an international city.

Second, local governments' capacity for social governance has been enhanced. Through e-governance" and online license applications, we are vigorously creating a new normal of "offering one-stop government services" and "transmitting data so that the people make fewer visits." Smart policing and security have been widely applied. Self-governance, rule of law and rule of virtue are developing in a coordinated way. With the utilization of the internet, Tongxiang has established a huge network of social governance covering its total area of 727 square kilometers. In this way, our people have gained a stronger sense of benefit and security.

Third, more benefits have been delivered to the people. We have stayed true to the mission of meeting people's aspirations for a better life, seeing to it that the conference and internet tangibly benefit our people. Free Wi-Fi is available in all public places with over 13,000 IP points. Smart transport, healthcare and elderly care together with other outcomes of the intelligence transformation have made people's lives more convenient and more colorful.

Wuzhen is a window through which China communicates with the world and a ferry where the boat of dreams sails from. The ancient water town is now at the forefront of industrial development. In jointly "Building a Cyberspace Community of a Common Future," we will uphold "Spirit of the Red Boat," keep our missions in mind and strive to be a pioneer. We will make continued efforts to contribute Wuzhen's wisdom, spread its voice and create its legend.

China News Service:

What kinds of technological achievements will be highlighted at this year's conference? What's new compared to last year? Thank you.

Ren Xianliang:

Just now, I mentioned that this year's conference will be themed on "Developing the Digital Economy for Openness and Shared Benefits — Building a Cyberspace Community of a Common Future" which has the following main features, including enhanced innovation, shared benefits and internationalization. Innovation, mostly innovation in advanced technologies of the internet, especially artificial intelligence, will be the most prominent feature this year, while artificial intelligence will also be in the limelight at the conference. We welcome you to attend the releasing ceremony of advanced technological achievements we have collected from around the world and pay a visit to the Light of the Internet Expo. A lot of technological outcomes will be showcased at the expo and I will not list them one by one here.

We have collected nearly 1,000 technological achievements covering different sectors related to Internet, including informatization, smart cities, big data, artificial intelligence, 5G communication technology and quantum technology. All of them I believe you will find fresh and new. I believe you will find topics you are most interested in. Thank you.

Hu Kaihong:

This is the end of today's conference. Thank you to the three contributors and thank you to the reporters.

Speaker:
Mr. Zhu Guangyao, vice minister of the Ministry of Finance

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

Date:
Nov. 10, 2017

Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to this press conference. Today, we are delighted to have with us Mr. Zhu Guangyao, vice minister of the Ministry of Finance.

He will introduce the economic outcomes achieved during the China-U.S. presidential meeting in Beijing, and answer some of your questions.

Now, I give the floor to Mr. Zhu.

Zhu Guangyao:

President Xi Jinping and U.S. President Donald Trump held in-depth talks on Nov. 8 and 9 during the latter's first state visit to China. President Trump is the first head of state received by President Xi since the 19th National Congress of the Communist Party of China (CPC) last month. An important consensus was reached during the successful and historic presidential meeting, charting the course and drawing up a blueprint for the sound and sustained development of Sino-U.S. relations in the coming decades.

President Xi said during the meeting that China-U.S. economic ties were mutually beneficial and covered a wide range of fields including the macro-economy, trade, investment and international economic cooperation. Continued stable development of these ties will not only be of benefit to the two peoples, but also be a major contributor to global growth. China and the United States should face all economic issues in a forward-looking and constructive way and resolve problems by expanding economic cooperation. President Donald Trump expressed agreement with these views.

China and the United States have maintained close coordination on financial, currency and exchange rate policies, as well as structural reforms and global economic governance. The two countries will work together to promote robust, sustainable, balanced and inclusive growth of the global economy. As well, both sides will encourage their aviation regulators to sign the Implementation Procedures for Airworthiness under the Bilateral Aviation Safety Agreement.

As an effort to implement the plans on opening the country wider to the outside world set out during 19th CPC National Congress, China has made the following decisions: to ease the proportion limitations on single or multiple foreign direct or indirect investment converted into securities, funding management and futures corporate structural establishment to 51 percent pending removal of the limit in three years' time; to lift the proportion restrictions of no more than 20 percent and 25 percent on foreign single and joint shareholding respectively in Chinese banks and financial capital management companies, and impose equal proportion restrictions on bank equity for Chinese and foreign investors; to lessen the proportion limit to 51 percent on single or multiple foreign investment into life insurance companies in three years' time and to lift the limit entirely in five years; to make a moderate reduction in car import tariffs in a gradual manner, and to launch trials on lifting the proportion limits on foreign shareholdings in special-purpose and new energy vehicle companies in pilot free trade zones before June, 2018; to implement the same value-added tax (VAT) policy on imported and domestic dried distiller grains (DDGS) and remove VAT on imported DDGS.

China urges the United States to relax its export controls on high-tech products, fulfill its obligations under Article 15 of the Protocol on China's Accession to the World Trade Organization (WTO), give fair treatment to Chinese enterprises investing in the United States, facilitate China International Capital Corporation's independent application for offering financial services in the United States and take a prudent attitude towards trade remedial measures. Both sides will maintain communications on one-year and medium-to-long term economic cooperation plans.

The two countries signed business deals and bilateral investment agreements worth $250 billion during President Trump's visit to China. That's all I want to share with you on the economic outcomes achieved during the China-U.S. presidential meeting in Beijing.

Now, I am ready to take your questions.

Xi Yanchun:

Now let's open the floor to questions. Please identify your media outlet before asking your questions.

Bloomberg:

As we can see from the two-day meeting, there was a natural chemistry between the two leaders. But it seems that there is no fundamental change taking place in the economic structures of both sides. And President Trump said that the China-U.S. relationship is not sustainable and fair. And it is said that more stronger measures will be taken by the U.S. government in the future weeks. So, how do you see the economic relations between China and U.S.? And will there be more measures taken to change the trade structure?

Zhu Guangyao:

At first, I quite agree with your opinions that both sides showcased a good interaction on the basis of mutual respect. The sound communication and coordination of both sides at the highest level ensured the healthy and sustainable development of China-U.S .relations. Since the Mar-a-Lago meeting, President Xi Jinping and President Trump have kept close communication. Looking back over the last months, the topics of discussion range from global issues to the specific China-U.S. economy, including various ways to communicate such as face-to-face encounters, exchanging telephone calls and sending letters. Since President Nixon's tour of China 45 years ago, the close communication between China and America is based on the mutual-respect, and laying a solid foundation for sustainable and healthy development of China-U.S. relations. And concerning your second question, about the future development of China-U.S. economic relations, I think this is directly linked to the sound communication between both sides. China-U.S. economic and trade relations are essentially mutually beneficial.

Just now I have noted that, during their talks in Beijing, President Xi particularly stressed to President Trump that seeking mutual benefits and reciprocity is the essence in the economic relations between China and the United States. President Xi also stressed that China-U.S. economic relations covers many areas like trade and investment as well as extensive cooperation in the field of the international economy. In this regard, President Trump expressed full consent. The important consensus reached by President Xi and President Trump aims at maintaining the sustainable and healthy development of China-U.S. economic relations and benefiting the Chinese and American peoples.

Certainly, the rapid development of China-U.S. economic relations doesn't just mean the annual over US$420 billion in total trade volume and over US$200 billion in bilateral direct investment. The figures are hardly a reflection of China-U.S. economic relations, in which the interests of both sides are closely intertwined and the two sides share in benefits. In other words, the two countries have become a community of close integration and shared benefits. On this premise, it is the aspiration of both sides to resolve the problems and contradictions arising from the rapid development of economic relations through consultations. It is a problem that President Trump wants to solve, and it is a problem that President Xi Jinping has already instructed relevant departments of the Chinese side to solve by enhancing policy coordination with the American side. All the approaches are to ensure the healthy and sustainable development of economic relations between China and the United states.

In preparation for President Trump's visit to China and the important meeting between President Xi Jinping and President Trump in Beijing, under the framework of a comprehensive economic dialogue between China and the United States, Chinese Vice Premier Wang Yang has maintained close policy communication and contacts with U.S. Secretary of Commerce Wilbur Ross and Secretary of the Treasury Steven T. Mnuchin. U.S. Secretary of Commerce Wilbur Ross visited China twice and made phone calls with Vice Premier Wang Yang many times. All the efforts made by both sides are to ensure that the meeting in Beijing between state leaders of China and the United States can achieve the desired results, which are not only substantive, strategic, and directional, but also specific and commercial.

As you can see, just now I have made a brief introduction of the common understanding of both sides on the nature of economic relations between the two countries, and the specific measures taken by the Chinese side to expand market access. The measures were hammered out in accordance with the principles defined in the 19th CPC National Congress and the strategic plans made by President Xi Jinping. In this regard, I think the approach will have a long-term, continuous impact. In terms of business cooperation, it doesn't just mean the over US$250-billion in contracts, either.

We believe that, with the joint efforts of both sides, the economic relations between China and the United States will realize a dynamic balance, mutual benefits and win-win situation, as president Xi Jinping stressed to President Trump during their talks in Beijing. Thank you.

CCTV:

There were lots of economic achievements made during the meeting between the two state leaders in Beijing, just as you have elaborated. My question is: What specific influences will these achievements have?

Zhu Guangyao:

President Xi Jinping has reiterated that the economic relationship between China and the United States is the bedrock of global stability and a booster of world peace. Evolving from the past to the present, this bilateral economic relationship has become increasingly close and has remained unbroken. With the development of a community of shared interests, the two countries have fully recognized that they must cooperate with each other for the sake of the two peoples and for the peace and development of the world.

Cooperation is the only correct choice for the two countries. This is the conclusion made by President Xi. Facts have proven that cooperation is conducive to the interests of the two peoples as well as to the peace and development of the world.

The economic achievements reached between us, such as broadening mutual market access and signing enormous volumes of pragmatic business contracts, will lay comprehensive and strategic influences on China-U.S. economic relationship, and will boost further development of the relationship. They will also leave a lasting, positive and helpful influence in the future.

Just like the icebreaking trip made by the late U.S. President Richard Nixon 45 years ago, President Trump's state visit to China will be remembered in history for the fruitful achievements it has made and the profound influence it has left. Thank you.

Wall Street Journal:

Can you clarify what you said earlier on the restriction changes to the banking, securities and insurance sectors? Can you explain in more detail the timeline and also the roadmaps for that?

Zhu Guangyao:

First, for securities and funds, China decided to relax the restrictions on shares owned by foreign individuals and groups in securities, fund management and futures companies from 49 percent to 51 percent, via both direct and portfolio investments. This is a significant change. In other words, foreign investors can hold over 50 percent of the total stake. Moreover, that restriction is no longer applicable after three years, which means that the 51 percent restriction will evolve into literally no restrictions at all for foreign investors. This will have a great impact on the reform of the securities and fund sectors.

Second, China will lift the restrictions on shares owned by foreign individuals (no more than 20 percent) and groups (no more than 25 percent) in China-funded banks and financial asset management companies and apply the same rule in the share of equity investment for both domestic and foreign investors.

Third, China will relax the restrictions on shares owned by foreign individuals and groups in insurance companies operating life insurance businesses to 51 percent in three years and lift the restriction in five years.

Therefore, the securities and funds, banking and insurance sectors, especially life insurance businesses, will definitely open up, and the impact is great. Moreover, there is a clear timeline for the opening up. Of course, after the announcement of the policy, related financial regulatory bodies will formulate specific implementation measures in accordance to Chinese laws and regulations. I think this will be very quick, because that is what President Xi Jinping has pointed out in his report to the 19th CPC National Congress on relaxing market access and expanding the opening up of the service sector.

We will work out the timeline and roadmap for the reform of the financial sector in accordance to the important instructions made by President Xi Jinping and the arrangements made by the CPC Central Committee and the State Council. This is a very good timing for us to announce China's reforms in the financial sector, especially the major reform measures with regard to market access of the financial sector. Thank you.

Phoenix Satellite TV:

How could the heads of state of China and the United States achieve so many economic and trade results in a course of two days? We're pretty surprised at the US$ 253.5 billion deals between the two countries, as well as China's announcement of a relaxation in market access requirements. What are the reasons behind all of those achievements? Thank you.

Zhu Guangyao:

Thank you. Just as I said when answering the first question, the two heads of state have attached unprecedentedly high importance to China-U.S. economic cooperation. You are right that their meetings lasted only for a couple of days. However, I can tell you that the working groups of both sides were in close contact in preparation for the summit meeting ever since the two leaders met at the Mar-a-Lago resort. President Xi has been attaching much importance to China-U.S. economic relations. He has stressed we should strengthen China-U.S. economic relations and ensure its full and effective role as the anchor and promotion of bilateral relations. China's working group has followed President Xi's instruction in this respect. Under the framework of the China-U.S. Comprehensive Economic Dialogue, Vice Premier Wang Yang has called meetings, listened to reports, coordinated related departments to implement President Xi's important directions, promoted the implementation of the economic arrangement, including aspects such as market access, that were stressed by President Xi in his report to the 19th CPC National Congress.

The achievements are thanks to the special attention paid by the two heads of state, the efforts made by Vice Premier Wang Yang, Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, who led the Comprehensive Economic Dialogue, as well as the reinforced coordination efforts of the bilateral working groups. The achievements could not be possible without the unprecedented mutual trust between the two heads of state, their special attention to China-U.S. economic relations, the direct instructions on specific works made by Vice Premier Wang Yang, Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, as well as the unprecedentedly close policy exchanges between the working groups. The summit meeting was short, but the preparations were long. I think the positive impact from their meeting is historic and long-lasting. Thank you.

Nihon Keizai Shimbun:

What overseas financial institutions have long been expecting is the openness of China's financial market; however, there are always some constraints that have not been removed. Why does China decide to open the financial market this time? What contexts, if any, or reasons are there for doing so? Thank you.

Zhu Guangyao:

The best answer to this question can be illustrated by President Xi's report delivered at the 19th CPC National Congress. According to the strategic plan, China will press ahead with opening up financial market access, fleshing out the related schedules and implementing blueprints for this. There is one more point that I would like to make it clear: despite the timing of China's announcement of wider financial market access during the meeting between the two heads of state of China and the United States, the openness is for all the countries in the world, which is the fulfillment of a commitment made in line with the principles of the WTO. As one of the important members of the WTO, China will unswervingly uphold the spirit of free trade and commit itself to the implementation of its principles. It will never close its door after opening up; on the contrary, the door can only swing open even wider. That is what President Xi has stressed time and time again. Thank you.

CRI:

We have noticed that during U.S. President Donald Trump's visit to China, enterprises of both sides have showed great interest in the establishment of Belt and Road investment platforms. Could Mr. Zhu comment on this? Thank you.

Zhu Guangyao:

Thank you. The issue you mentioned is very important. President Xi Jinping emphasized many times during his meeting with President Trump and later with the press, as well as at the U.S.-China Business Exchange, that China welcomes the participation of U.S. companies in its Belt and Road Initiative.

This was first proposed by President Xi in 2013, with the aim of facilitating policy coordination, facilities connectivity, unimpeded trade, financial integration and strengthened people-to-people ties, based on the principles of extensive consultation, joint contribution and shared benefits. The Initiative conforms to the trends of world development and meets the expectations of the people of all countries. Under the circumstances of economic globalization, we would like to work with other nations to promote economic cooperation and to build a community with a shared future for mankind.

Any interest shown by U.S. firms in China's Belt and Road Initiative is their own choice, with the purpose of searching for business opportunities and expanding market share. Of course, this is welcomed. We sincerely hope that U.S. market-oriented firms can meet their profit targets, and jointly push forward the growth of world economy with us.

In regard to any cooperation with a third party, American and Chinese enterprises should always follow the principles of market-oriented and independent decision-making in order to gain bigger profits.

In fact, the Belt and Road Initiative has received extensive recognition throughout the world. Meanwhile, it has been warmly welcomed and supported by many multilateral institutions, including the United Nations and the World Bank. We do believe that, in the process of building a community with a shared future for mankind, cooperation between Chinese and American companies will not only bring about benefits to the people of our two countries, but also make contributions to world peace and development.

CNN:

You just mentioned about contracts and agreements with a value of more than US$250 billion; however, many critics in the U.S. say these agreements have more symbolic than actual meaning, because many of them have no binding force. They think of them as China's gifts to President Trump so that he can be accountable to his American constituents. I wonder how you would respond to that interpretation, and could you explain how long it will take exactly for these agreements to demonstrate their paper value of US$250 billion? Are all these agreements newly reached, or were they signed before and just officially announced this time?

Zhu Guangyao:

Your question touches on the impact and the basis of commercial contracts. I think commercial contracts can only be reached when the supplier and the recipient both have the intention to fulfill their agreement; and, for intentional agreements, they can only be carried out after the two sides have undertaken sufficient and necessary study on their feasibility. Meanwhile, entrepreneurs of both sides involved were very smart and clever in this process. In terms of weighing up their interests, the two sides in the negotiations actually focused much on how to address their own interests and to meet the shared interests of both sides. Market rules and the dominance of companies are what China has been upholding throughout the contract negotiation, and so has the U.S. As a market economy, market rules must be upheld, and the dominance of companies is a fundamental principle. Without the real intention of the companies involved, it would be impossible to sign and implement big contracts like these.

Among the contracts signed yesterday, the biggest was a strategic cooperation framework agreement between China's National Energy Investment Group Ltd. and the State of West Virginia for a demonstration project with regard to complete industrial chain development of shale gas. It is an intentional agreement as our CNN friend has mentioned just now, but I can make it clear that, as we have heard from a Chinese company, namely the original Shenhua Group, they have made substantial preparations for the investment in West Virginia, including the input of funds. So, although the contract is a statement of intent, it carries high commercial feasibility considering the substantial preparations and prior-period input. A big contract like this really requires the efforts of both sides, which cover studying the market environment: how to create a more favorable environment for the companies. We think this project is indeed a very big one, with a value of more than US$80 billion, so it will take a long time to fully execute; however I value its impact more on the healthy development of China-U.S. economic relations, because President Xi has reiterated that China-U.S. economic relations are the anchor and driving engine for the overall China-U.S. relationship, and President Trump has also made clear that he is very keen on cooperation in big projects. I think the cooperation on such a large project is rare in the histories of China and the U.S. and even in the world history. We sincerely hope that it will become one of the greatest driving forces to ensure the healthy development of China-U.S. economic relations. Of course, the two sides should benefit from the cooperation in the first place. West Virginia wants to improve its employment and investment situation, and China also hopes to benefit from its involvement in the full industrial chain development of shale gas deposits in the U.S.

Meanwhile, I would like to emphasize that, in terms of policy appeals, sometimes it is China that makes the proposal, but eventually it comes down to the two sides reaching an agreement. The long-term contract of liquefied natural gas (LNG) is a good example. In the preliminary outcomes of the 100-day plan concerning the China-U.S. economic cooperation, China has a very clear policy appeal that the U.S. should allow LNG exports, and should allow China and U.S. companies to sign long-term contracts in this regard. Frankly speaking, China had been putting forward this request for a number of years; however, the U.S. did not lift restrictions on LNG exports to China for a variety of reasons, domestic legislation in particular. The preliminary outcome of the 100-day plan had realized LNG exports to China, and the U.S. had begun studying the signing of long-term supply contracts. Now, months later, the appeals of the U.S. have become stronger, hoping to sign a more fixed, long-term and big supply contract, so we can see that the changing process in the appeals of both sides is also a process whereby the economic interests of China and the U.S are closely linked and integrated. I hope very much that the CNN reporter will report this to the U.S. audience. Thank you.

China National Radio:

During your briefing just now, you mentioned that in the meeting between parties of China and the United States, there was a bilateral airworthiness agreement signed, which was applauded by both sides. May I ask what the significance of this achievement is? Thank you.

Zhu Guangyao:

Thank you. This is also a matter of mutual benefit and win-win for both sides as I just mentioned. Truthfully speaking, this is an important appeal made by China in the 100-day plan for China-U.S. economic cooperation.

However, signing this agreement actually reflects the interests of both China and the United States. Indeed, our large aircraft is on trial. We need cooperation with other countries, especially the United States. At the same time, as the second largest aircraft market in the world, China has great capacity. But, we actually operate half the number of aircrafts compared to the United States. In other words, we are the second largest aircraft market, yet we only have half the number of the United States, so the American Boeing has vast business potential in China.

Because of this, the U.S. enterprises strongly support signing the airworthiness agreement between China and the United States. It is the governments of the two countries that answer the demands of the enterprises of the two countries, so before this state visit of President Trump to China, both sides were able to sign this airworthiness agreement. The agreement, I think, will produce mutual benefits and win-win results for both countries and will have a long-term, effective and positive impact on the future economic relations between China and the United States, especially on the cooperation between both aviation industries. Thank you.

Lianhe Zaobao:

You just mentioned market access in the financial sector. I would like to ask whether there are any other sectors besides the financial sector, where China is going to relax controls over market access. Trump and other American companies have also been paying attention to market access as well as technology transfer and intellectual property theft. Have China and the United States been discussing these issues? If so, what is China's response?

Zhu Guangyao:

As for the issue of market access, just now I have specifically reported on this to you all. The principle China has followed is the substantial relaxation of control over market access and further opening up of the service industry, which was put forward by President Xi in his report to the 19th CPC National Congress. It is very clear - not just for the financial industry. The issues surrounding the financial industry were a consensus reached by both sides during Trump's visit to China. I think, just as President Xi stressed in his report to the 19th CPC National Congress, China will drastically relax control over market access and further open the service sector to the outside world. All relevant departments of the Chinese government are making the necessary timetables and roadmaps. China will become more and more open. The closer the integration of China's economy and the world economy, the bigger the contributions that will be made by China's economic development to the development of the world economy. At the same time, China also benefits from the development of the world economy. Therefore, the close integration between China and the United States are the basis for our close cooperation. Thank you.

Xinhua News Agency:

In your introduction, you mentioned that China will continue to open up in more sectors, including the finance and automobile sectors. My question is, what is the biggest benefit China would gain from the meeting between President Xi and President Trump. And what are the mutual benefits?

Zhu Guangyao:

The meeting between the two presidents is based on mutual respect. The two sides had sincere and frank talks on issues of concern. That means all issues of common concern of both parties were laid on the table. The two sides were both clear that our common goal is to maintain the sound development of Sino-U.S. economic ties, and the bilateral relationship as a whole.

Both presidents have stressed that Sino-U.S. cooperation has a significant impact on the wellbeing of the two peoples as well as on the peace and development of the whole world. Both sides have their aspirations for economic policies. Such aspirations reflect their confidence in each other's markets. American corporations want to be more involved in the Chinese market, eyeing up the opportunity to open more factories and ventures in China. Meanwhile, Chinese entrepreneurs want to invest more in the U.S., and carry out cooperation with U.S. counterparts in the U.S. or in third-party countries. This all results from their mutual confidence in each other's markets and development paths. Based on this confidence, the meeting has lifted the closely related bilateral ties, especially the economic ties, to a higher level.

President Xi pointed out in his report to the 19th CPC National Congress that China will work toward a new form of international relations featuring mutual respect, fairness, justice, and win-win cooperation. The Chinese side will unswervingly follow this principle in conducting negotiations with the U.S. I'm sure this will definitely bring benefits to both Chinese and U.S. peoples and, furthermore, make contributions to the peace and development of the world.

Why has the international community paid such close attention to this meeting and the results it has yielded? Because China and the U.S. are the two biggest economies in the world. As the biggest developing country and the biggest developed country, China and U.S. have their respective responsibilities. President Xi stressed that we have 1,000 reasons to maintain a good relationship between China and the U.S., and not one reason to spoil it, with which, I think, President Trump may have also agreed.

Yesterday, at the state dinner hosted by President Xi, President Trump played a video of his granddaughter Arabella singing Chinese songs and reciting Chinese poems, which was applauded by all the attendees. In her tender voice, Arabella started by greeting "Grandpa Xi and Grandma Peng" in authentic Chinese. Her performance at once brought closer the affection between the Chinese and American peoples. I think the video revealed that President Trump and his family highly value Chinese culture and his belief in the future of bilateral ties, and more importantly, his effort in pushing forward China-U.S. relations.

In his toast at the dinner, President Trump said that the two countries will make efforts to achieve a more just, secure, and peaceful world and a future based on the dreams of our children. I can tell you all that the meeting between the two presidents is of historic significance. From Arabella's video, the performances by the Chinese children at the state dinner, and the interaction between the two presidents and the Chinese children, we can see that the two leaders care much about the future generations of the two countries, and about the world peace and development. I think that is the biggest achievement of the meeting. Thank you.

Xi Yanchun:

Because time is limited, the briefing will end now. If you have other questions, you may contact the news office of the Finance Ministry. Thanks again to Mr. Zhu and all present.

Speakers:
Mr. Fu Ziying, China's international trade representative and vice minister of the Ministry of Commerce

Mr. Wang Bingnan, vice minister of the Ministry of Commerce

Mr. Zhou Bo, executive vice mayor of Shanghai

Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office

Date:
Nov. 2, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. At the Belt and Road Forum for International Cooperation in May, Chinese President Xi Jinping announced the nation would be hosting the China International Import Expo starting from 2018. Almost half a year has passed since then. Many people have expressed eagerness to know how preparations for the event are proceeding.

To address your needs, we have invited Mr. Fu Ziying, China's international trade representative and the vice minister of the Ministry of Commerce, Mr. Wang Bingnan, also a vice minister of the same ministry, and Mr. Zhou Bo, the executive vice mayor of Shanghai, to introduce the preparations made so far for the First China International Import Expo. They will also answer some of your questions.

I now give the floor to Mr. Fu Ziying.

Fu Ziying:

The Ministry of Commerce takes ensuring the success of the First China International Import Expo as a major political task to implement the guiding principles of the 19th CPC National Congress. Now, let me give you an introduction to the expo.

First, the significance to host the expo.

To host the China International Import Expo is a major strategic deployment and decision of the CPC Central Committee with Comrade Xi Jinping at its core, focusing on promoting a new round of opening up. It is an important action of the Chinese government in opening up the domestic market to the world, as well as an important embodiment of practicing General Secretary Xi Jinping's proposal for promoting construction of a human community of shared future.

The world economy is currently entering a period of deep adjustment, and the trend of economic globalization is encountering many twists and turns; therefore, the international community has shares a strong desire to see expansion of the Chinese market, get on the express train of China's development and participate in the construction of the Belt and Road Initiative. China's economy has shifted from the stage of high-speed growth to one of high-quality development. Accelerated adjustment of the economic structure creates stronger demand for commodities and services of high quality and specific features. Against such a background, to hold the China International Import Expo is in line with China's self-development needs and the common development needs of the world.

To host the expo, by opening and sharing the Chinese market, reflects China's willingness to shoulder its responsibility as a major country and is conducive to formation of a demonstration effect so as to promote international trade and achieve greater market opening, give impetus to the further development of economic globalization and the construction of an open world economy, and create conditions for promoting the construction of a human community with a shared future. Moreover, to host the expo will provide strong support for pushing forward a new round of high-level opening up and promoting further construction of the "Belt and Road", which will be conducive to higher-level open economic development and the sustained and healthy development of China's overall economy.

Second, a general introduction about the expo.

The first China International Import Expo is scheduled to be held at the National Exhibition and Convention Center in Shanghai from Nov. 5th to 10th, 2018.

The expo will be hosted by the Ministry of Commerce and the Shanghai municipal government in partnership with several international institutes, such as the World Trade Organization and the United Nations Industrial Development Organization, and organized by China International Import Expo Bureau and the National Exhibition and Convention Center (Shanghai).

The venue of the expo covers an area of more than 240,000 square meters, showcasing two exhibitions -- one on national trade and investment and the other on enterprises and commerce.

The former one is dedicated to establishing an open platform for countries at different developmental stages to expand their influence and deepen global economic and trade cooperation.

We plan to invite participating countries to present the general landscape of their trade and investment, including trade in commodities and services, industrial performance, investment, tourism and country-specific specialties. There will be no business transactions conducted at the exhibition.

The business exhibition is divided into two sections: goods trade and services trade. Enterprises from various countries and regions will be invited to exhibit, talk business and clinch deals.

Trade in goods covers six fields, namely smart and high-end equipment, consumer electronics and home appliances, vehicles, garments and consumer goods, food and agricultural products as well as medical devices and health care products. Trade in services covers emerging technology, services outsourcing, innovative design, culture & education, tourism services and other fields.

During the Expo, we will hold the first "Hongqiao international trade forum". The forum consists of the opening ceremony and three parallel forums, where we will invite leaders and ministers of exhibiting countries, heads of international organizations, representatives of domestic and foreign businesses and leading experts and scholars to participate in the forum.

Focused on promoting open, inclusive, beneficial-to-all, balanced and win-win economic globalization and building an open world economy, the forum offers a good platform for the participants to share ideas and make suggestions for boosting global trade and economic growth.

In addition, during the Expo, a series of professional supporting activities will be carried out, including supply and demand matching, industry seminars, product launches, etc., to better promote the matching of exhibitors and professional buyers.

The Central Committee of the Communist Party of China and the State Council of China have paid close attention to the preparation of the First China International Import Expo, and have subsequently given approval to establish a preparatory committee for the expo.

Wang Yang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and vice premier of the State Council, is the director of the committee. The committee consists of 19 ministries, departments and governments including the Ministry of Commerce, Shanghai Municipal People's Government, the Publicity Department of the CPC Central Committee, Ministry of Foreign Affairs.

On August 24, Wang presided over the first meeting of the preparatory committee and made a comprehensive preparation plan. The Implementation Plan for the China International Import Expo was approved by the Central leadership at the beginning of October.

The Ministry of Commerce and the Shanghai municipal government are taking several measures to prepare for the First China International Import Expo. Firstly, to make a detailed and clarified plan. We clearly defined responsibilities and administrative rules to coordinate all the supporting tasks. And plans were made in terms of inviting businesses and exhibitors, supporting the forum as well as urban management. A roadmap and timetable have been determined. Secondly, approval has been granted for the establishment of the China International Import Expo Bureau in Shanghai.

Thirdly, to invite exhibitors from across the globe.

We have already sent out invitations to over 200 trade partners around the world. And it is expected that there will be enterprises from more than 100 countries and regions taking part in this expo. Fourthly, to promote this event through various channels. The official website of the China International Import Expo has gone online today. And we will open a section for this expo on the website for the Ministry of Commerce. In order to promote public participation in this undertaking, we will collect submissions for logo designs through the official website and WeChat platform. Overseas promotional efforts will be carried out widely, in a bid to improve international understanding of this event.

Fourth, work plan for the future.

In accordance with the unified arrangements of the Import Expo Preparatory Committee, we will strengthen cooperation and achieve interconnected development in every dimension, striving to build an open cooperative platform where all countries can display their national development achievements and carry out international trade. We also aim to build the expo into an international public good helping promote building of the Belt and Road Initiative as part of the process of economic globalization, put into practice the new development philosophy, and advance a new round of the high-standard opening-up drive.

In the next step, we will go all out to complete the preparatory work and speed up the organization and publicity for inviting businesses, exhibitors and forums. At the same time, we will work out supporting approaches in greater detail to ensure the First China International Import Expo can be held as scheduled and be a great success.

Here, on behalf of the Preparatory Committee Office of China International Import Expo, I would like to extend our heartfelt appreciation for the representatives and guests from various governments, business circles, international organizations and institutions that plan to be present at the expo. We also welcome domestic enterprises to attend the expo for negotiating and purchasing activities. Thank you!

Hu Kaihong:

Thank you, Mr. Fu. Now, Mr. Zhou will brief you about the expo.

Zhou Bo:

I'm very happy to have this opportunity to brief you about Shanghai's preparations and efforts to host the first China International Import Expo. The choice of Shanghai as host city shows the CPC Central Committee and the State Council have full confidence in and give great support to our city. We feel deeply the significance of this task and we are extremely honored.

Shanghai has the necessary foundations, conditions and experience in hosting major international events, conferences and expos, such as the 2010 World Expo, the 2014 CICA Summit, the 2007 Special Olympics and the 2003 APEC Summit. Shanghai is also an efficient and convenient transportation hub. In terms of passenger volume, Shanghai Airport handles more than 100 million trips a year, and ranks fifth in the world. Pudong International Airport is within the top three of the world's airports in handling the import of goods. The container throughput of Port of Shanghai has topped the world for seven consecutive years. Shanghai's rail traffic network also ranks in the world front row along with Beijing.

Of course, Shanghai's urban management of infrastructure facilities, including precision-based urban management, are constantly being improved in accordance with the instructions of Xi Jinping, general secretary of the CPC Central Committee, who said a city should be managed as precisely as "doing embroidery." No matter if it is about eliminating traffic jams or about improving the city landscape, we have achieved effective results.

The Shanghai Municipal Committee of the CPC and the Shanghai municipal government attach great importance to this event and are doing preparatory work in the following fields.

Firstly, we have enhanced the organizational and leadership support. We established a special work team involving 36 government departments responsible for issues like commerce, finance, public security, customs and quarantine and inspection. The team is comprised of more than a dozen entities responsible for 16 special issues.

Second, we have stepped up our efforts to ensure a sound environment for city's operation. Take transportation as an example. The event is expected to attract a large number of participants and visitors, and thus will pose challenges for the operation of the city's transportation system. Luckily, Shanghai has good transportation facilities. With the help of information technology, intelligent management, big data, cloud computing and other approaches, our transportation system will run in an even better manner ready for the expo. Besides, we are working hard to build roads near the venue. There will be 13 new roads and several new parking lots. I'm sure transportation will be even more convenient than it is at present. Security is another public concern. We have taken a series of measures and adopted high technology to ensure things are under tight control and so as to eliminate hidden dangers. Our ultimate goal is to ensure the expo can operate in a safe and orderly manner.

Besides, we will ensure all expo participants can have easy access to healthcare services. We will do our best to receive and cater to their needs in an all-round way. We will ensure everything is ready for them, such as the urban environment, and the facilities for power, gas, water supply and sewage, telecommunication, and weather forecasting.

Thirdly, we'll step up with our efforts to provide professional services and all-round support. Although the expo will last for only six days, in accordance with what the Ministry of Commerce has required, we plan to offer all-round, 24 hour service throughout that period, and 365 days after the event ends, via online or offline channels. This is known as "six days plus 365 days" service. We'll continue to make exploration and innovation of the "3.0 version" of the Pilot Free Trade Zone, enhance reform, improve the functions of existing trade exhibition transaction and promotion platforms, and press ahead with alliances in four distinct aspects, namely, the alliance of businesses, the cross-border e-commerce alliance, the alliance of professional services and the alliance of commercial channels. We will provide a year-round online exhibition and open perennial State exhibition halls with services and conveniences that we should try our best to offer.

Hu Kaihong:

Thanks, Mr. Zhou. Now let's open the floor to questions. Please identify your media outlet before asking your question.

CCTV:

Why, in particular, is China going to hold the Import Expo at a time of sluggish global growth, rising trade protectionism and setbacks in economic globalization? Thank you.

Fu Ziying:

President Xi Jinping has systematically expounded China's firm stance on economic globalization on many major international occasions. Hosting the Import Expo is part of our efforts to implement China's stand on economic globalization and trade liberalization as presented by President Xi.

The import expo initiated by a developing country, China, is perhaps the only one of its kind in the world. It offers an opportunity for countries at varying development levels to present their achievements in trade and investment. It is also a platform for different parties to discuss international trade and other major global economic issues. This clearly demonstrates China's sincere readiness to open its market to the world and its assumption of the responsibility, as a major country, to advance economic globalization.

Major strategies to participate in and promote economic globalization, and develop an open economy, were set out in the report to the 19th CPC National Congress. We will implement the principles established by the congress, namely, strengthening cooperation with other countries and international organizations as well as mobilizing local governments, departments and enterprises to ensure the success of the first Import Expo. With this event as a bridge, China is ready to enhance communications with its trading partners around the world, boost global trade and economic growth to achieve win-win outcomes and common development. Thank you.

Jiefang Daily:

My question is for Mr. Zhou Bo. What initiatives will Shanghai undertake to seize the opportunities created by the expo to enhance the city's role as an international trade center?

Zhou Bo:

Building Shanghai into an international trade center is a national strategy. By 2020, the city is expected to be an international trade center which matches China's importance in the global economy and trade value. So far, we have greatly improved its ability to pool and allocate trade resources and attract innovative institutions.

For instance, the total volume of imports and exports handled in various ports in Shanghai accounted for more than one fifth of the nation's total. The imports handled in Shanghai accounted for 26.7 percent of the nation's total. Of the commodities imported into China via Shanghai, many represent a share of at least 30 percent in their individual market in the country. The service trade handled in Shanghai also accounted for more than 30 percent of the national total.

Besides, several commodity trading centers have been built in Shanghai. They all closely linked with the financial sector. The trade volume of Shanghai's financial markets reached nearly 1,400 trillion yuan, and the figure is expected to rise higher this year. Globally, Shanghai is one of the cities with the most complete financial facilities and infrastructure. We have 13 special financial institutions, including a stock exchange center, financial futures exchange center, gold exchange center, forex trade center, and insurance exchange center. With the help of the free trade zone established in Shanghai, we have made many positive attempts in improving trade facilitation, opening our economy wider, and improving investment environment. Many of our experiences are positive and can be used in other places in China.

The China International Import Expo will provide precious opportunities for Shanghai. First, we will improve our role in exports so as to better serve the country and the world. Shanghai has been a major export platform in China, and the expo will give us an opportunity to turn the city into an import platform too. Besides, we will open our economy wider to the outside world with the help of the upgraded free trade zone. We will work harder to use the zone to test the country's ability to cope with stress, to implement various pilot programs, and to promote the development of the Belt and Road Initiative.

More activities will be launched to enhance Shanghai's attractiveness as a trade center. We hope more new business will be formed and new models will emerge. We will do our best to support them. We hope we can help the expo exert a wider and deeper influence in the world. We also hope that we can make greater contributions to building Shanghai into an international trade center. Thank you.

China Daily:

What measures will the China International Import Expo take for the exports from developing countries and the least developed countries, especially for the entry of related products into the Chinese market? Thanks.

Wang Bingnan:

The most important goal of hosting the China International Import Expo is to provide a public platform for countries at different levels of development to improve their national influence and deepen their trade cooperation with others. We will take the following measures to assist the entry of related products from developing countries and the least developed countries into the Chinese market:

Firstly, sharing market opportunities and achieving common development. As we all know, China is a huge market with a population of over 1.3 billion. The demand for good quality and special products and services is increasing day by day. To set up such an international cooperation platform, we sincerely invite the developing countries and least developed countries to organize their companies to participate in the China International Import Expo. The China International Import Expo will provide them an opportunity to exhibit their special and competitive products and services, share the huge business opportunities in the Chinese market, strengthen their cooperation with China and other countries, and strive for mutually beneficial cooperation and common development.

Secondly, holding activities for promotion and facilitating cooperation channels. Trade and investment are inseparable and complementary. With the aim of facilitating the connectivity between trade and industry, and creating new channels for cooperation in trade and investment, we will organize a series of economic and commercial activities including a supply-demand meeting point, a negotiation meeting point and an investment seminar in accordance with the requirements from participating countries, especially from the developing countries and least developed countries.

Thirdly, providing assistance and improving support services. We will provide necessary assistance and help some developing countries and least developed countries at the China International Import Expo. For instance, we will reduce or waive exhibition fees for some countries. We will improve support services for the convenience of exhibitors and their products in entry and exit during the expo. According to different specifications and types of the products, we will establish an online and offline one-stop trading platform to provide display and trade services in a long term after the expo. Thanks.

The Wall Street Journal:

President Donald Trump will visit China. So, will there be any achievements made in terms of economy and trade after this visit? And before Trump's visit to China, what kind of exchanges have the both sides made in preparation? Compared to the President Obama's visit to China, what's the difference in terms of preparing the economic and trade activities? Also, will there be any new measures with regard to China's opening up?

Fu Ziying：

Thanks for your questions, which feature a quite hot topic. China has already published the date of President Trump's visit and relevant information. What I can tell you is that Wilbur Ross, the US commerce secretary, will lead a business and trade delegation to China at the same time. Related economic and trade activities will be undertaken between China and the U.S., and cooperation agreements will be signed. As you asked about the preparations that both sides have made for this visit, I may say that we have already reached consensus on some aspects and we are striving to make achievements in terms of economy and trade, as well as the next stage of China-U.S. cooperation. We also expect the two sides will produce pragmatic achievements on the basis of a consensus shared between them, in a bid to promote the China-U.S. relationship to usher in a better future.

China National Radio (CNR):

This time, the countries invited to the China International Import Expo are not limited to those along the Belt and Road. Would you please tell us which countries the expo is mainly targeting and what has been taken into consideration for that? Thank you.

Wang Bingnan:

At the opening ceremony of the Belt and Road Forum (BRF) for International Cooperation, President Xi Jinping announced that China will host the China International Import Expo starting in 2018. Since then, the international community has attached great importance to the event, and many countries and companies have expressed their wishes to participate in the expo through different channels. In response to their concerns and to give all the participants easier and quicker access to the expo, the Import Expo Preparatory Committee Office has started the work for inviting exhibitors worldwide. In mid-October, we sent invitations to more than 200 trading partners. We hope corporations all over the world will participate in the expo as well. From the information we've got so far, the work for inviting exhibitors overseas is proceeding smoothly.

We estimate that more than 100 countries and regions will send their corporations to attend the first Import Expo. We will release a specific invitation list later, and we will keep you informed of the progress in a timely manner. Here it is necessary to point out that the first China International Import Expo is not an expo in the common sense. It is an open cooperative platform provided by China for all countries to display their national development achievements and carry out international trade. We will invite the participating countries on an extensive basis. And we sincerely welcome corporations and guests from all countries, including those along the Belt and Road, to be present at the first Import Expo. Thank you.

