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Full transcript of the State Council policy briefing on July 31, 2015

Updated: Jul 31,2015 4:40 PM     english.gov.cn

LIST OF POLICY BRIEFINGS OF THE STATE COUNCIL

Hu Kaihong (host):

Ladies and gentlemen, good morning. Welcome to the State Council’s policy briefing. The State Council’s executive meeting on July 28 issued policies regarding the rebuilding of underground comprehensive pipe networks and policies to boost tourism, consumption and investment. Today we’re glad to invite Lu Kehua, Vice-Minister of Housing and Urban-Rural Development, and Wu Wenxue, Vice-Chairman of the China National Tourism Administration, to brief us on the situation and take questions. Minister Lu, you have the floor now.

Lu Kehua:

Ladies and gentlemen, good morning. The State Council has paid a great deal of attention on pushing forward the construction of a comprehensive urban underground pipe network. Since 2013, the government has issued related documents and policies to step up the construction and rolled out pilot trials in cities. Our ministry has, together with other government organs, made the construction of an underground pipe network a breakthrough in urban infrastructure construction and has made early progress.

Lu Kehua:

First, our ministry has rolled out pilot construction trials under the support of the Ministry of Finance. A total of 10 pilot cities, including Baotou in the Inner Mongolia autonomous region, were included in the trial. About 389 km of underground comprehensive pipe networks will be built in three years in these cities with a total investment of 35.1 billion yuan, among which the central government will invest 10.2 billion yuan and local governments 5.6 billion yuan. Altogether these investment could drive 19.3 billion yuan of social funds. Second, through these pilot programs, we try to encourage the initiative of building underground pipe networks on a national scale. Statistics showed that at least 69 cities have started such construction, with an estimated length of 1,000 km and 88 billion yuan. Jilin province has initiated provincial-wide construction of an underground pipeline network, which aims to build 1,000 km of facilities by 2018. Third, the general planning and management of underground pipe networks where strengthened.

Our ministry issued a guide to the general planning of urban underground comprehensive pipe projects this year. The guide aims to help governments make scientific plans for underground pipeline construction according to local urban development arrangements. It also requires local government to include underground construction projects into the area’s social and economic development plan. Fourth, the standards of such underground construction were improved. We have issued the technological standards for urban comprehensive pipe projects, the standards for planning urban pipeline projects and other related documents to support the construction.

Lu Kehua:

In a bid to step up underground pipe construction, and eliminate the “cobweb” of lines overhead and encourage investment, the government has clarified the guidelines, targets, principles and work assignments at a State Council executive meeting on July 28. The meeting has also decided on five measures to push forward the construction. First, to step up making plans. City governments have to work out specific planning for underground comprehensive pipeline construction before they start to build and the plan has to be carried out as a priority in the government’s annual work.

Second, to clarify construction requirements. Underground comprehensive pipe networks must be built at the same time as roads in newly-developed urban areas, industrial parks and development areas. In downtown areas, the underground system could be upgraded during city reconstruction.

Third, to ensure that pipelines were all moved into the network where the new underground corridor was built. All the pipes and lines must be gradually moved into the area where the network is built. Areas outside the network are not allowed to build new pipelines.

Fourth, to ensure the quality of the pipelines. Construction standards and anti-seismic standards should be improved, and responsibilities of the planners, constructors and operators of the project be clarified. Such responsibilities would be permanent with information on the project necessary to facilitate social supervision.

Fifth, to work out new financing channels. In addition to increasing government investment, social funds are also being encouraged to take part through franchising, investment subsidies and discount loans. Companies whose pipelines were built in the network should pay an initial down payment and maintenance fees to ensure a reasonable and steady profit of the projects. Development financing should also be used, and bonds are to be issued to support the construction. The government encourages operating companies of the projects to issue bonds and bills for financing.

At the moment, our ministry is working with related government departments to work out detailed policies to carry out the decision of the executive meeting.

Thank you! I’m glad to take questions now.

Hu Kaihong:

Thank you Minister Lu. Now Chairman Wu, please.

