Gao Feng: II. China’ online sales in the first quarter of 2018

According to the statistics of the State Statistics Bureau, in the first quarter of 2018, China’s online retails reached 1931.8 billion yuan, up 35.4% year on year. Among these, the online sales of national entity reached 1.4567 trillion yuan, up 34.4% year on year, 24.6 percentage points higher than that of the total retail sales of consumer goods, accounting for 16.1% of the total retailing of social consumption goods, greatly driving up the consumption growth.

The monitor of business big data on major e-commerce platforms showed that from the prospective of regional structure, the online sales of the eastern, central, western and northeast regions were 1541.88 billion yuan, 168.92 billion yuan, 163.19 billion yuan and 32.17 billion yuan respectively, up 30.9%, 39.8%, 39.7% and 25.3% respectively year on year. From the perspective of categories and structure, the online sales of clothes, shoes and hats, home appliances and communication equipment ranked the top three with transaction amounts reaching 416.04 billion yuan, 244.78 billion yuan and 113.95 billion yuan respectively, up 32.2%, 31.8% and 14.4% respectively year on year. The online sales amount of agricultural products was 45.27 billion yuan, up 38.8% year on year. Among these, the online sales of fruits, nuts and tea were 10.99 billion yuan, 9.54 billion yuan and 8.01 billion yuan respectively, up 30.1%, 46.1% and 35.2% respectively year on year.

China’s online sales market in the first quarter mainly showed the following features:

1. The trend of quality improvement and upgrading was obvious. The monitor of business big data showed that the consumption of culture, health and tourism increased sharply, and the increasing sales speed of books and videos, stationery and Chinese and western medicines was over 50%, which showed the consumption need of the market has been changing quickly and cultural implication and experience consumption have become the important factors influencing the consumers’ choice.

2. Rural online sales enjoyed rapid growth. According to the monitor of the business big data, the national rural online sales in the first quarter of 2018 was 287.82 billion yuan, up 34.7% year on year, taking up 14.9% of the national online sales. Among these, the online sales of physical goods reached 225.23 billion yuan, up 32.2% year on year, and that of the non-physical goods was 62.59 billion yuan, up 38.9% year on year. From the perspective of regions, the rural online sales in the eastern, central, western and northeast regions were 207.94 billion yuan, 41.35 billion yuan, 31.15 billion yuan and 7.39 billion yuan respectively, up 32.5%, 40%, 43.9% and 31.8% respectively year on year, accounting for 13.5%, 24.5%, 19.1% and 23% respectively in their own region.

3. E-commerce for second-hand goods promoted green development. The second-hand e-commerce grew rapidly in the first quarter and the online and offline exchange for untraded items was active, which helped the docking between the supply and demand of the unused social resources and strongly promoted green and cyclic development.

4. The social e-commerce helped enlarge the market. In the first quarter, through the spread of acquaintances at the social platforms, group buying and other modes, many consumers in the Midwest and rural areas and the middle-aged and elderly consumers were attracted to online purchase, which allows more consumers to enjoy the convenient online shopping.

That’s all the information I’d like to share with you. Now I’d like to answer your questions.

CCTV4: US officials say that the White House believes that its strategy to play tough on China in trade is successful and is planning to ratchet up pressure on China. USTR Lighthizer will detail the list of USD 100 billion worth of Chinese imports subject to a tariff of 25% as early as this week. The previous list didn’t include consumer goods such as apparel, cell phones and footwear. If the tariff scope widens, consumer goods will surely be included. What’s MOFCOM’s response?

Gao Feng: We’ve noted related reporting. Hopefully the US won’t misjudge the situation. China’s committed to advancing reform and opening up. It’s also determined and confident about fighting unilateralism and trade protectionism. As you mentioned, far from protecting the interests of US workers, trade war will hurt the interests of average US consumers and the common development of economies around the world. We don’t want an escalation in China-US trade frictions. Having said that, China is prepared for any possible fallout. If the US persists in going further down the wrong path, we’ll fight resolutely till the end. Thank you.

Economic Daily: I have three questions. First, on Apr.17th, both the US and UK issued bans on ZTE. What’s MOFCOM’s comment? Second, following the ZTE ban, it’s reported that the US might forbid Alibaba to provide cloud computing service in the US or obstruct its business expansion in the US until China lifts its restrictions on US companies. What’s MOFCOM’s response? Third, MOFCOM announced anti-dumping measures on US sorghum on the afternoon of the same day. Is this a hit-back at the US?

Gao Feng: With respect to the ZTE case, we’ve made our stance clear. I’d like to reiterate that China will follow the situation closely and is ready to take necessary measures anytime to protect the rights of Chinese companies.

At the same time, we’ve also noted that the US action has caused broad market concern about US trade and investment environment. The US action targets China in appearance, but will hurt the US itself in the end. It will not only cost the US tens of thousands of jobs, but also affect thousands of related US companies. More importantly, this will undermine the confidence of the international community in the stability of US investment and business environment. It’s hoped that the US will not fancy itself smart, or it’ll only reap what it has sown.