CRI:

You have just mentioned that the China International Import Expo will be made into a landmark project implementing the new development philosophy and promoting a new round of opening up. How should we understand that? And what benefits and effects will there be in holding such an expo to carry out the new development philosophy and deepen the opening up? Thank you.

Fu Ziying:

China has entered a new era, wherein the Chinese economy has entered a new normal. Foreign trade is an important force to stimulate China's economic growth. We must seriously study and understand the new development philosophy put forward by General Secretary Xi Jinping to promote the development of foreign trade in the new era.

The expo is one of the most important contents of that, and a most important step in the innovative development of foreign trade in the new era. We have to follow the new development philosophy, and made the expo into an innovative, coordinated, green, open and sharing event. Just now, Mayor Zhou said Shanghai is also working hard on various security and logistics aspects for the expo in accordance with the demands of green development. This expo is a high-level, low-carbon and green event, reflecting the demands of cyclic development. The threshold for participating in this expo is relatively high, and some of the products to be exhibited, including some services, must certainly meet the demands of the green economy, the demand for innovation, and the need for openness and sharing. They must fully show the new development philosophy.

Nikkei:

U.S. President Donald Trump will visit China next week. He is concerned with the imbalanced trade between U.S. and China. China's Ministry of Commerce has expressed its willingness to expand the import of American products. What products do you think can be included in these expanded imports by China?

Fu Ziying:

Thank you for your question. You might know that the governments, business circles and scholars of both countries pay close attention to the trade imbalance, which is an old question, as well as a new issue. The reasons for imbalanced trade are various and complicated. Every year, China's Ministry of Commerce will publish a whitepaper on foreign trade, explaining the current situation and the reasons for the imbalanced trade between China and the U.S., and expressing hopes and suggestions for solving the situation.

I mentioned that the reasons for the imbalanced trade are complicated. Fundamentally, the situation is caused by the different economic structures of the U.S. and China, the different industrial distribution of the two countries, and the international division of labor. Besides, the imbalanced trade also derives from the two countries' statistical systems, which inevitable contain statistical errors and have different methods of calculating entrepot trade factors. And there is a very important reason -- the U.S. controls on high technology equipment sales. China has a market demand, but the U.S. is not willing to satisfy its needs.

China keeps a favorable balance in the trade of labor-intensive products, but in the trades of capital and technology-intensive products, agriculture products, and especially services, China has seen a trade deficit for a long time. This fully proves that both in U.S. and China, no matter whether in commodities or services sector, trade always follows the market rules, and the result is decided by the market, the importers and the customers.

We could do some analysis. According to the data my colleague gave, China was the biggest foreign export market for the U.S., and it's also one of the markets with the fastest growth. In the past 10 years, the growth of U.S. exports to China reached 11 percent every year, which exceeded the four percent average level of the total exports of the U.S. in the same period. In 2016, the U.S. exports to China have quintupled from the figure in 2001; however, in the same period, U.S. exports to other countries only increased 90 percent overall. China has become an important overseas market for many American products. For example, China is the biggest market for U.S. airplanes and soybeans. As to automobiles, integrated circuits and cotton, China is America's second biggest export market. The 62 percent of soybeans, 17 percent of automobiles, 14 percent of cotton and 25 percent of Boeing aircraft sold overseas by the U.S. came to China. I would like to ask you, if China is not an open market, how could these goods have been exported to China? And three decades ago, could American goods be exported to China?

So, Chinese President Xi Jinping has stressed that China did not pursue a trade surplus painstakingly. That's why we plan to hold the China International Import Expo. We will follow the new development philosophy and make adjustment to cope with China's new contradictions in the new era.

I had mentioned that Wilbur Ross, the U.S. Secretary of Commerce, will lead a delegation to China. I know you are keen to know what goods will be imported and how many of them will be imported, but I must observe professional ethics and tell you now. However, I can assure you that the result will be positive and balanced. Thank you.

Dragon TV:

Mr. Zhou, would you please give us more details about the "six days plus 365 days" one-stop import transaction service platform, built both online and offline to facilitate business deals with professional support? Thank you.

Zhou Bo:

As I have briefed you, we'll provide professional, all-round and multi-pronged services to further strive for the expo's success. Following the guidance of the Ministry of Commerce, we'll establish a "six days plus 365 days" one-stop import transaction service platform within and beyond the period of the expo, making it part of our routine services.

First, we'll establish a one-stop import platform to provide regular transaction services. With the full-fledged development of the internet, we are able to forge ahead with a connection between exhibitors and purchasers with accurate information available both online and offline. We'll collect both supply and demand information, including the year-round, seasonal and one-off information, to narrow the information gap. At the same time, we'll constantly update purchase and trade dynamics, and also offer consultation and business match-making services.

Second, we'll expand multi-pronged connections and set up alliances among purchasers in different categories. We'll make full use of the influence of leading companies in different sectors to offer business match-making services for exhibitors and physical retailers, cross-border e-commerce, trade agents and exhibition and transaction centers. Take physical exhibition for example. We'll organize and explore exhibition platforms opening to various transactions and providing perennial showcases of the specialties of participant countries, especially, those involved in the "Belt and Road" Initiative.

Third, we'll pool market resources to provide a broad range of professional services. Shanghai enjoys certain advantages in the service sector inclusive to both domestic and overseas markets, and we'd be delighted if the service suppliers from home and abroad could join us to offer their professional support to purchasers and exhibitors all over the world. Thank you.

Macau Asia Satellite Television (MASTV):

You mentioned that enterprises from over 100 countries and regions will attend this expo. My question is: How will the Chinese government organize buyers to purchase at the scene so that the expo could achieve tangible results? Thanks.

Wang Bingnan:

As you said, merchants will play a vital role in this expo, and this aspect is going to take much effort from the Ministry of Commerce and the Shanghai Municipal Government. We will organize exhibitors and buyers to engage in purchasing activities under the government-guided, market-oriented and company-participation principle.

As for how to organize such work, we will take several measures. First, we will invite large-scale and competitive enterprises to attend the expo specifically for purchasing. We also welcome buyer delegations organized by specific provinces and cities, centrally administered state-owned enterprises, chambers of commerce as well as other countries. Second, in order to better promote the expo, we will hold press conferences and road shows in major target cities and countries. At the same time, we welcome the mainstream press, as well as new media such as Weibo and WeChat, to promote public awareness of the expo. Third, we will offer the list of exhibitors, information on products and their contact details to purchasers ahead of the expo, facilitating their negotiations and good communications at the scene. Fourth, we will provide better professional support services for trade promotion. We will build a one-stop import transaction service platform to help buyers and exhibitors apply for licenses and make appointments for business talks. Besides, the platform also provides services such as multilingual translation and business consulting. Through these efforts, we hope to have a successful and world-class import expo. Thanks.

Fu Ziying:

I would add that the China International Import Expo also provides an important trade platform for Hong Kong and Macao. We welcome enterprises from Hong Kong and Macao to attend the expo. We will have preferential policies for them to exhibit and carry out purchasing activities. Meanwhile, for companies in the Chinese mainland, they can only purchase at the expo, but will not be allowed to exhibit. All these arrangements are a reflection of the principle of "one country, two systems."

Shanghai Securities News:

The China International Import Expo being held next year is a major step for the country to expand imports. Specifically, what will the Ministry of Commerce do in the future to increase import? Thank you.

Wang Bingnan:

I'd like to stress the expo is an important measure for the country to increase its openness to the outside world in a new era. The Chinese government highly values imports. In recent years, we have taken active and effective policies to increase imports through multiple channels. Since 2013, the State Council has launched a series of policies and measures covering taxation, financing, optimized management and facilitation, all aimed at expanding imports and achieving balanced trade. In the future, we will focus on the following three aspects:

First, we will improve our fiscal, taxation and financial policies to encourage import expansion. We will reduce tariffs on some consumer goods to increase the inward flow and improve the overall import structure. By adjusting the "Catalogue of Encouraged Technology and Product Imports", and encouraging banking and financing agencies to strengthen their support of import credits, we will expand purchases of advanced technological equipment and key parts.

Second, we will improve the supply-demand relationship, as well as trade conditions, step up integrated customs clearance procedures and strengthen the quarantine inspection system to further facilitate inward trade.

Third, we will continue with import management reform to streamline administration, delegate more powers, enhance regulations where necessary and provide better services. We will explore innovations in the government supervision model, and improve import management and related services. At the same time, we will improve the import promotion system, strengthen the platforms that can promote imports and make further innovations in import trade modes. Take auto imports for example: We have explored innovative ways for parallel importation. More active exploration in such sectors will be carried out in the future.

While carefully preparing for the first expo, the Ministry of Commerce and related departments will continue to implement the aforementioned documents and policies issued by the State Council, improve and refine various policies and measures, try to create a fair, law-based, internationalized and effective business environment, and promote continued, healthy and stable growth of foreign trade. Thank you.

Hu Kaihong:

This is the end of today's conference. Thank you.

.

Speakers:
Mr. Liu Yongfu, director of State Council Leading Group Office of Poverty Alleviation and Development

Ms. Su Guoxia, head of the Comprehensive Department of the State Council Leading Group Office of Poverty Alleviation and Development, as well as the office’s spokesperson

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

Date:
Oct. 10, 2017

Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to this press conference. The Central Committee of the Communist Party of China (CPC) has always attached great importance to poverty reduction. To help you better understand China's progress in this regard, we have invited Mr. Liu Yongfu, director of the State Council Leading Group Office of Poverty Alleviation and Development, to introduce developments since the 18th CPC National Congress was held. He will also answer some of your questions. We have also invited Ms. Su Guoxia, head of the Comprehensive Department of the office, as well as its spokesperson, to attend this press conference.

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

Liu Yongfu:

Ladies and gentlemen, good afternoon. Welcome to this press conference. Thank you for your long-term support and close attention to our work of poverty reduction.

Oct. 17 will mark the fourth National Poverty Relief Day of China, as well as the 25th International Day for the Eradication of Poverty. Two days ago, Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, issued important instructions related to the poverty reduction work. While recognizing the achievements and efforts made in this field so far, he urged all Party members, and indeed the whole society, to keep moving forward and win the battle against poverty. Premier Li Keqiang has also urged all-out efforts to be undertaken in this regard, so as to ensure the overall poverty reduction goals can be fulfilled according to plan.

Liu Yongfu:

On Oct. 9, the State Council Leading Group Office of Poverty Alleviation and Development held a seminar in Beijing to share some outstanding examples and experiences of poverty alleviation. The seminar conveyed and learned the significant instructions from the Party General Secretary and the premier, and presented awards to some excellent individuals for their efforts in poverty alleviation. Also yesterday, the Poverty Relief Office of the State Council and the United Nations' China branches co-organized the 2017 Global Poverty Reduction and Development Forum, which was attended by delegations from 15 countries, envoys to China from 20 countries and representatives from 16 international organizations. Chinese and foreign representatives praised China's poverty alleviation achievements and targeted poverty alleviation plans. U.N. Secretary-General Antonio Guterres asserted his belief that targeted poverty alleviation is the only way to help the poorest people and achieve the major goals set for the U.N.'s 2030 Agenda for Sustainable Development.

In a few days, the 19th National Congress of the Communist Party of China (CPC) will be held in Beijing. China will begin a historic new chapter in its journey to carry out the great struggle, pursue the great undertaking, push forward the great cause and realize the great dream. We will work in full force to push forward poverty alleviation with the guidance of the spirit of the 19th CPC National Congress.

Liu Yongfu:

Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core has taken poverty elimination as the bottom-line, goal and landmark indicator for building a moderately prosperous society in all aspects. Poverty elimination forms part of the country's "five-in-one overall strategy" of promoting balanced economic, political, cultural, social, and ecological progress, and the country's "four-pronged comprehensive strategy" of building a moderately prosperous society in all aspects, deepening reform, exercising law-based governance, and practicing strict Party self-governance. The central government has established the goal of nationwide poverty elimination by 2020, when the entire impoverished rural population living below current poverty standards will be lifted out of poverty and there will not be a single "poverty county."

The Chinese government is pushing ahead with the work of poverty elimination with unprecedented vigor. President Xi Jinping has assumed personal command of the work, and has inspected all the contiguous areas of extreme poverty in the country. Among his more than 50 domestic inspection tours, more than 30 have been related to poverty alleviation. During the five inter-provincial poverty elimination meetings in Fuping of Hebei Province, Yan'an of Shaanxi Province, Guiyang of Guizhou Province, Yinchuan of Ningxia Autonomous Region, and Taiyuan of Shanxi Province, President Xi repeatedly stressed poverty elimination and issued a series of important instructions.

All the members of the Standing Committee of the Political Bureau of the CPC Central Committee as well as comrades of the Political Bureau of the CPC Central Committee attach great importance to the work of tackling poverty and continually give strong guidance on the issue. Governments at all levels have conscientiously implemented the central government's decisions and arrangements. People from all walks of life have actively participated in and made joint efforts in tackling poverty. Thus, it can be said that the work of poverty elimination has made some remarkable achievements.

Liu Yongfu:

First, we have established a series of systems of poverty elimination. The systems involve responsibilities, policies, funding, mobilization, supervision and assessment, providing a solid institutional guarantee for the work of poverty elimination.

Second, we have promoted the key work in tackling poverty. The work includes targeted poverty reduction, funds management and targeted policies tailored to local conditions.

Through joint efforts of governments at all levels and people from all walks of life, the number of people living in poverty has dropped by a great margin and the living conditions in the poverty-stricken areas has obviously improved.

During the last four years, the number of people living in poverty was accumulatively reduced by 55.64 million, an average of 13.91 million a year; this year the number is expected to stand at least 10 million. Therefore, during the past five years, a yearly average of more than 13 million people have escaped from poverty.

An immense poverty reduction program running from 1986 to 2000 lifted 6.39 million people out of poverty on average each year. And during the ensuing decade, the figure rose to 6.73 million. Since the 18th CPC National Congress, the government has reduced the number of people living in poverty by more than 13 million each year, signaling an unprecedented achievement in our history.

Liu Yongfu:

Second, poor counties were defined throughout the country from 1986. This year, Jinggangshan in Jiangxi Province and Lankao in Henan Province took the lead in poverty alleviation. Another group of poverty-stricken counties will also announce their poverty elimination by the end of this year, signifying that the number of poor counties has been reduced for the first time in history. This is a remarkable achievement.

The poverty reduction drive has not only lifted people out of poverty, but also improved governance and management competency of rural grass-roots units, inspiring community-level officials to change their way of administration. A great number of young grass-roots workers and Party officials came to the fore in the drive. With the change in their work style, and the experiences gained from dealing with actual situations, they will become a treasure trove for the new great causes that will follow in due course.

Despite the remarkable achievements in the poverty reduction drive, there are still difficulties and problems that we cannot afford to underestimate or ignore.

The major difficulties at present are: the task of poverty elimination in the deeply impoverished areas is arduous and the problem of the people who become poor or sink back into poverty due to illness is very striking. The problems related to these areas and these people can only be solved at higher expense and with greater efforts.

At the same time, we also have some problems in our work, such as impractical approaches, superficial work style, inaccurate assistance, formalism and bureaucracy. Besides, the lack of motivation of the affected people is also a hindrance.

Liu Yongfu:

Guided by General Secretary Xi Jinping's strategic thinking on poverty relief and development, we should be fully aware of our problems, and keep to a problem-oriented approach to continue to implement the policies and instructions of the central government, making an all-out effort to win the battle against poverty. That's all I want to share with you. Ms. Su Guoxia and I are ready to take your questions. Thank you.

Xi Yanchun:

Thank you, Mr. Liu. Now let's move to the question session. Please identify your media outlet before stating your question.

Phoenix TV:

You just now mentioned some places with high incidence of poverty such as the Tibet Autonomous Region, the Tibetan area in Sichuan Province, and four prefectures in the south of the Xinjiang Uygur Autonomous Region. Do you have any poverty-relief measures focusing on those deeply impoverished areas? Thank you.

Liu Yongfu:

As I just said, the goal for alleviating poverty by 2020 will be definitely achieved. However, the difficulty lies in the deeply-impoverished areas in ethnic minority-dominated areas on China's borders, such as Tibet and south Xinjiang. Due to longstanding historical problems, those areas, with less desirable conditions, are more likely to be poor and distressed. Six provinces and provincial-level regions are home to over 3 million poor people, and five provinces or provincial-level regions have an incidence of poverty over 10 percent. According to the progress made in poverty alleviation in past years, without reinforced efforts, those areas will find it hard to achieve the expected goal. Therefore, the CPC Central Committee has hosted a seminar on poverty alleviation for deeply-impoverished areas and drawn up corresponding documents and measures to deal with the issue.

First, the CPC Central Committee will give top priority to those areas in poverty alleviation efforts and enhance various financing and policy measures.

Second, various departments and agencies are expected to play their specific roles in poverty alleviation. For example, the transport department needs to build more roads and the department responsible for water resources needs to solve problems with the supply of safe drinking water.

Third, provincial-level governments must take full responsibility in solving the specific problems facing the deeply-impoverished areas.

Each area has its own special conditions. Besides those poor areas I mentioned just now, each province and provincial-level region also have relatively serious impoverished areas. With provincial governments taking full responsibility, they can identify their own impoverished counties, towns and villages and work out new policy measures to deal with specific problems there. Thank you.

CGTN:

Last year, I visited some impoverished areas in southwest China to produce a special report about their poverty alleviation efforts. I've seen that people in those areas are now enjoying better housing, medical and education services, and have a stronger sense of achievement. However, I wonder how we can establish a long-term mechanism to avoid the people in those areas from sinking back into poverty again. Is there any mechanism in place to help those people become self-dependent and self-sufficient?

Liu Yongfu:

As you have said, remarkable progress has been made in education, medicine, housing, transportation and drinking water thanks to targeted poverty alleviation efforts. While committed to our current work, we should also consider establishing a long-term mechanism to meet any future problems that might occur. First, there should be firm leadership at the grass-roots level to lead poverty reduction and promote prosperity. Second, we need to bring into full play the role of the first Party chief and the task forces assigned to those areas for poverty alleviation, build a group of front-runners and attract local talents back to contribute to poverty reduction and sustainable development. Third, we should develop featured industries in accordance with local conditions to ensure sustainable development. Fourth, there has to be a long-term mechanism covering education and public health. For example, those areas should constantly improve medical security, advance pre-school education, compulsory education and higher education to nurture talents and skills. All these measures should be carried out simultaneously. Thank you.

China Daily:

During an interview in Tibet Autonomous Region, I heard that local people who used to live in Nagqu - a high altitude area- had been relocated this July to new houses with a hot spring courtyard. It's a new method of poverty alleviation to relocate people from inhospitable areas. Mr. Liu Yongfu, could you share more about other innovative measures which will be adopted in the future to help people shake off poverty and become prosperous?

Liu Yongfu:

The place you mentioned is Yambajan, which has hot springs. The local government of Tibet has made preparation to move residents living above 4,200 meters in altitude to areas of lower altitude. In the next step we will increase policy support to deeply impoverished areas.

For instance, in Tibet, combined with the development of urbanization and the improvement of the ecosystems and the environment, we can continue to relocate groups of people to low-altitude and river valley areas. While in deeply impoverished villages, where the poverty rate is above 20 percent, we will carry forward specific projects to promote their development, covering infrastructure, industrial development and grass-roots organizational construction. We will also implement new measures to lead local people to change their old ideas and outdated conventions. Thank you.

Reuters:

The poverty relief program seems quite narrowly focused on a certain population of the rural poor. Is there any room or need to expand the definition to maybe urban migrant workers who also struggle a lot with living in the big cities, or people who do not fit into that narrow definition; or maybe people who are slightly above the definition. There may be several hundred million people who are still struggling but not the most extreme poor. I know in Tibet and Sichuan there are some very difficult areas, but even a few hours from Beijing and Hebei, there are people who do not have good access to education and healthcare. Is there any need to expand the focus, maybe after 2020, after the goal is met? Will there be any expansion of the program? Are there any other ways that the government is looking at to help other impoverished people who are also struggling?

Liu Yongfu:

You know well about China. You are right that our poverty relief program does largely target the rural poor. It is true that there are also people living in poverty in urban areas. But as you may also know, we have different policies for urban areas. We rely on subsistence allowances and employment guarantees to relieve poverty in urban areas.

We will see to it that each family has at least one member in stable employment and therefore a stable income. Meanwhile, we will aid those entitled to subsistence allowances in a timely fashion. And the subsistence allowances granted to urban residents are higher than those for rural residents. Regarding migrant workers, this group is covered by the poverty relief program for rural areas.

Right now, we are focusing on wining the poverty reduction war before 2020. How to further address poverty after that? Do we need to come up with a holistic plan that coordinates efforts in urban and rural areas? How to resolve relative poverty after absolute poverty is eliminated? These are all questions we are now studying. You have raised a very good question. Thank you.

Xi Yanchun:

The reporter from Reuters not only focuses on the current progress of poverty reduction, but also its future.

The Beijing News:

My question is in relation to when people become poorer or return to poverty because of illness. I have previously reported on middle-class families becoming poor because their children were diagnosed with a tumor. They had to sell their cars and houses in order to seek care in Beijing since there is no medical care system to cover their basic needs under special cases. For these people, is there any policy or measures to meet their needs?

Liu Yongfu:

Su Guoxia will answer this question.

Su Guoxia:

Thank you very much. We will communicate and coordinate with relevant government departments about incorporating the medical treatment of some major diseases into medical security. Actually, you have raised a question concerning a deeply impoverished group of people. Among the remaining poor at the present time, the percentage of family members caught in or set back to poverty due to illness is on the rise, up from 42 percent two years ago to 44 percent now. So, the government is paying special attention to this problem, and also regards it as one of our next priorities. Together with the National Health and Family Planning Commission and other government departments, we have carried out poverty alleviation projects to help increase health standards in poor areas, and also established systems like basic medical insurance, major disease insurance and medical assistance, complemented by some commercial insurance, to address basic problems. Now, local governments are carrying out many policies as well. We believe that the current healthcare system for the poor in rural areas has been basically sound.

A specific issue you mentioned just now is some rare diseases. Diseases like pediatric congenital heart disease and leukemia have been incorporated into the special medical treatment of critical diseases. For the congenital heart disease relatively common in the Tibetan region, the government has not only offered assistance with national policies and systems, but also mobilized the community to help. Only a small number of certain individuals are afflicted by rare diseases, who need help from society, including NGOs. Next, we will cooperate with other departments including the National Health and Family Planning Commission to work on additional measures for helping with the treatment of major pediatric diseases.

I would like to further address the question raised by Reuters. As Mr. Liu just explained, our main strategies for helping the poor in cities are minimum living allowances and employment assistance policies. In fact, another major policy that was developed in recent years is to guarantee the housing security of the poor in urban areas. The government has invested a lot in transforming shantytowns and providing support for basic housing over the past few years, and addressed the housing of 80 million poor people in cities. Thank you.

Liu Yongfu:

I'd like to add more. In addition to what she had just talked about, the National Health and Family Planning Commission has jointly launched with us an action plan on serious disease treatment, the contracted treatment of chronic diseases and medical assistance for special and serious diseases. Now the work gets underway nationwide. Thank you.

China National Radio (CNR):

China has made huge achievements in poverty alleviation since the 18th CPC National Congress. What policy mix has been introduced during the period? How do different departments and regions collaborate in this regard? Are there any specific measures for tackling some long-standing problems of poverty alleviation? Thank you.

Liu Yongfu:

There are a lot of measures. In my view, current poverty alleviation measures share certain characteristics:

First, the goal of this campaign is to eradicate poverty. The former massive campaigns against poverty left a large number of impoverished people afterwards. The number stands at more than 20 million or even more than 30 million, who live in absolute poverty. Our aim is to get rid of absolute poverty and leave no poverty-stricken population behind. We have formulated many policies and formed a policy mix on the target populations by comprehensively deepening reform and in accordance with the strategy of taking targeted measures in poverty alleviation and the requirements of implementing classified policies.

The central government is responsible for making overall plan, the provincial governments taking the overall responsibility and the cities and counties carrying it out. The principal leaders of the Party and governments in 22 central and west provinces have signed with the central government letters of responsibility on poverty alleviation with stricter performance evaluations. Irregular change of positions of the Party leaders and magistrates of 832 counties should be avoided from 2015 to 2020. The major secretary and other staff working in villages are transferred from the Party and government offices and state-owned enterprises and institutions at the levels of the central government, provinces, cities and counties respectively. Nearly one million people are on duty, with nearly three million people transferred accumulatively. All these measures are unprecedented.

With regard to financial investment, the central government requires that investment be adapted for the poverty alleviation task. The special funds for poverty alleviation from the central finance were very poor before. Poverty alleviation tasks are reliant on this fund even though it only amounted to 40 billion yuan. The poverty-stricken regions can hardly receive the money. Since the campaign against poverty was launched, the funds have seen a year-on-year growth of more than 30 percent. The funds allocated by provinces, cities and counties have also substantially increased accordingly. Now, more than 80 billion yuan is allocated by the central government, more than 60 billion yuan allocated by the provincial government and more than 60 billion yuan allocated by the governments of city and county level, which are unprecedented.

Liu Yongfu:

In terms of financial input, in the past there was only fiscal input - the financial sector didn't participate much. Now the financial sector is involved and provides poverty alleviation microloans for registered poor households. The financial product (microloans) has reached 380 billion yuan, and can be characterized as "under 50,000 yuan, repaid within three years, with no need for guarantees and mortgages to get loan, only requiring the benchmark interest rate, while the poverty alleviation fund would fully pay the interest, and the rural counties will set up risk funds." For the leading poverty alleviation enterprises which provide jobs for registered poor individuals, the central bank will issue poverty alleviation reloans with a very low interest rate -- 2 percent for local governments and 5 percent for enterprises. For example, if they need to relocate 10 million people with a budget of 600 billion yuan, then 250 billion yuan will be capital funds provided by the government, and the remaining 350 billion yuan will be financial bonds.

Local debts will be partially used for poverty alleviation. In the past two years, the local governments were required to allocate 60 billion yuan every year. And we also integrated social funds into it. In the last year, we integrated more than 200 billion yuan. This year, the amount will increase further.

For land policies, impoverished areas will be guaranteed land for poverty alleviation projects. And the surplus quotas of linking the amount of urban and rural land granted for construction purposes to that of land returned to cultivation are allowed to be traded within the provincial scope. Recently, the policies regarding this issue have been expanded, such as the policy for building village-level photovoltaic power stations.

Land-use policies deal with tough problems, many of which have existed for a long time. We have so many challenges to address.

China Business News:

I have three questions, first for Mr. Liu and then for Ms. Su.

Mr. Liu, just now you talked about the deeply impoverished areas that pose difficulties and problems of poverty elimination, with the task of tackling poverty being very arduous from now on. So, what specific measures will be taken to complete the task of poverty elimination in these areas? Moreover, you also said that, while helping poor counties and poor villages to escape from poverty, we should also pay great attention to poverty elimination in non-poor counties and non-poor villages. Precisely, how should this be dealt with?

Ms. Su, regarding your answer to the previous question, could you please add one point, that is, concerning the people living in poverty, the proportion of the people who have become poor or have sunk back into poverty due to illness rose from 42 percent in 2014 to 44 percent in 2016. So, what is the reason for this? Moreover, during the National Poverty Relief Day in 2016, you said that a phenomenon of "undue haste" in the work of poverty relief had spread to some areas of the country. As the fourth National Poverty Relief Day is drawing near, is there any improvement in this phenomenon?

Liu Yongfu:

Actually, I have already mentioned some issues involving the deeply impoverished areas, but I can elaborate here. The deeply impoverished areas designated by the central government include Tibet, the four southern Xinjiang prefectures (Hotan, Aksu and Kashi prefectures, and Kizilsu Kirgiz autonomous prefecture), ethnic Tibetan areas in the provinces of Sichuan, Yunnan, Gansu and Qinghai, Linxia Hui Autonomous Prefecture in Gansu Province, Nujiang Lisu Autonomous Prefecture in Yunan Province and Liangshan Yi Autonomous Prefecture in Sichuan Province. Now we are formulating a special plan for poverty alleviation in these deeply impoverished areas and also trying to work out more relevant policies and measures. As I mentioned earlier, the central government will increase its support for these deeply impoverished areas, and so should the various departments directly involved. All provinces are also required to develop their destitute areas that are not included in the deeply impoverished areas designated by the central government.

The second question is about villages and counties that are not on the country's list of impoverished villages and counties. There are certain prerequisites for counties or villages to be included in the list. Life there is indeed very hard, featured with an enormous poverty-stricken population, high poverty incidence and harsh living conditions. These impoverished villages and counties have been the focus of our work, and so are those deeply impoverished areas. This is one of the approaches of our work. However, now, when the poverty alleviation endeavor has reached a critical stage, we will never allow any counties or individuals to be left behind. Therefore, while alleviating poverty in the designated areas, we should in no way neglect the development of counties and villages that are not on the country's list of impoverished villages and counties. These counties and villages have a relatively stronger economy, better industrial facilities, improved governance, and lesser number of poor people. Hence, it is possible for them to alleviate poverty with their own efforts.

There might be some differentiated regional policies, but when considering impoverished villages and households, the policies are consistent. For example, there can be a poor village in a non-designated county or a poor individual in a non-designated village. The national policies adopted for them are no different. We have taken those issues into consideration while formulating policies. Of course, we'll continue to enhance our supervision to avoid any blind spots in our work.

Su Guoxia:

I will answer the question about "undue haste" in the work of poverty alleviation first. It is the result of officials' view on their political record -- Is it to be responsible for the people and the verdict of history or just their own political achievements? As the country recently stepped up efforts on examination and assessment, another tendency has emerged. Some places worried about failing to pass this process, so they slowed down the pace of the work on poverty alleviation. To settle the problem, we should guide cadres to adopt a correct view of political achievements -- our duty is to serve the people and our efforts on poverty alleviation should be responsible for a good historical judgement. At the same time, we will strengthen our efforts on examination and assessment, supervision and inspection to ensure full adherence.

Another question from you is about alleviating poverty by improving health. With the development of the rural economy and the increasing efforts for poverty alleviation, the economy in impoverished areas has been generally improved and the people's incomes have risen. Families with members capable and being willing to work have got rid of poverty with their own efforts along with government help. The proportion of these people is on the decline, yet the proportion of people whose poverty is due to illness is rising. We will increase our efforts to help them. Thank you.

Liu Yongfu:

I would like to add that, as for the progress and quality of poverty alleviation, we should adopt a practical and realistic way. Neither "undue haste" nor a slow pace is acceptable. Therefore, a reasonable and ordered timetable is needed. As General Secretary Xi Jinping has said, we should roll up our sleeves to work harder. So, we need to stick to the agreed standards and seek truth from facts on the issue of poverty alleviation. The pace could be faster or slower according to conditions in different areas; however falsification, bureaucracy and formalism are totally unacceptable. Thank you.

Reuters:

It is known that poverty reduction is a great issue in China. However, I have noticed that some local governments are sensitive about being interviewed by foreign media. What's the reason for that? That's maybe why some Western media is skeptical about the programs. We also want to go to these locations and report on the actual situation, but it's very difficult to get permission to go to these places and see these programs. Have you heard of this issue and know the reason for that? Another question is could you recommend some places that would be good to go visit? Thank you.

Liu Yongfu:

China remains committed to the policy of opening-up. The poverty reduction program will undoubtedly improve people's livelihood. We expect there will be more oversight from all sides. I have never heard about the situation you have mentioned. However, there are some places I would like to recommend to you for study. You could apply to the SCIO according to the regulations, and we will do our best to help.

Some local governments are afraid of its being exposed publicly that there are problems in their work. We sometimes have difficulties in inspecting their work, too. Of course, we have our own ways to resolve these difficulties, for example making unannounced visits. So, my suggestion will be that: firstly, we welcome media monitoring, including that from foreign countries; secondly, we will help the media contact the news and information departments of the local governments, if there is a need.

Xi Yanchun:

I would like to add a few more words on this point. It is a very important duty of the State Council Information Office to organize press conferences, briefings and collective interviews related to aspects of poverty alleviation, and that is what we have been doing. Previously, we organized press conferences and interviews related to poverty alleviation work with the strong support of the State Council Leading Group Office of Poverty Alleviation and Development. We organized a fact-finding trip to Guizhou in September, in which the interviews that occurred about poverty relief received support from the State Council Leading Group Office of Poverty Alleviation and Development. We have also organized foreign journalists to conduct interviews in Inner Mongolia and Sichuan Province. If you have any requirements regarding any interviews, please feel free to mention it, and we can coordinate the arrangements. If you encounter any problem during the interview process, you are welcome to contact our local colleagues as well.

Lastly, I agree with Mr. Liu that poverty relief as an ongoing cause that can hardly be fulfilled without the support and help of our media friends, so we encourage you to continue following its progress.

Our press conference will end here. Thanks again to Mr. Liu and Ms. Su. Thank you all.

Speaker:
Mr. Ning Jizhe, vice chairman of National Development and Reform Commission and commissioner of the National Bureau of Statistics

Chair:
Hu Kaihong, spokesperson of the State Council Information Office

Date:
Oct. 10, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. China has made much headway in economic and social development since the 18th National Congress of the Communist Party of China (CPC) was held in 2012, attaching much attention.

Today, we are delighted to invite Mr. Ning Jizhe, vice chairman of the National Development and Reform Commission and commissioner of the National Bureau of Statistics, to introduce China's progress in this regard. He will also answer some of your questions.

Now, let's welcome Mr. Ning to give a briefing.

Ning Jizhe:

Drastic changes have taken place in China and the world since the 18th National Congress of the Communist Party of China (CPC) was held. Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping as the core, much headway has been made in economic and social development. Important victories have been achieved in building a moderately prosperous society in all aspects, and the development of socialism with Chinese characteristics has entered a new phase, laying a solid foundation for the fulfillment of the "Two Centenary Goals" and the dream of rejuvenating the Chinese nation.

1. Economic performance has remained within an appropriate range, with further enhancement of comprehensive national strength and international influence.

The economy has maintained medium-to-high speed of growth. From 2013 to 2016, the average annual growth of GDP was 7.2 percent, higher than the global average of 2.6 percent and the 4 percent growth achieved by the developing countries.This involved an average annual increment of 4.4413 trillion yuan (at 2015 constant prices).

In the first half of this year, the economy continued to make steady progress with sound momentum. The national GDP grew by 6.9 percent year-on-year, remaining within the range of 6.7 percent to 6.9 percent for eight consecutive quarters.

Ning Jizhe:

The employment rate continued to expand. From 2013 to 2016, newly employed people in urban areas was over 13 million for four years in a row and from January to August this year, the newly employed persons in urban areas was 9.74 million. From 2013 to 2016, the surveyed unemployment rate in urban areas for 31 big cities was on average around 5 percent and was 4.83 percent in September this year, the lowest since 2012. From 2013 to 2016, the total number of rural migrant workers grew by 1.8 percent annually on average and by the end of the second quarter this year, the number of rural migrant workers grew by 2.1 percent year-on-year.

Prices have been stable. From 2013 to 2016, the average annual growth of consumer prices was 2 percent. From January to August this year, the consumer price grew by 1.5 percent year-on-year. In the past few years, the average annual economic growth rate was 7.2 percent accompanied by a 2 percent inflation rate and 5 percent surveyed unemployment rate. Such economic operation featuring a high speed of growth, expanded employment and low prices is an outstanding achievement in the world.

China's comprehensive national strength continues to be enhanced. In 2016, China's GDP reached 74 trillion yuan, 1.32 times that in 2012 at constant prices; the general public budget revenue was almost 16 trillion yuan, 1.36 times of that in 2012; the output of a number of industrial and agricultural products, such as cereal, meat, peanut, steel and automobiles, ranked the first in the world; the length of high-speed railways reached 23,000 kilometers, ranking the first in the world; by the end of 2016, China's foreign exchange reserve exceeded US$3 trillion and by the end of August this year, the number reached US$3.09 trillion, continuously ranking the first in the world. In 2016, China's Gross National Income (GNI) per capita reached US$8,260. On the GNI per capita ranking of 216 countries (and regions) publicized by the World Bank, China moved up from 112nd in 2012 to 93rd in 2016.

International influence has also been notably enhanced. In 2016, China's GDP was US$11.2 trillion, accounting for 14.8 percent of the world economy, 3.4 percentage points higher than that in 2012, making China the second largest economy in the world. From 2013 to 2016, the contribution of China's economy to world economic growth stood at around 30 percent on average, surpassing the total contribution of the United States, Eurozone and Japan. China has become the biggest contributor to world economic growth.

Ning Jizhe:

2. The innovation-driven development strategy was deeply implemented and the shift from the old driving forces to the new ones accelerated.

Major breakthroughs were made in scientific and technological innovation which gained strong support from the government. In 2016, the expenditure on research and development (R&D) activities reached 1,567.7 billion yuan, an increase of 52.2 percent compared with 2012, and its ratio to GDP was 2.11 percent, 0.2 percentage points higher than that in 2012. A number of landmark achievements in science and technology, such as quantum communication, high-speed railway, manned spaceflight, lunar exploration program, radio telescope, giant aircraft, manned deep-sea submersible and super computer have steadily been achieved.

Business startups and innovation by the general public flourished. With the deepening of the reform of the business system and the reform to streamline administration, delegate more powers to lower-level government and society, improve regulation and optimize services, the multiplier effect of pooling the wisdom and strength of the public has unfolded.

From 2014 to 2016, there were over 44.00 million newly registered market entities nationwide, 13.62 million of which were newly registered enterprises, an annual average increase of 30 percent. From January to August this year, 3.99 million enterprises were newly registered, and in August 17,000 enterprises were newly registered per day.

The number of patent applications and authorizations has increased sharply. In 2016, the number of domestic and overseas patent applications and authorizations increased by 69.0 percent and 39.7 percent respectively compared with 2012.

China's development moved towards medium-to-high end. While the new driving forces grew rapidly and robustly, the transformation of traditional industries accelerated.

From 2015 to 2016, the online retail sales of physical goods increased by 28.6 percent annually on average, 18.1 percentage points faster than the total retail sales of consumer goods. From January to August this year, the online retail sales of physical goods increased by 29.2 percent year-on-year, 18.8 percentage points faster than the total retail sales of consumer goods. In 2016, express delivery services delivered 31.3 billion parcels, 5.5 times of that in 2012 and an annual average increase of 53.2 percent. From January to August this year, the number of parcels delivered by express delivery services increased by 30.2 percent year-on-year.

New business models, such as the platform economy, sharing economy and collaborative economy, were widely penetrated, and new types of business, such as on- and off-line interaction, cross-border e-commerce, smart home and smart communication, were burgeoning. Plans and initiatives such as "Made in China 2025" and "Internet Plus" were effectively implemented. From 2013 to 2016, the investment in industrial technological transformation grew by 13 percent annually on average, among which the investment in technological transformation of the manufacturing industry grew by14.3 percent.

Ning Jizhe:

3. Supply-side structural reform advanced steadily with accelerated transformation and upgrading.

The supply-side structural reform achieved remarkable results. The reduction of overcapacity went on well. In 2016, the production capacity of steel and coal were cut by over 65 million tons and over 290 million tons respectively, which exceeded the annual targets.

From January to July this year, the target for reducing the overcapacity of steel was reached; the production capacity of coal was reduced by 128 million tons, fulfilling 85 percent of the whole year's target. The efforts to reduce inventory were effective.

By the end of 2016, the floor space of commercial buildings for sale reduced by 3.2 percent year-on-year, which included an 11 percent reduction of the floor space of residential buildings for sale. By the end of August this year, the floor space of commercial buildings for sale reduced by 12 percent year-on-year.

The efforts to deleverage have made steady progress. By the end of 2016, the debt-to-asset ratio of industrial enterprises above the designated size was 55.8 percent, 0.4 percentage points less than the end of last year.

By the end of August this year, the debt-to-asset ratio of industrial enterprises above the designated size was 0.7 percentage points less than the same period last year.

The efforts to lower costs were noticeable. In 2016, the cost for per-hundred-yuan turnover of principal activities of industrial enterprises above the designated size was 85.52 yuan, 0.1 yuan less than the previous year. From January to August this year, the cost for per-hundred-yuan turnover of principal activities of industrial enterprises above the designated size was 0.12 yuan less than the same period last year. The efforts to strengthen these areas of weakness enjoyed remarkable success.

Investment in areas such as eco-environmental protection, agriculture, water conservancy, and strategic emerging industries increased rapidly, and major initiatives were undertaken which would help to meet urgent needs at the moment and promise long-term benefits. From January to August this year, the investment in management of public facilities, agriculture, and ecological protection and environmental governance increased by 24.3 percent, 16.1 percent, and 28.2 percent respectively.

The supply-side structural reform in agriculture was steadily pushed forward. In 2016, grain production reached 616.25 million tons, maintaining more than 0.6 trillion kilograms for four years in a row. The distribution of production became more concentrated in the most advantageous areas.

Ning Jizhe:

The service industry accounted for half of the national economy. In 2016, the value added of the tertiary industry took up 51.6 percent of GDP, 6.3 percentage points higher than that in 2012; in the first half of this year, the value added of the tertiary industry took up 54.1 percent of GDP. From 2013 to 2016, the value added of the service industry witnessed an average annual growth of 8.0 percent, 0.8 percentage points faster than the growth of GDP; in the first half of this year, the value added of the service industry increased by 7.7 percent year-on-year. The "Made in China 2025" Initiative was fully implemented and the industrial upgrading stepped up. From 2013 to 2016, the value added of equipment manufacturing and the high technology industry saw an average annual increase of 9.4 percent and 11.3 percent in real terms, 1.9 percentage points and 3.8 percentage points higher than the industry above the designated size. From January to August this year, the value added of equipment manufacturing and the high technology industry saw an increase of 11.4 percent and 13.0 percent year-on-year, 4.7 percentage points and 6.3 percentage points higher than the industry above the designated size.