Wu Wenxue:

Ladies and gentlemen, friends from the media, good morning. Very glad you could join today’s policy briefing. The State Council executive meeting approved a document on facilitating consumption and investment in tourism on July 28. It is the second government policy of its kind since 2014 to encourage investment and spending in the industry. It is also an important measure to leverage the industry to boost growth, restructure the economy and improve people’s livelihood. Here is a brief introduction.

The government has long paid importance to the tourism industry. Both President Xi Jinping and Premier Li Keqiang regard tourism as an important part of the economy and modern service sector. They require tourism to play a specific role in expanding domestic demand, creating jobs, eliminating poverty and improving people’s lives. The Government Work Report this year has pledged to promote leisure consumption in the tourism industry. To that end, the China National Tourism Administration has worked out a government document to encourage the consumption and has submitted the draft to the State Council. The 100th executive meeting of the State Council approved the document.

Wu Wenxue:

The government has issued a series of policies to encourage the tourism industry in recent years and has made significant progress. In the first half of this year, consumption and investment in the tourism sector grew amid the sluggish economy. Trips across the country made by domestic visitors came to about 2 billion, 9.9 percent up year-on-year. These trips have saw an annual increase in spending last year of 14.5 percent, to bring the amount spent up to 1.65 trillion yuan. In addition, China received 65.1 million overseas visitors, 4.5 percent up year-on-year, while about 61.9 million Chinese have traveled overseas.

From the perspective of investment, 301.8 billion yuan was invested in the first half of this year, a 28 percent increase on last year. The growth rate of tourism investment was 16 percentage points higher than the general investment growth in the service sector and 17 percentage points higher than the growth in national fixed investment.

In terms of consumption, about 1.65 trillion yuan was spent in the first six months of this year, a 14.5 percent increase year-on-year and 4.1 percentage points higher than the growth in total retail sales of consumer goods.

Spending and investment in tourism have reached new heights despite sluggish investment and consumption. The industry has become a new driving force for economic growth and domestic demand.

Wu Wenxue:

However, the tourism sector is facing some bottlenecks amid the rapid growth. First, demand has far outstripped supply in the industry. Second, tourism infrastructure investment is inadequate and cannot match the latest development in the industry. Third, people’s potential need for travel will not become real unless social security and insurance system are improved.

Our administration has, together with other government departments, worked out measures targeting the problems mentioned above. These measures, approved in the document on July 28, include 26 specify policies covering six aspects.

Next, our administration will work out a timetable and a road map after the document is released to ensure that the measures can be carried out faithfully and the tourism industry will enjoy healthy development.

Thank you all! Now I’m ready to take questions.

Hu Kaihong (host):

Thank you, Chairman Wu. Now the floor is open. Please tell us the name of your media organization before raising a question.

Phoenix TV:

We have two questions for Minister Lu. With the underground construction of water pipes, there could be drainage problems. Are there any priorities or special measures arranged to address such problems? And could you unveil the scale of the investment as the State Council issued the plans? Is there any potential chance of fees being charged? Thank you.

Lu Kehua:

Great questions, especially the first one about drainage. We have just released a set of technological standards to regulate comprehensive pipe network projects. The standards cover pipes for electrical cabling, telecommunications, sewage, drainage, gas and thermal power, and the standards also cover both inflexible and flexible pipes. The first construction of an underground pipe network in the world was for sewage in France in 1833.

Much has been learned since then but landforms and geological structures differ drastically across the country and provide different challenges. Since draining water depends on gravity, a slope of a certain degree is therefore needed. Although some areas are not fit for regular pipe networks, we require that the comprehensive network should cover as much ground as possible.

For the second question about the scale of investment, we have an estimation, and as I have just briefed you, about 15,000 km of roads are built annually, including those located in various industrial parks and development zones. If 20 to 30 percent of them need to be equipped with comprehensive pipe networks, the annual construction alone could amount to about 4,000 km. Generally, construction investment consists of two parts. The first part is the entity of the network, which could be described as a process of digging a hole, dividing it into several racks and putting things in. The scale of investment depends on the total volume or size needed, especially the size of the cross-section of the hole. So investment varies in according to the size of the cross-section. For example, a cross-section of 30 square meters is totally different from the one with only three square meters. According to our estimation, such a network plus the auxiliary facilities and equipment requires approximately 80 million yuan per kilometer. A network is like a house, and when you get the pipelines into the network, they will take an investment of 40 million yuan per kilometer. So the total cost for per kilometer is 120 million RMB, including both the network and the pipelines. Of course, land varies across the country, and annual demands differ among the localities. There is renovation of the shanty towns, old areas of towns, including the overhauling of residential areas, city architecture and streets and rivers must all be taken into account. If the network is built in such places, then about 2,000 to 3,000 kilometers will be established in total every year, and if you need 8,000 km, most of you can do the math.