As for the sorghum anti-dumping case, it’s an isolated trade remedy case whose investigation and determination are in strict compliance with WTO rules and Chinese law. Thank you.

CRI: The Department of Commerce of the US announced anti-dumping and anti-subsidy measures against steel wheels made in China. On the same day, the USDOC made a preliminary determination that the common alloy aluminum sheets imported from China had been subsidized. What’s MOFCOM’s response? Besides, what shall we make of the frequent trade remedy investigations between China and the US?

Gao Feng: We’ve noticed that this year the US has launched five AD-CVD investigations on Chinese products, which is a big increase year-on-year. Three of the five investigated products are steel or steel-ware products. According to US statistics, 223 of the US trade remedy measures in force target steel or steel-ware products, accounting for over 50% of total US trade remedy measures.

We don’t want to see WTO trade remedy measures abused by a certain member, and are even more against turning trade remedies into tools of trade protectionism. The excessive remedy for certain industries is no fundamental way to maintain industrial prosperity. We urge the US to get back on the right track of win-win international cooperation, so as to promote the prosperity and stability of global trade and genuinely grow domestic industries through cooperation. Thank you.

Reuters: First question, China’s action against US sorghum will also have a negative impact on Chinese citizens and companies. How will China deal with this? Second question, in view of US measures against ZTE and its like, one voice argues that China has underestimated President Trump’s resolve to act on trade with China. What’s MOFCOM’s response?

Gao Feng: To your first question, I understand the measures announced by China you mentioned refer to the countermeasures China had to take after the unilateral announcement of the US to impose tariffs on Chinese goods based on its Section 301 investigation. We’ve made careful assessment. The overall impact on China is only moderate. Take grains as an example. China itself is a major producer of grains with output rising on the whole. From 2004 to 2015, China’s output increased for 12 years in a row, with 2016 and 2017 posting historical highs of over 600 million tons. According to statistics, the wheat and corn, among others China imports from the US account for less than 2% of domestic consumption, which is mainly purposed to enrich varieties. So the impact of the tariffs on domestic consumption is insignificant. As for the potential negative impact, we’re fully prepared. We have the means, ways and capability to meet the challenges of trade frictions.

With regard to your second question, we hope the US will not underestimate China’s resolve. If it wishes to contain China’s development and force China to compromise through unilateralism and trade protectionism, even at the expense of Chinese and US businesses, it’ll be a miscalculation. China stands by its determination and confidence to steadfastly defend the interests of the country and the people. We will fight resolutely. Thank you.

Phoenix TV：We follow both China-US trade and China’s internal issues. Export in March was not satisfactory enough. It was a negative growth and registered trade deficit for the first time since the February last year. What is your take of this? Apart from seasonal factors, does it also reflect the uncertainty of export and what will the future trend be? What is the largest source of deficit and is it related to China-US trade frictions? We know that China is expanding opening up, increasing imports and opening market. Will deficit be a norm or increasingly tolerated?

Gao Feng: Like what you said, China’s export indeed fluctuated this March. This March, China’s export was RMB 1.11 trillion, down by 9.8% year-on-year; the import was RMB 1.14 trillion, up by 5.9% year-on-year, with a trade deficit of RMB 29.78 billion. This was mainly influenced by the Spring Festival.

Influenced by the Spring Festival, companies would usually make concentrated efforts for export before the vacation. The purchase and import of raw material may start before the vacation, while production and export will gradually go back to normal after the fifteenth day of the first month of Lunar Year after workers return to their posts. This is the often cited pattern: people will work against the clock to export before the vacation; import will recover first after the vacation; and export will gradually follow. Based on historical figures, from 2010 to 2018, seven years witnessed trade deficit in a single month of February or March, with the Spring Festival as the main reason.

In this year, the sustained recovery of the world economy has gained momentum. According to IMF estimates, the world economy will grow by 3.9% in 2018, 0.2 percentage point higher than that of 2017 and a new high since 2012. The latest report just released by the WTO estimates that global trade in goods will grow by 4.4% in 2018. It is fair to say that the demand in the international market is generally on the rise. At the same time, the progress has been achieved and stability ensured in economic development and this trend is further strengthened. As the supply-side structural reform deepens, the internal impetus for China’s foreign trade becomes stronger. Therefore, in general, China’s foreign trade still registers a stable and good performance.

Of course, like what you said, a few countries only care for their own interests and pursue unilateralism and trade protectionism, indeed bringing uncertainty to international trade and adverse impact on business expectations and damaging the multilateral trading system, which promoted common development of economies after the war. This is a common challenge shared by all economies this year.