Consumption became the major driving force for economic growth. From 2013 to 2016, the final consumption expenditure contributed to 55 percent of the economic growth annually on average, 8.5 percentage points higher than the capital formation, indicating that economic growth was driven by domestic demands. In the first half of this year, the final consumption expenditure contributed to 63.4 percent of the economic growth. In 2016, the ratio between the final consumption and GDP was 53.6 percent, 3.5 percentage points higher than that of 2012; the capital formation rate was 44.2 percent, 3 percentage points lower. The proportion between consumption and investment became more rational with domestic demands taking up a large share of the total economy.

The coordinated development of urban and rural areas assumed a new aspect. By the end of 2016, China's urbanization rate was 57.35 percent, 4.78 percentage points higher than that by the end of 2012. The equalization of public services in urban and rural areas improved steadily and the gap between urban and rural areas continued to narrow. In 2016, the income ratio between urban and rural areas was narrowed by 0.16 compared with 2012, and in the first half of this year the ratio was narrowed by 0.01 compared with the same period last year. New measures of the Four-Region Strategy, namely the development of the western region, the revitalization of the northeastern region, the rise of the central region and the leading role in development taken by the eastern region, were launched; the Three Initiatives of the Belt and Road Initiative, the Beijing-Tianjin-Hebei Integration Initiative and the Yangtze Economic Belt Initiative were promoted; the Xiongan New Area was planned and established, and the national and regional central cities developed rapidly. All of these suggested new growth poles and belts were taking shape. From 2013 to 2016, the average growth rates for the eastern, central, western and northeastern regions were 8.2 percent, 8.7 percent, 9.2 percent and 5.3 percent and the per capita regional GDP ratio between the highest province and the lowest one was narrowed from 4.38:1 to 4.28:1.

Ning Jizhe:

4. Efforts in energy conservation and environmental protection were enhanced and ecological development was further strengthened.

Energy conservation and new energy development yielded new achievements. In 2016, energy and water consumption per unit of GDP decreased by 17.9 percent and 25.3 percent respectively compared with 2012. In the first half of 2017, energy consumption per unit of GDP was reduced by 3.9 percent year on year.

By the end of 2016, the installed capacity for nuclear power generation reached 33.64 million kilowatts, an increase of 167.6 percent over 2012; the grid-connected wind power generation capacity reached 147.47 million kw, an increase of 140.1 percent; and the grid-connected solar power generation capacity reached 76.31 million kw, a 21.4-fold increase.

Environmental protection and pollution control efforts have been significantly strengthened. In 2015, the chemical oxygen demand emissions decreased by 8.3 percent than 2012, ammonia emissions decreased by 9.3 percent, sulfur dioxide emissions dropped by 12.2 percent and nitrogen oxide emissions fell by 20.8 percent.

In 2016, 338 cities were monitored, among which 24.9 percent had standard air quality, 3.3 percentage points higher than 2015; and the density of fine particular matter (PM2.5) was 47 micrograms per cubic meter, down 6 percent from 2015. From January to August this year, the PM2.5 density in 338 cities at prefecture level and above fell 2.3 percent year on year.

Among offshore seawater quality monitoring sites, 73.4 percent met the national Class I or II standards for national ocean water quality in 2016, 4 percentage points higher than 2012, and 16.3 percent were classified as Class IV or Inferior Class IV, down 7.6 percentage points than 2012.

Ecological environmental governance achieved notable results. In 2016, the completed afforestation areas were 7.2 million hectares nationwide, an increase of 28.7 percent compared with 2012; an additional 5.62 million hectares was under soil erosion control, an increase of 28.6 percent compared with 2012. By the end of 2016, the urban household waste treatment rate was 96.6 percent, 11.8 percentage points higher; the green coverage rate of urban built-up areas was 36.4 percent, 0.7 percentage points higher. The comprehensive treatment capacity of the urban environment has increased.

Ning Jizhe:

5. "Bringing in" and "going global" both seen significant rises in scale, indicating a higher level of economic opening-up

Both imports and exports shifted from the old pattern of quantitative expansion to qualitative improvement. In 2016, the foreign trade of goods amounted to 24.3 trillion yuan, with the proportion in the world total remaining steady at over 11 percent. The trade structure was further optimized, with general trade occupying 55.1 percent of total volume in 2016, against the 52 percent in 2012. The figure was 56.8 percent for the period from January to August this year. In 2016, China's foreign trade in services amounted to US$657.5 billion, up 36.8 percent from 2012 with an average annual growth of 8.1 percent, ranking second in the world. Export of services with high added value saw robust growth, exemplified by the 40.4 percent and 38.1 percent increases in information services and advertising services respectively.

Inbound and outbound investment reached new levels. In the period from 2013 to 2016, China's aggregate of actually utilized foreign direct investment was US$489.4 billion, an average annual growth rate of 3.1 percent. The country's aggregate non-financial outbound direct investment was US$491.5 billion, or an average annual growth rate of 21.6 percent. Foreign direct investment in both directions improved in quality terms. China's service sector actually utilized 571.6 billion yuan of FDI in 2016, 8.3 percent more than last year and 86.1 percent of the total went to high-tech service entities.

The all-round opening up has created significant new development space. In 2016, China's foreign trade volume with Belt and Road countries hit 6.3 trillion yuan, accounting for 25.7 percent of the national total. In the period from January to August this year, exports to Belt and Road countries such as Russia, India and Malaysia expanded year-on-year by 24.1 percent, 23.7 percent, and 17.3 percent respectively. By the end of 2016, Chinese enterprises had set up 56 overseas economic and trade cooperation zones in Belt and Road countries with collective investment exceeding US$18.5 billion. In the January-August period this year, China invested US$8.55 billion in 52 Belt and Road countries, accounting for 12.4 percent of the outbound investment in the period, which is 4.3 percentage points higher than last year. A number of major projects and international industrial capacity cooperative projects were launched, with the "going global"efforts in high-speed railways and nuclear power making solid progress. The construction of free trade zones has also quickened.

Ning Jizhe:

6. People's livelihood improved remarkably, and economic development benefited all.

People's livelihood continued to improve. In 2016, the annual national per capita disposable income was 23,821 yuan, an increase of 7,311 yuan from 2012, with average annual growth of 7.4 percent. Per capita disposable income in the first half of 2017 increased by 7.3 percent in real term, 0.4 and 0.9 percentage point higher than GDP growth and per capita GDP growth respectively. Consumption upgrading continues to be promoted.

In 2016, the Engel coefficient reached 30.1 percent, a fall of 2.9 percentage points compared to 2012, which is close to the well-off standard of 20 percent to 30 percent set by the United Nations. The proportion of expenditure on communications, education and entertainment, and health care in total household expenditure was up by 2.0, 0.7 and 1.3 percentage points from the 2012 figures.

Great achievements have been made in targeted poverty reduction. According to the rural poverty line of annual per capita income of 2,300 yuan (at 2010 constant prices), in 2016, the rural population suffering from poverty was 43.35 million, a reduction of 55.64 million from 2012. And the poverty rate in 2016 was down to 4.5 percent, a fall of 5.7 percentage points compared to 2012. From 2013 to 2016, per capita disposable income in rural poor areas increased by an average rate of 10.7 percent annually in real term, 2.7 percentage points higher than overall rural personal income. The growth of farmer's income in poor areas is faster than that in the whole country.

Ning Jizhe:

The social security system has been established and improved. At the end of 2016, the number of people joining the basic old-age insurance, basic medical insurance for non-working urban residents, unemployment insurance, workers' compensation and maternity insurance increased by 99.80 million, 207.50 million, 28.64 million, 28.79 million and 30.22 million respectively as compared with that at the end of 2012.

Substantive progress was made in integrating the basic medical insurance schemes for rural and non-working urban residents. In 2016, the proportion of health care expenses borne by individuals dropped to less than 30 percent. The basic medical insurance system now covers all the population in general and a social security system covering urban and rural residents was basically established.

Social programs enjoyed comprehensive development. The education level of residents has kept rising. The average length of schooling of people over the age of 15 increased from 9.05 years in 2010 to 9.42 years in 2015. Medical and health conditions continued to improve. China's average life expectancy increased to 76.34 years in 2015 from 74.83 years in 2010. The infant mortality rate dropped from 10.3 per thousand in 2012 to 7.5 per thousand in 2016 and the maternal mortality rate dropped from 24.5 out of 100,000 to 19.9 out of 100,000. Cultural and sports programs have also accelerated.

In general, since the 18th CPC National Congress, and under the strong leadership of the Central Committee of the Communist Party of China with Comrade Xi Jinping at its core, the Chinese people have risen to the challenge and worked hard to press ahead with an innovative and enterprising spirit, and made new contributions and impressive improvements in the course of building a moderately prosperous society in all respects and the rejuvenation of the Chinese nation.

At the next step, we will rally even closer around the CPC Central Committee with Comrade Xi Jinping at its core, hold high the banner of socialism with Chinese characteristics, have every confidence in the path, theory, system, and culture of socialism with Chinese characteristics. We shall make persistent efforts with greater inspirations to push forward the great struggle, the great undertaking, the cause of socialism with Chinese characteristics, and work with tireless dedication to achieve the "two centenary goals," and realize the Chinese dream of national renewal.

Hu Kaihong:

Thank you, Mr. Ning. Now, the floor is open for questions. Please identify your media outlet before stating your question.

China Central Television (CCTV) :

China's economy has stepped into a new normal since the 18th CPC National Congress. Mr. Ning briefed on the progress of the country's social and economic development over the past five years. Could you summarize the most important achievements China has made in regards to the economy over the past five years? Thank you.

Ning Jizhe:

I have just introduced China's achievements over the past five years from the perspective of the five development philosophies. To sum up, a prominent feature of China's economic development over the past five years is the new normal.

On the one hand, the new normal refers to the slowing of economic growth from the former high speed to the current medium-to-high speed. It's true that China's economic growth has slowed down a bit now, but the speed remains high in comparison with other countries. As I just introduced, China's economy grew at an average rate of 7.2 percent over the past four years, the highest growth rate among the world's major economies. As one of the world's biggest emerging economies, India registered a growth speed of around 7 percent in recent years, which fell below 6 percent in the first half of this year. China has an economy of US$11.2 trillion and still maintains a medium-to-high growth speed of around 7 percent, which is one of the important aspects of China's economy in the new normal.

The new normal refers to structural optimization on the other hand. With regard to the proportion of investment and consumption, consumption has become a major driving force of economic growth and its contribution has reached over 50 percent in recent years. Although investment still plays a key role in economic growth, consumption now plays a fundamental role in development and has become a major driving force. This is an aspect of structural optimization.

Ning Jizhe:

Regarding the industrial structure, the agricultural foundations have been improved and the manufacturing sectorhas been upgraded; meanwhile, the service industry has grown into the largest sector. In the past five years, the proportion of the service industry's added value in GDP has grown from less than to more than 50 percent. The figure was even higher in major cities like Beijing and Shanghai.

The upgrading of the manufacturing sector mainly occurred in the high-tech industries, strategic emerging industries and equipment production. Some of these industries have seen rapid growth at a rate near oreven above 10 percent. In the recent two years, some gained evengreater growth momentum. This indicates that new driving forces have rapidly developed, and the industrial sector has been further upgraded.

Regarding domestic and overseas demand, the former has assumed a major role in the Chinese economy. While the world economy has remained sluggish in recent years underthe lingering impact of the global financial crisis, the growth of the Chinese economy was propelled mainly by domestic demand.

Ning Jizhe:

The third characteristic of the new normal is the shift from the old economic driving forces to new ones. In recent years, investment in technological transformation in industrial and manufacturing sectors has grown faster than overall investment. This confirms that the technological transformation has been accelerating. It also reflects the way in which enterprises are working very hard to transform and upgrade in order to meet changing market demand and enhance their abilities to cope. The new driving forces are growing rapidly. These refer to new industries, new types of businesses, and new business models. New industries, or to be specific, the high-tech industry and strategic emerging industry, maintain rapid growth. Driven by the general public's growing entrepreneurship and innovative capacity, new industries continuously introduce new products and new services. New types of businesses, such as the sharing economy and online retail sales, are what the majority of the Chinese people are very concerned about, as well as what the people of the world feel about China's economic vitality. Many new types of businesses are growing vigorously with the promotion and application of the "Internet Plus" and high technology. New business models are emerging not only in individually-run businesses but also in large- and medium-sized enterprises. Take the Haier Group for example. One of its business models is to encourage its employees to use the internet as a platform to directly face customers and conduct production and operation based on consumption and usage requirements. This new business model is also growing rapidly.

Ning Jizhe:

The NBS made initial calculations of the new industries, new types of business and new business models. In 2015, the value added from these three aspects made up 14.8 percent of national GDP. The proportion was even higher in coastal areas, such as Shanghai, Shenzhen and Guangdong Province. In 2015, the national new economic momentum development index stood at 129 percent. We are now working on the statistics of 2016, and the general trend is even better than 2015.

So, no matter whether you look at it from the perspectives of speed, structural optimization or the transformation of the drivers of growth, you will find out that the new normal of China's economic development has more obvious characteristics that support economic development, create more jobs and income, and strengthen the nation's comprehensive power. Thank you.

CGTN:

We have noted the Chinese economy has faced both a complex external environment and internal conundrums since the 18th CPC National Congress. Yet, even in such circumstances, it has continued to make outstanding achievements. What do you think is the driving force behind this? Thank you.

Ning Jizhe:

Over the past five years, the splendid achievements of the Chinese economy amid the complicated context existing both at home and abroad owe much to the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core and the direction of the Party regarding economic and social development work. This is the most distinctive feature of the socialism with Chinese characteristics.

No matter what difficulties and problems occur, the CPC Central Committee and the State Council will forge ahead with timely study, inspecting conditions in the grass-root society and studying both the domestic and international situation, to ensure that wise decisions and concerted efforts are made nationwide to surmount obstacles. Thus, the national economy is enabled to maintain sound development and continue with structural transformation and upgrading, securing good results.

Second, specifically speaking, the new normal has been driven by the new development philosophy. In the past five years, while complying with the requirements of the CPC Central Committee and the State Council, the philosophy of innovative, coordinated, green, open and inclusive development has been adopted to ensure continued economic and social development. It is conducive to resolving problems and disputes, ensuring strong and sustainable development.

Ning Jizhe:

Third, we have pushed forward supply-side structural reform and moderately expanded aggregate demand. We have been promoting supply-side structural reform unswervingly. The excessive and outdated production capacity in some sectors and industries has restricted their growth and even affected the balance of supply and demand in the macro economy. Our focus on supply-side structural reform has not only changed the supply and demand of some specific industries, but also contributed to the balance of supply and demand in the whole economy. At the same time, China's domestic demand is still very large. Thus, improving the supply quality, adjusting the supply structure, and continuously expanding demand in consumption and investment have both maintained the balance of the macro economy and improved the structure of the economy.

Fourth, we have addressed the difficulties of development with reform and opening up. The central government offered guidance on the reform and made important decisions. The series of major reform measures have not only addressed some current contradictions hindering growth and development, but also opened up a path for further development of China's economy. In terms of opening up, peaceful development, mutual benefit and win-win results, especially the Belt and Road Initiative, have received unprecedented recognition and responses in the past few years from many countries around the world. Based on extensive consultation, joint contribution and shared benefits, we have pushed forward policy consultation, trade promotion, infrastructure connectivity, financial cooperation and people-to-people exchanges, and improved the international environment in which we develop. So these are primarily our major achievements over the past five years.

Reuters:

I want to ask a question about a perceived weakness in the economy, which is the performance of small and medium-sized firms. NBS statistics show small firms are contracting, while the big and ultra-large firms are getting stronger. The PBOC is also focused on helping small firms, which indicates they need more help, or they may face some problems. What is the cause of the weakness? Are you concerned that it indicates bigger problems in the economy as it moves forward? Are you comfortable with the big and ultra-large firms playing such an important role in economy? That's my first question.

My second question is: There have been signs that the GDP slowed a bit in August and September. How do you think the government should react if the growth proves to be slowing? It will face the choice between supporting growth and continuing to control credit. What choice will be made? Is the government comfortable with letting growth slowdown to below 6.5 percent, if that is necessary to control debt?

Ning Jizhe:

Medium and small-sized enterprises have their weak points; however, they also constitute an important part of the overall economy. Together with micro-sized enterprises, they make up over 90 percent of the market entities in the country, while large enterprises only account for less than 10 percent. Besides, medium and small-sized enterprises have made great contributions to the job market and national tax revenue.

The Chinese government attaches great importance to the development of medium and small-sized enterprises. Since the 18th CPC National Congress, a series of policies and measures were introduced to address their weak points and promote their further development. So far this year, the number of new businesses registered every day averaged about 16,000. In August, in particular, the number actually reached 17,000. More than 90 percent of these businesses are of medium or small size. This figure matches the proportion I just mentioned.

The growth momentum and potential of the national economy mainly comes from self-employed traders. Most of today's large enterprises and "unicorn" enterprises were medium and small-sized ones a few years ago.

SMEs had indeed experiencedsome difficulties in the early days of their establishment. To solve the problem, Premier Li Keqiang presided over a State Council executive meeting in September especially to study financial inclusion. Over the past one or two years, as required by the CPC Central Committee and the State Council, China's major banks have all set up a financial inclusion unit to facilitate financingfor SMEs and micro businessesas well as to cater to theneeds of agriculture, farmers and rural areas.

Just the other day, the central bank announced a targeted cut to thereserve requirement ratio to encourage financial inclusionin commercial banks. The cut will become effective fromJanuary 1, 2018. I believe by working hard and embracing innovation in addition to government support,SMEs can emerge as Unicorns and then blossom into dynamic, competitive big companies.

Ning Jizhe:

In the report on the work of the government, this year's GDP growth is expected to be around 6.5 percent. And in the first half of this year, China's GDP growth grew by 6.9 percent year on year.

For example, from January to August, the profits of industrial enterprises above the designated size increased by 21.6 percent, growing faster than last month, showing the effective management of enterprises.

The Purchasing Managers' Index this September is 52.4 percent, the highest since May, 2012. And the non-manufacturing business activity index is approaching 55.4 percent, also the highest since June, 2014. The nominal growth rate of industrial enterprises above the designated size will be higher than the actual growth if considering price factors.

For example, from January to June, the nominal growth rate of industrial enterprises in Inner Mongolia Autonomous Region stood at 20 percent, and the actual growth adjusted from price factors was about five percent, representing profound economic development.

So, a total GDP growth rate of 6.5 percent is expected to be realized. Besides GDP growth, employment, prices, environmental protection and other factors should also be considered. In recent years, the overall employment situation has remained positive. Prices are lower than expected, and the eco-environment is improving. So we are confident to realize the major goals of economic social development.

Bloomberg:

I have three questions. The first is about cutting overcapacity. What effects will shutting down polluting enterprises have on economic growth? For example, how many jobs will be lost and what kind of negative effect will this have on GDP growth? The second is about the accuracy of statistics. In March, President Xi Jinping was quoted as stressing that the accuracy of statistics must be ensured. What efforts has NBS made to improve the accuracy of statistics? The third question is about economic indicators. As you mentioned just now, innovation is an important growth driver, and such technology companies as Baidu and Alibaba are developing some of their own indicators to measure economic growth. How does NBS cooperate with these companies in using network data to measure economic growth? Thank you.

Ning Jizhe:

All the three questions you raise are very important. As to the first, goals were set in this year's government work report for cutting overcapacity in the steel, coal and thermal power sectors. All regions and all government departments are making efforts to promote progress with the expectation of reaching the desired goals. Through market- and law-based methods, overcapacity and outdated production facilities, including those violating the environmental laws, are being cut in all sectors in a steady manner. Since cutting overcapacity is among the priorities of economic growth this year, it was taken into consideration when the economic and social development targets were set. As I said just now, cutting overcapacity will not impede economic growth. Instead, it will improve the environment of the market economy and the ecological environment related to people's wellbeing.

During the process of cutting overcapacity, people from certain sectors are faced with difficulties gaining reemployment. The CPC Central Committee and the State Council have attached great importance to the issue and the financial sector has provided subsidies. As we know, most enterprises have performed flexibly in staff resettlement, such as those in steel, services, research and development, circulation and sales industries. In Hebei Province, some workers from steel enterprises have been smoothly transferred to the service departments in the same enterprise. In addition, newly emerged innovative enterprises have also accepted a large number of workers.

Therefore, the unemployment rate data was collected using sampling methods rather than summary statistics. The data shows that in 2016 and 2017, even while the efforts to cut overcapacity were increasing, the unemployment rate still fluctuated around five percent. The number was higher when in graduation periods.

With the further development of mass entrepreneurship and innovation, there will be more opportunities of employment. More than one million people were reemployed last year and it will be better this year.

Ning Jizhe:

The second question is how the National Bureau of Statistics (NBS) improves the quality and the authenticity of the data. We have adopted a series of measures to improve the authenticity of the data and to avoid fake date in individual units and areas. We have preliminarily established responsibility and accountability systems to ensure data quality. Heads of local statistics bureaus and even local governments will be responsible for the problematic data.

We have also increased our efforts on law enforcement supervision. From Aug. 1, 2017, rules for the implementation of the statistics law (revised in 2009) came into force. The NBS at the same time has set up a special bureau for law enforcement supervision. We have zero tolerance for false data or statistical fraud, which is necessary to change the overall environment for economic and social development.

Meanwhile, we will make the statistical data more scientific. With economic and social development, many new phenomena emerge, so we want to make them understood. However, there are still some statistical data that we can't easily collect. It's related to your question. We will lose no time in establishing sound statistics for new driving forces and new industries with internet-based thinking, big data and cloud computing technology. This is also one of the important aspects of improving the quality of statistical data.

It relates to your third question. We have made it clear in researching statistics for the 13th Five-Year Plan that we intend to establish a statistical cloud, that is, to apply the internet, cloud computing and big data to statistics. We are making efforts and orderly progress in this regard. Some big internet companies have accumulated a lot of statistical data during their operation, and so have government departments. As required by the State Council, statistical data made by different departments will be shared among them and will be open to the public in accordance with the requirements of openness in government affairs. We have been promoting it fully and without exception. The National Bureau of Statistics is making more efforts in data openness and sharing. Just as we have mentioned, Alibaba as well as Inspur from Shandong Province have established a mechanism of cooperative research.

Since 2013, the National Bureau of Statistics has established a relationship of cooperative research with these enterprises to explore how to make statistical data truer, more accurate, more integrated and more up to date with the internet, cloud computing and big data. Efforts have been made in this respect. As for the development index just mentioned, some enterprises, colleges and universities have also established an index that reflects new economic development. I just introduced the new driving force index of economic growth issued by the National Bureau of Statistics. We are cooperating with some colleges and universities to look into the development of China's new industries, new commercial activities and new business models from multiple perspectives. Thank you.

China National Radio (CNR):

Employment is the foundation to people's livelihood. Since the 18th CPC National Congress, the job market has faced many challenges, such as a record number of college graduates and the resettlement of a large number of workers from industries needing to cut over-capacity. The employment pressure is considerable, and we also note the macroscopic employment figures in the just-released document. So, how do you evaluate the employment performance in the past five years? And how do you assess the employment situation in the next few years? Thank you.

Ning Jizhe:

Employment is not only an important indicator of people's livelihood, but also an important indicator of the macro economy. We develop the economy and promote production with the aim of creating more jobs, increasing incomes, improving consumption and promoting social well-being. So, employment is a most important indicator. At present, there are three main indicators we need to consider.

First, is the number of newly-employed in urban areas. From 2013 to 2016, the number of newly-employed was over 13 million annually for four years in a row. We have achieved all the annual goals previously set, which were 9 million to 10 million and then to 11 million this year.

Second, is the unemployment rate in urban areas. Jobless residents need to register with the labor departments of local governments or grass-roots units in urban areas. The unemployment rate has dropped from around 4.1 percent to less than 4 percent this year.

Third, is the surveyed unemployment rate implemented by the National Bureau of Statistics (NBS) on a trial basis in line with international practice. The surveyed unemployment rate was obtained by means of sample surveys rather than from the aggregated data of each unit. According to the present system, the NBS changes a certain percentage of samples every month to ensure that the figures obtained conform to the statistical principles of sampling. The obtained figures are also consistent with those applied in Europe and in the developed countries in the rest of the world.

Ning Jizhe:

These three indexes show that despite substantial employment pressure in the past few years, Chinese government at all levels, under the leadership of the CPC Central Committee and the State Council, put employment as the top priority, carried out employment-first strategies, made appropriate employment plans and policies, and especially, took a series of policies and measures to promote the employment and entrepreneurship of university students. Now, as seen from the employment rate of university graduates monitored by the Ministry of Education, these moves have proven to be very productive and addressed the employment pressure quite properly. One of the important reasons for this resides in the policies and measures of entrepreneurship and innovation, since the young generation cherish their strong passion to start their own businesses. Four years ago, the proportion of self-employment was only about 1 percent. Now, this index has reached more than 10 percent in some sectors. Despite still being a little bit lower than that of the United States, it represents a very promising prospect for the future. The awareness of entrepreneurship and innovation in Chinese youth is becoming even stronger now, and society has also provided a favorable environment, including support for small and micro businesses, all of which are conducive to employment. I believe that the employment of university graduates will increase in the next few years, and we remain optimistic about the trend of employment. Certainly the most important factor behind this is that the medium and long-term development of China's economic fundamentals does not change, and the economic growth and increasing production provide an important foundation for the increase of employment. With all the above factors combined, the problems in China's employment can be addressed completely. Thank you.

BTV:

My question is about the real estate market. In late 2016,at theCentral Economic Work Conference, it was noted that a house was for people to live in, and not for speculation. A series of policies were issued to control the real estate market. Recently, a special housing program for "new Beijingers" was launched. The program called for allocating over 50 percent of housing to these new residents of the capital. Would you like to comment on the achievements made in reducing the number of unsold homes, and the significance of these policies in developinga future real estate market? Thanks.

Ning Jizhe:

We will continue to cut excess inventory by implementing policies tailored to local conditions, in a bid to control the real estate market, which has continued to develop since the 18th CPC National Congress. In recent years, the property markets in different regions have shown signs of divergence. In the first-tier, and some second-tier cities, house prices grew rapidly, which was due to many factors, such as limited land, concentrated population and irrational investment. However, in third-tier and fourth-tier cities, unsold houses grew to a considerable number.We have been pushing ahead with supply-side structural reform, including cutting excess inventory. Therefore, to deal with the divergent prospects I mentioned, governmental measures suiting local conditions were adopted. You mentioned the special program launched in Beijing. It is designed to provide more homes with joint property rights between the government and occupiers in both Beijing and Shanghai to bring down prices and meet the needs of local people. In the third-tier and fourth-tier real estate markets, policies were introduced to reduce the number of unsold houses. For example, in rebuilding rundown urban areas, we put forward the policies of medium or small sized, medium-low priced housing. The government will continue to take measures to control the real estate market. And I believe these policies will play an important role in developing the long-term mechanism to regulate the market.

Hu Kaihong:

The last question.

Beijing Review:

Since the 18th CPC National Congress, China has made significant progress in green development. So, do we have any plans to extend the scope of the exchanges and cooperation regarding green development with the countries involved in the Belt and Road Initiative?

Ning Jizhe:

Green development is one of the key sectors in our new development concept. Since we are all living on one globe, it is a common cause to protect the planet for all humanity. As one of the world's major economies, China has increased its communications with other countries to share the endeavor of environmental protection, pollution control and the mitigation of climate change while pressing ahead with domestic green development.

The consensus of the policies among the countries involved in the Belt and Road Initiative, exemplified by the concerted efforts under the general plan of the Initiative and the individual country's own top-level programs, should all be guided by the fundamental principle of green development. As long as China and its partners achieve a production capacity to meet the world's green standards, they can truly secure win-win, reciprocal and mutually-beneficial cooperation.

In regard to international exchanges, it is being strongly stressed that China's backward production capacities should only be dissolved within China's territory. At the same time, overseas waste products should by no means reach China to threaten its soil and water.

All of our railways and equipment manufacturers operating in foreign countries are conforming to environmental criteria. It is undoubtedly a consensus that has been reached worldwide and a faith we have constantly upheld.

During their visits overseas, our state leaders have always stressed the importance of the social obligations when holding meetings with the Chinese enterprises investing in other countries.

One of the paramount social obligations is to follow local laws and regulations, especially operating and acting on local green standards. Despite the diverse environmental protection standards, the Chinese enterprises, wherever they are, are required to conduct their economic operations in line with local environmental requirements.

Hu Kaihong:

Today's press conference concludes here. Thanks to Mr. Ning. Thank you everyone.

Speakers:
Mr. Han Changfu, minister of agriculture

Mr. Han Jun, director of the Office of the Central Rural Work Leading Group

Mr. Ye Zhenqin, vice minister of agriculture

Mr. Wu Hongyao, deputy director of the Office of the Central Rural Work Leading Group

Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office

Date:
Sept. 29, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. The Central Committee of the Communist Party of China (CPC) has always attached great importance to the issues concerning agriculture, rural areas and farmers, and much headway has been made in this regard.

Today, we are delighted to invite Mr. Han Changfu, the minister of agriculture, and Mr. Han Jun, the director of the Office of the Central Rural Work Leading Group, to this press conference. They will introduce the progress on agriculture and rural development since the 18th CPC National Congress, and answer some of your questions.

Also present at this press conference are: Mr. Ye Zhenqin, the vice minister of agriculture, and Mr. Wu Hongyao, the deputy director of the Office of the Central Rural Work Leading Group.

Now, let's welcome Mr. Han Changfu to make his briefing.

Han Changfu:

Ladies and gentlemen, friends from the press, good morning. Thank you for your concern and support for the work concerning agriculture, rural areas and farmers over the years. Autumn is a season of harvest, and it's a pleasure to exchange ideas with you on agriculture at this time.

Since the 18th CPC National Congress, the Party and the state have made great achievements under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core and under the guidance of Xi's major addresses and his new vision, thinking, and strategies for the governance of China, and the same is true for the development of agriculture and rural areas.

The agricultural departments at all levels have studied Xi's speeches on agriculture, rural areas and farmers, focusing on agricultural supply-side structural reform and also on guaranteed supply, income and ecology to promote the modernization of agriculture. We have witnessed bumper harvests over the past five years, famers have gained increasing incomes and rural areas have maintained harmony and stability. All these factors have contributed to the stable economic and social development as a "ballast stone."

Since the 18th CPC National Congress, agriculture and the rural economy have made achievements in six areas, including progresses in grain production capacity, agricultural supply-side structural reform, agricultural modernization, rural reform, green agricultural development and the income of farmers.

Han Changfu:

First, the capacity for grain production has reached a new level, with annual output above 600 million tons for four consecutive years. General Secretary Xi Jinping has pointed out that we must ensure a sufficient food supply for 1.3 billion people. Based on that, we have always prioritized food safety and maintaining an adequate supply of important farm products, mobilizing local governments to focus on agricultural development and promoting farmers' enthusiasm for their industry.

Since 2013, China's food production has reached 600 million tons for four consecutive years. This year's food production is expected to remain at this level. Although accounting for only 10 percent of arable land worldwide, China produces food for 20 percent of the global population, which is a major contribution to the world's food security.

China has enjoyed good harvests for each of the last five years. In addition to bumper crops, the supply of other important farm products has also been adequate. The production of meat, eggs, vegetables, fruits and fish ranked first in the world. Urban and rural residents have both benefited from the rapid development of agriculture.

Second, supply-side structural reform in the rural sector has entered a new phase with marked results. President Xi Jinping has stressed promoting supply-side structural reform in the agricultural sector is the main thrust of the country's agricultural policy reform and development in the current stage as well as the future period.

We adhere to an orientation meeting market needs, deepen reform so as to create powerful impetus and further develop structural adjustment in agriculture. Now, the production structure has become smoother and unhindered. According to market needs, we have reduced the corn planting area by nearly 50 million mu (about 3.33 million hectares), and increased the soybean area by more than 16 million mu (about 1.67 million hectares) in the past two years. As much as 56 percent of livestock farming is now large-scale. Notable progress has also been made in the fisheries industry by reducing quantity and improving quality.

The industrial structure has been further improved, particularly in processing of agricultural products, farm-based recreation and agricultural tourism, and rural e-commerce. Development has been pursued in rural areas where the primary, secondary and tertiary industries have further been integrated. In 2016, the ratio between the processing of agricultural products and total agricultural output reached 2.2:1, e-commerce turnover of agricultural products reached 220 billion yuan, and farm-based recreation and agricultural tourism earned 570 billion yuan. Meanwhile, the production and supply of agricultural products featuring "green, ecological, high quality and safety" have increased significantly.

The regional structure is more reasonable. The concentrated area for grain, edible oil, cotton and sugar products continues to increase. Pig farming has been transferred to major grain-producing areas with a better environment. The output from major farming areas devoted to pigs and cows accounted for 80 percent and 60 percent respectively of the national total.

Third, modern agricultural construction has taken new steps, with the level of technology and equipment improved greatly.

Agricultural mechanization has been clearly enhanced. The level of comprehensive mechanization has reached more than 65 percent for the cultivation and harvest of all main crops. The cultivation and harvest of wheat is fully mechanized, while corn and rice have been more than 75 percent mechanized. These developments indicate that agriculture in China has pivoted from the centuries-old approach based on animal and human labor to mechanical engineering.

The level of technicalization has also been noticeably enhanced. Advances in agricultural science and technology contributed to 56 percent of agricultural production. Thus, China's agricultural development has gone from relying mainly on an increase of resources to a new phase of relying on technological progress.

Premium seed varieties have also increased. Improved breeds account for 96 percent of main crops, while the breeds and localization ratios of livestock are improving every year.

The production scale has also increased. There are more than 2.9 million new types of agribusiness in operation, such as family farms, farmers' cooperatives and leading industrial corporations. The proportion of suitably scaled-up operations of land reached 40 percent.

The installation of equipment and facilities has substantially increased. A total of 500 million mu of high-standard farmland was built to ensure stable yields regardless of drought or excessive rain, with more than 52 percent of farmland effectively irrigated. The facilities-equipped farmland covered 55 million mu. This indicates that the agriculture industry will no longer fully depend on the mercy of the natural environment.

Han Changfu:

Fourth, rural reform has been pushed forward with a new top-level design. Since the 18th CPC National Congress, General Secretary Xi Jinping has chaired 38 group meetings among members of the CPC Central Committee to deliberate on deepening reform, of which rural reform has been singled out for consideration 18 times. During these meetings, they scrutinized 24 plans in regard to rural reforms and issued several circulars, including the separation of the "three rural rights", namely, land ownership rights, contract rights and management right. Other reforms covered the collective property right system, the development of appropriate scaled operations of land, and the agricultural land reclamation reform. All in all, the fundamental framework of rural reform has been established.

The reform of the "three rural rights", in particular, has become an institutional design reflecting immense political wisdom and a visionary view to meet the expectations of farmers in preserving their contract rights and contract management rights of land under transfer. It represents a new round of significant systematic innovation following the establishment of the household contract responsibility system in rural China.

Rural collective property rights system reform is crucial to improve the rural production relationship. It clarified the ownership of property rights, activated collective assets, and increased property income for farmers.

The registration of land rights has become essential to rural reform. The country has so far completed the registration of 1.05-billion-mu (1 mu=0.067 hectare) of rural land.

Fifth, greener agricultural development and initial success in solving prominent resource and environmental problems. Xi Jinping, general secretary of the CPC Central Committee, pointed out that it is a profound revolution in development philosophy to pursue green agriculture. We have pushed for green production models and actively prevented and controlled agricultural pollution from nonpoint sources. This has been pursued mainly through five campaigns: curbing pollution from animal manure, replacing chemical fertilizers with organic ones in the production of fruits, vegetables and tea, treating crop straws in northwest China, protecting aquatic life (especially those inhabiting the Yangtze River), and recycling agricultural films. As a result, agriculture is now less resource-intensive, the coefficient on the effective utilization of water for farmland irrigation has risen above 0.55, 2.83 million hectares of marginal farmland have been turned into forests or grasslands, the crop rotation and fallow land trials have been expanded to 800,000 hectares, and the strain on resources and the environment from agricultural development has decreased. In addition, the worsening trend of agricultural pollution from nonpoint sources has moderated, the administration of pesticides has remained unchanged, the use of chemical fertilizers has seen almost zero growth, green technologies for preventing and controlling pests and diseases have been employed in over 33 million hectares of land growing grain crops, vegetables, fruits and tea, and the utilization rates of animal manure and crop straws and the recycling rate for agricultural films have all risen above 60 percent. (In short,) agriculture is turning green and rural areas are becoming beautiful.

Sixth, rural incomes have increased further, remarkably improving the living standard of farmers. In 2016, their per capita disposable income exceeded 12,000 yuan, with a four-year average annual growth of 8 percent, or a growth of near 1,000 yuan a year. In the first half of this year, the income growth continued to maintain a good momentum, with a growth rate of 7.4 percent, so that the income level is expected to reach 13,000 yuan by the end of this year.

The urban-rural income gap is continuing to narrow since the growth of rural income has surpassed that in urban areas for several years in a row. The ratio of urban income to rural income was 2.72 last year, a drop of 0.16 from 2012. In 2016, the Engel coefficients (i.e., the proportion of food expenditure in total consumption spending) per rural household fell to 32.2 percent compared to 37.5 percent in 2012. Incomes increased even faster in poverty-stricken areas, with an annual growth of over 10 percent. The figure is higher than national average rural income growth. As a result, we have further reduced the number of rural residents living in poverty by over 13 million a year during the period under review.

Looking back, we have made remarkable achievements; looking forward, we are firm in our confidence. We will be closely uniting around the CPC Central Committee with Comrade Xi Jinping at its core, and work diligently and blaze new trails to promote agricultural supply-side structural reform and consolidate the favorable development of agriculture and rural areas, so as to greet the 19th CPC National Congress with remarkable achievements.

Thank you.

Hu Kaihong:

Thank you, Minister Han Changfu. Now let's invite Mr. Han Jun, director of the Office of the Central Rural Work Leading Group to give us an introduction.

Han Jun:

Ladies and gentlemen, good morning. Since the 18th CPC National Congress, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, we have followed a new development philosophy, taking agriculture, rural areas, and farmers as the top priority of CPC's work and promoted innovation in the practice, theories and institutions of work in this regard. We have held an annual Central Rural Work Conference for five consecutive years; issued the annual No.1 Central Document focusing on agriculture, rural areas, and farmers; formulated policies to comprehensively deepen rural reform, accelerate agricultural modernization, build a new socialist countryside, advance supply-side structural reform in agriculture, foster new growth engines to power agricultural and rural development; underscored the importance of agriculture and boosted its development. Thanks to the concerted efforts of the CPC and the entire country, difficulties and challenges in the development of agriculture and rural areas have been overcome and historic achievements made.

Just now, Mr. Han Changfu described the progress on agriculture and rural area development from six perspectives. The achievements should be attributed to the Party's leadership. Preliminary statistics show that, after the 18th CPC National Congress, General Secretary Xi Jinping took 23 inspection tours to rural area across the nation to gauge public opinion and seek solutions that would promote further rural development. In a series of instructions and speeches, he proposed new ideas and strategies for the work related to agriculture and the rural areas.

After the 18th CPC National Congress, we have accumulated important experiences in three specific aspects.

Han Jun:

Firstly, we continue to adhere to overall planning and top-level design in rural reform. Focusing on properly handling the relationship between farmers and the land, we have implemented measures for separating land ownership rights, contract rights and management rights for rural land. We have also made overall arrangements to carry out trial reforms with regard to rural land requisition, the marketization of rural collective land designated for commercial construction and the system covering rural residential land.

Focusing on properly handling the relationship between government and market, we have been constantly deepening reforms of the purchase and storage systems, as well as the pricing mechanism for grain and other important agricultural products. We have gained notable progress through pilot reform programs for ensuring guaranteed base prices for cotton from Xinjiang Uygur Autonomous Region and soybeans from northeast China.

In addition, we have also improved the agricultural subsidy system, promoted the integration of agriculture-related funds, innovated the rural credit and insurance mechanism, deepened comprehensive reform of the rural supply and marketing cooperatives and promoted reforms in the handling of reclaimed land.

We have ensured an orderly, stable and rapid reform mode. The implementation of a series of rural reform measures has injected powerful endogenous impetus to agriculture and rural development.

Han Jun:

Secondly, we have been working on a balanced and coordinated development between urban and rural areas. Despite the tightening financial revenue and expenditure, we continue to give priority to agriculture, rural areas and farmers in our public expenditures, which ensured the stable growth of the investment in these three areas.

From 2013 to 2017, China's national general public budget expenditures for agriculture, forestry and water are expected to reach 8.28 trillion yuan. More newly-added budget expenditures for education, culture, health care and other social undertakings were allocated to rural areas. As such, the basic standards and level of rural public services have been improved. We promoted new socialist countryside construction and carried out projects to improve the water supply, roads, power grids and internet connectivity in the countryside. We have also reinforced the dangerous buildings in rural areas.

