Hu Kaihong(host):

Good morning, ladies and gentlemen, welcome to today’s policy briefing. This week’s State Council executive meeting has discussed policies supporting the stable growth of import and exports so today we have Vice-Minister of Commerce Wang Shouwen, Vice-Minister of the General Administration of Customs Zou Zhicheng and Vice-Minister of the State Administration of Taxation Wang Kang to brief us in this regard.

Wang Shouwen:

Good morning, friends from the press. Several Opinions on Supporting the Stable Growth of Import and Export Trade, which were adopted at the 98th executive meeting of the State Council on July 15, have put forward the seven measures in the following four aspects:

First, further improving foreign trade environment. In this area, two policies were introduced: sorting out and regulating import and export charges and enhancing trade facilitation standards. Measures including accelerating the customs clearance integration reform are stressed to improve clearance efficiency. A nationwide special operation has been launched to intensively deal with the business-related charges. A positive list for import and export fees has been established. Any charges beyond the list will be investigated and punished as unauthorized fee collection. The relevance and effectiveness of port inspections will be boosted.

Wang Shouwen:

Second, strengthening policy guarantees. Emphasis will be put on further improving the market-based formulation mechanism of the RMB exchange rate, raising the facilitation standards of RMB settlement in cross-border trade, expanding settlement scales and introducing more hedging products to help businesses counter risks. Financing services for foreign trade companies will be improved. Financial institutions are encouraged to engage in export tax rebate custody account lending and export credit insurance policy financing. Efforts will be made to continue to expand the scale and scope of foreign exchange reserve custody lending and steadily roll out nationwide overseas RMB borrowing by domestic companies. The policy for short-term insurance of export credit insurance will be strengthened continuously.

Third, speeding up reforms. In more details, we will continue to improve work on imports. We will make adjustments to the Catalogue on Encouraged Technology and Product Imports and expand the coverage of preferential interest rates for import credit. We will improve relevant policies on the import of consumer goods and launch pilot projects on lowering the import tariff of some consumer goods that are in strong demand in the domestic market. We will also increase duty-free shops at ports of entry, expand the categories of duty-free products and raise the quota on duty-free shopping to bring overseas consumption back to the domestic market.

Wang Shouwen:

Fourth, promoting innovation-driven development. We will accelerate the development of new business models in foreign trade. We will push forward the rapid development of cross-border e-commerce and establishing the Hangzhou cross-border e-commerce comprehensive pilot zone. We will expand the pilots on the modes of market procurement trade. By the end of this year, we will put forward the plan on further expanding pilot programs and promote new business models of foreign trade, which will be enacted next year.

We believe that, with the joint efforts of different departments and local governments, the relevant policies and measures in the document will be translated into a driver for the steady growth of foreign trade and effective measures in reducing the burdens for the enterprises.

Hu Kaihong(host):

Thank you, minister Wang. Now questions, please.

China Daily:

I have a question for Minister Wang. How is China’s trade performance this year? What difficulties do we have? How do you view the situation regarding trade this year?

Wang Shouwen:

We had a difficult situation for trade in the first half of this year. However, we still achieved a 1 percent growth in exports in the first half. Imports have dropped due to various reasons. In general, our exports have kept stable, while the range of decline in imports is narrowing.

We should view our trade performance from a global viewpoint. WTO statistics show that exports of major trading countries in the first four months was weak. For instance, exports from the US and EU dropped 4.6 percent and 13.8 percent respectively in the first four months, while exports from Japan and South Korea jumped by 7.8 percent and 5.7 percent respectively in the first five months. Exports of some of our other major trading partners all declined. So the 1 percent growth of China’s exports in such an environment was not easy.

The key difficulty in trade is the shrinking demand of the global market. Imports of major countries are deceasing. To sell things, there has to be somebody buying things. With demand declining, it is impossible to see a large growth margin in exports.

Wang Shouwen:

The International Monetary Fund said recently that the RMB is not undervalued. Recently the effective exchange rate of the RMB has kept rising, which has affected our exports. Rising labor costs also impacted our trade. Still, in general, we have advantages in global trade competition. We have relatively complete industry chains and competitive companies. Local governments have issued policies (to facilitate trade), while departments of the central government have attached great importance to the issue. I believe that will greatly help with trade growth this year.

Thank you.