Lu Kehua:

As for the charging fees, it needs consideration regarding the cost of directly burying the pipelines and the cost of the new approach - taking the pipelines into the network. Comprehensive deliberation is needed, and the cost may also vary because of different places and different pipes.

Generally speaking, first, all the pipelines should go beneath the ground. Second, a balance should be made between the charges for direct burial and those for constructing a pipe network. We need to ensure a reasonable benefit based on a charging mechanism for the social investors. We will issue a guideline after making an overall calculation and estimation along with the National Development and Reform Commission. Thank you.

Xinhua News Agency:

I have a question for Minister Wu. Could you tell us how paid vacation stimulates consumption and what’s the National Tourism Administration’s plan to effectively implement the paid vacation system? And another question for Chairman Lu, how would you define tourism real estate?

Wu Wenxue:

The issue of paid vacation involves all aspects of society. Currently, the average statutory vacation per capita has reached 115 days annually (including weekends), that is to say, we have 115 days holidays. If we implemented 10 days to 15 days paid vacation, the holidays would be 125 days to 130 days. Recently, to implement the paid vacation system, the State Council has introduced The Outline for National Tourism and Leisure, which mentioned paid vacation. Generally speaking, the paid vacation system has been carried out relatively well throughout these years. However, some companies and institutions didn’t implement the system very well. A guideline by the State Council on further stimulating the tourism investment and consumption clearly stated the need to better implement paid vacation system.

Firstly, we should encourage companies and institutions to design paid vacations in reference to local traditional holidays and activities, that is to say, we should adopt flexible vacation arrangement to avoid holiday travel rushes, provide better tourism activities and attain higher tourist satisfaction, in order to avoid the overcrowded situation during holidays.

Wu Wenxue:

Secondly, we should encourage companies and institutions to manage their summer working time flexibly, create possibilities for a medium-long vacations of two days and a half, such as combining Friday afternoons with weekends. This is how a vacation is flexibly managed.

Thirdly, we should encourage localities to work out detailed paid vacation plans and regulations and fully fulfill them. The key issue lies in how to put those plans and regulations into practice to create good economic and social benefits. The National Tourism Administration and other relevant departments will formulate detailed regulations and measures after the State Council guideline to further stimulate the tourism investment and consumption is officially issued. The administration will spare no efforts to implement the paid vacation system well, to accommodate tourists well and to boost holiday experience of the public. Thank you.

CCTV and CNTV:

I have two questions. They go to Minister Lu. First, many big cities have “road zippers” - roads that have been dug repeatedly for installing various pipelines - and are often waterlogged during rain. What is the government’s plan to upgrade the construction of underground utilities? Second, what should be done to guarantee enough funds for such construction? Thank you.

Lu Kehua:

We can avoid “road zippers’’ by developing utility corridors. A city needs more than 30 kinds of underground pipelines to support the lives of its residents. “Road zippers” occur when different pipelines are built by different departments or companies. These organizations build their pipelines at different times, thus the road is dug repeatedly. If all the pipelines are placed in a utility corridor, the departments and companies can install and maintain their pipelines through a shaft, so the road doesn’t have to be dug open.

Underground drainage system is not all to blame when cities are waterlogged during rainfall, because we can’t solve the problem by expanding the drainage system without limits. Now we are promoting the construction of “sponge cities’’. Such cities have an environment that can take in heavy rainfall, preserve it and use it when necessary. Besides underground pipelines, we need this spongelike environment to prevent cities from being waterlogged during rain.