We worked to improve living conditions in rural areas, with waste and sewage treatment as the focus. Rural production and living conditions have undergone significant changes. With increased support to rural compulsory education, the conditions for schools have been further improved. New systems for rural cooperative medical care and assistance for treating major and serious diseases were put in place. We increased subsistence allowances, benefits and basic pension benefits for entitled groups. The culture and sports industries have become more prosperous. Take the new rural cooperative medical care system as an example: financial subsidies at all levels reached 450 yuan this year, a twofold increase since 2012.

By the end of this August, over 500 million urban and rural residents have been covered by endowment insurance, among which 488 million were rural residents; over 150 million people reaching the age of 60 have been able to draw a pension. The income of farmers has been growing faster than urban residents for five consecutive years. The income gap between urban and rural residents fell from 2.88:1 in 2012 to 2.72:1 last year.

We have also carried out targeted poverty alleviation. By the end of last year, 55.64 million poor people in rural areas had been enabled to shake off poverty steadily, and the incidence of poverty in the country dropped from 10.2 to 4.5 percent. In the process of promoting new type urbanization, we have promoted basic public services in urban areas to cover all permanent residents. From 2012 to 2016, 60 million people originally with a rural household registration were able to transfer to urban household registration.

We have been making full use of the unique advantages of the countryside to foster new industries like rural e-commerce, leisure agriculture and rural tourism, and promote integrated development of the primary, secondary and tertiary industries in rural areas. With coordinated planning of urban and rural areas, the agriculture sector and rural areas have demonstrated new appeal. More people are moving or returning to the countryside to start their own businesses.

Third, sticking to green, sustainable development, with the firm belief that green can turn to gold too, we have put greater emphasis on ecological progress and promoted clean production methods in rural areas.

We ensured that China's farmland remains at or above the red line. Presently, the area of land recognized as permanent basic cropland totals 1.55 billion mu (1 mu=0.067 hectare).

We protected the community of life, which consists of mountains, water, forests and farmland ecosystems. Pilot programs were launched to reform crop rotation and fallow land systems. More marginal farmland was turned into forests or grasslands, with 30.10 million mu of marginal farmland transformed from 2014 to 2016, and 12.30 million mu of farmland to be transformed this year.

We also protected natural forests in an all-round way, and tackled agricultural pollution from non-point sources and other prominent problems in the ecological field.

We have entered a new phase of reform on agriculture and the rural area. The future will be even brighter.

That's all I want to share with you. Thank you.

Hu Kaihong:

Thank you, Mr. Han. Now let's move to the question session. Please identify your media outlet before stating your question.

CRI:

In recent years, people from all walks of life have been concerned about entrepreneurship and the development of new industries in rural areas. Would you please brief us on this and any related measures taken by the government?

Han Jun:

I think people have seen the vigorous development of the new industries of farm-based recreation and agricultural tourism in recent years. A new wave of migrant workers, trade owners and even some college students have started their businesses in rural areas. This trend has only just begun. We believe that, through appropriate guidance, the development of new industries and entrepreneurship can hopefully become deliverables in China's agricultural supply-side structural reform and highlights in the development of the country's rural reform.

What are the reasons behind these? After analysis, we believe there are three major points: first, urban and rural residents have such demands. In the past, the demand of people was to have enough food. Now, they not only demand enough food, but also demand good and safe food. They want to eat safely and enjoy the food. As their income levels and living standards have been improved, they have new demands for the development of agriculture and rural areas.

Second, the rural areas have advantages. Many villages have a very good environment, without PM2.5 pollution, great ecology, the water is clean and the mountain is green. The ecological advantage is more and more obvious. And, there are great folk cultural environments in the countryside. There are distinguishing architectures, unique folk customs, distinct regional cultures and ethnic cultures, and particular lifestyles. I can say the cultural charm in the rural areas is very outstanding. And the values of ecological and cultural advantages are clearly rising fast.

Third, there are conditions for development. The rural areas have new industries and businesses, and the business start-ups didn't come out of the blue. You can feel that at present that rural traffic and transportation is becoming ever more convenient and accessible. In addition, the internet and information technologies are increasingly popular in the countryside. The gap between rural and urban areas is clearly shrinking, while logistics distribution systems are quickly entering the rural areas. These have placed a very good foundation for the development of new industries and businesses in the rural areas.

The development of rural areas needs not only clean water and green mountains but also young talented people. Therefore, we encourage migrant workers, entrepreneurs and college graduates to launch start-ups in our countryside. The No.1 Central Document has set out an overall program with policies required to be implemented for dealing with a particular issue, shoring up land utility, financial applications and training programs.

In regard to land utility, there is a certain proportion of new construction land that should be contributed to emerging industries or to other trends concerning rural development.

Synergic efforts are being undertaken to support the various preferential policies, including, market access, fiscal and tax issues, financial services, land use, electricity consumption, entrepreneurial training and social security, all designed to inspire innovation and entrepreneurship in rural areas.

Migrants returning from the cities are encouraged to start their own businesses through innovation zones, incubators, start-up service platforms, streamlined and open-window administrative services to support new development modes in the countryside.

All in all, we believe, as long as the momentum emerging from village maiden entrepreneurship is maintained, China's rural economy, now known as the 2.0 Version of China's rural entrepreneurial endeavor, will flourish again with the inception of new start-ups and innovation among the returning migrant population. Thank you.

Han Changfu:

I'd like to give another figure. So far, the number of migrant workers returning home to start a business and permanent urban residence holders who are rural business owners has exceeded seven million. We welcome more people to follow suit.

CCTV:

We only have less than three years to go before 2020, but still many farmers are not well-off. Income increases for farmers has now become quite difficult after a streak of rapid growth in recent years. My question is what concrete measures will be taken next to ensure rapid income growth.

Han Changfu:

Affected by the international market, the price of farm produce saw only a slight increase in the past two years, which resulted in a sluggish increase in farmers' operating revenues. For migrant workers, their income increased, but at a slower rate. How to make the income growth sustainable for them? This is indeed a question for us. Anyhow we will never cease our efforts and continue to take it as our central task in our work related to agriculture, farmers and rural areas.

There are several key aspects to maintaining the good momentum: First, to keep up the growth of household business operating income. Specifically, we should prioritize a green and eco-friendly approach as well as safety in agricultural production, and nurture high quality farm products with brand recognition, so as to ensure they can be sold at a good price. And we should also be more efficient and energy-saving. Together with green development, water and energy saving should be widely applied in agricultural production, so as to reduce the cost of labor, transportation and resources. Meanwhile, we should facilitate the development of appropriately scaled-up agricultural operations.

Second, we should further expand the channels available for increasing rural incomes. This involves developing emerging industries, such as leisure agriculture, rural tourism, creative agriculture and e-commerce. In addition, we should also encourage migrant workers to start businesses in their hometowns and villages.

Third, reform of the rural collective property-rights system will be deepened to clearly identify such rights and to provide rural residents with a more adequate property rights system.

Fourth, in poor counties, various actions for promoting rural development will be carried out vigorously. We will take targeted measures to cultivate business operations with distinctive local features, for instance, growing vegetables, fruits, tea trees, edible mushroom and herbal medicines as well as raising silkworms. We are confident in achieving the growth of rural income at a higher rate than that of the GDP and urban income.

Reuters:

I have two questions. The first is about pig breeding. About 200,000 pig farms have been shut down since this year's new environmental rules were introduced. Could you inform us about the specific drop in numbers of pigs? How many pigs will there be at the end of the year? The second question is about ethanol. China plans the nationwide use of ethanol fuel by 2020. How much corn will be consumed to achieve the goal? Does China have enough corn? Or will it have to import corn or other raw materials for ethanol as many predict? Thank you.

Ye Zhenqin:

It is important to control pollution caused by pig breeding. The Ministry of Agriculture has implemented the policies of the central government and made efforts in the following four aspects order to achieve a balance between production and environmental protection.

The first is introducing bans. Pig breeding is banned in drinking water-protected areas, scenic spots as well as in educational and sci-tech parks.

The second aspect involves setting limits. Limits have been set on the number of pigs bred in areas containing an intensive water network, restricting the huge amount of pigs and low farming capacity in southern China.

The third aspect is relocation. Some pig farms have been relocated to areas with high capacity, such as northeast China, where there is vast land and enough corn to feed the animals.

Finally, there is treatment. Environmental pollution is being controlled through such ways as ecological breeding and waste recycling.

All those efforts aim to handle properly the relationship between agricultural production, stock supply and environmental protection. Up to now, areas with high capacity in northeast China have accommodated a substantial number of pigs transplanted from the water-extensive areas in the south. I think this is a growing trend. Meanwhile, we should avoid the "one-size-fits-all" approach and only impose bans on a scientific basis so as to protect farmers' interests.

Han Changfu:

Please allow me to offer you two figures. The first relates to the number of hogs. There was a slight drop in those in stock, but the general situation remains stable. The total number of hogs in stock and sold is around 1.2 billion a year.

The second figure concerns hogs raised on large-scale farms. About half of the hogs are raised on farms capable of feeding at least 500 animals and even more, making it easy to prevent epidemic diseases and treat the manure in a more efficient manner.

Han Jun:

You have talked about the impact of using corn to make fuel ethanol just now. Lately, 15 government departments of China jointly issued a plan to increase the production capacity of fuel ethanol by another 8 million tons. Currently, only 2.6 to 2.7 million tons of fuel ethanol are produced from grain. With this plan in place, the production capacity will reach 10 million tons. What does it mean? It means every three tons of grain can be processed into one ton of fuel ethanol, and if all the fuel ethanol is to be made from corn, the production capacity of 10 million tons of fuel ethanol will consume 30 million tons of corn, or 30 billion kilograms.

One of the major considerations behind this plan is that our corn has had good harvests for several years in a row, which has accumulated into the largest stock of corn in the world, but the corn in the granary must be channeled due to its short storage period. So now, multiple channels have been utilized to reduce the excess stockpiles of policy-supported grain. According to the calculation and measurement of relevant national authorities based on the current grain stock, increasing the production capacity of fuel ethanol now will not have a big impact on the food supply and demand in the short term.

The de-stocking of corn will help the market return to its basic balance of supply and demand gradually within three to five years. Also, we are not just using grain to produce fuel ethanol now. Actually, if you take a look at the plan by the 15 government departments, you will notice that we will adopt many other ways to develop fuel ethanol apart from corn, for example, raw materials like the crop straws.

Based on China's national conditions, one thing has been made very clear in the policies is that it is not permitted to appropriate agricultural land or grain to develop fuel ethanol. China is a country with a large population density, so our primary guideline is to make sure that everyone has food to eat. You asked if China will import corn from abroad to develop fuel ethanol. This is a question many people have asked before. Actually, I have already answered this question just now. The leading reason why we are developing fuel ethanol and expanding its production capacity now is to de-stock the corn. So I think, from our national conditions, it is not practical to import corn from abroad to develop the industry of fuel ethanol.

That's all I would like to say for now. Thank you.

People's Daily Online:

This year's No. 1 Central Document put forward the need to keep advancing agricultural supply-side structural reform. Please introduce in more detail the progress made so far. Thank you.

Wu Hongyao:

Agricultural supply-side structural reform involves using the reform approach to promote the adjustment of the agricultural structure, so that the supply of agricultural products better fit ongoing changes in demand, thus being better able to meet consumers' expectations. Over the past two years, various regions and departments have implemented fully the spirit of the No. 1 Central Documents, deeply promoted agricultural supply-side structural reform, and made positive progress mainly in the following aspects.

First, the structure of agricultural production has been constantly improving. Fostering high quality products and distinctively local products has become the direction of current agricultural development. In the past, we cared only about yield. Now, we rely on high-quality brands to develop the market and improve incomes at all levels.

Second, we are fostering an environment-friendly mode of agricultural development. Green ecology has become the consensus for agricultural development.

Third, we have speeded up reform of the rural industrial structure. In particular, the integration of the primary, secondary and tertiary industries, and promoting flourishing new industries and businesses in rural areas, all of which have injected fresh impetus into agricultural and overall rural development. These have all become the most prominent agricultural and rural development highlights. Overall, the ecological and cultural values of rural areas, and such functions as sightseeing and recreation, are becoming investment hot spots.

As for rural reform, we have mainly activated the following three points.

First is to activate the market. The reform of the agricultural products' purchase and storage system has achieved remarkable results. The reform of the guaranteed base price policy for cotton is better than expected. We have initially established the pricing mechanism for agricultural products, activated the mainstay market of industrial chains, guaranteed the basic income of farmers, and enhanced the overall efficiency and competitiveness of agriculture.

Second is to activate the key elements. We have implemented measures for separating land ownership rights, contract rights, and management rights for contracted rural land. We have taken steady steps to reform the rural collective property rights system. We have also made overall arrangements to carry out pilot reforms with regard to rural land requisition, the marketization of rural collective land designated for commercial construction and the system covering rural residential land. Through a series of reforms, we have made rural resources proactive and effective, and the potential of the rural economy is gradually being played out.

Third is to activate the principal parts. The principal production and service parts in new agriculture continue to develop in various forms and in moderate scale. At the same time, governments at all levels are paying great attention to supporting small-scale production. By strengthening cooperation and service, small producers are gradually being brought into the track of agricultural modernization. Thanks.

Economic Daily:

I'm concerned about the crop seed industry. A modern crop seed industry is a strong symbol of modern agriculture. In recent years, China has made a series of arrangements to grow the industry. Would you like to elaborate on the industry's development? Thank you.

Han Changfu:

China is a large agricultural country with a big population. It ranks first in the world in the output of many agricultural products, so it is necessary for the country to have its own crop seed industry.

In recent years, the industry has seen obvious changes as a result of unswerving sci-tech and institutional innovations. These changes can be summarized as follows:

First, the industry is now significantly more capable of innovation. In 2016, the number of intellectual property applications for new seed products doubled that of five years ago. Seed strains independently bred by China now account for 95 percent of those used for the country's staple crops. For the two staple crops of rice and wheat, the proportion is 100 percent. For vegetables, the proportion of foreign-bred strains has been reduced across the board to 13 percent from 20 percent five years ago.

Second, seed enterprises have grown much stronger. Research institutes and universities used to carry out seed breeding research, but now it is mostly enterprises. This change is the result of government incentives being given to enterprises. Meanwhile, we support and encourage enterprises to engage in mergers and restructuring and increase their spending on R&D. Currently, the top 50 seed enterprises spend 7.4 percent of their collective sales revenues on R&D.

Third, seed production and supply capacity have improved remarkably. In the past, seed breeding was quite scattered and farmers kept a portion of the seeds from their own crops for future use. We have set up seed breeding bases where conditions are favorable. There are currently three national bases in Gansu, Sichuan and Hainan respectively.

Fourth, legal oversight has been strengthened. Not long ago, China revised its Seed Law along with nine supporting rules and standardization documents to improve the legislation regulating the industry.

Going forward, we will focus on breeding green, high-quality and cost-effective seeds and increasing the competitiveness of seed enterprises in the international market. It will take time for China's seed industry to grow strong, but it won't be long. Thank you!

China News Service:

Rural land expropriation, collective operational construction land entering the market, and rural residential land pilot reforms have been underway for more than two years, so I would like to ask how the pilot reforms are progressing? How can you protect the rights and interests of farmers in carrying out these reforms? Thank you.

Han Jun:

Rural land expropriation, collective operational construction land entering the market, and rural residential land system reforms are the three key areas of the rural land system that we identified as the "Three Reforms." This reform task was proposed by the Third Plenary Session of the 18th Communist Party of China Central Committee, and is being led by the Ministry of Land and Resources, and also involving the participation of the Central Agricultural Office and the Ministry of Agriculture. The three reforms were planned to be completed by the end of this year, but have now been moved back to the end of 2018. Looking at the reforms occurring in the past two years, the most important thing is that we have recorded a number of institutional achievements with the aim of further improving the rural land system. Land expropriation reform can be said to have entered the actual operational phase. Collective operational land for construction entering the market is now covered by a relatively mature and efficient system of rules, so that the results of reform in this aspect are outstanding.

In regard to rural residential land system reform, people are very concerned about it, and it is a very sensitive issue. It also has achieved very profound progress, and the protection of farmers' residential land property rights and interests has scored remarkable results.

For example, the first deal of the collective operational construction land entering the market, and the first land officially entered into the market transactions occurred in Deqing County, Zhejiang. Last year, while conducting research in Deqing County, we found 49 cases involving nearly 400 mu of land that had entered the market, with the volume of transactions reaching 104 million yuan. Meanwhile collective economic organizations and farmers obtained income of 83.55 million yuan.

Deqing comrades told me they have 1,180 cases involving 10,000 mu of land in 12 townships and 150 administrative villages that can enter the market as collective operational construction land. If all this land were put on the market, can you guess how much money would be involved? About 2.6 billion yuan! Farmers and collective economic organizations would get more than 2 billion yuan in revenue. This reform brings tangible benefits to the farmers. More importantly, when this 10,000 mu enters the market, it provides land support for local rural new industries, as well as for many people to return home to start businesses.

Another example is the system for rural residential land, where reform efforts have paid off. Yujiang County, Jiangxi Province, for instance, has achieved a success in its institutional reform far beyond expectations.

Nearly 40 percent of villagers in the county possessed more than one house site under a single household, which violated the law that one household can only possess one site.

The county has 92,400 house sites among which 23,000 are deserted. How to reclaim these abandoned sites? Within two years, villagers submitted a total of 28,000 house sites covering 3,800 mu (or 253.33 hectares). The retrieved land can sustain housing supply to the entire village for the next 10 to 15 years. Most of the 28,000 house sites were illegally built, and 81 percent of the land was providing no returns.

The difficulty of the work is beyond our imagination. However, after learning from their experiences, we know that highly autonomous governance with an executive board comprising local farmers is the key to addressing the disputes like those about residential land in rural society.

The major challenges facing land requisition are unspecific scope, low compensation standard and irregular procedures. Our pilot reform is drawing lessons from those experiences so that they can work as a testimony for amendment of pertinent laws.

The No.1 Circular has made it clear that we'll learn from the spearheading reform of the system for rural residential land to keep the property rights of farmers from being infringed by external capital. In view of such a prerequisite, the government should implement farmers' collective rights for residential lands, ensuring their rights to use and live on them, seeking rental or other cooperative models to ensure reuse of abandoned lands in the form of collective economic organizations, all contributing to an increase in farmers' incomes.

Beijing and Wuhan, capital of Hubei Province, are leading the way in testing the effectiveness of the reform. The Central Agricultural Office is resolved to press ahead with the pilot programs under the concerted efforts of other authorities, such as, the Ministry of Land and Resources, to release maximized reform dividends in this regard. Thank you.

Hu Kaihong:

This press conference is about to end. We only have the time for two more questions.

CCTV:

Food safety has been a great concern to the public over the past years. In particular, the people want to be assured that domestic formula milk is safe for our kids to drink. My question is for Mr. Han Changfu. What measures have the government taken to ensure the safety of agricultural products and to promote the sound development of the domestic diary industry? What progress has been made? Thank you.

Han Changfu:

The people want safe food. That's natural. The agricultural department shoulders the responsibility of ensuring the safety of agricultural products. Many measures have been taken in this regard.

In the past five years, we conducted food sampling annually. More than 96 percent of the sampled products from the farming, husbandry and fishery sectors met the quality standard. In the first half of this year, the ratio went up to 97.6 percent.

But of course, there are problems to be solved. One is the small-scale producers, who pose a great threat to food safety, and the other is law enforcement, which needs to be further improved and intensified.

The production process and regulation of agricultural products are crucial to ensuring product safety. There were three notable changes in the regulation field.

Firstly, sound systems have been established. In recent years, we have revised over 6,000 items of pesticides and veterinary drugs residual limited standards, and over 5,000 agricultural industrial standards. Powerful enforcement and operations will be ensured under these standards.

Secondly, supervision of farm products safety has been strengthened since the 18th CPC National Congress. We have built up a team from all levels to oversee quality safety of agricultural products. The supervision is becoming even more effective.

Thirdly, responsibilities have been clarified. We have urged the local governments to perform their administrative responsibilities and operational entities to fulfill their primary responsibilities.

The dairy industry also produces milk powder. The quality of milk powder produced by China has improved a lot over the last five years compared with that produced eight years ago. Several China's mainland milk powder brands have been certificated by the EU, and some have entered the Hong Kong market. Specifically, improvements have been made in three aspects. First, dairy farming has been scaled up. Second, the milking process has been mechanized. Mechanization has been achieved in large-scale farms. Third, production, supervision, and product standards of the dairy industry are in place. The dairy industry is a relatively modern one with a long and complete industrial chain, so its regulatory framework is developing from strength to strength.

All in all, now we have undergone a great change and laid a sound foundation. We have the confidence to revitalize China's dairy industry, and let our children be able to enjoy high-quality and safe milk produced in China. Thank you.

China Business News:

I have two questions. First, I would like to ask Mr. Han Changfu: the "No. 1 Central Document" in 2013 proposed that China should complete the registration for rural land contract rights and management rights in five years. And just now you mentioned that the rights covering 78 percent of the land has been made clear. During the process, are there any experiences and what are the difficulties? How will we handle the remaining 22 percent? And my second question is to Mr. Han Jun: Anhui, Hubei and Sichuan yesterday launched a minimum purchase price plan for medium and late rice. According to the plan, the minimum purchase price of 50 kilograms of medium and late indica and japonica was reduced by 2 yuan and 5 yuan respectively. The minimum purchase price of wheat was the same as 2016, but 3 yuan lower for early indica. So, what are the considerations behind such adjustment? Will there be further reforms in the future?

Han Changfu:

I will answer the first question. In relation to registering and certifying the rights to the contracted use of land in rural areas, I have stressed that it is a basic work. What kind of basic work is it? It is a basic work on rural reform, on the stability of rural land contract relations, and on the policy of separating land ownership rights, contract rights, and management rights for contracted rural land.

Primarily, land is collective and the form of ownership cannot be changed. Meanwhile, land is contracted by households and the contracting right cannot be changed, either. If this basic work can be done well, it will be of great significance for us to further improve the reform of rural land contract relations. President Xi Jinping said that, the main line of rural reform is still to manage well the relationship between farmers and the land.

The central document put forward outlines that it will take us five years to complete the work of registering and certifying the rights to the contracted use of land in rural areas. Namely by 2018, we will basically complete the work. The schedule may be postponed for some remote areas, ethnic minority areas and larger areas. Currently, five provinces have basically completed the work, and the country has completed 78 percent of the work.

When talking about experience, I would say there's a lot available. However, I think the most important experience may be summed up by the following two points. First, there is the attention of the leaders. Now, Party committees and governments at all levels, down to county Party committees and governments, are attaching importance to this matter, and organizing and implementing in accordance with the central government's policies, and then giving support in providing the best working conditions, in particular, leadership in regard to in-depth grass-roots research, so that the leaders can understand the situation and be able to resolve problems and conflicts. This may be a very important experience.

A second element involves relying on the public. It is a good thing for farmers when the central government issues them with the registry certificates confirming their rights to contracted farmland. This soothes farmers' nerves and they become active. You issue a certificate to one farmer, give him confidence that a land is contracted to him for a long time, and then he would like to expand, and move on to other places and businesses. Even when a new entity occupies his land, the original holder will still rest assured that all is well. We have to rely on the public to solve problems, so that in everything you should start from the realities, and rely on the public of a county, a township and a village to carry out the land contract work efficiently. In such a big country, with so many farmers and so much land to be cultivated, there are no huge clashes of interests and social instability. I think these two points are very important.

Han Jun:

The question you asked concerns a major reform carried out over the past few years. Generally speaking, we want to offer different policies to different products and reform the pricing system step by step.

The price of domestic corn has remained high, so Chinese processing factories and animal feed producers are inclined to use foreign products. From 2013 to 2016, they purchased 100 billion kilograms of foreign sorghum, barley, distillers grains and cassava to replace domestic corns in production.

This resulted in a growing stockpile of policy-supported corns. In view of this situation, in 2016, the government decided to reform the pricing system to let the market determine the price. Corn farmers are now subsidized directly, so as to guarantee their basic earnings.

Things are different concerning wheat and rice, which are a staple food.

Regarding wheat, supply and demand has remained basically balanced, with a gap of 2 million tons last year and a surplus of 5 million or 6 million tons this year. Because of the sound balance, the stock-piled policy-supported wheat can be auctioned at a price basically the same as the price the government purchased it - therefore not requiring a government subsidy. Wheat has a special advantage. It can be stored for a long time.

Regarding rice, the government will take actions this year too. The rice supply is increasing faster than demand. What's worse, it can't be stocked for a long time like wheat, and its industrial chain is not as long as for corn. Therefore, the pressure on stockpiles is mounting. We need to find a solution to reduce the stock of policy-supported rice.

This year, the prices of early indica rice, middle-season and late indica rice and japonica rice have been revised down 0.06 yuan, 0.04 yuan and 0.1 yuan per kilogram respectively. This shows that, on the whole, the supply of rice exceeds demand. As required in this year's No. 1 Central Document, we will take constructive, steady steps to reform the pricing mechanism for grain and other important agricultural products. We will also continue and improve the minimum purchase price policy for rice and wheat, making reasonable adjustments to these prices, to enable parity between prices. The reform should reflect the market demand under the basic policy framework. Therefore, these measures should play a vital role in maintaining farmer's enthusiasm to grow grains, pushing forward grain production and increasing farmers' income. Thanks.

Hu Kaihong:

Today's press conference will end here. Thanks to the spokesperson. Thank you everyone.

Speaker:
Xiao Yaqing, chairman of the State-owned Assets Supervision and Administration Commission of the State Council

Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office

Date:
Sept. 28, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to the press conference. As we know, many people are paying close attention to the reform of state-owned enterprises (SOEs), and are eager to know what has happened so far.

Today, we are delighted to invite Mr. Xiao Yaqing, the chairman of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, to introduce the progress of reforms since the 18th National Congress of the Communist Party of China (CPC). He will also answer some of your questions.

Also present at the press conference are: Ms. Huang Danhua, SASAC vice chairwoman, and Mr. Peng Huagang, SASAC deputy secretary-general and spokesperson.

Now, let's welcome Mr. Xiao Yaqing to make his briefing.

Xiao Yaqing:

Thank you. Ladies and gentlemen, good morning. It's a great pleasure for me to be here with you.

Now, I would like to present a brief introduction to the reform of SOEs, especially centrally-administered SOEs, since the 18th CPC National Congress.

The CPC Central Committee attaches great importance to the reform and development of SOEs. Since the 18th CPC National Congress in 2012, the CPC Central Committee with Comrade Xi Jinping at its core has specified the direction and plans for the reform. The Committee pushed it forward with unprecedented determination and strength, as demonstrated by the series of major decisions it has made. General Secretary Xi Jinping has given a number of important speeches and instructions on the direction of the reform. Premier Li Keqiang has also clarified on multiple occasions the requirements for the reform and development of SOEs.

Subdivisions of the SASAC at every level and all SOEs, especially those centrally-administered SOEs, have worked in accordance with these plans and requirements. Remarkable results have been achieved in comprehensively advancing the reform and making breakthroughs in key areas.

Over the past five years, we have essentially completed top-level design of SOE reform and paid extra attention to implementing systematic, integrated and coordinated reforms. The Party Central Committee and the State Council have put in place a framework that consists of the Guidelines on Deepening Reform of SOEs as well as 22 supplementary documents, which have played an important role in guiding and leading practice at the grassroots level. Central and local SOEs have kept to a problem-oriented approach, adopted work plans and detailed implementation rules in view of their own circumstances, and intensified reform of SOEs.

In the five years, significant measures for SOE reform were implemented one by one. Breakthroughs occurred continually in regard to those key and difficult issues. Centrally-administered SOEs' classification reform was carried out comprehensively so that their functions were defined more precisely. There were 10 pilot reforms, all of which made significant progress and established many precedents and experiences that can be copied and replicated. More than 90 percent of the SOEs have undergone corporate system reform, along with about 92 percent of the branches and subsidiary companies under centrally-administered SOEs. Mixed ownership reform was carried forward in a stable way, and more than two-thirds of the central enterprises have introduced or are in the process of introducing capital from various social source in order to promote shareholding diversity. The regrouping and integration of SOEs is also been advanced in a significant way. The SOE structure is constantly being optimized through regrouping of the State-owned capital layout. The three key institutional reforms have achieved further progress. The supervisory function related to State-owned assets was further transformed, with continuously strengthened oversight. Party building was enhanced comprehensively, providing solid assurances for the development and reform of SOEs.

During the past five years, the SOEs have made big strides while gradually releasing the reform dividends. They have improved the market-oriented institution during the ongoing reforms, exemplified by the intensified operational controls of the centrally-administered ones, the quality, efficacy and vitality of which have continuously progressed.

By 2016, the aggregate assets of the centrally-administered SOEs grew to 50.5 trillion yuan, an 80 percent surge compared to the previous Five-Year Plan. Meanwhile, benefits over the five years reached 6.4 trillion, up 30.6 percent from their last quintuple effort, registering comparatively high growth.

The amount of taxes and fees paid was 10.3 trillion yuan in 2016, up 63.5 percent, and the good momentum was sustained in the first eight months of this year. The centrally-administered SOEs have secured historically high year-on-year growth represented by the 15.7 percent increase in revenues and 17.3 percent surge in gross profits.

The achievements made in the reform and development of SOEs has well proven the brilliance and correctness of the CPC Central Committee's policies on SOE reforms. These reforms and policies are completely in line with China's national conditions and market economy laws as well as the laws of corporate growth, and have won the sincere support and enthusiastic participation of SOE staff.

Meanwhile, we also know that the SOE reform has a long way to go. We have a lot of work to do to implement the requirements by the central government. Standing at a new higher starting point, we will double our effort in further deepening and implementing reforms and finding solutions to problems. We will push through the reform of SOEs to make them stronger, better and larger.

Now, my colleagues and I would like to take your questions.

Hu Kaihong:

Thank you, Mr. Xiao. Now, the floor is open for questions. Please identify yourself before asking your question.

China Central Television (CCTV) News Program Center:

Since the 18th CPC National Congress, the CPC Central Committee and the central government have issued a series of documents to promote reforms of central SOEs - the priority of economic structural reform. What efforts have the State-owned Assets Supervision and Administration Commission of the State Council and central enterprises made to implement those documents? What effects have been delivered? Thank you.

Xiao Yaqing:

Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping at its core has made a series of strategic arrangements. In implementing "1+N" series of documents, both central and local SOEs have undertaken the following work.

First, making a strong push for implementation. In order to implement the "1+N" documents, ministries and commissions introduced a further 102 supportive documents, and local governments also produced a total of 926 supportive documents. Moreover, the central and local SOEs also worked out many implementation programs and detailed procedures according to their own needs.

Second, they launched various pilot programs. The pilot programs in 18 central SOEs are progressing well. China Central Television (CCTV) covered developments of the central SOEs pilot programs via several of its channels and People's Daily as well as other media also introduced their best practices.

Third, best practices are chosen to lead the way. In implementing the "1+N" documents, especially in various pilot programs, we undertake timely summarization and try to scale up the best practices that have emerged. At the same time, we are constantly learning lessons from dealing with new problems and challenges, so as to further promote reform.

Fourth, there is a strong focus on monitoring and assessment. During the reform, we are paying special attention to monitoring, reviewing and assessment of the results in order to ensure public satisfaction and drive the reform program forward.

As for the results of our efforts, firstly, great progress has been made in system and institutional reform. More than 68 percent of central SOEs have finished their process of mixed ownership reform, a total of 83 central SOEs have regulated the establishment of a board of directors and 92 percent of local SOEs have established a board of directors. Many central SOEs have reduced employees in their headquarters.

Secondly, the process of structural adjustment of the state-owned economy has been optimized and improved. Since the 18th CPC National Congress, 34 central SOEs have been merged, the number of central SOEs has been cut from 117 to 98 and a total of 136 provincial SOEs have started to merge. After the structural adjustment, the assets of SOEs are optimized and the development goals of SOEs are clear.

Thirdly, the system of assets supervision has been improved. We have accelerated the transition of our functions by focusing on capital management. Forty-three functions of the State-owned Assets Supervision and Administration Commission of the State Council have been cancelled and decentralized, while 563 functions of local State-owned Assets Supervision and Administration Commission of the State Council have been decentralized. There are ten pilot companies chosen from investment companies and operating companies of central SOEs with 18 functions being decentralized. Meanwhile, we have strengthened state-asset supervision to prevent the loss of state-owned assets.

Meanwhile, the leadership of CPC in SOEs has been strengthened through the reform.

To sum up, the reform facilitates the development of central SOEs. Without the reform and the leadership of the CPC, it will be difficult for central SOEs to achieve a great performance in 2017.

China Daily:

The central government has vowed to further boost supply-side structural reform to promote long-term, sustainable economic development. Since the reform involves a wide variety of issues, could you tell us what is the main focus for the central SOEs? Thank you.

Xiao Yaqing:

Implementing supply-side reform is a major strategic decision of the central authorities. Central SOEs have resolutely carried out the reforms and greatly benefitted from them.

The following are some of the main aspects.

First, taking the lead in reducing excessive production capacity. Central SOEs, especially those in the steel and coal sectors, achieved their goal ahead of schedule and, indeed, beyond expectations, in 2016 and continuing in the first eight months of this year.

Last year, the amount of overcapacity cut by the central SOEs in the steel industry accounted for 80 percent of the industry total. Meanwhile, in the coal industry, the central SOEs cut overcapacity by 200 million tons, or 73 percent of the industry total. In the first eight months this year, enterprises in the two sectors undertook further cuts in their overcapacity of 16.14 million tons and 55.10 million tons respectively.

Besides, small coal companies under the central SOEs, with a total production capacity of some 100 million tons, were either shut down or integrated.

The second area involves addressing the problem of "zombie enterprises". A total of 500 "zombie enterprises" of those in serious trouble achieved rectification, reducing annual losses of companies directly under the central SOEs by 88.5 billion yuan.

The third focus is reducing leverage and debt. A risk control system is taking shape and has achieved positive initial results. The system sets the debt alarm level for enterprises in different industries, monitors and controls operations of heavily indebted enterprises, and curbs issuance of bonds by such companies. At the end of August, the average debt to asset ratio fell by 0.2 percentage point to 66.5 percent.

Fourth, efforts were undertaken to further streamline the organizational structure. They focused on redundant and overlapping departments in central SOEs. Unprecedented efforts have been made in the past year and achieved remarkable results, with 6,395 departments shut down, and the posts of 6,395 general managers and an even larger number of deputy general managers abolished.

Fifth, there was also a significant focus on resolving long-lasting problems. Pilot programs have been launched to relieve enterprises of the burden of providing water, electricity, heating, gas, and property management services to employees, and to improve the service system covering retired employees.

The economic structure has noticeably improved as a result of supply-side structural reform. As was just mentioned, when carrying out reform, we obviously favor emerging industries of strategic importance and those that have a bearing on the national economy and people's livelihood.

On the whole, the reform has contributed to the development of central SOEs, especially in ensuring their development becomes more sustainable, market-oriented and in line with the expectations of the people. However, the reform needs to go deeper in a number of aspects, and we are undertaking studies and improvements in this regard. At any rate, we will continue the reform among central SOEs to help elevate the Chinese economy to the medium-to-high level.

NHK:

In June, the People's Daily reported that the building of Party organizations had been written into the regulations of more than 3,000 enterprises. Would you please briefly explain this?

Xiao Yaqing:

We appreciate our foreign friends' concern about Party building in SOEs.

Party building and the Party's leadership are a unique political advantage of SOEs, because all their progress has been made under the Party's leadership. For an enterprise with good management and strong competitive strength, the building of its team and top-level managers must be excellent as well. The leadership of the Party plays a very important role in the building of an enterprise's team and its top-level managers.

To give full play of the Party's leadership and its core political role, SOEs should stick to the political principle that all SOEs must be under the Party's leadership, and stick to the ultimate goal of establishing a modern enterprise system. The leadership of the Party should be emphasized during the improvement of SOEs' governance system.

Currently, 98 central SOEs have written Party building into their regulations. Notably, the responsibilities of two positions, the secretary of Party committee and the chairman of the board of directors, are borne by one person. This arrangement will strengthen the governance of enterprises.

In addition, Party building is strengthened during reforms. A series of measures have been taken to implement the responsibility system and simultaneously build Party organizations and working institutions. The heads and working staff of Party organizations are required to go to their duty posts at the same time. Party works are required to focus on enterprises' main business. As a result, the Party works and business operation of enterprises are integrated.

Another important point of Party building is to develop a team of enterprise leaders. We select personnel who possess management capabilities and are innovative, honest, just, and loyal to the Party. They are recruited into the management of SOEs, especially top-level management, so as to train and develop an excellent team of entrepreneurs.

On the other hand, to strengthen Party building within SOEs, we must unswervingly advance clean governance and anti-corruption work. Since the 18th CPC National Congress, we have worked hard in this regard, and achieved unprecedented results.

While deepening the reform of SOEs and increasing the value of State assets, we have strengthened anti-corruption work, which is the guarantee of success of all other works. After the 18th CPC National Congress, three rounds of nation-wide inspections were undertaken. Central SOEs removed a group of corrupt officials and closed loopholes to prevent the loss of State assets. More importantly, by strengthening the work of Party building, we have closed loopholes in the supervision and management system of State assets, thus ensuring the supervision system is sound and effective.

By upholding CPC leadership in SOEs, we should take improving enterprise efficiency and performance as the starting point and the ultimate goal of all Party building work, and treat the fruits of our reforms as a litmus test of the success of Party building. We can already see that enterprises able to undertake a better job in Party building possess a more vibrant staff and a better relationship between administrative personnel and common workers, so as to achieve stronger performance and greater competitiveness.

Japanese enterprises are famous for their unique business culture and personnel management. They have always placed great importance on team construction. Many of their ideas are worth learning.

In conclusion, Party building is an important foundation of SOE reform and development. It provides strong political support for raising the overall competitiveness of SOEs. Thank you.

Bloomberg:

SOE mergers have been used to build single, large, powerful national champions, and this is happening with automobile builders and others. Can you tell us what are the next sectors to become the focus of mergers, and would shipbuilding be one of those, with Beichuan (China Shipbuilding Industry Corporation) and Nanchuan (China State Shipbuilding Corporation) involved?

Xiao Yaqing:

Anything can happen. I would like to ask Ms. Huang Danhua to answer your question.

Huang Danhua:

Thanks, Mr. Xiao, and thanks to the Bloomberg reporter for your concerns about the restructuring of central SOEs.

The restructuring of central SOEs is pressing ahead as part of the CPC Central Committee and the central government's strategic layout to reinforce SOE reform, a big move for SOEs to increase their competence and competitiveness.

Since the 18th CPC National Congress, the State-owned Assets Supervision and Administration Commission of the State Council has coordinated efforts with the pertinent authorities to restructure 34 central SOEs, including China North Railway, China South Railway, Baosteel Group, Wuhan Iron and Steel Corporation and China COSCO Shipping Corporation Limited.

In keeping up with the needs of the times, we have jointly founded the Aero Engine Corporation of China and China Tower, and the number of central SOEs has now amounted to 98.

Yesterday (Sept. 27), the State Council released a statement about work in the next phase after hearing the report on what had been done so far in regard to the restructuring of central SOEs.

The Bloomberg reporter just asked what we will do next. Actually, the State Council has made that clear at yesterday's executive meeting. All we need to do is to continue to fulfill the decisions.

As for the integration effect the journalist just mentioned, I think it is comprised of many facets rather than merely integration. Thus, the integration effect is shown in the following aspects:

First, horizontal mergers strengthen the enterprises' scales. In 2017, a total of 48 central SOEs were included on the list of the Fortune 500 globally, significantly improving their leading role and influence in the industry.

Vertical partnership generates complementary advantages and improved upstream-downstream coordination of the industry chain. It explores ways to solve long-existing problems in the development of some industries and greatly enhances the overall strengths of enterprises.

Integration also optimizes the allocation of resources. It increases the level of resource sharing and cuts off redundant projects. It saves investment as well as land, and also protects the environment.

Second, as far as structure optimization is concerned, the restructuring and integration of central SOEs speeds up excess capacity cuts, improves the technological innovation of enterprises by integrating their complementary advantages, cuts managing and operational costs, and steadily increases their economic benefits.

Third, integration has had remarkable effects for individual enterprises. Their main business is more prominent. Their organization and structure are more streamlined, and their internal management is more efficient. More efforts are made in the coordination of enterprises and other reform work.

Therefore, we should view the effects of structural optimization and integration from multiple dimensions. Practices over the years show that the restructuring and integration of central SOEs is not aimed to change their numbers. It mainly aims to optimize resource allocation as well as the layout and structure of the state-owned sector of the economy. It also aims to enhance the overall functioning and efficiency of the state-owned sector of the economy.

Next, we will persist in deepening reforms to further boost the structural optimization, restructuring and integration of central SOEs. We will continue to improve the flow of state-owned capital. We will motivate the central SOEs to strengthen their main business, speed up their transformation and improvement as well as improve their quality and efficiency for better growth. Thank you.

Xiao Yaqing:

Thank you Ms. Huang for your answer. I would like to add that expanding these enterprises is a goal of the restructuring, but it's not the most important one. The problem is that dozens of enterprises are competing in the same industry, thus causing heavy friction between them. However, reducing the overall number is not the most important goal, either.

I think what really matters is developing enterprises that the domestic and international markets need. You mentioned CRRC, which is a large Chinese enterprise. But some world-famous companies, such as Siemens and Alstom, are undergoing restructuring as well. So the development of technology and markets constitutes the strongest driving force behind the restructuring of central SOEs, and we need to adjust the enterprises in line with this development.