China Xinhua News Network Corporation:

We learned that the General Administration of Customs are enhancing integration reform all over the country to promote efficiency. Can you tell me more about it? Thank you.

Zou Zhiwu:

We are now implementing regional integration reform for the convenience of exports and imports. We started this work last year, first in Beijing and Tianjin, then in the Yangtze river areas. This year, we promoted this reform to Guangdong, the Silk Road Economic Belt and northeast provinces of China. The integration reform means that corporations are allowed to choose a customs point to declare for clearance, pay taxes and follow the clearance mode. Procedures which used to be done in several customs points can be now accomplished at just one.

In the next step, we will implement the integration reform to the whole country. We will establish a national customs risk prevention and control center and a national tax collection administration to make sure that all enterprises face the same policies and requirements when declaring for clearance anywhere in China.

Zou Zhiwu:

We will also carry out three reforms to establish new mechanisms. First, we will reform the current declaration procedures. Enterprises need only deliver us a simplified declaration to have their cargo passed. They don’t need to have all the declarations done like the past, they can complete their declaration after their cargo has passed. This will not only improve efficiency, but also save them considerable time in getting their goods from airports, ports and stations.

Second, we will reform the current tax collection mechanism. Before, the customs inspected every ticket that was given enterprises to prove they had followed procedures and then taxes were paid. From now on the enterprises will pay the taxes themselves and we will supervise them by random auditing and inspection to ensure they are following procedures.

Third, we will reform the current supervision mode. We have 42 customs points that do all their businesses independently. We will consider establishing several points in the next step to further improve efficiency, streamline customs procedures and regulate administration and services.

China Radio International:

I have a question for Minister Wang. Could you please explain to us the detailed measures you have taken in accelerating the process of export tax rebates and the effects of these? Thank you.

Wang Kang:

Refunding export taxes is the country’s major policy to encourage exports, and it is also common practice internationally. The State Administration of Taxation has always treated quickening export tax rebates as an important task and one of its major targets, as required by the State Council, and a series of measures have been adopted.

From the beginning of this year, we have started to classify the enterprises according to their credit when implementing export tax rebates. For those with good credit, the procedures could be finished within two days as long as the electronic information is verified, and paper credentials are no longer required. I think this measure has achieved good results.

Also, we have delegated the approval of export tax rebates for manufacturing enterprises and some foreign trade companies to the county-level taxation authorities, for convenience as well as better communication between the enterprises and authorities. Moreover, we have comprehensively implemented a standardized process for export tax rebates. The procedures are all the same across the nation and the approval procedures have been simplified.

We also carried out pilot programs for paperless export tax rebates in some areas and addressed problems that enterprises have encountered during the rebates via consulting platforms. The effects of such measures have been quite good since they were adopted in the first half year.

During January to June, China’s volume of export tax rebates has increased 12.4 percent over the same period last year, which is far higher than the growth of export volumes and has greatly boosted the growth of foreign trade exports.

In the future, we will further improve various measures that aim to quicken export tax rebates, provide better services, and simplify the procedures to increase working efficiency.

I’d like to say that, while accelerating the procedures of tax rebates, the State Administration of Taxation will also be cautious and crack down on fraud involving export tax rebates, to create an equal and fair environment that benefits economic development and foreign trade export. Thank you.

People’s Daily:

I have a question for Minister Wang from the Ministry of Commerce (MOC). What kind of measures will the ministry roll out to boost stable growth of foreign trade?

Wang Shouwen:

Thank you for your question. As requested by the CPC Central Committee and the State Council, the MOC attaches great importance to foreign trade, and it has introduced a series of measures to promote exports amid the downward pressure of foreign trade this year. As mentioned by Minister Wang from the State Administration of Taxation, efforts have been stepped up for the implementation of export rebates.

The administration and the MOC have jointly taken measures, including improving the sharing mechanism of export rebates, reducing the burden on local authorities, expanding export credit insurance and facilitating financing. In addition, the MOC is pressing ahead with the implementation of policies on tax refunds for tourists from overseas.

Regarding imports, the MOC, together with other departments, has adjusted in a timely manner the catalog of technology and products that the authorities suggest should be imported, expanded import credit with preferential rates, and sped up the pilot reform of automobile parallel imports. This pilot reform has been extended from the Shanghai free trade zone (FTZ) to the FTZs in Qianhai of Shenzhen city in Guangdong province, Tianjin municipality and Fujian province. And, as many people know, the MOC has coordinated and pushed forward the reduced import tax on 14 types of consumer goods that became effective on June 1.

