On December 27 of 2013, during the National Conference on Commercial Work, Mr. Gao Hucheng, Minister of Commerce of PRC offered an interview to media on the overall situation of commercial work.
Journalist: Minister Gao, what highlights do you think the commercial work of 2013 has?
Gao Hucheng: The economic situation of 2013 is complicated both domestically and internationally, with many uncertainties. In face of the complex and capricious international and domestic environment, we explored and innovated, worked steadily, and directed the development energy through institutional innovation and transformation of functions of governments according to the deployment of the Party Central Committee and the State Council. We have also taken a series of measures to encourage the expansion of domestic consumption and the transformation of development of foreign trade, which have gained favorable results. The expected goals of commercial development are basically realized, which made positive contributions to the improvement of people’s well-being and development of national economy. It is expected that the total retail sales of social consumer goods this year would reached RMB23.8 trillion, going up by 13% year-on-year. Import and export achieved significant results, and will exceed USD 4 trillion for the first time this year, a growth rate over 7%. Especially, the proportion of our export in the global market will still rise. The growth rates of import and export were slower compared with that of China in the previous dozen years. However, when compared with that of developed countries and emerging economies, our foreign trade growth is still high. Amidthe fierce competition for attracting international capital, China’s market is still favored by foreign investment. The utilization of foreign investment this year will be about USD 117 billion, and expected to grow by about 5%. Besides, as a highlight of international economic cooperation in recent years, China’s investment abroad this year still grow at a high level of about 15%. The non-financial investment abroad is expected to reach nearly USD 90 billion. At the same time, China’s discourse power and influence in international economic and trade affairs are further improved. All in all, in the context of sluggish recovery of global economy, China’s achievements in terms of domestic trade, foreign trade and international economic cooperation are hard-earned.
Journalist: You have said in your report that, in the upcoming 2014, we are still facing arduous tasks, and will carry forward a series of reform and new measures. Could you please give us a specific introduction and analyze the development prospect?
Gao Hucheng: Commercial work is totally connected with China’s economy, both for international and domestic market. For domestic market, the key work the next year is to improve the market environment, especially the environment for domestic trade and circulation. Measures that are conducive to promotion of the legalization of business environment are required to be formulated and issued after study to expand consumption. We should strengthen plans of governments at all levels for circulation, and increase public investment to improve people’s well-being and expand consumption. The development of emerging industries is encouraged, such as e-commerce and online shopping. Standardization of market management order, fight against infringement and counterfeit, and reinforcement of the establishment of credibility system of enterprises in circulation field are required, and it is necessary to, through a series of measures, advance the stable growth of consumption demands, especially demands for agricultural products and those related to the livelihood of the common people. At the same time, we will further strengthen the popularization and support to encourage the growth of industrial consumer goods such as new-type intelligent household appliance and energy conservation and environmental protection products.
In general, we are optimistic to the growth of domestic consumption next year. The one important reason is the stable growth of urban resident income. The other important reason is that our domestic demands is now in the transformation period, transforming from industrial demands to consumption and service demands. Especially, the demand for service consumption is expanding, which is closely related to China’s age structure of population and social structure. This administration makes efforts to deepen reform and expand opening-up in the service field, further streamline administration and delegate power to the lower levels, further transform the function of the government, and further relieve the dynamic and bonus of institution and reform so as to further stimulate and improve domestic consumer demands.
Foreign economy and trade covers many aspects. China is undoubtedly a large trade country in import and export, and the work next is how to further drive the transformation and upgrading of import and export trade, and create new development advantages, making China become a strong trade country from a large trade country. In this respect, we who engaged in commercial work are inspired. The previous financial crises broke out in 1997 makes China’s enterprises to continuously innovate and adjust the growth pattern. Our foreign trade growth rate has not reached 20% that was recorded annually in the first ten years after entering into WTO, but still a strong engine to lead the growth of global trade, and the growth rate is higher than that of the global trade. This is greatly related to the transformation of foreign trade and endogenous innovation of enterprises. We will continue to push the development in this respect. When consolidating the exports of the traditional labor-intensive products like textile, light industries, toys and furniture, the prospects of emerging industries are encouraging, such as equipment of infrastructure construction like thermal power, hydroelectric, wharf, transportation and building, and higher technical content equipment like high-speed rail and nuclear energy. All of these will become new strong growth points to boost export. Therefore, I am optimistic to the export next year.
China’s investment abroad will be further expanded. This is not only because that we possess the maximum foreign exchange reserve in the world, but also the need of adjustment and transfer of industrial structure. The equipment, technology, management and standard advantages that China possesses in some fields could satisfy the market demands of many developing countries and parts of developed countries’ demands for new construction or renewal of infrastructure construction. Therefore, the potential of Chinese enterprises to invest overseas in these aspects is huge.
In terms of attracting foreign investment, there are two points you should pay attention to. The first one is that some enterprises think that China’s investment environment is worse than before. We can explain it through statistics. The foreign investments that China has absorbed this year increase rather than decrease. We have gained such achievements amid the overall inactive global investment. The other one is that, thanks to China’s opening-up of service industry, the proportion of service industry in the attracting foreign investment this year obviously grew. With the implementation of the Decision of the Third Plenary Session of the 18th CPC Central Committee and the gradually issuing of its enforcement measures, especially the expansion of the opening-up of service industry, service industry will surely be a hot spot of attracting foreign investment. We can see that from Shanghai Pilot Free Trade Zone. China will unswervingly implement the Decision of the Third Plenary Session of the 18th CPC Central Committee, further deepen reform, and promote reform, innovation and development through opening-up. First of all, in terms of institutional arrangement, create a legalization business environment according to the requirements of the Decision. Secondly, in fields subject to opening-up, trade in services will be a new highlight. I am optimistic and confident in this respect.