In the meantime, restructuring should be combined with reform and opening up. We hope to cooperate with all kinds of companies at home and abroad when advancing the restructuring of central SOEs. Let's work together to accomplish this endeavor. Thank you.

CGTN:

What measures have the SASAC taken to prevent the loss of state assets? What have been the results? Thank you.

Xiao Yaqing:

I am also paying much attention to this issue. Let's invite Mr. Peng to answer this question.

Peng Huagang:

Thank you. We are fully aware that preventing the loss of state assets is an important part as well as a prerequisite of SOE reform - or the reform won't achieve expected result. We can summarize our efforts on this front in the following four aspects.

Firstly, improve the institutional system. In the past two years, we have formulated and improved a total of 27 rules and regulations in monitoring state assets which has laid a solid institutional foundation for our work.

Secondly, set up a closed-loop monitoring system to find problem and address them timely. In recent years, especially last year, the SASAC has set up three monitoring bodies during its functional transformation so that they can synergize with other bodies to facilitate the cycle of investigation, rectification and punishment.

Thirdly, strengthen the supervision in key sectors, in especial, SOEs mergers, equity transactions, and important investment. The supervision of overseas management has been highlighted in our supervision in recent years. We have taken many methods to strengthen the supervision of overseas management of SOEs systematically.

Fourthly, promote SOE's management and investment accountability. Last year, we established a mechanism to investigate and punish SOE management based on investment accountability. We have already investigated and punished relevant officials in the cases of huge losses of state-owned assets in China Railway Materials Company Ltd. and the Metallurgical Corporation of China Ltd according to the mechanism.

Strengthening the supervision of SOEs and preventing the loss of state-owned assets are our major responsibility. We will transform our function and improve our supervision to prevent the loss of state-owned assets. Thank you.

Reuters:

My question concerns the future of SASAC. As the modern enterprise system is fully employed by the central SOEs and mixed ownership is implemented within the corporate structure and completed by the central government companies, what is the future role of the SASAC in your estimation? Thank you.

Xiao Yaqing:

Thanks for your question, which inspires us to further consider the issue.

Speaking of the future, we are, on one hand, full of expectations, while, on the other hand, worry about its uncertainties. However, I agree with you that, with the furthering of the reform process, the central SOEs and other SOEs will definitely keep on changing with a new look, substantial achievements and progressive performance. The transformation is a pathway created by consecutive reforms, a pathway of improved systems and, more importantly, a definite trajectory of corporate progress.

We expect the SOEs, including the central SOEs, to keep on developing in such a way.

Will SASAC have nothing to do, when all SOEs have developed well? Of course, I hope we will have nothing to do. However, as far as I know, SASAC undertakes two important tasks assigned by the central government, which are supervision and administration. Since state-owned assets belong to the public, I think SASAC under the State Council, and SASAC organizations at all levels, are needed to preserve and increase SOE value, prevent losses, and enhance their functions so that SOEs and the related state-owned assets can achieve the optimum level and the most reasonable position in economic competition. In this way, SOEs can serve national development strategies and meet people's aspirations for a better life. The central SOEs should lead by example in this regard. SASAC and the SOEs should work together to fulfill all of their political, economic and social responsibilities.

Looking forward, the better the SOEs develop and the more enabling the market economy environment can become, the greater will be the need for SASAC to play an enhanced role. It should have a better grasp of the market economy, market rules and the laws governing enterprise development so as to enhance its supervision.

With regard to the missions and duties of SOEs and central SOEs, the SASAC also has great responsibilities.

There must be a sound legal and economic growth environment for the enterprises to fulfill their missions and duties -- so such supervision is essential. So far, both developed and emerging economies as well as SOEs and non-state economies are required to be regulated and supervised under the rule-of-law.

Therefore, the point is not to discuss the SASAC's future existence. The biggest pressure for us is how to improve it to let our supervision and regulation help boost the growth of enterprises, implement the national policies and achieve the goals of reforms set by the central government as soon as possible. Thank you.

People's Daily:

My question is about the mixed ownership reform. Last month, telecom carrier China Unicom released its mixed-ownership reform plan, which drew wide attention from the public. Meanwhile, many enterprises have advanced pilot reforms to introduce a mixed ownership structure in different levels and sectors. Could you please give me a briefing about the progress? Which areas will be the next focus? Do you have some specific timetables? And how will the experience of the mixed ownership reform be promoted?

Xiao Yaqing:

The mixed ownership reform is an entry point for reform and a focus of public attention. The pilot reforms are now underway to introduce a mixed ownership structure in various sectors. Now I will invite Mr. Peng to answer your question.

Peng Huagang:

There are three key points in regard to the process of mixed-ownership reform. Firstly, the number of SOEs involved in mixed-ownership reform is increasing. A total of 68.9 percent of central SOEs have initiated mixed-ownership reform, while 47 percent of local SOEs have been involved in that.

Secondly, the level of mixed-ownership reform is being upgraded. As we have seen, third-tier SOEs and those below the third tier were often chosen as pilot companies to undertake reform. In recent years, we have explored ways to facilitate mixed-ownership reform in both second- and third-tier SOEs, even in their headquarters.

Thirdly, the industries covered by mixed-ownership reform have been expanded. A total of 19 central SOEs from key industries have initiated mixed-ownership reform, covering electricity, oil, petrochemical, telecommunications, aviation, and military industries.

Mixed-ownership reform is an important breakthrough in the reform of SOEs. We will continue to promote the reform under the rule of "One Enterprise, One Policy."

Xiao Yaqing:

Apparently, you are eager to know the results of the reform. However, it takes time for the reform of an enterprise's ownership, especially the mixed-ownership reform, to yield results. The time needed can be a product lifecycle or an industry lifecycle. Meanwhile, we should be prepared that the reform won't necessarily succeed, so while looking forward to the results, we should also allow an enterprise time to pursue the reform through trial and error.

Wall Street Journal:

What do you see as the challenges to reforming SOEs, especially in the northeast, both in the medium and long term, and in Liaoning Province in particular? What do you think are the best examples of SOE reform? Can you expound on anything that you see as progress?

Xiao Yaqing:

Thank you for the questions. They cover a wide range of issues. I'll try my best to answer them.

SOEs are faced with many challenges. It's difficult to say which one is the toughest. Actually, all the reforms we just talked about are challenges for SOEs. In my opinion, the most crucial issue is whether the reforms can cope with economic development, and this can be gauged by the performance of SOEs.

I'm fully confident of the result, and I'm eager to see how SOEs will achieve it. There are many challenges and problems ahead. The problems may concern specific issues and general policies, such as government supervision and regulation, and company development strategies. All of the problems will be our targets in reform and will be addressed step by step.

You mentioned SOE reform in northeast China. That is an important topic. The CPC Central Committee has been paying much attention to the economic development of the region, especially its SOE reform. In recent years, the CPC Central Committee and the State Council have introduced many guidelines and supportive policies to rejuvenate the region's economy. I can see that it is now developing at a steady pace. According to my multiple field trips, I've noticed some positive changes in companies there -especially SOEs.

First, much progress has been made in relieving SOEs of their obligation to operate social programs, like the obligation to provide water, electricity, heating, gas and property management services to their employees' homes. Second, SOEs in northeast China are also proactively transforming themselves.

Third, as an old industrial base, northeast China is home to many heavy industries. But it is now shifting toward robotics, software design and modern logistics, among other new and strategic industries.

For example, the reform of pharmaceutical companies in Liaoning Province has achieved considerable results in terms of effective management and relieving their obligations in social programs. The restructuring of Dongbei Special Steel Group, which is a typical case, is so far quite successful considering its difficulties. Of course, there are more cases to demonstrate that northeast China is prospering and we can expect much more from the development of SOEs there. Thank you.

Economic Daily:

CCTV aired a documentary called Amazing China recently. The documentary contains scenes of central SOEs undertaking major projects, which was quite encouraging to watch. It was no less encouraging when we saw the innovative achievements of central SOEs at an ongoing exhibition. My question is to the SASAC: What are the areas where central SOEs have progressed most and what are the underlying reasons. Thank you.

Xiao Yaqing:

The exhibition you mentioned is a collective one staged by all the central SOEs to display their achievements in innovation. Thanks for your attention. Ms. Huang Danhua will answer your question.

Huang Danhua:

Thanks for your concern about the central SOEs' innovation efforts. As you mentioned just now, Amazing China is indeed very thrilling and encouraging. Many roads, bridges, harbors and networks that appear in the documentary were built by central SOEs with the application of major sci-tech innovations. Since the 18th CPC National Congress in 2012, the central SOEs have earnestly pursued innovation-driven development and seized the opportunities brought by the global technological revolution and industrial transformation. Their enhanced endeavors to make original, independent and collaborative innovations have delivered remarkable results. There are four aspects I'd like to mention here.

First, we have made multiple major scientific and technological breakthroughs at the world's most advanced levels. The manned spaceflight, submersible deep ocean exploration, high-speed railway, UHV transmission, mobile communication, domestically manufactured aircraft carrier launched this year and the homegrown large passenger aircraft which made its maiden flight this year. They are the world's top-notch technologies.

Second, we have many farsighted and groundbreaking scientific and technological innovations which have reinforced the industrial developments. They, as we know, include the Hong Kong-Zhuhai-Macao Bridge, the "No.1 Blue Whale" Deep Water Drilling Platform and the Beidou Navigation Satellite System, signaling our great achievements.

At the same time, the exploration of shale gas, the mining of combustible ice and the space-ground integrated information network, let alone the nuclear reactor and new carrier rockets, all have driven China towards the high-end of the industrial chain.

Third, there are lots of platforms which have supported entrepreneurship and the innovative aspiration of the entire Chinese society. The central SOEs have created 518 pertinent platforms involving a number of brilliant organizations, such as, Casicould, Avicui.com, Ouyeel and Shining Star Innovation, which have pooled social resources to ramp up innovation nationwide.

With its interconnection between big, medium and small enterprises, the new development model has created 6 million jobs and amassed innumerable resources, funds and knowledge for the innovative society where central SOEs have played a leading role.

Fourth, the central SOEs have formed a major force behind the nationwide drive of innovation. I'll reveal a group of data to show how the central SOEs are involved, in regard to funds and personnel for innovation. By 2016, the central SOEs have 808,000 people engaged in R&D. Besides, they have hired 226 academicians from the Chinese Academy of Sciences and Chinese Academy of Social Sciences. They have established 632 country-level R&D platforms and hold 486,000 valid patents.

The sci-tech progress awards and invention awards won by central SOEs accounted for one third of the national total, and the proportion was even higher in terms of special prizes and first placed prizes. Over the past five years, central SOEs invested 1.7 trillion yuan, or one-fourth of the national total, in sci-tech development, and won 424 national awards, accounting for one third of the national total. Generally speaking, great efforts have been made in deepening reform, intensifying innovation and cultivating talents.

In the next step, we will further implement the national strategy of innovation-driven development, and help central SOEs to make a greater contribution in making China an innovative country and strong sci-tech power in the world. Thank you.

Die Welt:

I read in your report that the number of central SOEs has decreased from over 170 to 98 in the past five years. Will the number continue to be fall in the next five years? Is there a target? Since the borrowings by SOEs account for about 60 percent of total corporate debt, is there a target of debt reduction for the next five years? What measures will be taken to meet the target?

Xiao Yaqing:

As to the number of central SOEs, Ms. Huang has already elaborated on this. Unprecedented efforts have been channeled into the restructuring of central SOEs in the past five years delivering obvious effects. As I have mentioned, we will not be taking the reduction in numbers or the size of any expansion as set goals. Instead, we will set the pace of restructuring on the basis of the needs of domestic and international markets, as well as the development trends of certain industries. Therefore, we will focus on enhancing enterprise core competitiveness and management level as well as raising the returns in regard to the preservation and increased value of State-owned assets. We will advance the restructuring process according to the laws governing scientific and market development and the demands of technology innovation.

Your second question is about corporate debt. At the end of 2016, the debt ratio of the central SOEs stood at at 66.7 percent. This was moderate compared with other countries. Over the past five years, the ratio has remained stable, rising slightly by 0.4 percentage point to 66.7 percent in 2016 from 66.3 percent in 2012.

To curb the rise of this ratio, a major approach is to intensify supply-side structural reform and structural adjustment.

Presently, the debt risk of the central SOEs is completely under control, as shown by the statistics I just mentioned. The enterprises are operating well. This means the risk has been reduced. So far this year, the central SOEs have maintained the positive growth momentum seen in the fourth quarter of last year, while a particularly rapid growth rate is appearing in the major sectors and among the large SOEs.

New York Times:

Regarding the merger of large SOEs, why does the government think that this is in line with the law of the market economy? Why not let the market decide? For example, let them take part in the market competition until one of them is shut down. Thank you.

Xiao Yaqing:

Thank you for your question.

Chinese enterprises have been competing in the market. After the 18th National Congress of the CPC, and especially after its third plenary session, the central government stressed that the market plays a decisive role in resource allocation and the government should play a better role in creating the best conditions. In the historical development of China's reform and opening up, a very important experience is that the process should never stop. We have been moving forward and have made remarkable achievements, especially since the 18th National Congress of the CPC. In the market economic context, central SOEs scored prominent achievements, including many innovations, enhancing the effects of mixed ownership reform and other reforms. All these show our success and progress in market-oriented reform.

The growth of an enterprise of any country must be in line with the country's laws and policies. Government regulation helps enterprises improve their competitiveness and develop themselves within the legal framework. The development of a market economy cannot be separated from the legal environment and market cultivation. In my view, the achievements made by Chinese enterprises and fresh and vivid experiences formed in market-oriented development have proven such development is feasible. Therefore, our development will become more international and market-oriented in the future. Thank you.

Hu Kaihong:

The last question.

Market News International:

My question is about mixed-ownership reform. You just mentioned that China is considering introducing the third round of pilot programs in the reform. What specific areas will it cover? Are there more rounds of pilot programs in the pipeline?

There have been some voices complaining that the reform is slow, indecisive and losing momentum. Are there any subtle changes in the government's attitude? Other overseas voices like the AmCham China complain about foreign companies' low access to major areas in China. How do you respond to that? Can foreign companies participate in China's mixed-ownership reform? Thank you.

Xiao Yaqing:

Your question covers many levels, just like the levels in the reform we are carrying out. I will try my best to give you an answer.

The reform to establish mixed-ownership systems is a key area in the reform of SOEs, and we have been firmly pushing it forward. However, the reform of mixed-ownership is only a part of the reform of SOEs, not the whole of it. It should be said that, the reform of mixed-ownership is not suitable for all SOEs.

Take the United States for example. Its enterprises not all feature mixed-ownership. They are not all privately-owned. Some are State-owned and undertake important social responsibilities.

In the reform to establish mixed-ownership systems, we hope that enterprises of different ownerships will learn from each other and play their respective roles so as to better develop SOEs. Many privately-run enterprises in China have excellent decision-making systems and decision-making procedures, as well as excellent management and experience.

Our SOEs have strong cohesiveness and pioneering spirit. Coupled with a sound foundation for development, they can overcome their own weak points by learning from each other's strong points and unite together. The mixed-ownership reform is open as well, just like other reforms.

President Xi Jinping delivered keynote speeches at this year's World Economic Forum in Davos, the Belt and Road Forum for International Cooperation and the 9th BRICS Summit. We have carefully studied these speeches and feel that China's gate for opening up and reform is always open -- this is also our demand for the central and local SOEs and the national assets supervision department. China's SOE reform is an open program that attracts all enterprise of various ownership forms to participate. If foreign enterprises are willing to join in, we also welcome them.

Of course, we hope America will be open to us, and open to our SOEs, as well. We hope the American government look at China's SOEs from a full, correct and objective perspective. The process of opening up must be a win-win, a multi-win situation. The process of reform must be exactly the same. All parties involved should see their interests enlarged and assured during the process of opening up and reform. Mixed ownership reform must continue, and the results and effects of the reform should just keep on emerging, which is something we are greatly anticipating.

Hu Kaihong:

Due to the time limit, today's press conference must end here. Thank you, Mr. Xiao, Ms. Huang and Mr. Peng. Thank you everyone.

Speaker:
Liu Aihua, spokesperson of the National Bureau of Statistics

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

Date:
Sept. 14, 2017

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Ms. Liu Aihua, spokesperson of the National Bureau of Statistics, to introduce and analyze China's economic performance in August. She will also answer some of your questions.Now, let's welcome Ms. Liu to deliver her briefing.

Liu Aihua:

Thank you. Ladies and gentlemen, good morning. As usual, before answering your questions, I will make a brief introduction.

In August, China's economic performance was stable with good momentum for growth.

The overall situation was sound. Structural adjustment continued to go deeper. New emergent driving forces continued to gain strength. Economic performance improved steadily in both quality and returns.

First, industrial production was stable, corporate profits continued to improve.

In August, the total added value of industrial enterprises above designated size increased by 6.0 percent year-on-year, down 0.4 percentage points from the previous month; and grew 0.46 percent faster than July, representing a gain of 0.05 percentage points.

An analysis by types of ownership shows State holding enterprises saw a gain of 7.8 percent; collective enterprises were down 2.1 percent; share-holding enterprises achieved a 5.8 percent increase; and those funded by foreign investors or investors from Hong Kong, Macao and Taiwan rose 7.9 percent.

The added value of the mining industry fell 3.4 percent year-on-year; manufacturing rose 6.9 percent, a gain of 0.2 percentage points from the previous month; and that of the production and supply of electricity, heat, gas and water rose 8.7 percent. The production and sales rate of industrial enterprises above designated size reached 98.5 percent. From January to August, the total added value of industrial enterprises above designated size increased by 6.7 percent year-on-year. In August, The Purchasing Manager's Index (PMI) stood at 51.7 percent, a gain of 0.3 percentage points from the previous month. This represented 13 consecutive months of improvement.

From January to July, industrial enterprises above designated size achieved a total profit of 4.2481 trillion yuan, an increase of 21.2 percent year-on-year. The main business income profit margin reached 6.09 percent, up 0.41 percentage points year-on-year.

Second, the service sector grew at a relatively fast pace, with the business activity index extremely active.

In August, the service sector production index increased by 8.3 percent year-on-year, the growth rate being unchanged from the previous month; however, it was 0.9 percentage point higher than the same period last year. Information transmission, software and information technology services, rental and business services maintained double-digit growth.

From January to August, the service sector production index increased by 8.3 percent year-on-year, 0.2 percentage point higher than the same period last year. From January to July, the operating income of service enterprises above designated size grew by 13.4 percent year-on-year, up by 0.2 percentage points from the first half of the year. The operating profit of service enterprises above designated size grew by 22.6 percent year-on-year, up by 6.6 percentage points from the first half of the year.

In August, the business activity index for services stood at 52.6 percent, showing a continued good performance. Specifically, the business activity index for sectors such as air transport, postal services, telecommunications, radio and television and satellite transmission, and the Internet and software information technology services stayed within the relatively good range of over 60.0 percent. From the market demand perspective, the new orders index of the service sector was 50.3 percent, 0.1 percentage points higher than the previous month, and maintaining an advance for the fourth consecutive month.

Third, the growth of fixed-asset investment slowed down with the investment structure becoming optimized.

In the period January-August, total fixed-asset investment (excluding rural households) was 39.42 trillion yuan, up 7.8 percent year-on-year. However, the growth rate was 0.5 percentage point lower than at the end of July. This included investment of State-owned capital of 14.38 trillion yuan and private investment of 23.91 trillion yuan, with year-on-year increases of 11.2 percent and 6.4 percent respectively. Private investment accounted for 60.7 percent of the total. Primary industry investment was 1.27 trillion yuan, up 12.2 percent from the same period last year; secondary industry investment was 14.82 trillion yuan, up 3.2 percent. This included investment in manufacturing of 12.17 trillion yuan, an increase of 4.5 percent. Investment in the tertiary industry was 23.32 trillion yuan, up 10.6 percent. Infrastructure investment totaled 8.47 trillion yuan, up 19.8 percent; hi-tech manufacturing investment increased by 19.5 percent, 11.7 percentage points higher than the growth rate of total investment. Investment in manufacturing industries with extensive energy consumption declined by 1.6 percent. A total of 39.62 trillion yuan of fixed-asset investment was available, up 2.8 percent and 1.3 percentage points from the end of July. The planned total investment in new projects was 33.01 trillion yuan, up 2.2 percent and 0.3 percentage point higher than at the end of July. Total fixed-asset investment (excluding rural households) increased by 0.57 percent month-on-month.

Fourth, investment in real estate grew in a stable way, and commodity housing for sale continued to decline.

In the period, January-August, the total investment in real estate was 6.95 trillion yuan, up 7.9 percent year-on-year. Investment in residential housing increased by 10.1 percent. Construction began on housing totaling 1.15 billion square meters, up 7.6 percent, with the area of residential housing up 11.6 percent. A total of 985.39-million square meters of commodity housing was sold, up 12.7 percent, with the area of residential housing up 10.3 percent. The sales of commodity housing reached 7.8 trillion yuan, up 17.2 percent, with the sale of residential housing up 14.2 percent. Property developers bought land totaling 142.29 million square meters, up 10.1 percent. By the end of August, the commodity housing for sale remained at 623.52 million square meters, 11.44 million square meters less than a month earlier. In the period from January to August, the capital available for property developers was 9.98 trillion yuan, up 9 percent.

Fifth, market sales continued to expand and online retailing showed good momentum.

In August, total retail sales of consumer goods reached 3.03 trillion yuan, up 10.1 percent year-on-year, 0.3 percentage point lower than the July figure, up 0.76 percent month-on-month, 0.05 percentage point higher than July. Sales of consumer goods in cities reached 2.62 trillion yuan, up 9.9 percent, while sales in rural areas reached 416.1 billion yuan, up 11.5 percent. The catering sector reported revenue of 336 billion yuan, up 10.7 percent; retailing 2.7 trillion yuan, up 10.1 percent, with retail sales of enterprises above designated size reaching 1.24 trillion yuan, up 7.5 percent. Sales of commodities regarding consumption upgrading saw fast growth, with the growth of sales of sports and entertaining commodities up 14.9 percent and that of communications equipment up 12.2 percent. In the period from January to August, total retail sales of consumer goods achieved stable growth of 10.4 percent.

In the period from January to August, online retail sales reached 4.25 trillion yuan, up 34.3 percent year-on-year, 0.6 percentage point higher than at the end of July. Online retail sales of tangible goods reached 3.21 trillion yuan, a year-on-year increase of 29.2 percent, accounting for 13.8 percent of total retail sales of consumer goods, which was 2.2 percentage points higher than the same period of last year; online retail sales of Intangible goods reached 1.04 trillion yuan, up 52.9 percent.

Six, mild rise in CPI; greater rise in PPI.

In August, the consumer price index (CPI) rose 1.8 percent year on year, 0.4 percentage point higher than in July. The breakdown is as follows: 0.4 percent for food, tobacco and alcohol, 1.3 percent for garments, 2.7 percent for housing, 1.3 percent for daily-use goods and services, 0.7 percent for transportation and communications, 2.5 percent for education, culture and entertainment, 5.9 percent for healthcare and 1.4 percent for other goods and services. Within the "food, tobacco and alcohol" category, the prices of grain and fresh vegetables rose by 1.6 percent and 9.7 percent respectively, and the price of pork dropped by 13.4 percent. The month-on-month rise for CPI was 0.4 percent. For January-August, CPI rose 1.5 percent year on year.

In August, the producer price index (PPI) rose 6.3 percent year on year, 0.8 percentage point higher than the growth in July, and rose 0.9 percent month on month. The rise for January to August was 6.4 percent year on year. In August, the producer purchasing price index jumped 7.7 percent year on year and 0.8 percent month on month. For January-August, the jump was 8.4 percent year on year.

Seven, rapid growth in imports and exports; higher proportion of general trade in imports and exports; higher proportion of mechanical and electrical products in exports.

In August, foreign trade increased 10.1 percent year on year to 2.41 trillion yuan, of which 1.35 trillion yuan was exports, up 6.9 percent, and 1.06 trillion yuan was imports, up 14.4 percent, resulting in a trade surplus of 286.5 billion yuan. For January to August, foreign trade increased 17.1 percent year on year to 17.83 trillion yuan, of which exports were 9.85 trillion yuan, up 13 percent, and imports were 7.98 trillion yuan, up 22.5 percent. In January to August, general trade expanded by 17.9 percent year on year, increasing its share in China's total foreign trade by 0.4 percentage point from last year to 56.7 percent. Exports of mechanical and electrical products expanded 13.4 percent, increasing its share in China's total exports by 0.3 percentage point from last year to 57.1 percent.

In August, industrial enterprises above the designated size (those with an annual revenue from their main business operations of 20 million yuan or more) delivered exports worth 1.09 trillion yuan, up 8.2 percent year on year. For January to August, the figure was 8.27 trillion yuan, up 10.3 percent over last year.

Eight, progress in the supply-side structural reform; extraordinary results in transformation and upgrading.

New progress has been made in cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness. By the end of July, overcapacity cutting in iron and steel industry had progressed smoothly with sales and production of substandard steel products banned; overcapacity cutting in coal resulted in a combined capacity of 128 million tons, or 85 percent of the annual target, eliminated. The area of commodity housing for sale at the end of August declined 12 percent year on year, 1 percentage point higher than a month earlier.

The debt-to-asset ratio and production cost of industrial enterprises continued to fall. At the end of July, the ratio was 55.8 percent for industrial enterprises above the designated size, down by 0.7 percentage point compared with the same period last year. The cost for each 100 yuan earned from main business operations was 85.72 yuan for January to July, 0.04 yuan less than the corresponding period last year. Investment in areas of weakness grew rapidly. In January to August, investment in environmental protection, public facility management, road transportation, water conservancy management and agriculture grew 28.2, 24.3, 24.1, 17.6 and 16.1 percent respectively.

New achievement was scored in adjusting the industrial structure and expanding new growth drivers. Technology-intensive and low-resource-consuming new industries and products that are in keeping with the trend of transformation and upgrading grew rapidly. In August, the high-tech industry and equipment manufacturing industry expanded 12.9 percent and 11.6 percent year on year in terms of value added. The expansions were 0.8 and 0.9 percentage point higher respectively than in July and 6.9 and 5.6 percentage points higher than those by industrial enterprises above the designated size.

In January to August, output of industrial robots, new-energy cars and SUVs increased by 63, 25.4 and 17.2 percent year on year respectively. Emerging services and producer services also recorded rapid growth. In January-July, enterprises above the designated size offering emerging services of strategic importance and producer services earned 16.8 and 14.5 percent more in business revenue compared with the same period last year.

On the whole, the national economy continued to make progress and move in a positive direction while remaining stable in August. Growth was steady with structure and quality improved. But we should also be aware that there are still concerns and challenges, because the international environment continues to suffer from numerous instabilities and uncertainties, and the Chinese economy is still clearing away barriers for restructuring. Going forward, we will rally even closer around the CPC Central Committee with Comrade Xi Jinping as the core, make progress while maintaining stable performance, and use new development concepts to steer the new normal in economic development.

We will continue to focus on the supply-side structural reform, moderately expand aggregate demand, make innovation a greater growth driver, better guide expectations, seek impetus and vitality through reform and pursue development and transformation through innovation. We will strive to upgrade the economy, making it more efficient, and boost the real economy, keeping risks at bay, so as to consolidate and stabilize the foundation for development.

That's all for my introduction. Now I'm ready to take your questions. Thank you.

Xi Yanchun:

Thank you Ms. Liu for your introduction. Now, the floor is open for questions. Please identify yourself before asking your question.

China Central Television (CCTV):

You just mentioned that some of the economic indicators were still declining in August, which has drawn public concern. How do you see the overall economic performance of that month? Thank you.

Liu Aihua:

Thanks for your question. According to what I introduced just now, the Chinese economy has both maintained stability while taking a turn for the better, which can be seen in the following five aspects:

First, growth is stabilizing. According to the main growth indicators, the added value of industries above designated size from January to August increased by 6.7 percent, up 0.7 percentage points year-on-year. In August alone, the rise was 6.0 percent year-on-year, indicating maintenance of steady growth. From January to August, the service sector producer price index reached 8.3 percent, up 0.2 percentage points year-on-year; in August alone, the figure was also 8.3 percent, up 0.9 percentage points year-on-year. So, the growth was quite steady in regard to the production side. In terms of demand, total retail sales of consumer goods grew by 10.4 percent in the first eight months of this year, up 0.1 percentage point over last year. Investment growth also remained stable, with a year-on-year increase of 7.8 percent in fixed asset investment during the period. Investment in areas of perceived weakness also maintained rapid growth. Moreover, imports and exports maintained double-digit growth. Therefore, demand-side growth was also quite stable.

Second, employment has seen an upward turn. In August, the surveyed unemployment rate in urban areas remained stable, with the figure remaining below 5 percent in 31 major cities, a slight decline over the previous month. The weekly working time in industrialized enterprises increased by 0.07 hours compared to July. A total of 9.74 million jobs were created in urban areas from January to August, up 260,000 year-on-year. August saw a slight rise over July.

Third, increases in commodity prices have remained mild. In August, the consumer price index (CPI) rose by 1.8 percent year-on-year, and 0.4 percent month-on-month. This can be considered a moderate level compared to the same period in previous years and when set against other major world economies.

Fourth, the structure is continued to be optimized. In terms of industrial structure, high-tech industries have maintained relatively rapid growth, with their added value rising by 12.9 percent year-on-year in August, up 0.8 percentage points over the previous month; the added value of equipment manufacturing industries rose by 11.6 percent, up 0.9 percentage points. At the same time, manufacturing industries with high-energy consumption saw a slowdown, with growth of 2.9 percent in August, down 0.4 percentage points. In regard to the demand side, products that meet higher consumer demand grew fast. In August, sports and entertainment products as well as communications equipment registered double-digit growth, up 14.9 percent and 12.2 percent year-on-year respectively. The investment structure is also improving. On one hand, investment in high-tech manufacturing grew by 19.5 percent year-on-year; on the other hand, traditional sectors are also speeding up their transformation showed by the fact that investment in technological improvement for manufacturing grew by 11.4 percent from January to August. In addition, investment in infrastructure and in areas of perceived weakness also picked up. Since the beginning of this year, infrastructure investment has risen by 19.8 percent year-on-year; investment in environmental protection, public facilities, road transportation and other areas of perceived weakness enjoyed a growth of over 20 percent. Therefore, investment in industrial upgrading is quite obvious.

Fifth, quality has improved. From January to July, profits in industrialized enterprises above designated size increased by 21.2 percent, up 14.3 percentage points year-on-year. Operating profits of the service sector in the same period grew by 22.6 percent. Fiscal revenue continued a desirable growth rate. From January to August, general public budgets grew by 9.8 percent overall.

From the above five indicators, we can see that, from January to August, China's economic growth was within a proper range with deepened structural adjustment, improved quality and positive and steady growth momentum.

Phoenix TV:

We have noticed that the PPI rose to 6.3 percent in Augustafter three consecutive months of flat growth.What do you think of the rebound of PPI in the case of the overall decline of growth rates of several major indexes, involving the just-mentioned investment, consumption, imports and exports? Thank you.

Liu Aihua:

Thank you for your question. PPIhad a year-on-year growth rate of 6.3 percent in August, and the growth rate hasslightly expanded compared with last month. And itsmonth-on-month growth rate is also slightly expanding.Why? I think there are two main reasons.

First, the domestic supply-side structural reform has continued to advance. In terms of PPI's internal structure, PPI's rise is actually a structural boost. In August, the rise of PPI mainly came from the means of production, while the growth rate fromconsumer goods were relatively stable.

Second, changes in the prices of major international commodities had an impact on the rebound of PPI.Data from relevant international organizations show that in August there were a rise inprices ofmany upstream products. This was mainly caused by the recent sustained recovery of world economy and the steadily expanding of international markets which has a great demand for China's raw materials.

Here are some examples. The international energy price rose by 4.4 percent in August, the metaland mineralprice by 8.2 percent, and the raw material priceby 2.3 percent. The prices of major international commodities also rose invarying degrees. This impact of external factors cannot be ignored, either.In general, both domestic and international factors have contributed to the rebound of PPI in August.

Over the next period, the rise of PPI will have pushing-up factors and pulling-down factors. The pushing-up factors will include the just-mentioned sustained advancing of domestic supply-side structural reform and the continuedrising of major international commodities.

But there will be certain pulling-down factors, too.PPI's year-on-year growth turned from negative to positive for the first time in September last year. This base will appear as a comparatively large increase, which will also have a certain impact on PPI's year-on-year growth in September this year.

So from a whole point of view, the trend of PPI is yet to be seen. Thank you.

Economic Daily:

Since the second half of the year began, the statistics of production, consumption and investment have been falling. Now, there's a saying that the bonus brought about by the supply-side structural reform is shrinking. Can you please comment on this opinion. In addition, as our reform keeps on moving ahead, what will the next phase of the economic trend be like? Thank you.

Liu Aihua:

Thank you for your questions. Looking at the general picture, we can see certain numbers have indeed shown a slowdown in this month's statistics. However, if we observe the economy as a whole, there is a need to consider it from multiple angles and in multiple dimensions. The short-term ups-and-lows are often affected by some non-economic factors, such as climate and cardinal numbers, which do not necessarily reflect the overall trend. For example, in the recent two months, July and August, you know the high-temperature and often rainy weather can affect many indices. Because of this oppressive kind of weather, many industrial enterprises suspend their production and take advantage of the lull to undertake maintenance. So, the regular production and operation may be influenced, which will also affect the year-on-year growth of industrial production. Furthermore, we have mentioned that consumer prices have seen a larger increase on a month-on-month basis, and this is also due to the weather factor. For example, due to the weather, the cost of storing fresh vegetables will be higher. So, when we evaluate the economic situation, we should not only look at the year-on-year growth, but also the month-on-month and accumulated growth figures. When we look at it from various perspectives, in general the basic situation of economy in August did not change. Production and demand are stable, and the economic structure continues to be adjusted, and the quality and benefit are also on the rise. The stable and positively improving trend is not changed.

When there are no fundamental changes, the trend for the second half of the year will continue in a good direction. And there are three major factors to support that.

First, the base is stable. As supply-side structural reform continues, the enterprises' operations and benefits keep on improving, as the residents' income is improving in a stable way, and fiscal incomes are growing faster. The three major income sources are performing at their best rate in recent years, and this is very rare. The micro-foundations are positive, which has laid a stable base for the macroeconomic positive trend. For example, in regard to the consumers, in the past half year, incomes have actually grown 7.3 percent, or 0.8 percent faster on a year-on-year basis. This is a high speed when we look at recent years. When residents' incomes grow faster, this will promote upgraded consumption. In addition, as the supply-side has seen stable improvement of quality and level, so the consumption will have chance to stay in fast lane and continue to grow. From the perspective of investment, as enterprise profitability keeps on rising and the market demands keep on improving, this will strengthen the investment capabilities of enterprises and enlarge the investment space. And from the perspective of foreign demand, currently the world economy continues its revival and our export products have enhanced their competitiveness, so we have a relatively solid base for foreign needs to grow stably and positively. So, looking at the three demands, the base for the demand to stably enlarge is becoming better and more stable.

Second, there are clear signs of increased vigor. Thanks to the boost by public entrepreneurship and innovation, there are many more new entities appearing. In August, the number of newly-registered enterprises reached 17,000 a day, faster than the figures last year. Besides, new industries and new models are also fast developing. From January to August, in the online retail volume, the physical commodities' value of retail sales increased by 29.2 percent year-on-year, and non-physical commodities' value of retail sales grew even faster, increasing by 52.9 percent year-on-year. This dynamic new growth also created new impetus and vitality into overall economic growth, and will make the economic growth more stable and better.

Third, the prospects are very positive. As noted already, in August, the manufacturing industry's Purchasing Managers'Index was 51.7 percent, which has stayed above the critical point for 13 straight months. The non-manufacturing PMI activity was 53.4 percent, while the consumer confidence index also remains at a high level. Recently, the international community also have stronger confidence in China's economic development. So many international organizations have raised their projections of China's economic growth.

So, from these three aspects - first, more solid foundation; second, strengthened vigor; third, positive prospects - we can see that the short-term fundamental base for economic growth has not changed, and the stable and positive trend will continue.

Nikkei:

Industrial production has slowed down for two straight months. Besides the weather factor, is there any other reason in your view? Some local governments are currently strengthening their regulations on environmental protection, so how does that impact industrial production?

Liu Aihua:

First, industrial production may indeed have slowed down, but it still maintained steady growth. From January to August, the added value of industrial enterprises with annual revenue of at least 20 million yuan from their main business operations increased by 6.7 percent year-on-year, up 0.7 percentage point. Industrial production grew by 0.46 percent in August, up 0.05 percentage point from July.

Second, due to the hot and rainy days, industrial production in July and August did see a slowdown. However, this slowdown is also related to structural adjustment. The added value of industries with extensive energy consumption grew by 2.9 percent, 0.4 percentage point less than the previous month. Meanwhile, other industries that have speeded up their transformation and upgrading managed to raise their production. The added value of manufacturing industries rose by 6.9 percent, high-tech industries rose by 12.9 percent, and equipment manufacturing industries grew by 11.6 percent, respectively 0.2, 0.8 and 0.9 percentage point higher than the previous month.

The productive activities of industries with extensive energy consumption has slowed down, but, on the whole, we were able to speed up transformation and upgrading. Therefore, it shows we are following the new vision of development, which will not only boost short-term economic development but also give sustainable and fresh impetus to medium and long-term development. Thank you.

Reuters:

Recently, the exchange rate of RMB has been appreciating significantly. What is the impact on China's exports and macro economy? Thank you.

Liu Aihua:

Thank you for your question. I think the RMB appreciation reflects the fact that China's economic development was progressing steadily with some improvement, and it has boosted the confidence in China's economic fundamentals from home and abroad.

Based on this fact, I think China's economy can maintain the current trend and seek further development. There will be more and more factors to support the further development of the economy, which will grow at a medium and even high speed with higher quality. The exchange rate of RMB will also maintain a reasonable growth rate. Thank you.

CNR:

I have two questions. First, the investment in real estate development in the first eight months has witnessed a relatively stable increase, both the housing areas being newly developed and sold continued to grow year on year. Do you think the investment increase will last in the second half of this year? In addition, the "golden September and silver October" are usually the best months for the real estate industry, but some argue that September and October this year will witness a sluggish performance compared to previous years. What do you think of this? The second question is: we have also seen that PPI and CPI have been rising year-on-year. Does it mean that inflationary pressures still exist? How do you think the CPI will change in the H2? Thank you.

Liu Aihua:

Thanks for your questions. Let me address your first question about the real estate market first. The regulation on the real estate market since last year has manifested its effects in two aspects.

First, the housing prices in popular cities have kept rising too quickly. As seen from the housing prices of 70 large and medium cities in July, the year-on-year increases of new commercial housing prices in 15 first-tier cities and popular second-tier cities have all slowed down markedly, ranging from 0.8 percentage points to 4.9 percentage points; with month-on-month increases have narrowed down as well. Second, de-stocking has speeded up. By the end of August, the areas of commodity housing for sale had fallen by 12 percent year on year, and one percentage point higher than that of the end of last month.

As you said, real estate sales are still growing at a relatively fast rate. From January to August, the national commercial housing sales grew by 12.7 percent. During the same period, the investment in real estate development increased by 7.9 percent year on year at a relatively steady speed. In addition, from the supply side, the recent policies of some government departments including pilot rental housing will expand the supply of commercial housing and channel some of the demand. Therefore, the real estate market is expected to maintain a steady and healthy development overall under the exploration and efforts of all the regions and various government departments.

The second question is about the CPI. In August, the CPI rose 1.8 percent year on year and 0.4 percent from the previous month. In fact, the expansion of the CPI increase in August is mainly attributed to seasonal factors. The month-on-month increase of CPI was mainly due to rising food prices, which contributed a share of about 0.24 percentage points to the month-on-month increase of the CPI according to our measurements and calculations.

Non-food prices rose 0.2 percent month on month, an increase basically equivalent to that of last month. The rise in food prices was mainly due to the rise in the prices of eggs, fresh vegetables, pork and chicken. High temperatures were the main reason for the decline in egg production, which explained a month-on-month increase of egg prices by 16.2 percent. High temperatures and rainfall as well as strong convection weather increased the costs for storing and transporting fresh vegetables, and which led to a month-on-month increase of egg prices by 8.5 percent.

The price of chicken and pork rose by 3.0 percent and 1.3 percent respectively. The CPI rose by about 0.32 percentage point under the influence of the above four items. You are concerned about the trend of the CPI and whether its change will lead to inflation, I think the answer is no, because the CPI increased by only 1.5 percent from January to August, and the food supply is relatively adequate at present. This year, the summer crops and the early season rice yield are greater than last year, and the autumn crops are growing well so far.

Therefore, the overall supply of agricultural products is relatively adequate, and thus, food prices will not increase much. Moreover, the prices of industrial consumer goods showed a relatively low increase of 0.6 percent from January to August. Comparably, the prices of services increased by more by 2.9 percent, but under the continuous supply-side structural reform, the quality and level of services kept improving, so the prices were not supposed to show a large increase. Thus, overall, there will be no problem in fulfilling the objective of controlling price inflation for the whole year. Thank you.

Xi Yanchun:

The press conference ends up here. Thanks again for Ms. Liu Aihua, and thank you all.