Wang Shouwen:

Meanwhile, the MOC has taken measures to improve the business environment for foreign trade. Since last year, it has assisted the National Development and Reform Commission and the Ministry of Finance in their nationwide efforts to overhaul business services and fee charging concerning imports and exports. As a result of the campaign, the financial burden for relevant enterprises has been reduced by 4 billion yuan. The ministry has cancelled licenses of 81 coding automatic imports involving five types of products, including CD manufacturing equipment and car products, and it has delegated to low levels the power to approve the postponed farm produce processing trade that requires import quotas.

The MOC also cancelled the approval of international tendering agencies for mechanical products and export quotas for products including tungsten and molybdenum. It should be noted that the MOC is working to promote the development of new types of foreign trade. Following the State Council’s approval of the China (Hangzhou) cross-border e-commerce pilot zone, the MOC and other departments have been pushing for the start of the trial operation of the zone. The State Council has published the Opinion on Cultivating New Competitive Advantages for Foreign Trade. These measures are part of our efforts to boost foreign trade.

And we are also working on other measures to bolster foreign trade. For example, China proposed a series of initiatives at the APEC meetings in 2014, including one on the establishment of demonstration electronic ports in the Asia-Pacific region. The initiative has already led to the implementation of a trial basis in Shanghai with the aim of facilitating foreign trade between China and other APEC members. So far, China already has 12 FTZs that have became effective. China and the Republic of Korea signed a free trade agreement earlier this year to reduce foreign trade tax, and this move is expected to greatly promote China’s imports and exports. We are speeding up talks on the RCEP (Regional Comprehensive Economic Partnership) and other FTZs, and working to push forward the implementation of trade facilitation measures being piloted in the Shanghai FTZ in special Customs outlets nationwide.

The MOC, the major department in charge of boosting foreign trade, is working hard to ensure the State Council measures are fully implemented.

Bloomberg:

Just now you mentioned that China’s foreign trade is facing huge downward pressure, while the market in the United States doesn’t look so well either. Could you explain it?

Wang Shouwen:

The World Trade Organization’s statistics showed that imports in both the United States and the European Union declined this year. China’s exports also face downward pressure due to declined demand from the general international market. Besides, Chinese companies may feel they have become less competitive due to other factors, such as competition from other countries, increasing labor costs and a sharp depreciation in some currencies.

But on the whole, China is still competitive in its exports. For example, the country has performed very well exporting equipment. It has exported railway equipment to more than 80 countries and equipment for electricity to more than 50 countries. Some of the products have entered developed countries. Chinese automobile companies, such as Chery, Huachen Auto Group and JAC have set up plants overseas.

Also, though facing challenges, private companies have become an important force in exports. Private companies exported 6.9 percent more during the first half of the year compared to the same period last year. In the first half of 2015, the country’s export increased 1 percent over the same period last year. The central and western regions exported 5.2 percent more than the same period last year. In spite of challenges, Chinese private companies are developing fast, the central and western regions are exploring their potential in foreign trade with greater efforts.

As a result, China’s foreign trade volume is taking a larger proportion of the international market. All this was won by our hard work. We will better implement the State Council’s policies, which we believe will play an important role in supporting the country’s foreign trade.

Thank you.

China News Service:

My first question goes to Minister Zou. The efficient trading measures in free trade zones also suit some other places. Can you introduce the measures in other places?

My second question goes to Minister Wang. Regarding the Opinion passed by the State Council on the executive meeting, no full text was published. Will it be made public nationwide shortly?

Zou Zhiwu:

After the Shanghai Free Trade Zone was set up, the General Administration of Customs researched many innovative measures and made the Shanghai Free Trade Zone the first pilot area. Last year we issued 14 innovative rules, which made the system convenient, safe and efficient. According to our statistics, currently the 14 rules have been promoted nationwide - with a promotion rate of 92.9 percent. Customs points have deepened the reform and improved procedures. It made trading more convenient and improved the efficiency of supervision.

There are several rules which have made the process more efficient, such as “enter the zone first and then declare”. In the past, goods could only be transported to zones after declaration. The new measure can reduce clearance times by 1-2 days for enterprises.