Lu Kehua:

As to your second question, the investment needed for utility corridors is huge. There are several ways to raise the funds. First, the central government sets aside funds for the construction. For example, the government has set aside 3.4 billion yuan this year and plans to set aside 10.2 billion yuan within three years to help cities build and manage utility corridors in a pilot program. Second, the local authorities should prioritize the construction of the corridors. Third, we should attract private companies to take part in the construction. We can also reasonably charge departments or companies who install pipelines in the corridors. Besides, the central government has allowed companies building utility corridors to issue enterprise bonds and medium-term notes. Some banks will also offer favorable loans to support the construction.

Xinhua News Agency:

I have a question for Minister Lu, about the underground pipeline network. Since the 13th Five-Year Plan (2016-20) is about to start, I wonder whether the construction of underground projects will be included in the plan. And what are the country’s expected goals by 2020 about the scale and investment concerning the projects?

Lu Kehua:

This will be included in the 13th Five-Year Plan about urban infrastructure and we have already done some preparatory work. The specific scale of investment will be decided according to the arrangements of the plan.

Japan Broadcasting Corporation (NHK):

Minister Wu, I have two questions. First, we often hear “civilized tourism”, do you think that tourists are traveling in a civilized manner nowadays? Second concerns the public toilet renovation project - can you please introduce its goal and current situation?

Wu Wenxue:

Thank you for your questions. The central government and related ministries are deeply concerned about “civilized tourism’’ as it is closely related to the development of the tourism industry. As we all know, China is a country with a rich history and traditions. Generally speaking, both outbound tourism and domestic tourism are in good order. But we can’t deny that since the number of tourists has risen dramatically, some problems have occurred. We should face these problems and solve them properly.

President Xi Jinping promotes “civilized tourism” in person and a special department has also been set up to handle related works. Recently, the China National Tourism Administration, the Civil Aviation Administration of China, the Ministry of Public Security and the General Administration of Customs all published regulations on civilized traveling. As the China National Tourism Administration, we take up the responsibility and we have published a guideline on civilized traveling, a related promotional video and there are reminders abroad. We want our tour guides to fully implement the work. Recently we introduced a blacklist to record the uncivil tourists.

We think the problem will be solved properly through our effort.

Wu Wenxue:

Regarding the public toilet renovation project, it was started early this year and announced by the China National Tourism Administration. To strengthen the construction of tourism public service systems, the National Tourism Administration will promote the project through policy guiding, assistance funds, and regulations in the next three years. It is planned that 57,000 public toilets in tourist attractions will be built or renovated. The goal of the project is to improve public services and provide a more convenient, comfortable and civilized environment for tourists.

Thank you.

Economic Daily:

My question goes to Vice-chairman Wu. The investment in China’s tourism industry maintained a high-speed growth level in the first six months. What are the new features, sectors and trends of such investment?

Wu Wenxue:

Despite the growing economic downward pressure, the investment in the tourism industry has increased and become a new engine for economic development. The direct investment to this industry across the nation reached 705.3 billion yuan, up 32 percent on the previous year and 15 percentage points higher than the growth rate of investment to the third-tier industries.

In the first half of this year, a total of 301.8 billion yuan was invested into the tourism industry, up 28 percent on the same period last year. The growth rate was much higher than the growth rate of the investment to the third-tier industry and to fixed assets. The western region has seen a 3-percentage-point higher growth rate in investment than the central region. Private capital, which contributed to 59.5 percent of this investment, has become a main force. The investment in the tourism industry has been maintained and will continue a vigorous momentum as China’s economic restructuring turned to the service industry.

Ten sectors will be the priority for investment for now and later in China. The first of these are the tourism-themed villages and towns amid the development of a new-type of urbanization. Second is rural tourism with a combination of modern agriculture and the new rural construction. Vocation tourism is third. Fourth, large tourism equipment manufacturing that combines with the new-type of industrialization. Fifth, cultural tourism products. Sixth, medical tourism and tourism for the elderly. Seventh, tourism commodities and outdoor products. Eighth, motor homes and camps for self-driving. Ninth, development of online tourism products. Tenth, tourism camps for research, studying and education. Thank you.

Hu Kaihong (host):

If there is no more question, this is the end of the briefing. The press hall needs maintenance recently, so the briefing will be suspended for the next two weeks. We will inform you of the time of resumption. Thank you.