Speakers:
Zhou Qiangwu, director general of the International Economics and Finance Institute of the Ministry of Finance;

Ye Fujing, director general of the Institute for International Economic Research of the National Development and Reform Commission

Chairperson:

Hu Kaihong, spokesperson of the State Council Information Office

Date:

Aug. 31, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to this press conference. The BRICS summit is going to open shortly in Xiamen. Yesterday, the Foreign Ministry held a press conference, in which Minister Wang Yi made a brief introduction of the forthcoming meeting. As we know, the event has attracted great public attention, so today, we are holding this press conference to introduce the economic and financial cooperation of the BRICS countries. Present here are: Mr. Zhou Qiangwu, director general of the International Economics and Finance Institute of the Ministry of Finance, and Mr. Ye Fujing, director general of the Institute for International Economic Research of the National Development and Reform Commission. They will make an introduction and then answer some of your questions.

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

Zhou Qiangwu:

Thanks. Good morning!

The BRICS Xiamen summit is just around the corner. Iappreciatethe opportunity offered by the State Council Information Office to meet all of you here today. I'd like to start by sharing with you the achievements made by the BRICS cooperation in the economic sphere, especially in fiscaland financial areas, in the past decade, as well as the outlook for this year's Xiamen summit.

Since the BRICS cooperation mechanism was launched ten years ago, the five member countries have upheld the spirit of openness,inclusiveness, cooperation and win-win results, expanded the fields of cooperation and improved the mechanism of collaboration.

Step by step, the five countries have developed BRICS into a key platform for dialogue among major developing countries as well as global economic governance. The international influence and attraction of BRICS has also increased markedly. Now BRICS holds an overarching leaders' summit annually, coupled with more than 20 ministerial-level dialogues.

In China, over 40 departments are involved in the BRICS cooperation mechanism, in which fiscal and financial cooperation is a major part. BRICS countries have kept strengthening communication and coordination regarding fiscal and financial issues over the years, including the establishment of the New Development Bank more than two years ago. The bank has achieved tangible results in many fields, contributing to the socio-economic development of BRICS countries and the improvement of global governance.

I believe the upcoming Xiamen summit will producerich results in fiscal and financial areas.Now I'd like to introduce to you the expected results and possible highlights.

Since China took over the chairmanship of BRICS earlier this year, we have held two meetings of BRICS finance ministers and central bank governors and a meeting of their deputies, which I believe have laid a solid foundation for the upcoming Xiamen summit.

First, we must promote the economic growth of the BRICS countries and the world. BRICS countries will further strengthen communication and coordination at the macro level, including the use of all policy instruments of fiscal and monetary policy, and structural reform to promote their economic growth. The BRICS are also jointly urging developed countries to adopt responsible macro-economic policies to reduce negative spillover effects. At the same time, we are very clear in our joint opposition to trade protectionism

Second, is to deepen financial cooperation under the G20. At the G20 Hamburg Summit held in July, the BRICS countries also issued a joint statement, which made unique contribution to the success of the G20 summit.

Third, this summit will promote the development of the BRICS Development Bank, or, the New Development Bank. In this regard, if there is time, I will explain it to you further.

Fourth, facing the task of common development, we BRICS countries will work together to promote cooperation in the field of Public-Private Partnership (PPP) to lay a consolidated foundation for cooperation.

Fifth, we will work together on the convergence of accounting standards and the standardizing of audit supervision, with an aim to prepare for the interconnection of the BRICS bond market.

Sixth, we will improve tax cooperation, especially international tax cooperation, so as to improve the seamlessness and effectiveness of policy coordination.

Second, financial cooperation is a key part of cooperation among the BRICS countries. We will promote the improvement of the contingency reserve mechanism, keep fostering thelocal currency bond markets in the BRICS countries, propel the development of financial institutions and the network of financial services among the BRICS countries and intensify communication and collaboration on financial regulation, all of which dovetail nicely with the themes of G20.

We will also push cooperation on currencies, anti-money laundering and anti-terrorist funding. Fruits yielded from the practical cooperation in these areas will not only contribute toglobal economic governance, the economic development of the BRICS countries and the world, but will also elevate the cooperation among the BRICS countries to a new level, laying the foundations for the next ten year of BRICS. Thank you.

Hu Kaihong:

Now the floor is given to Ye.

Ye Fujing:

Mr. Hu, friends from the press, good morning.

BRICS cooperation is one of the most important mechanisms of South-South cooperation. The ninth BRICS Summit is another major diplomatic activity held at home this year after the Belt and Road Forum for International Cooperation.

We know that the current world economic and political situation is undergoing profound changes. Although the global economy is showing signs of moving in the right direction, there are still many uncertainties and destabilizing factors. The supply-side constraints, in particular, have not been fundamentally resolved, thus we have to wait and see whether or not the economy can stride into a new round of growth. Moreover, anti-globalization and protectionism is still rampant.

The open world economy is facing new challenges and risks, and the global governance system needs to be further reformed and improved, therefore, there is still a long way to go to achieve the goal of inclusive and balanced development.

Under these circumstances, the ninth BRICS Summit, themed deepening the partnership and opening up a brighter future, aims to deepen the BRICS partnership to better promote the BRICS development, achieve win-win in emerging markets and developing countries, build an open world economic system, improve global governance and push for solutions to deficits in peace, development and governance.

BRICS cooperation has just stepped into the second "golden decade," having achieved spectacular success in the past ten years. We have been jointly building an open world by being at the forefront of international cooperation, outlining a vision of the future as a booster of global economic development, coping with global challenges by making significant contributions to the long-term stability of the international community, and safeguarding fairness and justice by continuing to lead the reform process of global economic governance.

The Strategy for BRICS Economic Partnerships outlines eight key fields, which have witnessed progress in different phases. For example, in the field of trade and investment, several cooperation agreements have been reached during the 7th Meeting of BRICS Trade Ministers, such as the BRICS service and trade cooperation roadmap, e-commerce cooperation agreement and program on investment facilitation.

In regard to industry, agriculture, technology and innovation, several action plans and consensuses have been reached during the ministerial level meetings in each field. And corresponding cooperation mechanisms have been established.

Considerable progress has been made in connectivity as well as other fields. While noting these achievements, we also see the challenges faced by the BRICS countries, both internal and external.

Internally, in the economic field, the BRICS countries generally face dual pressures of creating steady growth while undertaking structural adjustment, as well as the considerably biggerchallenge of energy transformation. In other sectors, some disputes and misunderstandings still exist. As we are developing countries, various kinds of implicit and explicit barriers also exist in our cooperation and remain to be eliminated.

Externally, the present deep-rooted problems of the world economy have yet to be settled fundamentally; there is no fundamental change in the balance of powers; and the driving force of world economic growth is still insufficient. Moreover, the stubborn determination of some developed countries to maintain their vested interests should not be underestimated, and some unstable factors, especially geopolitical conflicts, are frequent. Therefore, the BRICS countries face a complicated and severe international political and economic environment.

As the next step, we expect the BRICS countries to strengthen their cooperation in six areas and jointly address the challenges facing the organization itself within the context of global development.

Firstly, to strengthen innovative cooperation. We should establish a platform for technology exchange and an innovation alliance to promote joint innovation.

Secondly, to improve openness and cooperation. All parties concerned should work out and implement the roadmap for the economic, trade and investment cooperation before 2020 as soon as possible. On the basis of WTO regulations, we can adopt some reciprocal investment arrangements, including lowering trade barriers, like tariffs, to deliver a batch of pragmatic outcomes at the early stage, then further consider the possibility to establish a BRICS Free Trade Zone.

Thirdly, to further implement the strategy of economic partnership. We can deepen cooperation in eight key sectors, like production capacity cooperation and energy cooperation, and launch some landmark cooperation projects. Learning from the experiences of the G20 Hangzhou Summit, we can also strengthen evaluation and supervision over the implementation of the strategy.

Fourth, to promote the strategic docking mechanism. A brand new opening-up pattern, led by the Belt and Road Initiative, has been taking shape. Under the framework of the BRICS mechanism, we should dock the initiative with the development strategies of all member countries, so as to jointly prioritize sectors such as economy and trade, financial circulation, infrastructure connectivity and people-to-people exchanges.

Fifth, to grasp cooperation opportunities in emerging industries.

Sixth, to expand the range of sectors which benefit from BRICS cooperation.

We believe that the impact of the BRICS mechanism will be more far-reaching; its function positioning will be more accurate; its degree of openness will be much higher; its measures will be more practical; and its cooperation will be more beneficial.

Hu Kaihong:

Now, we move on to the question session. As always, please identify your media outlet before raising questions.

CRI:

I have a question for Mr. Zhou. You just mentioned the BRICS New Development Bank. It was established two years ago, and has now become a highlight of the fiscal and financial cooperation among BRICS countries. How is it now? And, what cooperative agreements will be reached for the next step of cooperation at this summit?

Zhou Qiangwu:

The New Development Bank is "the baby" jointly owned by our five BRICS countries. For the past two years, there has beengreat progress in organizational structures, business development, financial and personnel policy making, some internal control policies as well as its general strategy.

At the same time, we have made phased progress in financing. We issued 3 billion yuan of green bonds on the Chinese capital market. The New Development Bank also started relevant procedures for inviting new members and has made solid progress in approving projects since last year. It approved seven projects last year, worth US$1.55 billion. All are sustainable development projects. Generally speaking, it is inspiring that thenew multilateral development bank has made such great achievements within only two years after operation.

This year, we will make new progress at the Xiamen summit to push forward the development of the New Development Bank. First, you may notice that the New Development Bank has established an African regional center, which opened on Aug. 17 in Johannesburg.

Second, we will provide a reserve project fund for the five BRICS countries to apply for loans, and this will boost the development and implementation of relevant projects.

Moreover, we will approve some new projects in 2017. The bank is expected to have a total loan value reaching US$2.5 billion in the whole year. Besides, the permanent office building of the New Development Bank headquarters will start construction in Shanghai soon. We believe that the bank will enjoy new opportunities for development at the BRICS Xiamen summit. Thank you.

TASS:

I have two questions. The first is for Mr. Zhou Qiangwu. In September, Russian President VladimirPutin will meet Chinese President Xi Jinping, and they are expected to discuss issues related to economic and trade cooperation. What do you think of the prospects for bilateral financial cooperation?

My second question is about use of the yuan and ruble, instead of U.S. dollars, in trade and investment between China and Russia. What do you think of its prospects? Will it develop in a good direction?

Zhou Qiangwu:

The two State leaders will hold a meeting at Xiamen, and discuss a wide range of issues. I believe financial cooperation will be on the list.

There are several financial cooperation mechanisms between China and Russia. One of them involves regular meetings of Chinese and Russian finance ministers. The latest meeting between them was held in Shanghai in June. It paved the way for the upcoming BRICS summit and the two State leaders' discussion on financial cooperation.

China and Russia both face challenges in the macroeconomic field. They have also developed a consensus on issues like pushing forward structural reforms and promoting cooperation under bilateral and multilateral frameworks. China has expressed its welcome and support to Russia issuing yuan-denominated sovereign bonds in the Chinese market.

I believe the two countries will further strengthen their macroeconomic cooperation. They will surely show stronger support for reform of the global governance system and even stronger opposition to protectionism. Under the Belt and Road Initiative, they will explore innovative methods on financing and connectivity development. Particular attention will be paid to the building of a financing mechanism under the Initiative. As a matter of fact, after the Belt and Road Forum in May, the two countries began exploring ways to build a long-term, stable and sustainable investment and financing system involvingdiversified participants and with controllable risk.

Regarding financial cooperation, the two sides will surely exchange views in depth and over a broad range of issues. It's certainthat China will support Russia in issuing yuan-denominated sovereign bonds in the Chinese market. In due course, they will sign a bilateral auditing regulation agreement to facilitate the issuance of the bonds. I believe financial cooperation will play a positive role in the development of bilateral ties.

Ye Fujing:

I want to add a few words concerning yuan settlements. I am glad that China-Russia political and trade relations have been boosted with the China-Russia Investment Cooperation Commission playing a positive role.

China and Russia are pushing forward settlements of reciprocal currencies. However, the choice of currency is made by the market and enterprises, so the government should rather foster the environment for facilitation.

Second, local currency settlement indeed helps circumvent currency risks and reduces the transaction costs of trade and investment, so it should be encouraged.

Third, the yuan's internationalization is an inevitable trend at the current stage, and it is also a helpful participation in and complement to the current international currency system.

Forth, China-Russia cooperation on currency is an important part of the current China-Russia economic ties and is also a focus put on China-Russia financial cooperation, which we should maintain and promote in the future.

China Review News Agency:

I wonder how are BRICS members going to enhance their cooperation to deal with trade protectionism from the United States?

Ye Fujing:

We are always opposed to trade protectionism, as it goes against the trend of economic globalization and the common interests of trading nations; it only meets the expectations of certain interest groups seeking to restrict competition through protection. Trade friction is nothing to worry about. Friction should be resolved through the WTO or by bilateral negotiations within the framework of international law, rather than through unilateral actions.

China adheres to trade openness based on a principle of modest and gradual progress, the process being in line with the national conditions and the development phase of each country. Due to differences in the development phase, China and the United States, indeed, have different industrial policies. However, it is not justifiable to embrace trade protectionism on the pretense of policy differences. We have always placed great emphasis on the protection of intellectual property rights, and are ready to safeguard and promote it on various fronts, including the BRICS mechanisms.

In addition, I'd like to talk about the trend of anti-globalization, of which trade protectionism is a key part. I think anti-globalization should neither be underestimated nor overestimated. Though the sentiments are still prevalent, its momentum has decreased. It has, for instance, receded through elections in France and the Netherlands. In the United States, those who have endorsed it have also regretted their action. Therefore, we should not overestimate its impact.

Anti-globalization is hardly constructive. People have realized that it cannot help improve their lives, but will only prove counter-productive in the future. Therefore, we can be optimistic about the trend of opposing trade protectionism and any moves towards anti-globalization.

Zhou Qiangwu:

The BRICS countries have always sought to promote globalization, which has benefited all of them. In the past two years, they have clearly voiced their support for globalization on various occasions. For example, at the G20 Summit in Hamburg, leaders from the BRICS countries issued a joint statement firmly supporting a rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system, implementation and enforcement of existing WTO rules and commitments, and opposing protectionism. The BRICS countries have also made positive contribution in enlisting forces opposing protectionism as one of the outcomes of the G20 summit. We, the BRICS countries, speak with one voice in opposing protectionism, no matter whether this is under the framework of the G20, BRICS or the WTO.

Press Trust of India:

My question is about economic cooperation under the BRICS mechanism. Trade and economic cooperation is a core component of the BRICS cooperation. We are both new emerging market countries, but in recent years, we can see that many BRICS countries have trade deficits between them. For example, China and India are facing such problems.

You two are from think tanks. In your opinions, what progress has been made in resolving the issue of bilateral trade deficits? What measures can we take to promote the resolving of the deficit issue and push forward fairer trade? The problem I say isn't just within the framework of the BRICS countries; it goes even beyond the WTO framework to a larger scope. What are your opinions?

Moreover, we now are saying the BRICS cooperation has entered a new era for the next decade. How do you expect this issue to be resolved in the future?

Ye Fujing:

Thank you very much for your question. In order to answer it, I think, first we should go beyond specific issues, and look at how the BRICS countries deal with the challenges we are facing at a higher level and within a wider range. We should resolve the particular issues existing in the economic and trade cooperation under this overall framework.

We need to consider whether there is a very strong impetus to enhance cooperation. We should stand at this strategic level to look at the necessity of further strengthening the BRICS cooperation, and tackle the challenges together. We should know that it is very normal for countries, including the BRICS countries, to have various problems between them. It will be abnormal if there's no challenge. The key is not challenges, but how to respond to the challenges.

We should not only view it in terms of challenges, but also see if the favorable elements for dealing with challenges are increasing. In my opinion, over the past decade of BRICS cooperation, the good factors in our cooperation haven't reduced but increased significantly.

The challenges we are facing are not more severe than in the past, but much easier for us to deal with. This is a very basic judgment. In the past years, the achievements we have made were so profound in our hearts. China and India, as well as other countries under the BRICS framework, and all those developing and developed countries, all benefit from the cooperation and have received rewards. This is an irreversible and important foundation of our cooperation.

Another important factor exemplifying the efforts of China and India to promote globalization should be our resolve to uphold the core value of multilateralism around the world.

We see some challenges facing China or India. To be more specific, they include getting the financial sector more deeply involved in the real economy, immature measures currently available to prevent financial risk, and the need for broader opening of financial markets. However, these challenges can also be considered as emerging opportunities to foster bilateral cooperation between China and India, as well as multilateral cooperation among BRICS members and other developing countries.

Problems like trade deficits can become minor and unimportant details if we take a panoramic view of development, which can be blamed on insufficient or unexplored opportunities for cooperation, rather than cooperation itself being the cause of the troubles. We will solve those problems through development and cooperation enhanced with investment and trade in commodities and services. At the same time, other problems can also be resolved if we underscore the importance of mutual openness, mutual cooperation and friendly relations.

Zhou Qiangwu:

I'd like to say a bit more on the issue. First, the trade among five BRICS countries is immense. The trade between China and India hit more than US$70 billion last year and the volume between China and Russia and China and Brazil also reached enormous proportions. It is nothing unusual to witness some trade disputes among the BRICS countries because frictions arise even among full brothers.

Second, I cannot agree more with what Director Ye has said in regard to viewing trade frictions and trade deficits in the context of development. However, I would like to add one more point, that every time when we want to solve trade frictions, we'd better work them out through dialogues rather than abuse of the trade remedial measures available, which may cause the economic and trade relations to turn sour among BRICS members.

CGTN:

At the 7th Meeting of the BRICS Trade Ministers held in August, all parties reached an agreement to promote the development of e-commerce. I wonder if there will be any kind of agreement to be reached in the field of e-commerce at the forthcoming summit. What further action is to be taken in this regard?

Ye Fujing:

The 7th Meeting of the BRICS Trade Ministers in August approved a series of documents involving the BRICS' service trade cooperation roadmap, e-commerce cooperation initiative, and investment facilitation cooperation outline. We are looking forward to the forthcoming summit to discuss specific ways of implementation, and specific measures of cooperationat the next stage.

Zhou Qiangwu:

Here I would like to add one more point. At the just concluded Meeting of the BRICS Trade Ministers, the five member states completed eight major achievements through their concerted efforts. You might have noticed that these involved issues concerning the building of the BRICS countries' electronic port networks and investment facilitation as well as economic and technological cooperation. These eight achievements will be highlighted at the forthcoming BRICS summit.

I particularly value the building of the BRICS demonstration electronic port network you have mentioned. In this respect, China may already be at the forefront in some areas. We will work together with other BRICS members to make a positive contribution to this construction.

At the same time, I would like to stress two other points I just mentioned, namely, the BRICS countries' investment facilitation and economic and technological cooperation. In my opinion, they will become two wheels guiding BRICS economic and trade cooperation to advance further. Thank you.

TASS:

Just now, you mentioned that the wide use of yuan is welcomed. Do you mean investments made by Russian companies in China? Are Chinese investors who do businesses in Russia willing to use the ruble to make deals with Russian companies?

Ye Fujing:

Since the implementation of China's reform and opening up policy, China-Russia economic and trade ties has developed rapidly.

Monetary cooperation is a vital component. Many companies and investors in China and Russia are using each other's currencies, and the governments of both sides have show great support to them in this regard.

Therefore, we should not only internationalize China's official currency, but also promote the internationalization of Russian currency, which is beneficial for the bilateral cooperation.

Hu Kaihong:

We'll wind up today's briefing. Thanks for our two experts who have joined us and thanks to you all.

Speakers:
Zhang Yansheng, chief research fellow of the China Center for International Economic Exchanges

Zhang Jianping, deputy director of Academic Steering Committee, Chinese Academy of International Trade and Economic Cooperation, Ministry of Commerce

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

Date:
Aug. 28, 2017

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. As far as I know, you all share great interest in the prospects of BRICS cooperation. To help you gather more information on it, we invited Mr. Zhang Yansheng, the chief research fellow of the China Center for International Economic Exchanges, and Mr. Zhang Jianping, the deputy director of the Academic Steering Committee of the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, to make an introduction and answer some of your questions.

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

Zhang Yansheng:

Good morning. It's my pleasure to share my opinion with you today. Please allow me to first make a brief introduction of the upcoming BRICS summit in Xiamen.

First of all, the BRICS mechanism has been running for 10 years. In the spirit of openness, inclusiveness, cooperation and mutual benefit, we have made our partnerships closer, more comprehensive, and more solid. Through practical strategic cooperation, we have promoted peace and development in the world. In the pursuit of mutual benefits and win-win results, through open and transparent cooperation mechanisms, we have expanded our scope of cooperation, and shared our gains to the fullest extent.

Over the past 10 years, the proportion of the GDP of BRICS countries in the world total increased from 12 percent to 23 percent; the proportion of foreign trade increased from 11 percent to 16 percent; the proportion of investments made in foreign countries increased from 7 percent to 12 percent. In 2016, the proportion of foreign investments we attracted reached 16 percent, and our contribution to the world economic growth reached 50 percent.

This indicated that the BRICS mechanism has played a significant role not only in the economic and trade development of the five member countries, but also in the development of other emerging markets and developing countries, as well as in the economic development of the world as a whole.

The BRICS Xiamen summit will lead the BRICS mechanism into its second golden decade. Therefore, the summit in Xiamen will have two parts to its theme: the first part will center on deepening the BRICS partnership. It is what we have talked about before, the "BRICS plus," which means how the five BRICS countries can get more friends from all over the world, which will allow more and more emerging markets and developing countries to join together in the BRICS mechanism, and boost and enhance the BRICS causes, spirit and mechanisms.

The second part is inaugurating a brighter future. In fact the economic environment in our current world has two prospects: one is a bright one, which will push forward the world to be more open, safer and full of cooperative spirit. The BRICS mechanism and countries participating in the mechanism can benefit from this prospect. However, the world economy has another prospect, which has recently been frequently discussed by economists. It is the uncertainty of the world economy.

As a matter of fact, now there is an anti-globalization trend, accompanied by protectionism, populism, isolationism and unilateralism in trade, investment and finance. In 2017, the global economy has shown signs of improvement, but at the same time, there still exist uncertainties that may change the international environment and economic situation. Therefore we arrive at the theme of "deepening the BRICS partnership, inaugurating a brighter future."

In this case, we are very much looking forward to this year's BRICS summit in Xiamen to make joint efforts in deepening cooperation and injecting new energy towards achieving a new solution for improved global governance and making new contributions to world economic growth. Therefore, we believe that the Xiamen summit will focus on the following four aspects.

First is deepening cooperation among the BRICS member states and promoting common development. International cooperation will be pushed forward through a strengthened BRICS economic partnership.

Second, it will focus on strengthening global governance and jointly responding to challenges. BRICS member states are devoted to maintaining international peace and stability, improving the international financial and monetary system, and strengthening coordination and cooperation in regard to the multilateral mechanisms.

Third, it will focus on carrying out people-to-people exchanges and laying a solid foundation of public support. BRICS member states should carry out cultural exchanges and mutual learning, strengthen educational cooperation and promote development of various sports.

Fourth, it will focus on promoting the building of mechanisms and creating a broader partnership. We are looking forward to achieving a BRICS mechanism able to play a greater role in promoting international development and cooperation in the future. Thank you.

Xi Yanchun:

Thanks to Mr. Zhang Yansheng for that briefing. Now, we move on to the question session. As always, please identify your media outlet before raising questions. In addition, we have arranged a full range of simultaneous English interpretation for today's press conference. Now, please proceed with your questions.

China News Service (CNS):

Just now, you mentioned that China has been promoting the "BRICS Plus" initiative, hoping to widen our circle of friends, so as to turn BRICS into the most-influential platform for South-South cooperation. What sort of impact can we expect from such an initiative in terms of BRICS cooperation, as well as the global economy? Could you please elaborate on this?

Zhang Yansheng:

We often say that the BRICS mechanism is designed to establish the most extensive cooperation partnership. BRICS countries differ greatly in culture, religious beliefs, development level and national conditions. As the Chinese saying goes, gentlemen seek harmony but not uniformity, which means that we can cooperate with people who are totally different with us. Our aim is to promote world peace, development and cooperation. In this respect, we believe in openness and look forward to working with those countries and regions willing to join in a "BRICS Plus" system. Thank you.

Zhang Jianping:

I'd like to say something more about this issue. The "BRICS plus" initiative is being promoted on behalf of developing countries and those transitional economies with their GDP per capita lagging far behind the developed world. Among the five BRICS countries for instance, the richest member like Russia has a GDP per capita of over US$20,000, while China barely reaches above US$8,000. Even though Brazil once hit a high of US$12,000, the figure has fallen to US$10,000 now. South Africa is lower, and India, the poorest, has a GDP per capita of around US$1,760.

Many developing countries have faced such economic conditions. Therefore, while developing economies, they face various imperative missions, such as shaking off poverty, promoting industrialization, improving infrastructure, and cooperating and participating in global value chains, based on which, they will be able to blaze a trail for their own advancement.

In view of that, the BRICS countries are expected to shape a system together while facing the critical challenge of development. However, the five member countries alone barely have enough power to achieve the desired goals. Exemplifying the model of the G20, the system, on one hand, consists of seven member countries from the developed world, and, on the other hand, comprises 10 more developing economies.

In such a perception, the "BRICS plus" initiative is open to all developing countries. However, at the same time, we consider the G20 a very important mechanism as well as a potential partner with its member countries being welcomed to "BRICS plus."

Going forward, BRICS countries and all the other developing countries will carry out "South-South cooperation." China knows very well the needs of other developing countries, including the need to improve infrastructure as well as the means to achieve it. China has a lot of advantages in infrastructure, industrialization as well as investment. We are willing to unite with other BRICS countries to form a global supply and value chain, so that all the developing countries will have more opportunities to develop themselves, improve their infrastructure and link their industrial chains. That way, we are bound for a better future.

Developing countries of the ''BRICS Plus" group will also talk (about our common development) along the way. Mr. Zhang said earlier that global governance today faces the challenges of anti-globalization, thus we have to figure out how BRICS members and other developing countries can be united to better safeguard and promote globalization and economic cooperation, as well as to find the momentum of development and economic and industrial cooperation so as to benefit each other.

Associated Press:

BRICS refers to five of the fast-growing emerging economies. However, now the situation is changing. Brazil, Russia and South Africa are facing some economic issues, while something is wrong with the relationship between China and India. My question focuses on these problems. Is the present concept of BRICS still workable? Can it still bring some achievements? Thanks.

Zhang Yansheng:

Just now, I mentioned the BRICS mechanism has been operating for 10 years. What does that mean? We can make comparisons between various mechanisms such as the G7, G8 and the Non-Aligned Movement. We know that these mechanisms have a history of several decades, or even a hundred years. So, for the BRICS mechanism, 10 years means it's still at an early stage of development. And at different stages, it needs to address different problems. Indeed, Russia, Brazil and South Africa are now faced with structural contradictions during their economic development. There is an important mechanism within BRICS that we need to explore so as to find a way for cooperative development for emerging economies and developing countries. The economies of Russia, Brazil and South Africa greatly depend on staple commodities and energy resources. Hence, BRICS cooperation aims to solve structural contradictions in economic development and achieve the diversity of economic structures. That's what we call "the Dutch disease" in economics -- focus on development of, say, natural gas actually causes a country's economic decline. We need to address this important issue and cure "the Dutch disease."

Besides, China and India are two major developing countries of a diversified economic structure. They need to rise from being a low-income country to a middle-income one, and then move further to become a high-income nation. There are traps everywhere. China and India need to overcome the low-income and middle-income traps. That's the second important issue the BRICS cooperation mechanism needs to address.

The third one is that, in addition to economic development, China and India are facing some problems and contradictions along their border. The BRICS mechanism needs to work out the way to maintain world peace while promoting economic development and cooperation. We should reach a consensus and establish an action plan within the BRICS mechanism to make clear what principles and measures we should take to deal with the various contradictions, conflicts and problems that emerge.

Zhang Jianping:

In fact, your question represents a typical view known as "fading of the BRICS" that has been around for a while. However, I would remind you that the acronym of "BRIC" was actually invented by economists from Goldman Sachs Group Inc. in the United States and therefore, as it is an institution based in the United States, you should not be suspicious of the BRICS concept.

People talk about Brazil, South Africa and Russia suffering from the "resource curse." However, as Secretary-general Zhang Yansheng just mentioned, the BRICS countries presently contribute 52 percent of global economic growth. Although developed countries account for a larger proportion of the total amount of the world economy, that is in the form of stocks. On an incremental basis, the contribution of the United States and Japan to current world economic growth is far below that of the BRICS countries. Over the last 10 years, the overall GDP of the five BRICS countries has accounted for 23 percent of the global economy, a ride of 11 percent over that period. If we look at the next 10 to 20 years, this proportion will steadily increase, and as part of a dynamic process, BRICS cooperation will become ever more valuable.

Looking at trade and investment, we just mentioned that the international trade of BRICS countries accounts for 16 percent of the global figure, rising from 11 percent a decade ago. The proportion of BRICS countries' GDP in the world economy has increased to 23 percent from 12 percent. In other words, almost double. You can see that the trade volume didn't keep up with the pace of GDP growth, which points to big demand of mutual trade and mutual investment among the BRICS countries as the next step.

In fact, from China's perspectives, our cooperation on production capacity with Latin American countries, such as Brazil, as well as with South Africa and Russia, is now moving forward rapidly. Even though there are contradictions between India and China, our entrepreneurs have also begun to invest in India. For example, Huawei, Xiaomi and Midea, companies well known internationally, have all invested in India.

As for mechanism cooperation, I will say that the BRICS will continue to press ahead in this regard. Some people have questioned there are the necessary cooperation mechanisms within the BRICS system, and I would say that the annual BRICS Summit itself is the most important mechanism. We also have the Meeting of the BRICS Trade Ministers, which was established in 2011, a mechanism established earlier than the G20 Trade Ministers Meeting, which was only set up last year. Thirdly, under the ministerial mechanism we have created different working groups handling different areas, such as e-commerce and intellectual property rights, playing a good role in promoting pragmatic cooperation in each field. Moreover, we have established the IPR protection mechanism, under which we hold talks and promote cooperation each year.

Next, we will improve the mechanisms in many areas, including e-commerce and service trade. China will host the China International Import Expo in 2018, which will be a very important mechanism for BRICS cooperation. India, Brazil and South Africa have high expectations of a growing share in the Chinese market. Therefore, with the improvement of mechanism, the economic and trade potential of BRICS countries will be continuously tapped and we will make greater contributions to the world economy in the future.

The gold of BRICS will glitter ever brighter, rather than fade over time. Thank you.

ITAR-TASS:

Will there be meetings between state leaders during the Xiamen summit in September? Will President Putin meet President Xi Jinping at the sideline of the event? If so, what issues will they discuss? What kinds of economic cooperation between the two countries will be promoted during the summit?

My second question is about the border dispute between China and India. Has it provided any negative influences on the Xiamen summit? Is there any worry over a possible split it could cause in the bloc? Will President Xi meet with India's top leader at the sideline of the summit? Thank you.

Zhang Yansheng:

Regarding your first question, relevant arrangements will be announced by the competent authorities. I'm sorry that I don't know the plan, but I'm sure you'll find the answer from the Foreign Ministry and other competent departments soon.

Regarding the second question, I'd like to talk about my understandings. As I have said when answering the questions of the Associated Press, the incident has provided a great opportunity for the BRICS countries to find out a way to handle problems concerning bilateral peace, development and cooperation. Possible solutions should be discussed and developed at high levels. I'm glad to see that all state leaders will meet at the summit. This will provide a good chance for them to discuss the disputes and problems between their countries, thus to find out possible solutions. Such talks are unavoidable for the BRICS countries if they want to make the mechanism more mature. Thank you.

Lianhe Zaobao:

Just now you said that the BRICS summit would allow leaders to communicate face to face. Will Indian Prime Minister Narendra Modi attend if the stand-off between the two countries on their border area lasts until September? Presently, there is no indication he won't come because of the stand-off. However, I just want to make sure.

Zhang Yansheng:

We are in the same position as you, namely, we haven't got any information to suggest he won't come. That means neither you nor I have any new information about this situation. Without new information, we cannot make any statements on a hypothetical issue, so, we will go ahead as planned.

Zhang Jianping:

Since everyone is very concerned about the issue of China and India, I would like to say a few words from the perspective of economic and trade cooperation. If we look at the volume of trade between China and India, there is still a lot of room for development. When Indian Prime Minister Modi visited China, his most important task was reducing India's trade deficit with China, which can be attributed in part to the underdeveloped infrastructure in India.

The next step for the development of India is very difficult. Whether it is infrastructure development or industrial development, India and China is complementary and have a lot of room for cooperation. Every time I ask you which country will become the new manufacturing center of the world, a lot of people would choose India. If it comes true, the BRICS cooperation will see an even brighter future, and the two countries will see further progress of trade cooperation.

As a matter of fact, there is a strategic economic dialogue between China and India every year. It is at the ministerial level and is advancing year by year. Therefore, we hope that bilateral and multilateral tracks will continue to promote pragmatic cooperation between China and India, and bring benefits to both sides. Thank you.

Xi Yanchun:

Please note that our guests for today's briefing are experts, not government officials. Your questions concerning the meetings of state leaders and the concrete agenda of the summit still need to be officially confirmed by the authorities. Therefore, we ask for your patience until the authorities announce their plan in due course. Now, let's continue with questions.

Press Trust of India:

What is the focus of this year's BRICS summit and what is the difference between this year's meeting and the previous years'? You mentioned this year marked the tenth anniversary of the BRICS summit, then what consensus is expected to be reached among the five economies and where is the BRICS heading for? Thanks.

Zhang Yansheng:

The theme of this year's summit is "BRICS: Stronger Partnership for a Brighter Future." As Professor Zhang said, documents on ten aspects were approved at a trade minister meeting in early August.

The first aspect was on the establishment of a BRICS Pilot E-port Network. We are now in an era of artificial intelligence, and a key issue is to set up an e-port network to make cross-border trade and exchange more convenient.

Second, the meeting endorsed the Guidelines on the BRICS Trade in Services Cooperation. Service trade, especially those which strengthen the manufacturing industry as well as enrich people's lives, can promote the BRICS countries' economic development.

Third, BRICS cooperation in the e-commerce sector was also endorsed at the meeting. E-commerce has played an important role in China's development in the past thirty years, thus BRICS nations are figuring out how to develop our cooperation more rapidly in this respect. During the G20 Hangzhou summit last year, Jack Ma (founder of Alibaba) came up with the idea of EWTP, an electronic world trade platform which we believe will help better develop e-commerce.

Fourth, the meeting also approved the Guidelines on Cooperation in Intellectual Property Rights. The protection of intellectual property rights is essential for the BRICS to foster an innovation-driven economy.

Fifth, the BRICS countries signed the Outline for BRICS Investment Facilitation to ensure the finance of small-and-micro or small-and-medium-size enterprises (SMEs).

Sixth, the Framework on Strengthening Economic and Technical Cooperation was signed at the meeting. The framework makes clear how the BRICS countries will achieve green, exclusive, sustainable and balanced development through economic and technical cooperation.

Seventh, a consensus was reached to support the multilateral trading system and oppose protectionism in fields of trade, investment and finance.

Eighth, as announced by Chinese President Xi Jinping in his speech at the Belt and Road Forum for International Cooperation on May 14 this year, China will host the China International Import Expo in 2018, and is expected to import goods worth US$8 trillion in the ensuing five years. As long as each BRICS member country takes the lead in exploring its internal demand, expanding consumption and increasing imports, it will provide a driving force for the development of BRICS countries as well as for the world economy as a whole.

These eight aspects mentioned above will be submitted to the summit in September for further implementation. The summit aims to promote economic development through partnerships so that the world will embrace a brighter future. That is critical to emerging markets and developing countries, like China and India, as it will benefit ordinary people, youngsters and small businesses.

Zhang Jianping:

Mr. Zhang, just now, mainly talked about some important fields and priority areas for cooperation in regard to the 2017 BRICS Summit. This time is different from past summits, at which leaders of BRICS nations focus their discussions in a certain field.

The theme of 2017 Summit is to build a stronger partnership for a brighter future, aimed at upholding world peace, promoting common development, improving global governance and deepening economic and trade cooperation so as to make the cooperation between the blocs most comprehensive and on a fuller scale.

As we all know, now the proportion of BRICS nation's investment in another member country is low. We will offer more convenient investment schemes and mechanisms, including intellectual property protection, e-commerce and the single-window service approach, to promote closer economic cooperation and make BRICS countries stronger.

It is common interest that makes us develop together. As we progress, we will have a bigger influence on the global system. The current institutions, pattern and model of global governance, mostly established in the past by the developed countries, cannot meet the needs of the times under new conditions, like the rapid progress of developing countries and the appearance of the trends towards de-globalization Mr. Zhang mentioned.

For BRICS nations, the crucial step is to deepen cooperation and explore new methods and patterns for global governance. The BRICS Plus initiative is also working toward the same target.

We BRICS nations will devote ourselves to building a global multi-polarization pattern, under which diversified civilizations can respect and reinforce each other, which, in my opinion, is the most significant future direction of global development.

The Beijing News:

Today, we've been talking about the deglobalization trend and trade protectionism starting to re-emerge, so I wonder if the BRICS summit would discuss this and come up with some measures to deal with the situation.

Zhang Yansheng:

As for the related issues of deglobalization, trade protectionism and populism, we have seen a strange phenomenon: the economies leading the deglobalization movement are not emerging markets. The United Kingdom is seeking to withdraw from Europe, known as Brexit, while the United States has conducted Section 301 investigations and holds a different view on trade protectionism. The two are both the leaders who had been pushing the globalization drive in history. Why do these two most developed countries with the soundest market economies and best legal and supervision capabilities allow their voters to elect leaders who have such a different view on globalization? Why?

Personally, I think these voters are not satisfied with the results of the globalization that started from 1990, so they choose to vote in this way. Why are they not satisfied? I think there are three problems. First, people are not satisfied with current income distribution. A very few people, about one percent of the population have been getting more of the benefits, while the vast majority have missed out, especially the middle class. Globalization promotes development, but the results have not been distributed well. Second, since 1990, we have seen the following phenomena: in the major powers of the world, the hi-tech manufacturing industry has slowed down, the application rate of innovations and inventions has decreased, and the proportion of the real economy has also shrunk; at the same time, the finance and real estate industries have prospered along with construction. So, in this way, we can see the major powers of the world have developed hollows in their economies. Therefore, not only political leaders but also business circles are not satisfied, because the real economy's proportion is going down. Third, we have seen an increase without development, that is, some countries see their GDP and GDP per capita increasing but the development of society and the overall structure are unbalanced.

You've just raised this question: How will the BRICS mechanism sum up the problems emerging from globalization since 1990, and resolve the problem of income distribution through cooperation? This is actually an issue of inclusive development, including how to encourage innovation and how to build strong growth dynamics. I think the BRICS mechanism can urge the countries to participate in global governance and improve it so as to build a better world economic system and a more consummate coordination mechanism for international macro policies. The BRICS mechanism can promote world peace, world development, world openness and world cooperation. If we make successful efforts in this aspect, it will be a contribution to world development and also to emerging markets and developing countries. Thank you.

Zhang Jianping:

As a matter of fact, anti-globalization sentiments are more prevalent in developed countries. For BRICS countries, we are very aware that globalization offers us real development opportunities, and that won't stop. President Xi had made that very clear at the World Economic Forum earlier this year, and I'd better not repeat it.

Take the climate change negotiations as an example. Over the past two decades or so, we BRICS nations have upheld the interests of developing countries in the negotiations despite our minor differences. We had talked with developed countries for a long time, which eventually landed us at the Paris Agreement. We believe all BRICS nations will continue to promote its implementation.

Another example is trade. A statement issued after a BRICS ministerial meeting earlier this year included a commitment to continue facilitating trade and investment and abnegation of trade protectionism. I believe we can still reach consensus on this issue this time. Some people say that India and Brazil have launched a slew of anti-dumping and anti-subsidy measures against China, which I think have to do with their attempt to protect their domestic market due to the weakness in their own industrial development and product competitiveness. But this is not the dominant practice in trade; we should look at the prevailing trend (of trade cooperation), which is evidenced by the 70 to 80 billion U.S. dollars of trade between China and India and between China and Brazil.

So, in short, trade friction remains a major conflict between developed and developing countries, because industrial manufacturing is being transported to the developing countries, resulting in an increased deficit for developed countries and an increasing surplus for developing countries.

Among the BRICS countries, we are promoting trade cooperation, economic cooperation, and industrial chain cooperation while resolving conflicts and frictions. With China accelerating investment into other BRICS countries, future trade frictions will gradually be reduced, and the global value chain cooperation will be strengthened. Thank you.

Xi Yanchun:

We'll wind up today's briefing for reasons of time. Thanks for our two experts who have joined us and thanks to you all.

Speakers:
Liu Wei, vice minister of the Ministry of Finance

Wang Jianfan, director-general of Tax Policy Department, Ministry of Finance

Wang Kebing, vice director-general of Budget Department, Ministry of Finance

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

Date:
July 28, 2017

Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to today’s press conference. We are delighted to invite Mr. Liu Wei, vice minister of finance, to introduce China’s fiscal and monetary policies and answer some of your questions. Also present are Mr. Wang Jianfan, director-general of the Tax Policy Department of the ministry, and Mr. Wang Kebing, vice director-general of the Budget Department of the ministry.

Now, let’s welcome Mr. Liu Wei to provide his briefing.

Liu Wei:

Ladies and gentlemen, good afternoon.

In the past six months, the Ministry of Finance has concentrated on supply-side structural reform, and launched a proactive fiscal policy, ensuring China’s economic performance would remain stable and would move in a positive direction.