Another measure is about transportation in the zones. The transportation of goods in bond, in special areas, used to have strict rules – only specific vehicles could be used and only enterprises that were approved could transport the goods. Under the new rules, enterprises can transport goods with their own vehicles - this can save 200-300 thousand yuan every year.

The flow of goods has speeded up. The new collective declaration can help enterprises reduce costs by up to 1.5 million yuan every year, and shorten the waiting time by 2 hours on average.

We will continue to strengthen the coordination with related departments, accelerate the promotion progress and make more enterprises enjoy the convenience brought by the new rules.

Wang Shouwen:

Regarding your second question, the State Council will publish the Opinion in the near future. Thank you.

China National Radio:

The Opinions aim to promote the development of a cross-border e-commerce comprehensive experimental zone in Hangzhou. Could you give more details?

Wang Shouwen:

Cross-border e-commerce has been growing very fast in China and has aroused wide interest. The State Council has decided to set up a cross-border e-commerce comprehensive experimental zone in Hangzhou. It has started and everything is going well. Zhejiang provincial government organized an introductory meeting on June 29th, giving a list of the first batch of pilot companies and 78 necessary institutional innovations relevant departments need research on.

It is very difficult to supervise cross-border e-commerce, especially B2C and C2C, due to the high number of daily transactions. Besides, the majority of cross-border e-commerce companies are small and medium-sized enterprises. They experience a lot of difficulties in financing, foreign exchange settlements, export rebates, customs declarations, quality inspection and quarantine.

To address the above, we need institutional innovation. Relevant departments have attached great importance to these issues and 32 out of the 78 tasks have been completed or will be completed soon. These efforts are very important to the development of cross-border e-commerce. Hangzhou’s successful experience will be duplicated and adopted in other areas. So far, I can say with confidence everything starts well and relevant policies are being carefully implemented.

China Central Television:

My question goes to Minister Zou. Statistics showed that foreign trade with countries along the Belt and Road has increased in the first half of the year, and China has formulated policies aimed at strengthening trans-regional customs cooperation. Will these play a significant role on these emerging market economies along the Belt and Road?

Zou Zhiwu:

The General Administration of Customs has launched a set of measures to support the Belt and Road initiative. In recent years, trade with countries along the Belt and Road increased more quickly than that with China’s major trading partners like the European Union and Japan, and the trade volume will definitely upgrade in the future. Within the measures unveiled by the customs body, we are promoting cooperation between customs bodies in different regions where we have trade and investment cooperation.

A high-level forum was held in Xi’an, Shaanxi province, on May 27, where the customs authorities of related countries and international organizations took part. At the forum, we put forward the concept of interconnection and cooperation for mutual benefits, and got a great response from many countries. In fact, some of the efforts have already achieved results, such as the China-Europe railway express. By cooperation between customs authorities with Kazakhstan and Russia, procedures have been simplified and smooth operation guaranteed, thus the transportation costs and time have also been greatly reduced.

Bloomberg:

I have two questions. Will China expand its favorable import tax policy to cover infant formula? Could you analyze the foreign direct investment in China in the first half of the year?

Wang Shouwen:

Thank you.

The favorable policy was implemented on June 1, only last month. We need to evaluate the effect of the policy after a while. Then we will decide our next move. Right now it’s too early to say how the policy has worked.

As to your second question, I’m glad to tell you that in spite of the slow recovery of the global economy, the foreign investment China utilized in the first half of 2015 increased 8 percent from that of the same period last year. The structure of foreign investment is also improving. The foreign investment in the service sector has been increasing rapidly. In the first half of the year, foreign investment in the sector increased by 23 percent. More than 60 percent of the foreign investment has gone to the service sector. The amount of money going to the property market is decreasing. Some of our high-end manufacturing sectors are also attracting more investment.

Most of the foreign investment in China used to be green field investment. Now the amount of foreign investment going to mergers and acquisitions is increasing rapidly with 19 percent of the foreign investment in China going to mergers and acquisitions. It’s very good for us to make better use of our production capacity, upgrade our technologies and learn advanced managerial skills.

All in all, China has done well in attracting foreign investment this year. Thank you.

Hu Kaihong(host):

That is the end of today’s briefing. Thank you.