Besides, you can see that we have positively taken part in working out international multilateral trade rules. In the Ninth WTO Ministerial Conference that closed recently in Bali, an agreement on “early harvest” of Doha Round was reached, namely, “Bali Package of Agreements”. China, as a positive participant, rule maker and contributor, has made great contributions to the final agreements and won positive evaluation and applause from WTO members, WTO Secretariat, Director General as well as our trade partners. We will continue to maintain the multilateral trade system in such manner, start with “early harvest” of Doha Round to step up Doha Round negotiations and even finish the concept of Doha Round negotiations.
As for the regional free trade arrangements, the Ministry of Commerce holds a clear position in this respect as required by the Central Government: we are open to all the free trade areas. We regard them as a complement rather than a replacement to multilateral trade system. We are open to all the free trade areas that are conducive to regional investment and trade facilitation and we are also positively involved in relevant arrangements regarding regional investment and trade facilitation when we strive to maintain multilateral trade system.
Journalist: As you mentioned various reforms regarding commercial areas jut now like the decentralization of examination and approval and reforms on investment system, what concrete progress did we make this year?
Gao Hucheng: To illustrate a simple example. Foreign investment has changed from examination and approval system into on-file system except in some sensitive areas and we also work out the on-file system for personal investment overseas in concert with relevant departments. That is a big change. Another example, we also decentralize several examination and approval items or carry on on-file management on products for foreign trade. Certainly, we also face another challenge. That is how to supervise halfway and afterwards while we decentralize the examination and approval as well as management authority. That is a very important issue and also a big challenge for government departments in case of the mess. Therefore, at present, we strive to make plans on how to strengthen supervision, maintain an open and fair competition order and achieve a sound market environment after the decentralization so as to push the sound development of economy. That is one of the main reasons for decentralizing examination and approval items to stimulate market’s vitality and vigor.
As a matter of fact, the market vigor released by several batches of examination and approval cancellation or decentralization since the new government came into office has begun to emerge. We can see from the economic trends in the second half of this year that macro economy could get a recovery from two-quarter recessions, which was greatly attributable to the system bonus and increase vigor released from further reforms of examination and approval as well as management system.
Journalist: You mentioned the change of role that China played in the present global trade system and the development of China-U.S. economic and trade ties in particular in the deployment of commercial work for 2014. So how will the Ministry of Commerce see to push China-U.S. economic and trade ties?
Gao Hucheng: China, as a large trading country, will occupy an important position in making global trade rules and the next Doha Round negotiations. As an important member of WTO or a core member, China will positively take part in working out various rules. The bilateral trade volume has registered USD 500 billion between the U.S., the largest developed country and China, the largest developing country, which was incredible at the time when China and the U.S. first established diplomatic relations and even a decade ago.
China-U.S. economic and trade ties are one of the most important economic and trade ties between China and other countries and also the “ballast” for overall China-US relation in other aspects. The new relation of two powers of China and the U.S. featured by “no conflict and confrontation, mutual respect and win-win cooperation” was established when China’s President Xi Jinping and the U.S. President Obama met in Annenberg Estate, California last June, and has pointed out a direction for the development of China-U.S. economic and trade ties. We can see that both China-U.S. strategic and economic dialogue held hereafter and China-U.S. Joint Commission on Commerce and Trade that closed lately followed this way and made satisfactory achievements, reflecting the vision to build a new relation of two powers. Since the two countries are different in social system, development level and trade structures, it’s natural to see contradictions in the process of cooperation to such a large scale. In this respect, we adhere to the requirements of the Central Government, strive for the consensus reached by the two presidents and solve the problems through negotiations. We advocate frank dialogue. If we can reach a consensus, we will work together to make contributions to China-U.S. economic and trade ties; otherwise, we can exchange views honestly. If we can create conditions to settle the disputes at a certain stage, then we can go for the same goal to solve issues of both concerned; if we cannot surmount the barriers and differences temporarily, we can stop for the moment and wait to discuss new cooperation models when time is mature. We are confident that following the new relation of two powers, China and the U.S. could strive for the same goal and achieve further development based on win-win cooperation.
Journalist: Is there any concrete achievement regarding China-U.S. economic and trade cooperation, for example, the negotiation on China-U.S. bilateral investment treaty?
Gao Hucheng: China-U.S. bilateral investment treaty per se shows a great change of China’s investment system since it’s a substantive negotiation on the basis of pre-establishment national treatment (PENT) with a “negative list”. The substantive negotiation has kicked off after technical communications. It was confirmed when the two presidents met in Annenberg Estate, California. During the period of China-U.S. Strategic and Economic Dialogue last July, China and the U.S. have officially declared to launch negotiations on China-U.S. bilateral investment treaty on the basis of pre-establishment national treatment with a “negative list”. It shows that China is pushing forward China-U.S. bilateral investment treaty towards the direction of a new relationship of two powers in 21st century major-country relations proposed by the two presidents with more open-ended attitude. We have come to the stage of negotiations in this aspect. The negotiations will go deeper and deeper as time goes by. It will provide an important system arrangement and legal guarantee for China-U.S. bilateral investment once the agreement is reached.