First, Stepped-up efforts to cut taxes and fees.

We continued to ease the corporate tax burden. Measures taken included: implementing and improving the program to replace business tax with VAT in all sectors of society; simplifying the structure of VAT rates; halving corporate income tax for an increasing number of small and micro businesses; providing tax credit policies to more enterprises investing in business start-ups; widening the scope of tax deductions for R&D expenses of high-tech small and medium-sized enterprises.

We also made more efforts to cut fees. Measures taken included: overhauling and exercising standard-based management of administrative fees and government-managed funds; releasing the lists of administrative charges of central and provincial governments on the website of the Ministry of Finance; launching short-term policies to lower premiums for unemployment, reduce logistics and energy consumption costs of enterprises, and reduce business and service fees and charges.

These policies and measures are expected to save enterprises 1 trillion yuan in taxes and fees this year.

Second, Improving management of budget implementation.

Regarding central government’s transfer payments to local governments, by the end of June, we had carried out most of the appropriations to local governments, while the remaining funds are for special items, such as payments to those needing settlement by actual spending.

We deepened reforms to introduce a system for the treasury's centralized revenue collection and expenditure payments. Government funds, allocated and transferred in a timely way were also put to better use.

We speeded up the process of making budgetary funds available for fiscal expenditures. In the first half of this year, the growth rate of national fiscal expenditure was six percentage points higher than fiscal revenues. The proportion of budgetary expenditures implemented was 0.7 percentage points higher than the same period last year.

We improved performance-based budget management. Besides the general public budget, some government-managed funds and State capital operations were also placed under closer supervision.

Liu Wei:

Third, improved people's living standards.

Precise measures are being launched to alleviate or eliminate the prevailing impoverished conditions, with special attention being paid to the most affected areas. Funds for the agricultural sector have expanded from the pilot poverty-stricken counties to the entire impoverished area and local government attempts to alleviate poverty by asset incomes are being buttressed.We have unified policies whereby Chinese students receiving compulsory education are exempted from paying tuition and fees and paying for textbooks and a subsidy will be provided for the living expenses of students from families with financial difficulties, so that the exemptions can be deemed valid everywhere.

Funds for the needy group have been better integrated and the local governments are expected to better assist people with minimum incomes or those suffering severe poverty. Meanwhile, more efforts have gone into healthcare and great importance been placed on efforts to protect the air, water and soil from pollution through programs of ecological conservation.

The government has placed more importance on the most impoverished areas where the shortage of resources and energies leads to fiscal difficulties.

Fourth, tightened control of local government debt.

The fundraising programs by local governments have been further regulated. There are clear guidelines for the issuance of local government bonds. We have improved the system for local governments' special debt and a mechanism in response to risks and emergencies has been established. At the same time, a regular institution overseeing local governments' debts has also be established.

In the past few months, the joint efforts of macro-economic policies, such as fiscal policy, have ensured the sound and smooth development of the national economy and the execution of fiscal budgets has also performed well.

During the first half of this year, the National General Public Budget Revenue hit 9.4 trillion yuan, up 9.8 percent year on year--an increase of2.7 percentage points compared to the same period last year and 5.3 percentage points higher compared to the figure of last year's total. By slashing considerable amount of taxes and fees, revenue during the past six months surged above expectations, which demonstrates the sound and positive development of the national economy. The improved economic structure, the resurgence of the service industry, the positive balance sheet of enterprises and the growing imports and exports have laid a good foundation for increased revenue. At the same time, the growth also partly resulted from the rise of the producer price index (PPI) as well as the price hike of bulk commodities.

The structure of the revenue has changed positively. During the first half of this year, tax revenue growth constituting 92.9 percent of the entire increase, 13.3 percentage points higher compared to the figure of last year's total. The value-added taxes, including industrial and commercial VAT, enterprise and personal income taxes and taxes on imports, maintained double-digit growth. The secondary and tertiary sectors,accounting for 47.5 percent and 52.3 percent respectively, have contributed considerably to the growth of tax revenues.

Considering the tax growth of different sectors, the reduction of excessive capacities, supply-demand reform and the surging prices of products led to tax increases in the energy and raw material industries; the constant driving force of the improved industrial structure produced an increase of taxes from medium or high-end manufacturing industries and the shift of growth drivers and emergence of the new market demand brought about the rapid tax growth in cultural, sports, the internet and IT sectors. In regard to regional economies, the growth basically can be seen in balance, with 11.3 percent and 10.7 percent respectively in the middle and western areas and 9.3 percent in the east.

In the first half of this year, the National General Public Budget Expenditure hit 10 trillion, constituting 53.1 percent of the planned budget, and registering growth of 15.8 percent year-on-year. The growth rates of education, science and technology, social security and employment, healthcare and family planning and energy saving and environmental protection were respectively 17.2 percent, 22.7 percent, 24.6 percent, 18.2 percent and 39.8 percent.

The Ministry of Finance, in the following phase, will continue to comply with the strategic policy decisions made by the CPC Central Committee and the State Council, uphold the consistency and coherence of the policies, implement proactive and effective fiscal policies, fend off the risks of local government debts generally guided by the supply-side reform, curb the growth of hidden debts and ensure the sound and stable development of national economy.

I will conclude my report here and move onto the question-and-answer session with my colleagues. Thank you.

Xi Yanchun:

Thank Mr. Liu Wei for his introduction. Now, the floor is open to questions.

Phoenix TV: 

We have noticed that the recent National Conference on Financial Work demanded local government debts be strictly controlled. A lifelong accountability system and a system to retrospectively hold officials accountable for their erroneous acts were to be implemented. At a meeting of the Political Bureau of the CPC Central Committee, a warning was issued about local government debts and improvements were sought in a mechanism for local governments to secure financing so as to contain hidden debt-related risks of local governments. From this point of view, what is your opinion, and how will you implement the central government’s requirements?

Liu Wei:

The question you have raised is one that all sectors of society have been paying close attention to. At the meeting of the National Conference on Financial Work, President Xi Jinping laid down new and higher requirements. The CPC Central Committee and the State Council have placed emphasis on preventing and reducing risks of local government debts. In recent years, the Ministry of Finance has strengthened top-level planning, promoted institutional set-up and formed a “closed cycle” system for local government debt management and supervision. Let me introduce the work in detail. 

 First, setting ceilings on local government debts. It is known that ceilings on local government debts should be examined and approved by the National People's Congress. And the ceilings on government debts are determined through certain procedure for each province, and it is not allowed to break through.

Second, bringing local government debt under budgetary management. It means that new debts must be included in budget and under the examination and supervision of the National People’s Congress. Local governments cannot freely increase their debts at will.

Third, issuing new local government bonds. Local governments can issue bonds within the statutory limit in a legal and regulated way. The amount of bonds to be issued by local governments should be decided in accordance with their ability of debt repayment and their needs of financing.

Liu Wei:

Fourth, issue local government bonds in swaps with government debt. The previously mentioned newly-issued bond in the budget under central government guidance is the increment, which would be controlled in the new increased quota. But what should we do with the stock of local government debts already existing? Those debts were gradually replaced by issuing local government bonds, which will lower the entire cost of debt.

Fifth, improve local government's special debt management abilities. We are promoting special and particular bond management methods, strengthening the management of special debts related to local government's funded income and local assets (e.g. land assets).

Sixth, establish a risk pre-warning and emergency response mechanism. The Ministry of Finance has established approaches for achieving risk pre-warning and emergency response, asking local governments to evaluate the risks based on the total amount of debts and the debt structure. This involves very precise system design.

Seventh, we built a system of regular supervision of local government debt. Besides audit supervision, the Financial Supervision Commissioner's Office of the Ministry of Finance also exercises routine supervision on the debt of local governments according to law, which is also their major task. Somecity or county-level governments under theearly warning, and financing platforms with non-standard operation have also been placed under surveillance. We have taken a series of measures to strengthen daily supervision of local government debt.

Eighth, we will resolutely stop such action as financing guarantee in violation of the relevant law and regulations. Media friends may notice that, in regard to those illegal behaviors, local governments are not only required to take corrective steps, but also are held fully accountable for their actions.

With the gradual implementation of the measures, it can be said we have achieved remarkable success in controlling risks of local government debt, and we are fully capable of defending the bottom line, namely no outbreak of systemic risk. By the end of last year, local governments' outstanding debt stood at 15.32 trillion yuan, within the quota of 17.19 trillion yuan approved by the National People's Congress. If assessing the level of local government by measure of the debt ratio, it was 80.5 percent in 2016, which stayed below the international standard.

Adding in the outstanding central government debt of 12.01 trillion yuan included in budget management, the outstanding government debt nationwide stands at 27.33 trillion yuan. Calculated in accordance with GDP preliminary accounting of 74.41 trillion yuan released by the National Bureau of Statistics, the government debt ratio stood at 36.7 percent. This figure is lower than the European Union's warning line - 60 percent - and it is also lower than the level of major market-economy countries and emerging markets. In regard to government debt risk, we think it is generally controllable, which is our rational and confident answer.

As approved by the fifth session of the 12th National People's Congress this year, the debt limit for local governments in 2017 is 18.82 trillion yuan. At the end of June, with the issue of more bonds, the current debt balance of local governments is 15.86 trillion yuan, still under the limit of 18.82 trillion yuan. China's National Financial Work Conference and the meeting of the Political Bureau of the Central Committee of Communist Party of China have made special arrangements and specified requirements on controlling local debt levels and prevent risk, and the Ministry of Finance will carry out the implementation in a clear and resolute way. We will further implement the new concepts of development, and adhere to supply-side structural reform as the main effort, resolve accumulated local debtrisk in an active and prudent way, and regulate the debt financing of all local governments.

CCTV:

As for supply-side structural reform, the Central Economic Working Conference at the end of last year noted that the reform would be deepened this year. My question is, what measures has the Ministry of Finance taken to support the reform?

Liu Wei:

It's a good question. Supply-side structural reform involving a wide range of aspects is a key reform that will have profound influence; hence, all sides should coordinate and implement measures in a comprehensive way in order to accomplish reform tasks assigned by the Central Government. The Ministry of Finance and its subordinate departments have been following the spirit of the Central Economic Working Conference, deployment set in the Report on Government Work, and the new vision of development, so as to promote supply-side structural reform in the three following aspects:

First, carry out five tasks ofcutting overcapacity, reduce the excess urban real estate inventory,cutting costs,deleveraging and strengthening areas of weakness. We have appropriated specific incentive and subsidy funds of industrial enterprise restructuring in a timely way and supported personnel placement in the process of cutting overcapacity in the steel and coal sectors. We adjusted and completed subsidy policies on corn and soybean and cut policy-type inventories of cereal, cotton and oil. We improved the ratio of monetized compensation for personnel resettlement during shanty town renovation to cut real estate inventory. We implemented and completed policies related to enterprise merger, restructuring, and the assignment and writing-off of debts. We have carried out measures to lower taxes and administrative fees to relieve the burden on enterprises. We have also stepped up poverty alleviation in poor regions, promoted the pilot program of agriculture funds integration in all poverty-stricken counties, and supported local governments to explore ways of poverty alleviation through assets income.

Second, we have been pushing for supply-side structural reform in agriculture. Specifically, we have carried out green-oriented reform of agricultural subsidies, introduced a disaster insurance scheme on a pilot basis for farmers whose operations are suitably scaled-up in 200 major grain-producing counties from 13 major grain-producing provinces or provincial-level regions. Moreover, we will also work with related departments of the State Council to provide some preferential policies and subsidies for producing and processing high-quality grain and oil, as well as for brand promotion, in order to meet upgraded consumer demand.

Third, we have been pushing for the transformation and upgrading of the real economy through innovation. Specifically, we will continue to increase assistance for basic research, deepen the implementation of "Made in China 2025," support smart manufacturing and green manufacturing, strengthen industrial foundations, and carry out trials of the insurance compensation mechanism for newly-developed major technological equipment.

Under support of fiscal policy and other macro policies, supply-side structural reform is gradually producing a telling effect: the relationship between market supply and demand is improving, business performance and expectations have become stronger, and the economic structure continues to be upgraded. Next, under the direction of the CPC Central Committee and the State Council, we will continue to focus on supply-side structural reform, gradually implementing the priority tasks of "cutting overcapacity, reducing excess inventory, deleveraging, lowering costs and strengthening areas of weakness," so as to ensure supply-side structural reform in agriculture, rejuvenate the real economy, and promote healthy and continuous economic growth.

Thanks.

Reuters:

The financial deleveraging carried out recently is likely to increase the financing costs of some businesses. In this context, will any fiscal policies be introduced to cushion the impact? In addition, how serious is the problem of hidden debt at local levels?

Liu Wei:

The first question you raised involves both fiscal and monetary policies. As to fiscal policies, we will intensify our efforts to reduce taxes and fees so as to ease the burden on businesses. Besides, budgetary spending will also play its role in this effort.

I think the relationship between deleveraging and financing cost increases you mentioned is not mathematical. As to what policies will be introduced, we will try to reduce the burdens on businesses by slashing taxes and fees. In addition, we will give more support to small and micro- businesses in key sectors and policy-backed financing guarantee institutions in the endeavor to promote more business start-ups and innovation. Meanwhile, we will cooperate with other departments to improve the risk compensatory mechanism so as to lower the costs of financial institutions.

As to the second question, I have talked a lot about government debt, and I would like to invite Mr. Wang to give further information.

Wang Kebing:

Vice Minister Liu has elaborated on the management of local government debt from the perspectives of the measures undertaken by the Ministry of Finance, the achievements it has made and work in planning.I would like to add the following two points：

First, the CPC Central Committee and the State Council require that the increase of local government debt should be strictly controlled. The Ministry of Finance will adhere to the guidelines set by the CPC Central Committee and the State Council. We will stick to the approach of "close the back door, open the front door," improving mechanisms for local governments to secure financing in an appropriate way. In this regard, the following steps should be taken:

Impose appropriate ceilings on government debt in accordance with the law. Local governments should coordinate the use of funds allocated to major public projects. More should be spent on strengthening areas of weakness.

Steadily promote the management and reform of special bonds, an important measure to "open the front door."We have issued two documents, namely,Local Government Land Reserve Special Bond Management Approach andLocal Government Toll Road Special Bond Management Approach. Analysis shows funds raised for these two areas account for much oflocal government debt. The measures, based on local realities, deliver Chinese "municipal bonds" to ensure local reasonable financing requirement. The work concerns constructing an important mechanism to ensure local reasonable financing requirement. So, we must do it well.

Accelerate the market-oriented transition of financing platform companies. We will delineate the boundaries of government and enterprise in accordance with the law, separate government's financing function from financing platform companies, and support the latter in their transition tobecoming independent and self-financed State-owned enterprises. Local governments undertake responsibility in regard to the financing range. The enterprises serve local economic development in accordance with laws and regulations. However,governments cannot take the responsibility of paying debt they have incurred.

Take resolute and legal measures to ensure that local governments raise funds in a regulated manner. Local governments can only issue bonds within the ceiling set; beyond that, there's no other way to borrow money.

Step up work in regard to investigating and dealing with illegal bond issuance and hold those responsible to account. The hidden debtmentioned by Reutersis, in fact, the debt raised by local governments in breach of laws and regulations. We must strengthen oversight over this kind of debt.Provincial governments should establish strict accountability mechanisms. The Ministry of Finance and other government departments will form a synergy to exercise joint oversight and supervision.

Second, six ministries and commissionsjointly issued a Notice on Regulating Local Governments Debt Financing in May this year. The Ministry of Finance then issued a Notice on Resolutely Stopping Illegal Financing in the Name of Government. These two notices clarified the time limits for local governments to undertake overhaul of their procedures. As far as we know, local governments are stepping up their actions. They are required to submit reports to us within the time limits set. I think great progress will be made in this aspect. Thanks.

China News Service:

In the opening speech, Mr. Liu said that, this year, enterprises may save 1 trillion yuan in taxes and fees. Does it mean that the policies on cutting taxes and fees have taken full effect? What specific policies have the Ministry of Finance taken in the recent years?

Wang Jianfan:

In recent years, the Ministry of Finance has worked with other departments to launch a series of policies and measures to cut taxes and fees. These measures have been conducive to implementing the innovation-driven development strategy, promoting supply-side structural reform, encouraging widespread entrepreneurship and innovation, reducing costs for enterprises in the real economy, improving the overall business environment, and so on.

Generally speaking, we have worked on two aspects: First, stepping up efforts to cut taxes and fees; second, overhauling and exercising standard-based management of administrative fees and government-managed funds.

Regarding tax cuts, we have implemented trials in replacing business tax with VAT in all sectors. Measures taken include: cutting the number of tax brackets from four to three by cancelling the bracket of 13 percent on July 1; providing tax credit policies to more small- and micro-businesses; widening the scope of tax deductions for enterprise R&D expenses; widening tax credit policies concerning the accelerated depreciation of fixed assets; introducing policies on equity-based incentives for innovation and on deferred payment of individual income tax for R&D personnel who have become shareholders through their technology and innovation; widening the scope of tax deductions for R&D expenses of high-tech small and medium-sized enterprises; providing tax credit policies covering more enterprises investing in business start-ups.

Other measures taken included: exempting the vehicle purchase tax for new-energy cars; reducing the vehicle purchase tax for cars with small engine displacement; introducing policies on personal income tax deduction for buyers of commercial health insurance; introducing policies on deferred payment of individual income tax to encourage development of annuity plans in enterprises and public institutions.

These are just some of the measures we have taken, and I won't take more of your time on giving examples.

In terms of administrative fees, there has been downsizing in fields in which the government provides public services in general or common administration such as administrative licensing, inspection and detection, registration and retrieval, and supervision and management. In terms of government-managed funds, environmental resources and electric power bonds, certain counteracting policies and regulation or those considered unadaptable to reform and development have been removed. With continuous efforts, administrative fees set by the central government have been reduced by over 70 percent from 185 items to 51, among which fees for enterprises have fallen by nearly 70 percent from 106 items to 33, and those for government-managed funds have dropped 30 percent from 30 items to 21. The items of administrative fees by local governments have also dropped dramatically.

Thank you.

Nihon Keizai Shimbun：

China's fiscal deficit reached 917.8 billion yuan in the first six months of this year, an increase of 15.1 billion yuan over the same period of last year. What do you think is the main reason for the substantial increase in the base number? And, what do you expect will be the scale of the deficit in the second half of this year? Thank you.

Wang Kebing:

First, the deficit scale was approved by the National People's Congress at the beginning of the year, and the financial department itself has no options in determining it. Moreover, the deficit is calculated according to annual revenues and expenditures. As there is an imbalance between the monthly and quarterly revenues and expenditures, the deficit scale cannot be measured on a monthly or quarterly basis.

Second, even if calculated on an annual basis, the deficit is not simply the result of subtraction between revenues and expenditures, because, in addition to the general public budget revenue collected every year, the annual available revenues also include the central budget stabilization fund transfers according to law, the government-managed fund and the State-owned capital management budget fund allocated according to law, and any surplus fundsnot used up in the previous annual budget and carried forward to the next year.

In terms of spending, apart from general public budget expenditure, we also have expenditure to replenish the central budget stabilization fund. For example, the Budget Law stipulates that a surplus in the general public budget will be totally used to replenish the central budget stabilization fund. Moreover, the expenditure also includes surplus funds carried forward to the next year. Therefore, the fiscal deficit is the overall income from which overall expenditure is deducted.

China Daily:

Just now you mentioned something about disclosure of government-managed funds and the catalogue of administrative charge items. Can you tell us how you will implement this? And whether the catalogue will have space for future changes or adjustments? Thanks.

Wang Jianfan:

The Ministry of Finance published "a network" of government-managed funds and administrative charge items on its official website on June 29. When we say "a network," we mean it will either include central government-managed funds and administrative charge items, or those in various provinces, cities, and regions. It covers all charge items in various departments of the central government as well as provincial, regional and municipal governments. In fact, before the network was announced, according to the arrangement and deployment of the State Council, the Ministry of Finance and the various finance departments at provincial level had already been publishing lists of the government-managed funds and the administrative charge items from 2014. However, there were no requirements for formatting then, while there were differences in project arrangements. Besides, some places might also have problems with delayed updating and not properly maintaining the catalogues. When the network was published, we received positive feedback from all walks of society. The network is quite significant in reinforcing and expanding the reform achievements in terms of delegating power, streamlining administration and optimizing government services, speeding up the establishment of a modern fiscal system, and working hard to build fiscal transparency.

As the next step, the Ministry of Finance will continue to manage the Network with routinized and dynamic characteristics to clarify the subjects of duty, to strengthen the supervision and accountability mechanism so as to carry out the policies of slashing fees approved by the State Council and further improve economic development environment.

Firstly, we will take the Network as the carrier, in order to improve the mechanism system of charges. Through the Network, we will strengthen guidance and supervision of the central government on local governments' charge items. We are building and seeking to improve the dynamic adjustment mechanism. And the Ministry of Finance will check with the local governments regularly to ensure the timeliness and accuracy of the Network.

Secondly, we will take the Network as the model to push local governments to further review and regulate fees and charges. By exposing the lists of charge items in different provinces (cities, districts), local governments will be able to spot gaps by comparison, and learn from each other to absorb advanced experience and methods, in a bid to improve their management. The Ministry of Finance will analyze the charge items of these districts in the Network, leading local governments to deepen reforms in the process ofreviewing and regulating all fees and charges.

Thirdly, we will step up the effort to clean up arbitrary charges and focus on the "service network." On the basis of the "service network," the Ministry of Finance and other related departments will strengthen supervision and inspection of arbitrary charges and fees which are not on the lists, do our work in accordance with the lists, and establish an operational and supervisory mechanism.

Xi Yanchun:

We will invite more macro-economic departments to attend the SCIO briefings and answer your questions. Please stay tuned for more press conference notices published on the SCIO APP. 

That's all for today's press conference. Thank you.

Speakers:
Yang Weimin, vice minister of the Office of Central Leading Group on Financial and Economic Affairs;

Wang Zhijun, director of Division One on Economic Affairs, the Office of Central Leading Group on Financial and Economic Affairs;

Cong Liang, director-general of the Department of National Economy, the National Development and Reform Commission;

Xing Zhihong, spokesperson of the National Bureau of Statistics and director general of the Department of Comprehensive Statistics of the bureau

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

Date:
July 27, 2017

Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to this press conference. The State Council Information Office has held several press conferences this month to release latest economic data and provide relevant explanations. To help you gain a better understanding of the current situation, we are delighted to have with us: Mr. Yang Weimin, vice minister of the Office of Central Leading Group on Financial and Economic Affairs; Mr. Wang Zhijun, director of Division One on Economic Affairs, the Office of Central Leading Group on Financial and Economic Affairs; Mr. Cong Liang, director-general of the Department of National Economy, the National Development and Reform Commission, and Mr. Xing Zhihong, spokesperson of the National Bureau of Statistics and director general of the Department of Comprehensive Statistics of the bureau. They will introduce China's current economic performance and answer some of your questions.

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

Yang Weimin:

Ladies and gentlemen, good afternoon. It's a pleasure to meet you. As you know, the Communist Party of China (CPC) Central Committee recently held a special meeting to review national economic performance in the first half of this year and arrange the relevant work for the remainder of the year. The press release has been distributed to you. Now, I'd like to brief you on how the Political Bureau of the CPC Central Committee viewed China's economic performance in the first half of this year and what will be carried out in the second half.

1. How to understand China's economic performance in the first half of this year.

Generally speaking, in the first half of this year, Chinese economy produced a stable performance and moved in a positive direction, with further structural adjustment.

What are the reasons behind this conclusion?

First, economic development was stable, with all major economic indicators standing in an appropriate range, and some even surpassing expectations. National GDP expanded by 6.9 percent, 0.2 percentage points higher than the same period of last year, reaching the highest level since the fourth quarter of 2015.

Second, the quality and efficiency of the economic performance were both enhanced. Fiscal revenue increased by 9.8 percent, and the profits of industrial enterprises above designated size increased by 22 percent.

Third, people's livelihood continued to improve. In both rural and urban areas, a total of 7.35 million new jobs were created, approximately 180,000 more than the same period of last year. Consumer prices remained stable, with the CPI growing by 1.4 percent year on year, and maintaining the same growth rate as the first quarter of this year. Personal per capita disposable income increased by 7.3 percent which was adjusted for inflation, higher than the economic growth rate. Remarkable achievements were made in poverty reduction. New progress was made in ecological conservation, environmental protection and other areas.

Why are we convinced that the structural adjustment has been deepened? Supporting evidence can be provided in three aspects:

First, consumption, investment and export growth had obviously become more balanced as we reviewed the recent structure of demand. The retail sales of consumer products grew by 10.4 percent, reinforcing the role of demand as a driving force to cement economic growth gauged by a contribution rate of 63.4 percent. Investment in fixed assets surged by 8.6 percent, with private sector investment increasing by 7.2 percent for a growth of 4.4 percentage points year-on-year. Exports and imports soared by 19.6 percent, with 15 percent growth in exports and 25.7 percent for imports. The international balance of payments was positive, the current account maintained surplus and the foreign currency reserves were above US$3 trillion.

Second,the industrial structure was much improved: the service industry continued to grow fast, supply-side structural reform in the agricultural sector kept advancing, industrial structure was improved and overcapacity problems continued to be alleviated. Moreover, the driving force of innovation started to take effect and various industries pressed ahead with upgrading and new technologies expanded rapidly. The growths of high-tech industries and equipment manufacturing, respectively standing at 13.1 percent and 11.5 percent, are higher than the increase of the entire industrial sector and the GDP. Besides, the industrial organizational structure saw further improvement as demonstrated by the rise of the concentration ratio of competitive industries and the further segmentation of small, medium and large enterprises. At the same time, controls were effectively strengthened over the real estate market.

Third, judging from the regional structure, the coordinated efforts of three major strategic programs, namely, the Belt and Road Initiative, the concerted development of Beijing, Tianjin and Hebei Province and the operation of Yangtze River Economic Belt are obviously paying off. China's eastern, middle and western region have all seen improvements, with good momentum being sustained in the east, development expanded in the middle and the west and signs of recovery have appeared in the northeastern region.

The good performance of the economy in the first half this year mostly resulted from the proposal of the economic new normal charted by the CPC Central Committee to create a unified view on the future course of national economy since the 18th CPC National Congress.

We need to uphold clear thinking while observing the future of the economy. President Xi has more than once stressed that we need dialectic views and farsighted visions to address the issue in particular. In doing so, we need to take into consideration both the current economic course and its future trajectory, both the indexes and expectations and both the achievements and problems.

Given the outlook of China's economy in middle and long term, positive changes can be seen. General development has maintained good momentum and it will keep improving in the long term, the structure of supply and demand has been essentially transformed, the combined expectations of enterprises and market confidence have been boosted and the driving force of the economy has been reinforced. Such progress has not only stimulated the national economy but also contributed to the recovery of the world's economy.

More to the point, the new development conception and supply-side reform have gained popularity, especially, among the local governments and enterprises, causing them to change for the good. Conceptions, referring to a fundamental change and a strengthened force, are attempting to reach a more advanced economic structure by spearheading a transformation in development modes, improving the economic structure and renewing the economic driving force. Therefore, I feel upbeat about China's economy and I am confident it will by no means fall into the middle-income trap as some have alleged.

Meanwhile, we are aware that China is at a crucial stage in its economic development where structural reform is still underway. Particularly, supply-side structural reform is deepening, with many challenges to be overcome. Despite stable performance with good momentum in the first half (H1) of this year, there are problems in China's economic development. Some of them are deep-seated, such as poor circulation of the real economy, the arduous task of managing financial risks, the lack of long-term mechanisms to ensure the sound and stable development of the real estate market as well as mounting pressure from increasing business costs.

Furthermore, the economic prospects for different regions, sectors and enterprises are increasingly divergent. Given the deep integration of the Chinese economy in the world economy, the latter, though improved in H1 this year, is transmitting its uncertainties to the former.

2. The work we will do in the second half of this year

The CPC Central Committee and the State Council stressed that to deliver sound and sustained economic growth in H2 of this year, we must make it our top priority to remain committed to the underlying principle of making progress while keeping economic performance stable. This serves as a major principle of China's governance and a reliable method for its economic development.

Ensuring stability requires making progress while maintaining stable overall performance. However, the stability we pursue is not equivalent to inactivity or stability achieved through strength and rigidity. Instead, we should endeavor to make progress while striking a balance, seizing opportunities and moderating our pace. New achievements should be made this year in managing financial risks and continuing supply-side structural reform.

We should stick to the guidelines set by the Central Economic Work Conference 2016 and the Report on the Work of the Government 2017, and seek progress in all areas of our work. To be specific, we will do the following: keep macro-level policy consistent and stable; pursue a proactive fiscal policy and a prudent monetary policy; focus on supply-side structural reform; expand aggregate demand as appropriate; do better in guiding expectations; and strengthen the role of innovation in driving forward development.

We should ensure that we achieve three essential goals, namely, maintaining stable and sound economic development, continuing supply-side structural reform and forestalling systemic financial risks.

Taking into account both the current situation and the long-term development needs, the CPC Central Committee and the Sate Council stressed that, while seeking progress in all areas, we should focus on the following six tasks: first, firmly continuing supply-side structural reform; second, actively yet gradually dissolve the accumulated debt risks of some local governments; third, suppress financial chaos; fourth, stabilize the real estate market; fifth, maintain the steady growth of foreign and private investment; sixth, word hard to improve people's livelihoods. That concludes my introduction. Now officials from National Development and Reform Commission, National Bureau of Statistics and the Central Leading Group on Financial and Economic Affairs as well as myself would like to take your questions. Thank you.

Xi Yanchun:

Thanks to Mr. Yang Weimin for his introduction. Now, the floor is open to questions.

CCTV:

Since the second half of last year, the economy has shown signs of bottoming out. Production, prices and profit indicators are visibly picking up. One view is that these improvements still rely on real estate development and infrastructure investment. Mr. Cong, what is your opinion? Thank you.

Cong Liang:

Mr. Yang has just made a detailed evaluation on the whole economic situation. Since the 18th CPC National Congress, the CPC Central Committee and the State Council have established a judgment on the new normal of economic growth. They have steered the new normal with new concept of development, focused on improving quality and efficiency, and took supply side structural reform as the main line. Under the combined effect of these policies, some positive changes have taken place since the second half of last year. These positive changes were achieved on the basis of structural optimization. We didn't implement any powerful stimulation as was the case with Western countries. Instead, we are vigorously promoting mass entrepreneurship and innovation and revitalizing the real economy. We focus more on promoting development by speeding up structural adjustment and the conversion of old and new growth drivers, so as to achieve steady economic development.

Specifically, there are a few aspects to consider: First, the entire industrial structure has seen continuous optimization, with the service sector maintaining rapid development. From 2013 to 2016, the average annual growth of the added value for the service sector reached 8 percent, or 0.8 percentage point higher than the GDP growth rate. The service sector contributed 44.9 percent to the economic growth in 2012 and up to 58.2 percent in 2016. In the first half of this year, the service industry grew by 7.7 percent, contributing 59.1 percent to economic growth. From the point of view of proportion, service sector's added value accounted for 46.7 percent of the total in 2013 and 51.6 percent in 2016, a rise of 6.3 percentage points from 2012. In the first half of this year, its proportion increased to 54.1 percent. From an annual perspective, looking at each quarter, the contribution of the service sector might undergo a small change. However, viewed long-term, this change has been the most obvious in the last five years.

Second, the quality was improved on the basis of stability for the secondary sector. As the strategies of innovation-driven development were implemented, including the rapid advance of the "Made in China 2025" plan, as well as in-depth boost from the "Internet Plus" action plan and the construction of "Digital China," the transformation and upgrading of traditional industry was able to move ahead faster. The whole economy, especially the industrial economy, was able to maintain stable growth. Looking at the internal structure of industry, we can see that in the traditional industries - especially from the angle of cutting excessive industrial capacity - many invalid processes and products of low efficiency were reduced gradually, while the high-level and efficient parts of industry were able to play an increasingly important role. So. the supply and demand relationship of the whole market saw a relatively positive and substantial change. For example, the coal industry cut capacity totaling 290 million tons in 2016, and, since the beginning of this year, it has cut a further 111 million tons. This produced obvious easing in the excessive supply situation facing the coal market. Regarding the steel industry, in 2016, production capacity was cut by 65 million tons, while another 40 million plus tons has been eliminated so far this year. What's more, more than 100 million tons of substandard steel were prevented from being produced through bans based on safety and environmental protection standards. There was a great change in the supply and demand relationship in the entire steel industry. The industries with higher value added potential grew faster than traditional ones. Take, for instance, the equipment manufacturing industry. In 2016, its proportion was 32.9 percent, 4.7 percent more than what it was in 2012. The high-tech industry's proportion was 12.4 percent in 2016, three percent more than in 2012. So, there were relatively obvious changes in the entire supply and demand relationship, the transformation and upgrading of traditional industries, as well as the development of new industries. Especially, green development saw some achievements, and the utilization efficiency of energy resources was clearly raised. The energy consumption per unit of GDP dropped by 17.9 percent in 2016 compared with 2012, and the main pollutant emissions kept decreasing. During this period, the economic aggregate kept expanding.

While the structure was optimized, there were some changes in the demand structure, and consumption has become the main force. Currently, consumption's contribution to economic growth was 63.4 percent in the last half year. Consumption's fundamental role functioned efficiently. Regarding investments, those in ecological environmental protection, education, irrigation and innovation, including the investment in technology transformation aspects, all increased by double-digit figures. So. the whole economic structure, no matter if it is about industry structure or demand structure, has seen a lot of positive changes, which also have created their own trends. Viewed from a long-term prospective, this positive trend is very clear. Thanks.

Phoenix TV:

Recently, the "gray rhino" has been mentioned several times. The Chinese media first reported "gray rhino" threats and said these and "black swan"eventsshould be prevented. And the foreign mediaalso reported that China should pay attention to "gray rhino" threats. How do youevaluate this matter? Thank you.

Wang Zhijun:

Thank you. Firstly, I'd like to explain the meaning of the"gray rhino" threats and the "black swan"events respectively. The"black swan"event is a metaphor that describes an event that comes as a surprise. As for the "gray rhino,"it is known that the rhino has a big body, so the word meansthat a serious matter has not attracted enough attention, which leads to a serious event, even though it could have been expected in the early stage. The CPC Central Committee is effectively preventing and defusing risks in the financial sector. And the CPC is always defending the bottom line of no outbreak of systemic risk. Both "black swan" events and "gray rhino" threats may offend the bottom line of financial risk. However, as I mentioned, these two events differ in nature. So, we should have different ways to deal with and prevent risks.

Regarding "black swan" events, they are unexpected, and so we should keep calm and have a high sensitivity, especially in regard to the condition of an unstable economic base. We will become more aware of potential dangers and always keep potential risks in mind. We will strengthen the ways to trace, monitor and analyze various matters and improve the prediction and precaution system for identifying emerging issues as soon as possible. We will make full preparations and take preventive measures

In "gray rhino" threats, the matters have already appeared. So, we should have crisisawareness and adhere to a problem-oriented approach. Facing "gray rhino" threats, including a shadow banking system, property bubbles, inflated local debt levels and illegal fund raising, we should size up the situation, solve problems in order of importance and urgency, pay attention to the key factors, then take effective measures and properly solve problems. Thank you.

CRI:

Government data for the first half of this year showed that industrial profits grew 19.1 percent in June year on year, up 2.4 percentage points from the previous month's growth. Does the growth represent a turnaround in the real economy? And what will the economy be like in the second half of this year? What about the industrial profits?

Xing Zhihong:

With the deepened supply-side structural reform this year, the relationship between supply and demand has been improved, and we also saw a recovery in industrial product prices and industrial companies' operating conditions. According to the June data released this morning, we can see the following positive changes:

Firstly, profits maintained steady growth. The profits of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations rose by 19.1 percent from the year before, up 2.4 and 5.1 percentage points from May and April respectively. Profits of large-scale industrial enterprises for the first half year increased by 22 percent from a year earlier, with growth level up 15.8 percentage points year on year.

Secondly, profits margin kept growing. The profits margin of industrial enterprises earning more than 20 million yuan from their main business operations increased 6.35 percent, up 0.29 percentage points from a year earlier.

Thirdly, the profits structure has been improved. Starting from the Q2,there's a new development in industrial profits growth. Industries upstream shared a smaller part in the newly-added profits, while industries in the middle and downstream shared more. Of the newly-added profits in June, the equipment manufacturing industry shared 40.7 percent of the total, up 11.3 percentage points from May; high-technology industries accounted for 19.3 percent, up 0.6 percentage points from May. As a typical upstream industry, the mining sector's portion of profits decreased by 13.4 percentage points from May, a fall for the second consecutive month.

Reasons for these positive changes in industrial enterprises' profits are as follow: firstly, we maintained a steady growth in market demand, and speeded up selling. In June, income from industrial enterprises' main business operations increased by 13.7 percent from a year earlier, up 0.6 percentage points than the May growth. This year, income from industrial enterprises' main business operations maintained double-digit growth, and the turnover of finished products was also speeded up. The turnover time of finished industrial products was 13.7 days in June, 0.8 days less than May. A number of the 34 industries in the second quarter of this year maintained price growth, showing market demand is increasing, which is also a major reason for the industrial enterprises to continue steady growth.

Secondly, the effect of taxes, fees and other costs cut was now felt. The government has been pushing forward supply-side reform since last year, and reducing costs is one of the major tasks. By cutting the taxes, fees and other costs relating to human resources, land, logistics, and systematic trade, industrial enterprises reduced their costs by 0.18 yuan per 100 yuan of income from their main business operations.

Thirdly, the upgrading and optimized supply strengthened the industrial enterprises' earning power. Under supply-side structural reform and innovation-driven development strategy, industrial enterprises proactively coped with the changes in market, and took effective measures to improve their equipment, crafts and technology. We can see that, in the first half of the year, not only the emerging industries maintained a good momentum, but also the traditional industries improved their operations through upgrading. Take the textile and garment industry as an example. This traditional industry rose by 12 percent in the first half of the year, up 9.6 percentage points from last year. Among the 41 sectors, 38 saw increased profits based on the improvements mentioned above.

Nikkei:

Market interest rates and mortgage rates both increased in the first half of this year. How will the increase impact the performance of the Chinese economy in the second half of this year?

Wang Zhijun:

China's prudent monetary policy and proactive fiscal policy, especially the supply-side structural reforms, have enabled the national economy to maintain stable and sound growth in the first half of this year. As Mr. Yang said just now, China will continue such policies in the second half of this year.

To cope with any possible impact from rate moves, we will maintain a prudent monetary policy, emphasize preemptive adjustment and fine tuning, and ensure moderate credit growth and stable liquidity so that interest rates remain at a reasonable level.

I believe China is able to sustain sound economic growth by using monetary policy instruments to offset the impact of interest rate moves.

Financial Times:

As has just been mentioned, it is very important to curb systematic risk. Could you please explain what kind of risk this refers to? In what circumstances would the highest probability appear? Which sector, for instance, will face such risk? What does systematic risk mean exactly? Thank you.

Yang Weimin:

Systematic risk refers to the risk that will affect the overall economy and the entire society. Definitely, it can be caused by small risks of different sectors and aspects rather than one sector alone. The subprime crisis, for example, didn't look like systematic risk, but it finally resulted in one, as it triggered a financial crisis in the United States and touched off the global financial crisis.

What we mean by guarding against systematic risk is to prevent those small risk points of different sectors, including interbank business, local governmental debt, and debt defaults of some State-owned enterprises (SOE) and a high leverage ratio. We have to identify, find and deal with those risks as soon as possible. By handle them in this way we can prevent small risks from becoming huge systematic risk in the end and doing more serious harm to Chinese economy. So, we balance the relationship between stable growth and risk prevention even at the cost of sacrificing something in other aspects now.

In the second half of this year, we will work on deleveraging, which is the source of risks. The direction of deleveraging is unchanged. Definitely, deleveraging will undergo a lengthy process with priorities, as the leverage ratio of different industries and sectors varies. It was stressed at the National Financial Work Conference that deleveraging of SOEs should have top priority. If SOE deleveraging is achieved, the leverage aspect of the entire enterprise sector will go down and leverage of the whole national economy will decline as well, which is how to prevent dangers at source. We will not maintain growth at the mercy of a rebounding leverage ratio. The economy of the first half year continues to be stable and is getting better. Meanwhile, the trend that the macro leverage ratio was rising too rapidly in previous years is now under control to some extent. That means both deleveraging and stable growth can be achieved. We are able to maintain a stable economy, and to curb the leverage ratio to some extent as well. Thank you.

CGTN:

My question is about employment. This year's economic statistics show the current employment situation is good, and there is no sign of any slowdown in the reduction of industrial overcapacity. At the same time, the number of graduates nationwide this year has hit an all-time high. How can we maintain this good momentum? Thank you.

Xing Zhihong:

There has been steady and sound development in the national economy since the beginning of this year. More positive changes have taken place in economic development, among them the sustained improved employment is a bright spot. I think the main reasons for this are as follows.

First, the effect of entrepreneurship and innovation initiatives. The implementation of entrepreneurship and innovation initiatives has further promoted market vitality and social creativity. New enterprises have emerged in large numbers, bringing about many new job openings. Statistics from relevant departments show the number of newly registered enterprises reached 291,000 in the first half of this year, an increase of 11.1 percent over the same period of last year. The average daily number of newly-registered enterprises reached 16,000. According to the National Bureau of Statistics, about 70 percent of the country's new jobs last year came from sectors regarded as new economic drivers.

Second, the economic effect. Presently, China's economic development has entered the period of the new normal. During the economic structural transition period, economic growth has steadily expanded instead of narrowing. In the first half of this year, GDP growth reached 2.35 trillion yuan, an increase of more than 200 billion yuan over the same period of last year. As long as our labor productivity is holds steady, the expansion of economic growth will mean a steady expansion of new employment in this regard.

Third, the effect of structural adjustment. The service industry began to exceed the secondary industry in terms of the proportion occupied in the national economy in 2013, and the proportion exceeded 50 percent in 2015.It can be said that China's economy has entered a service-leading development stage. Compared with the manufacturing sector, the service industry is a more powerful employer, because it has many labor-intensive sectors. The growing service industry is leading to a more flexible employment rate.According to our estimates, every one percentage point of GDP growth meant 1.7 million new non-agricultural jobs in the2012-2016 period, an increase of 300,000 over the 2009-2011 period. This is a tribute to economic structural adjustment.

Fourth, the effect of policies. The CPC Central Committee and the State Council have always adhered to the policy of giving priority to employment and have implemented other positive policies to cope with employment pressures.In supply-side structural reform, the scaling down of overcapacity in some industries has brought about such problems as the resettlement of laid-off workers. Meanwhile, the number of college graduates is unprecedentedly high in China this year. The central government has taken a series of positive measures aimed at these key groups. Let me give you an example. Last year, the central government allocated 100billion yuan in special funds for the resettlement of laid-off workers, and introduced an employment and entrepreneurship action plan for college graduates. All these approaches have provided a stable environment for the job market and further improved employment.

Thanks to these four reasons, China has maintained steady and sound employment development momentum. Thank you.

Bloomberg News:

The nation's economy has been stable overall, but there's great regional divergence. Gansu, Hainan and Tianjin, for instance, have decelerated in the first half by more than one percentage point from the first quarter. How can you explain that and what can policy-makers do to address these regional differences?

Cong Liang:

As regions differ in terms of their development stage and factor endowment, they naturally differ in economic growth.Just as you mentioned,the growth in Gansu and Hainan didslow down somewhat. However, for these two provinces, greatpriority should be given toenvironmental protection rather thaneconomic growth. Hainan is an island in the tropical rainforest zone. Its ecology can be found nowhere else in China, so its protection deserves greater attention than economic growth. Gansu's Qilian Mountain is regarded as China's "water tower."If the mountain were polluted, the entire Yellow River and Yangtze River networks would suffer. Therefore, for such regions, environmental protection is more important than economic growth. Thank you.

Yang Weimin:

I have something more to say on this issue. China has a large territory, with natural and geographical conditions differing greatly between regions. The natural environment in Qinghai and Tibet in the west is very different from Beijing, Shanghai, Jiangsu and Zhejiang in the east. That's why we create policies for functional zones to promote regional development. Under these policies, some regions can concentrate on industrialization and urbanization, while some perform the role of an agricultural zone. As major producers of agricultural products, these zones should not put too much effort into industrialization and urbanization. Likewise, the main responsibility for some regions is ecological conservation.

You mentioned Hainan just now. The province's main responsibility is protecting its ecological environment, thus serving as a "back garden" for the Chinese people. Therefore, it's reasonable for Hainan's economic growth rate to be a bit lower than some others. This was the necessary consequence of the central authorities' policies and new, green development methods. I think the result is positive.

Regarding Gansu, besides concerns on ecological conservation, the province is also handicapped by natural condition that is not as good as eastern provinces. The mining industry makes up a rather high proportion in Gansu's economic structure. As the official of National Bureau of Statistics has just said, profits in the mining sector have continued to drop; hence, in regions where the mining industry accounts for a large proportion of the economic structure, it's normal that the economic growth rate would be lower than others.

When analyzing economic development in different regions, we can't use a one-size-fits-all standard. What we care about most now is whether their development fits green ideas, and whether they have fulfilled their functions and promoted development as required. This is different from our previous appraisal of regional performance. We changed our way of thinking because great efforts have been undertaken to advocate ecological progress and green development after the 18th National Congress of the Communist Party of China (CPC). Thank you.

CNR:

As a vital part of regional economy, economic development of northeastern China has drawn a lot of attention in recent years. In particular, as Mr. Yang Weimin just mentioned, economic development there saw a recovery this year after touching bottom. Could you talk about China's economic development in the first half of this year from the perspective of regional development? What's more, will this recovery in the northeast be sustainable? Thanks.

Cong Liang:

As we have mentioned before, due to various factor endowments and geographic conditions among regions, their development differs from each other. However, this year, guided by the new development philosophy, the eastern, central, western and northeastern regions interacted and coordinated well. Economic development of eastern China maintained a good and powerful momentum. The economy of central and western China grew steadily, and the northeast underwent a recovery.

As the leading region of the country, eastern China contributes over 50 percent of the total national economy. In the first half of the year, the growth of industrial value added in the top five provinces - Jiangsu, Guangdong, Shandong, Henan and Zhejiang - all surpassed the national average, thus providing a steady base for China's economy. Especially, the transformation and upgrading carried out in eastern China played a vital role in leading the economy. In Zhejiang Province, the high technology and equipment manufacturing industries contributed over 50 percent of industrial growth. And in Jiangsu Province, 3D printing and industrial robots saw a growth rate of 70 percent. Some cities have achieved a lot during their transformation and upgrading. For example, in Shenzhen, its per capita GDP is over US$25,000, so it has avoided being caught in any "middle income trap." And its GDP growth, featuring high quality, great benefits and advanced technology, reached 8.8 percent in the first half of this year. Through these facts, we could see China's great economic development capability and potential.

Regarding the central and western regions, their development index is higher than the whole country, indicating they have gained obvious advantages as late comers. Over the last two years, with industry relocation and technology transfer from the eastern regions, the central and western regions saw their industry grow at a rather high rate.

Many provinces enhanced growth momentum by raising the quality and returns of development, and promoting industrial upgrading. For example, in Shanxi and Shaanxi provinces, after cutting excessive industrial capacity and treating zombie enterprises, the total corporate profit increased by 30 percent, much faster than the whole country. In Hunan province, which encouraged its equipment manufacturing industry to integrate with the software industry, the growth rate of the equipment manufacturing industry was double that of the industrial sector as a whole. In Anhui province, the growth rate of strategic emerging industries was over 20 percent, which is common in the central and western regions.

In the northeast region, the pressure of economic growth has been high in recent years. But from this year, the signs of stability are increasing. The growth rate of industry was 1 percent in the first half of the year. Last year, it decreased 3.1 percent. The drop in investment has slowed down. Meanwhile, some key industries are improving in terms of profitability. In previous years, the petroleum and petrochemical sector, including the mining industries, experienced great losses, but their profitability have markedly improved now.

Meanwhile, proactive efforts have been made to promote the three key initiatives: the Belt and Road Initiative, the coordinated development of Beijing, Tianjin and Hebei, and the development of the Yangtze River economic belt. Much headway has been made in promoting the Belt and Road Initiative. Steady progress has been made in the coordinated development of the Beijing-Tianjin-Hebei region, and in the projects to relieve Beijing of functions nonessential to its role as China's capital. The development of the Yangtze River economic belt is centred upon environmental protection, and the restoration of the whole ecological environment has achieved substantial results. Overall, the coordinated and integrated development between regions is clearly progressing well. New growth poles and growth belts are gradually forming. Deep-rooted problems in some regions are gradually being solved, and some have achieved obvious improvement. Thank you.

The Wall Street Journal:

I have a question regardingsupply-side structural reform. The expert just mentioned that the capacity of the coal industry has dropped sharply. We noticed that coal enterprises made a profit of about 100 billion yuan in the first half of the year thanks to the cuts in coal capacity and the rise in coal prices. However, rising coal prices will result inrising costsfor the coal-based power industry and the losses of coal-based power enterprises reached nearly 100 billion yuan in the first half of this year. Asadecision maker are you aware of this problem? The cuts in capacity in one industry may exert negative impacts on other related industries. If possible, will you be taking measures to avoid this phenomenonas supply-side reform continues in the future? Thank you.

Yang Weimin:

This is a good question. We areaware of the relationship between the upstream coal industry and the downstreampower industries, irrespective ofsupply-side structural reforms.As coal prices rise, the profits of the coal-based power industriesmay decrease. This continues to be a difficult problem to solve during China's long-term economic development process.

Currently, coal prices have rebounded very quickly due to complicated factors. Therefore, the practice of cutting capacity duringthe previous stage may need some fine-tuning for the next step. We will makebetter use of the measures enacted forremovingZombie enterprises as well utilizingmarket and legal approaches. We will also make less use of administrative orders in the future capacity-cutting process. Capacity cuts aim to correct distortions in the allocation of elements, and through reform, establish a more normal market order in theupstream-downstream relationship. But it needs some time. The conflicts will gradually ease in the future process of dissolving excess capacity and disposing Zombie enterprises. Thank you.

Xi Yanchun:

Thanks again for the release. In the next days, we will invite other economic departments to attend the SCIO briefings introducing China's economic situation. Please stay tuned for more interview notices published on the SCIO APP. Thank you. That's all for today's press conference.

Speaker:
Xing Zhihong, spokesperson and director general of the Department of Comprehensive Statistics, National Bureau of Statistics

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

Date:
July 17, 2017

Xi Yanchun:

Ladies and gentlemen, good morning. Welcome to this press conference. Today, we are delighted to invite Mr. Xing Zhihong to introduce China's economic performance in the first half of 2017. Mr. Xing is the spokesperson and director general of the Department of Comprehensive Statistics of the National Bureau of Statistics (NBS). He will also answer some of your questions.

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

Xing Zhihong:

Good morning. It's a pleasure to meet you again. As usual, I will make a brief introduction before the Q&A session.

In the first half of this year, China's economic performance was sound and stable with more visible good momentum. Generally speaking, the growth was steady; employment levels rose; prices were stable; incomes kept growing; the economic structure further improved. National economic development became more stable, coordinated and sustainable

According to preliminary statistics, the H1 national GDP was 38.149 trillion yuan, rising 6.9 percent year on year at comparable prices. The Q1 GDP and Q2 GDP both rose 6.9 percent yearly. The added value of the primary, secondary and tertiary sectors was 2.2 trillion yuan, 15.3 trillion yuan, and 20.65 trillion yuan respectively, rising 3.5 percent, 6.4 percent and 7.7 percent on a yearly basis. The Q2 national GDP grew 1.7 percent as compared with Q1.

First, the agricultural sector posted a sound performance with a bumper harvest in summer.

In summer, the yield of grains was 140.52 million metric tons, increasing 0.9 percent, or by 1.31 million metric tons, from last year. In H1, the total amount of pork, beef, mutton and poultry was 38.92 million metric tons, growing 1.0 percent yearly, or 0.8 percentage points higher than Q1.

Specifically, the amount of pork was 24.93 million metric tons, growing 0.8 percent, with the growth rate up by 0.6 percentage points. The total number of live hogs was 403.5 million, up 0.4 percent, while that of hogs slaughtered was 321.83 million, up by 0.7 percent, both year-on-year.

Second, industrial production accelerated with rapidly growing corporate profits.

In H1, the added value of industrial enterprises above designated size registered a year-on-year increase of 6.9 percent in real terms. This was 0.1 percentage point higher than Q1, or 0.9 percentage point higher than the same period of last year.

Regarding different types of ownership, the added value grew 6.2 percent in state holding enterprises,1.9 percent in collective enterprises, 7.1 percent in share-holding enterprises, and 6.7 percent in enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan.

Regarding different economic sectors, the added value fell 1.0 percent year-on-year in the mining industry, while growing 7.4 percent in the manufacturing industry and 8.1 percent in the production and supply of electricity, heat, gas and water. .

In particular, the manufacturing industry moved towards the medium-high end at a faster pace. The added value of the high-tech and equipment manufacturing industries grew by 13.1 percent and 11.5 percent respectively, 6.2 percentage points and 4.6 percentage points higher than the average of industrial enterprises above designated size, accounting for 12.2 percent and 32.2 percent of the total.

Regarding industrial enterprises above designated size, the sales-output ratio was 97.5 percent.Their added value in June grew 7.6 percent year-on-year, 1.1 percentage points higher than May, or up 0.81 percent month-on-month.

From January to May, the total profit of industrial enterprises above designated size was 2.9 trillion yuan, up 22.7 percent, 16.3 percentage points higher year-on-year. The profit rate from their primary activities was 6.05 percent, 0.45 percentage points higher than the same period of last year.

Third, the service sector grew at a relatively fast pace with a high prosperity index.

In H1, the Index of Services Production increased by 8.3 percent year-on-year, the same rate as Q1. Specifically, rapid growth was seen in the transport, storage and postal sector, the information transmission, software and information technology sector, as well as in the rental and business service sector. In June, the index grew 8.6 percent, 0.5 percentage points higher than May, or 0.6 percentage points higher than the same month last year.

In June, the Business Activity Index for services stood at 53.8 percent, 0.3 percentage point higher than the previous month and 1.6 percentage points higher than the same month last year.

Specifically, the index exceeded 59.0 percent in the producer service sector and logistics service sector, and exceeded 60 percent in the air transport sector, postal service sector, telecom, radio, TV, and satellite transmission sector, internet and software information technology service sector, monetary and financial service sector, insurance sector, among others. This indicated that the above mentioned sectors all saw robust development.

Regarding market demand and prospects, the New Order Index and Business Activities Expectation Index for the service sector were 50.7 percent and 60 percent respectively, 0.4 percentage point and 0.8 percentage point higher than last month respectively.

Fourth, the growth of investment holds steady with a slight slowdown, while the growth of investment in manufacturing and private investment rebounds.

In the first half of this year, fixed-asset investment (excluding rural households) reached 28,060.5 billion yuan, registering a year-on-year growth of 8.6 percent, down by 0.6 percentage points from the second quarter. Specifically, investment by State--holding investment reached 10,202.2 billion yuan, an increase of 12.0 percent; private investment totaled 17,023.9 billion yuan, up by 7.2 percent. The two figures in June were 0.4 and 4.4 percentage points higher compared with the first five months, and the same period last year respectively, accounting for 60.7 percent of total investment. Investment in the primary industry was 869.4 billion yuan, up 16.5 percent. The secondary industry received 10,580.7 billion yuan, up 4 percent, of which investment in manufacturing was 8,680.9 billion yuan, up 5.5 percent, 0.4 percentage points higher than that in the first five months, posting positive growth for the second consecutive month; it was 2.2 percentage points higher than the same period last year. The tertiary sector received 16,610.4 billion yuan, an increase of 11.3 percent. Specifically, investment in infrastructure reached 5,942.2 billion yuan, an increase of 21.1 percent, 0.2 percentage points higher in June than the first five months and the same period last year. The investment in high-tech industries grew rapidly and investment in hi-tech manufacturing and hi-tech services increased by 21.5 percent and 22.3 percent respectively, or 12.9 and 13.7 percentage points higher than the growth rate of the total investment. The fund in place for fixed-asset investment in the first half of this year was 28,627.5 billion yuan, up 1.4 percent year on year, shifting from negative growth to positive. The total planned investment in newly started projects was 23,725.8 billion yuan, a decrease of 1.2 percent year-on-year. This was 4.4 percentage points lower in June than in the first five months of the year. In June, fixed-asset investment (excluding rural households) increased by 0.73 percent month on month.

Fifth, the growth of investment in real estate development slowed down and the floor space of commercial buildings for sale continues to decrease.

In the first half of this year, total investment in real estate development was 5,061.0 billion yuan, 8.5-percent growth year on year, 0.6 percentage points lower in the second quarter than in the first. In particular, the investment in residential buildings went up by 10.2 percent. Total floor space of houses newly started in the first six months was 857.20 million square meters, up by 10.6 percent. The floor space of residential buildings newly started went up by 14.9 percent. The floor space of commercial buildings sold was 746.62 million square meters, up 16.1 percent, of which the floor space of residential buildings sold grew by 13.5 percent. The total sales of commercial buildings were 5,915.2 billion yuan, up 21.5 percent. Specifically, the sales of residential buildings rose 17.9 percent. The land space purchased by real estate development enterprises was 103.41 million square meters, up 8.8 percent year on year. By the end of June, the total floor space of commercial buildings for sale was 645.77 million square meters, 14.41 million square meters less than at the end of May. The fund in place for real estate development enterprises in the first half year reached 7,576.5 billion yuan, up by 11.2 percent year-on-year.

Sixth, the growth of market sales accelerates and online retailing shows strong momentum.

In the first half of the year, total retail sales of consumer goods reached 17,236.9 billion yuan, a year-on-year rise of 10.4 percent, 0.4 percentage points and 0.1 percentage point higher compared with that at the end of the first quarter and the same period last year respectively. Specifically, the retail sales of consumer goods by measure of units above designated size stood at 7,695.3 billion yuan, up by 8.7 percent. Analyzed by different areas, retail sales in urban areas reached 14,778.6 billion yuan, up 10.1 percent, while those in rural areas stood at 2,458.3 billion yuan, up by 12.3 percent. Grouped by consumption patterns, total income of the catering industry reached 1,854.6 billion yuan, up 11.2 percent; and the retail sales of goods totaled 15,382.2 billion yuan, up 10.3 percent. In particular, the retail sales of units above designated size reached 7,242.0 billion yuan, an increase of 8.8 percent. The sales of upgraded consumer goods witnessed fast growth. Specifically, the sales of cultural goods and office supplies grew by 11.8 percent, sports and recreational articles17.1 percent, furniture 13.4 percent and construction and decoration materials 13.9 percent. In June, total retail sales of consumer goods rose by 11.0 percent year on year, 0.3 percentage points higher than May, or 0.93 percent month-on-month.

In the first half of the year, online retail sales across China reached 3,107.3 billion yuan, year-on-year growth of 33.4 percent, or 1.3 percentage points higher in the second quarter compared to the first. In particular, online retail sales of physical goods were 2,374.7 billion yuan, an increase of 28.6 percent, accounting for 13.8 percent of total retail sales of consumer goods, or 2.2 percentage points higher than the same period last year.

Seventh, imports and exports grow rapidly with improved structure of foreign trade.

The total volume of imports and exports in the first half of 2017 was 13,141.2 billion yuan, an increase of 19.6 percent year-on-year. Specifically, the total value of exports was 7,209.7 billion yuan, up 15.0 percent; the total volume of imports was 5,931.5 billion yuan, an increase of 25.7 percent. The trade balance was 1,278.2 billion yuan in surplus. The import and export of general trade occupied a larger proportion, growing by 20.5 percent and accounting for 56.7 percent of the total volume, 0.4 percentage point higher than the same period last year. As for major exports, mechanical and electrical products grew by 14.6 percent, accounting for 57.2 percent of the total export volume. The import and export to some countries along the "Belt and Road" increased. In the first half year, trade with Russia, Pakistan, Poland and Kazakhstan increased by 33.1 percent, 14.5 percent, 24.6 percent and 46.8 percent respectively. In June, the total value of imports and exports was 2,404.3 billion yuan, a year-on-year increase of 19.8 percent. Of this total, the value of exports was 1,349.3 billion yuan, up by 17.3 percent; and that of imports was 1,055.0 billion yuan, up by 23.1 percent.

In the first half of this year, the export delivery value of the industrial enterprises above designated size reached 6,103.0 billion yuan, up 10.9 percent year on year, 0.6 percentage points higher than the first quarter. In June, the export delivery value of the industrial enterprises above designated size reached 1,172.3 billion yuan, up 11.7 percent.

Eighth, consumer prices rose moderately, while the increase of industrial prices slowed down.

In the first half of the year, national consumer prices rose 1.4 percent year-on-year, although the increase was flat after the first quarter. Among them, urban residents saw a consumer price rise of 1.5 percent, compared to 1 percent for rural residents. By category, food, tobacco and liquor prices fell 0.8 percent year-on-year, clothing prices rose 1.3 percent, housing 2.4 percent, daily necessities and services 0.8 percent, transport and communications 1.5 percent, education, culture and entertainment 2.5 percent, health care 5.4 percent, and other goods and services 3.3 percent. Among the food, tobacco and liquor prices, the price of grains went up 1.4 percent, pork fell 6.1 percent, while fresh vegetables fell 14.7 percent. In June, the national consumer price rose 1.5 percent year-on-year, the same rate as last month. The figure was down by 0.2 percent month-on-month.

In the first half of the year, the producer price for industrial products rose 6.6 percent year-on-year. There was a 0.8 percentage point reduction in the increase compared to the first quarter. In June, the producer price for industrial products rose 5.5 percent. The increase ratio had been flattening out. But compared with the previous month, the price actually dropped 0.2 percent. In the first half of the year, the purchasing price of industrial producers rose 8.7 percent yearly. In June, the price was up 7.3 percent year-on-year and down 0.4 percent month-on-month.

Ninth, the incomes of urban and rural residents grew rapidly, and the income gap between urban and rural areas continued to shrink.

In the first half of this year, the per-capita disposable income of the country's residents was 12,932 yuan, an increase of 8.8 percent year-on-year in nominal terms, with actual growth of 7.3 percent after deducting price factors. The growth rate accelerated by 0.3 percentage point as compared with the first quarter, and up 0.8 percentage point over the same period of last year. According to the place of permanent residence, the per capita disposable income of urban residents was 18,322 yuan, with actual growth of 6.5 percent after deducting prices factor; that of rural residents was 6,562 yuan for actual growth of 7.4 percent. The per capita income of urban residents was 2.79 times that of rural residents, 0.01 lower than that of the same period of last year. The median per capita disposable income of all residents was 11,238 yuan, an increase of 7 percent in nominal terms year-on-year. The per capita consumption expenditure of residents was 8,834 yuan, an increase of 7.6 percent in nominal terms for actual growth of 6.1 percent after deducting price factors. At the end of the second quarter, the total number of migrant workers from rural areas working in cities was 178.73 million, an increase of 3.64 million and 2.1 percent year-on-year. In the second quarter, the average monthly income of rural migrant workers was 3,405 yuan, an increase of 6.3 percent.

Tenth, the work of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas identified as weak was further advanced, and the policy effect continued to manifest itself.

Overcapacity was addressed in a well-ordered way. In the first half of the year, the industrial capacity utilization rate reached 76.4 percent, an increase of 3.4 percentage points over the same period of last year. Real estate inventory continued to be reduced. At the end of June, the floor space of commercial building for sale dropped by 9.6 percent year-on-year, 3.2 percentage points higher than that at the end of March. The leverage of enterprises was brought down. The debt-to-asset ratio of industrial enterprises above designated size at the end of May stood at 56.1 percent, 0.7 percentage point lower year-on-year. The costs of enterprises continued to be reduced. In the first five months, the cost per 100 yuan of revenue from the principle business of industrial enterprises above designated size was 85.62 yuan, 0.04 yuan less year-on-year. Areas of weakness were identified and strengthened. In the first half of this year, the investment in ecological protection and pollution treatment, management of water conservancy, transport, storage and postal services, as well as education grew by 46.0 percent, 17.5 percent, 14.7 percent and 17.8 percent respectively, markedly higher than the growth rate of the investment in fixed asset in the same period.

Generally speaking, the national economy has maintained the momentum of steady and sound development in the first half of 2017, laying a solid foundation for achieving the annual target and better performance. However, we must be aware that there are still many unstable and uncertain factors abroad, and long-term structural contradictions remain prominent at home. At the next step, uniting even closer around the CPC Central Committee with Comrade Xi Jinping as the core, we will stick to the general principle of seeking progress while maintaining performance stable, focus on supply-side structural reform, give central importance to improving the quality and returns of development, expand aggregate demand as appropriate, guide social expectations, strengthen the role of innovation in driving development, accelerate the replacement of old growth drivers with new ones, and promote economic transformation and upgrading, so as to cement the foundation for steady and sound development, and better fulfill the goal of national economic development this year. Thank you!

Xi Yanchun:

Thanks to Mr. Xing Zhihong for his introduction. We see many foreign media reporters here today, and we have arranged on-site simultaneous interpretation. Now, the floor is open to questions. Please identify the media you represent before raising a question.

CCTV:

According to your introduction just now, China's economy has still maintained strong growth in the second quarter. How has China managed to maintain this growth? What's your view of the national economy's performance over the past half year? Thanks!

Xing Zhihong:

Thank you for your questions. During the past half year, China's economy has had stable progress and a positive trend. There were many positive changes in the economic area, I can say that the good elements have further increased to sustain the economy's intermediate- and high-speed growth.

To summarize the characteristics of the economy's operation in the past half year, there are two points: one, stability has been reinforced; and the good trend has become more evident.

As I say, the stable situation has become more reinforced and it was reflected in the fact that the economy keeps operating in a reasonable range. First, economic growth was stable in the past half year, China's economy maintained intermediate and high speed growth and GDP grew by 6.9 percent year-on-year, which is in line with the first quarter. The economic growth rate has kept within a range of 6.7 percent and 6.9 percent in eight consecutive quarters.

Second, the employment situation maintained a positive trend. In the past half year, urban and township areas saw new employment of 7.35 million people, which was 180,000 more on a year-on-year basis, and this completed 66.8 percent of the annual goal. The urban and township unemployment rate generally went down. According to statistics from the National Bureau of Statistics of China, the survey shows that the national urban unemployment rate was kept under 5 percent in two consecutive months. In 31 big cities, the survey shows that their urban unemployment rate was kept under 5 percent in four consecutive months. There is more labor from rural areas. Just now I have mentioned that by the end of the second quarter, the number of migrant workers from rural areas working in urban areas has increased 3.64 million people, a 2.1 percent growth year-on-year.

Third, the price of commodities was generally stable. In the past half year, the national consumer price increased by 1.4 percent, which was basically in line with the first quarter; minus food and energy, the core CPI was basically stable, and the core CPI increased by 2.1 percent on a year-on-year basis.

Fourth, the international balance of payments continued to improve. The trade in goods continued its surplus. In the past half year, after balancing exports and imports of the trade in goods, we realized a 1.28 trillion yuan surplus. The RMB slightly appreciated, and foreign exchange reserves continued to rise. By the end of June, RMB's middle rate is 1 US dollar against 6.77 RMB yuan, which means an 1.84 percent appreciation for RMB compared with the rate at the end of March. China's forex reserves reached US$3.0568 trillion, a consecutive increase for 5 months.

So generally looking at the indexes of the four aspects in the macro-economy, we can see China's economy in the past half year shows stable growth, good employment, stable prices of commodities and an improved international balance of payment. The economic growth stability clearly was reinforced.

Regarding the positive trend becoming more evident, it is shown in three aspects: First, the structure was optimized by reform. The supply-side structural reform continues to have deep progress, which pushes forward the production and demand structure to be further optimized. From this year on, the distinction of the service industry dominating economic growth became clearer. In the past half year, the growth rate of the service industry was 1.3 percent faster than the secondary industry, while the service industry accounted for 54.1 percent of the whole economy, which was 14 percentage points higher than the secondary industry's percentage.

The manufacturing industry was progressing to the middle and high end. The high-tech manufacturing industry and equipment manufacturing industry grew 13.1 percent and 11.5 percent respectively on a year-on-year basis, which is 6.2 and 4.6 percentage points faster respectively than the overall industry above designated size. They accounted for over 12.2 percent and 32.2 percent of the whole industry above designated size respectively. Consumption has speeded up transformation and upgrading; high-tech industry investment has increased rapidly, while the consuming and needs structures are also adjusting and optimizing.

Second, the dynamics was strengthened in the transformation. The deep pushing forward of reforms to delegate power, streamline administrative procedures and optimize government services will optimize the environment of entrepreneurship and innovation. From this year on, many market entities surfaced and developed. From January to May, the number of newly registered enterprises increased by 14.7 percent on a year-on-year basis, and there are an average of 15,600 new enterprises registering on a daily basis.

The development of new entities and new technologies efficiently prompted the growth of new industries, new business formats and new patterns – resulting in new dynamics for economic development. In the past half year, the national online retail sales of physical products increased by 28.6 percent year-on-year, which was 18.2 percentage points faster than the nation's consumer goods retail sales. This took over 13.8 percent of total consumer goods retail volume, which was 2.2 percentage points higher year-on-year. Strategic new industries grew 10.8 percent year-on-year, which was 3.9 percent faster than the industry above designated size. The new force in the economy is constantly growing and strengthening.

Third, the quality is improving in transformation. While the economy keeps intermediate- and high-speed growth, quality has further improved. This year, enterprises' benefits clearly improved. From January to May, the enterprises above designated size saw their profits grow by 22.7 percent year-on-year. The main business revenue of the enterprises above designated size had profit margins of 6.05 percent, which is 0.45 percentage points higher year-on-year. The business profit of enterprises above designated size also maintained double-digit growth, and the consumer income's growth rate was faster than economic growth. In the past half year, personal per capita disposable income increased by 7.3 percent, 0.8 percentage points higher than the same period last year, and 0.4 percentage points higher than the economic growth rate in the same period of this year.

In fiscal terms, although tax reductions and fee cuts were large for enterprises, due to stable and positive economic growth, the tax base continues to expand. Therefore in the past half year, the public budget revenue increased by 9.8 percent year-on-year, and the growth rate was 2.7 percentage points higher year-on-year.

To summarize all of the above, in the past half year, China's economy was stable and positive, this trend became clearer and laid a solid foundation for China to complete its projected main economic targets.

Phoenix Satellite Television:

The data of the second quarter, including those in June, demonstrate a very good performance. However, we have also noted that, based on the analysis of different economists, there are different voices being heard. Some believe the economy is advancing in a new upward spiral having hit bottom; meanwhile, there is another view that pressures are lurking in the second half of this year. So, could you please tell us your view, especially, the impact of the retarded control over the real estate investment on the economy in the latter part of this year.

Xing Zhihong:

Your question generally seems to be about the economic tendency in the next stage. Amid deepened supply-side reform and implementation of the innovation-driven development strategy, so to speak, there will be more positive factors for the economy in the second half this year and the good momentum will be consolidated and expanded.

In my view, there are several points to be addressed here. First, the development of the real economy has sustained good momentum, consolidating the foundations of economic development.

The negative growth of the producer-price index (PPI), having lasting for 54 consecutive months, ended last September. Entrepreneurs saw their businesses and development prospects obviously improved, and industrial production has remained relatively stable since the deflationary impact ran out of steam. Industrial Enterprises Above Designated Size have generally sustained a growth of more than six percent since March last year, while, industry added value this year has achieved higher growth rate. Stabilized industrial productivity, improved efficiency and the promising forecasts will lure increasing investment to the sector. In the first half of this year, investment in the manufacturing industry grew by 5.5 percent, up 2.2 percentage point year-on-year. Investment for the purpose of technical upgrading increased by 11.8 percent, accounting for 45.6 percent of the total industrial investment, which would lay a solid bedrock for sustainable growth of the industry. The development of the tertiary industry also maintained a good momentum as the Service Industry Index has been able to retain a growth of eight percent since the beginning of this year. The interaction between the secondary and tertiary sectors has fostered growth of the producer service sector and the growth of IT-, commerce- and logistics-oriented service sectors have kept accelerating.

Second, the stabile growth of demand has expanded and the driving force of economic growth has been continuously enhanced. Domestic demand, a fundamental strategic target towards which we have made ceaseless efforts, has essentially fostered the internal stimulus of economic growth, a balanced structure between supply and domestic demand, mutual stimulation between updated consumption and efficient investment, andcoordinated development between urban and rural areas--all of which highlighted the role of domestic demand in economic growth. Since the beginning of this year, consumption has made stable progress, as the Final Consumption of Expenditure contributed 63.4 percent to overalleconomicgrowth, followed byproactive investments that hold key to the increase of GDP. At the same time, overseas demand, which rose by 15 percent in the first half this year, has interacted well with the domestic demand for the improvement of the economic driving force.

Third, small and micro businesses have been more dynamic in theireconomic growth. The prosperity index among 40,000 such enterprises in a survey conducted by the National Bureau of Statistics reached 96.5 percent in the second quarter, 3.4 percentage points higher than the first quarter and the highest in the past two years. The dynamic growth of small/micro businesses is no coincidence, and the large scale of such businesses formsan extensive force for economic development and construction. According to the survey, 75.4 percent of small/micro enterprises have facilities being used at or above the normal criterion, while, 72.7 percent of respondents disclosed that the amount of their orders has also stayed at or above the normal level, signaling consecutive growth for six straight quarters. The Purchase Management Index (PMI) indicated that small and micro businesses had maintained their momentum of expansion in two consecutive months up to June. The vitality of those businesseshas reflected the inclusiveness and extensiveness of the country's economic growth.

Fourth, the market forecast is turning positive and the confidence level in the national economy keeps rising. The PMI of the manufacturing sector reached 51.7 percent in June, up 0.5 percentage points up from a month before and maintaining an interval of expansion for 11 consecutive months. The PMI of the non-manufacturing sector in June reached 54.9 percent, rising 0.4 percentage points from a month earlier and keeping the prosperity indices above 54 percent for nine straight months. At the same time, the Consumer Confidence Index reached 113.3 percent in June, considered a comparatively high rate in the past few years. We have also noted that the International Monetary Fund (IMF) and the Organization of Economic Cooperation and Development (OECD) have increased their forecasts ofChina's economic growth.

Based on the statistics, the good momentum of the national economy will further be maintained and explored amid stable growth. Thank you.

Reuters:

Has the recently revised Chinese System of National Accounts (SNA) affected the growth rate in the second quarter and the first half of this year? What was the the contribution of gross capital formation (GCF) as well as imports and exports to economic growth?

Xing Zhihong:

Thank you for your attention to the statistical work. Recently, the State Council has officially approved NBS's proposal to implement the Chinese System of National Accounts 2016 (2016 Chinese SNA). Next, NBS will phase in the system, but the work has not yet been fully started, so it has no impact on the calculation of GDP and its growth rate. In addition, I would like to take this opportunity to inform you about the "2016 Chinese SNA."

SNA is an international standard system of national accounts which helps build up a comprehensive, scientific and systematic picture of economic performance. In the 1990s, China constructed its own national accounting system based on SNA. Over the years, Chinese SNA, in its various released versions, has formed the basis for a real and accurate picture of China's GDP, economic structure and growth rate. In 2009, the U.N. and other four international organizations published the latest version of SNA—"2008 SNA," which has been adopted by many countries.

To promote international comparability and compile national accounts in a more accurate and scientific way, NBS conducted an in-depth study on the"2008 SNA" and constructed the "2016 Chinese SNA" with China's realities taken into consideration. In "2016 Chinese SNA," there are new concepts, revised indexes, expanded accounting areas, more detailed standards and refined accounting methods.

However, to adapt the massive system for our use, we have to take progressive steps. We have adjusted some items. For example, we adjusted the method of accounting for R&D activities last year, and improved it at the local level earlier this year. But there are still many items to be adjusted. In brief, NBS will make continuous efforts to implement the approval of the State Council and make the national accounts more accurate.

As to the contribution of the three major demands of economic growth in the first half of this year, household final consumption expenditure (HFCE) contributed 63.4%; GCF 32.7%; and net exports of goods and services 3.9%. Thank you.

Nihon Keizai Shimbun (Nikkei):

I would like to know the possible impact of the current interest rate rise on both financial market and for mortgage loans in the second half year. Thanks.

Xing Zhihong:

This is related to the currency market. China's monetary policy, as made clear both at this year's Central Economic Work Conference and the Report on the Work of the Government (2017), is to maintain policy continuity and stability, and continue to implement a proactive fiscal policy and prudent monetary policy. China's monetary policy will remain stable and neutral; that is, it should provide necessary liquidity support for the economy to float within a reasonable range, and create a favorable financial environment for supply-side structural reform. At the same time, monetary policy should not be too loose, as this might lead to a leveraging effect, amplifying asset bubbles and thus bringing risks to the Chinese economy.

For your question concerning the current interest rate and money supply, I noticed a few days ago that a top officer from the People's Bank of China stated China's M2 figure had expanded 9.4 percent from a year earlier as of the end of June, slowing down a little. From the introduction of the People's Bank of China, this slower M2 expansion was mainly the result of financial deleveraging. This was especially evident in a slower pace of interbank lending, including off-balance sheet activities, where the total outstanding yuan-denominated loans at the end of June had risen 12.9 percent year-on-year,which is regarded as moderate growth. The central bank also diversified liquidity types through a variety of monetary policy tools. Such arrangements helped maintain market stability and provides important support for the real economy. The reform of China's financial system is speeding up. We will continue to improve and strengthen the transmission mechanism of monetary policy to stabilize market interest rate and ensure the stable and healthy development of the Chinese economy. Thank you.

China News Service:

The steady and sound development momentum of the national economy was more pronounced in the first half year. However, I would still like to ask why the CPI grew comparatively slowly and the PPI suffered a drop from a high level?

Xing Zhihong:

Thank you for your question. We often say that prices are a comprehensive reflection of supply and demand. In fact, the pattern of supply and demand has changed in a positive way this year, with the relationship between them markedly improved.

While analyzing changes in the CPI, we can see the figure has remained generally low for this year, as it has mainly affected by declining food prices, particularly pork, fresh vegetables and eggs, which declined continuously in the first half of this year. More specifically, pork and fresh vegetable prices declined for five straight months from February, and egg prices witnessed a consecutive eight-month decline, with only a slight new change recently.

We all know food consumption is relatively stable among residents, and its elasticity is relatively small, so any decline in food prices is mainly due to increased supply. Overall, so far this year, the situation of food supply in pork, fresh vegetables and eggs has been comparatively good, leading to significant price falls. However, we also noticed that prices in non-food sectors rose by 2.3 percent over the same period of last year, 1.1 percentage points higher than the same period of last year. Among them, the industrial consumer price rose by 1.9 percent compared to the same period of last year; however, last year's figure was 0.3 percent lower than previous year. Service-related project prices rose by 2.9 percent in the first half of this year, an increase of 0.9 percentage point year-on-year.These two statistics reflect a marked rise in market demand in the industrial consumer sector and in the service consumer sector. They are also consistent with the positive changes in our current industrial production and service development.

Moreover, in regard to the PPI, we can see the growth of the figure has gradually slowed down in recent months, mainly influenced by changes in raw material prices. Last year, a series of raw material prices – mainly involving coal, iron and steel, nonferrous metals and petroleum – rose fairly drastically to reach a high point in February this year before a downward adjustment took over. Take the oil exploration industry as an example. Prices rose by about 70 percent overall in the first quarter and rose only by about 25 percent in the second quarter, obviously, a huge fall. As for the steel industry, namely ferrous metal smelting and rolling processing, its price rose by more than 30 percent in the first quarter and about 21 percent in the second quarter. Such large price movements have great impact on the overall lmovement of the PPI. However, at the same time, we have also noticed that prices in most industrial sectors are still rising. Among the 40 surveyed sectors in the second quarter, prices in 34 saw year-on-year growth. At the same time, the trend of price changes in the equipment manufacturing, consumer goods manufacturing and other industries is in the opposite direction with year-on-year growth continuing to expand. The second quarter witnessed a higher increase of prices in 25 related sectors compared to the first quarter. This reflects an overall upward boom in our entire industrial field, which is a very positive change for the development of the industrial sector. Thank you.

NET(Japan):

Many cities have published house purchasing restrictions. Meanwhile, the growth of real estate investment slowed down in the first half of this year. What is the trend for the next half of the year? What will be its impact on the GDP?

Xing Zhihong:

Thank you for your question. Since last year, China has implemented a new round of property market regulations. There are two main tasks: one is to control property prices and to fend off risks in the first-tier and second-tier hot cities; the other one is to reduce the excess inventory of property in the third-tier and fourth-tier cities. The new round of work is different from before, owing to the new guidelines of giving guidance tailored to the local situation and implementing policies suited to the location. Under these circumstances, the growth of real estate investment slowed down, but not majorly.

The investment in houses increased by 10.2 percent from January to June; while the growth decreased by 0.2 percent in June comparing to that from January to May. All of the above was owing to the guidelines that I mentioned before. Commercial housing sales increased by 24.5 percent in non-key cities, maintaining a growth rate of 20 percent.

The growth of house sales slowed down mainly in the first-tier and second-tier cities, but the regulations are not only targeted at curbing purchases, loan and sales. For solving the contradiction between supply and demand and increasing the supply of land and residences, the range of changes in real estate investment is not as high as before. In general, the growth of real estate investment is expected to register a slower but stable performance. Thank you.

China National Radio:

You mentioned the composition of CPI just now. The data for a certain period of time, especially for the first half of this year, showed that the growth of food prices had been relatively stable with a slight decrease, while the prices in the service sector rose visibly. It indicated that the sub-indices of different CPI categories are moving toward different directions. What do you think of this change? Does it signify the upgrading of consumption is accelerating? What effects will the continuous price rise in the service sector have on the future trend of CPI? Will it impose certain pressure to the CPI target of this year? Thank you.

Xing Zhihong:

It is certain that the CPI target for this year will be achieved. As I introduced just now, prices in the service industry are increasing, and the main reason lies in the high consumption needs in this sector, which has lasted for a long time.

The price increase of the service sector has been maintained at a quite stable figure of over 2 percent. There are some long-term factors supporting the growth. In addition to the impact of consumption upgrading, rising labor costs also contribute to the higher price increases in the service sector than other industries.

However, looking at the overall price changes, the supply of industrial products still exceeds demand in general. The food sector maintains a relatively stable price increase under government regulation, and the overall price level of the service sector shows a stable trend, so the CPI will continue to rise moderately. In fact, the core CPI is relatively stable after deducting food and energy prices. Given these facts, the overall situation will remain stable. Thank you.

Xi Yanchun:

Thanks again for the explanation of Mr. Xing Zhihong, and thank you all. Our press conference today will end here.