President Xi Jinping pointed out at the just concluded Boao Forum that, with the future in mind, we need to engage in cooperation for win-win results. China will continue to open up markets and take the initiative to expand imports. It is necessary for the common development of China and economies of the world. It is also a key move for the Chinese people’s pursuit of high quality of life. China never intentionally seeks trade surplus as both deficit and surplus are the result of the market. We will further promote sustainable, healthy and balanced development of foreign trade and build China into a trader of quality. Thank you.

RIA Novosti: The US Treasury recently announced that the US will impose sanctions on 24 individuals and 14 companies of Russia. The US sanctions have already influenced the normal operation of those Russian companies. Is China worried that the US sanctions on Russia will influence trade and cooperation between China and Russia? What are China’s expectations for trade growth between China and Russia?

Gao Feng: We have noticed the relevant moves by the US. China always opposes the willful practice of unilateral sanctions in international relations. We hope that Russia and the US will appropriately resolve differences on the basis of equality and mutual respect.

The mature and stable relations between China and Russia will not be influenced by the external environment. In recent years, the bilateral trade and economic relations between China and Russia developed faster, as trade volume rapidly recovered, investment cooperation sped up and cooperation on large strategic projects gained progress. In 2017, the trade between China and Russia reached USD 84.07 billion, up by 20.8% year-on-year. China has remained the largest trading partner for Russia for eight consecutive years. The bilateral trade between China and Russia enjoys a good start this year, as the bilateral trade grew by nearly 30% year-on-year in the first quarter and may exceed USD 100 billion this year.

In the next step, China will work with Russia to take strong measures, optimize bilateral trade structure and expand trade of mechanical and hi-tech products; we will also mutually liberalize market access for agricultural produce and develop new trade modes, such as cross-border e-commerce; we will deepen cooperation in standard, measurement, inspection, quarantine, custom clearance and transportation to improve bilateral trade facilitation.

In addition, China will host the first China International Import Expo this November and Russia is enthusiastic about joining the expo. China and Russia will also host the 5th China-Russia Expo this July in Yekaterinburg, Russia. We stand ready to work with Russia to make these events a success, expand trade and turnover and build a good platform for cooperation between the localities and companies of the two countries. Thank you.

CBN: A question on anti-monopoly issues. The Anti-monopoly Bureau recently announced the progress of some cases under concentration of undertakings reviews in the first quarter. What about the progress of the anti-monopoly investigation on Qualcomm’s NXP deal? Is it true that China is the only region in the world that has not arrived at a conclusion over this case? What is the key reason why it takes longer to review the Qualcomm case than the other cases? Will MOFCOM’s investigation be influenced by President Trump’s move to block Broadcom’s purchase of Qualcomm? As the US Department of Commerce is penalizing ZTE, there is public opinion that China may use Qualcomm’s NXP deal as a chip to fight back. Will this also be influenced by the restructuring of the Anti-monopoly Bureau of MOFCOM?

Gao Feng: At present, based on the provisions of the Anti-monopoly Law, MOFCOM is investigating Qualcomm’s NXP deal according to law. The acquisition might have a profound impact on the industry and compromise market competition. It takes a lot of time for regulators to investigate, obtain evidence and analyze the case. MOFCOM has raised competition concerns to Qualcomm over this case and consulted with Qualcomm on reducing adverse effects of the acquisition. Regarding the remedy proposals raised by Qualcomm, the initial feedback from the market testing conducted by investigators have shown that the company's proposal might not fully address relevant market competition concerns.

On April 16, Qualcomm withdrew its request for regulatory approval from MOFCOM and will refile the application. We will conduct an open, fair and just anti-monopoly investigation on the case based on the relevant provisions of the Anti-monopoly Law.

As for the institutional reform you mentioned, MOFCOM will firmly implement the decisions of the CPC Central Committee and guarantee that anti-monopoly investigations will be conducted orderly according to laws in this process. Thank you.

21st Century Economic Report: On April 16, China and Japan held the high-level economic dialogue for the first time in eight years. What consensus has been achieved at the meeting on the trade and economic front?

Gao Feng: The China-Japan High-level Economic Dialogue is an important mechanism for strengthening comprehensive and macro-level exchanges on economic cooperation. The resumption of the mechanism after an eight-year hiatus can help the two countries have more positive interaction, add new impetus to the two economies, drive the process of improving China-Japan relations forward and produce trade and economic outcomes for high-level exchanges.

In the fourth round of the Dialogue, the two sides had in-depth discussion over and reached consensus on four topics, which are macroeconomic policy, Sino-Japan economic cooperation and exchanges, triangular cooperation involving China, Japan and a third party, and East Asian economic integration and multilateral cooperation.

The Dialogue reviewed achievements of economic cooperation between the two countries and took a holistic and long-term view in discussing cooperation going forward. The two sides agreed that as the world’s second and third largest economies, China and Japan will promote trade and investment liberalization and facilitation, uphold the multilateral trading system, push forward economic globalization and do their bit for regional and global economic growth and addressing global challenges. China and Japan will further expand mutually beneficial and practical cooperation, work together on such areas as energy-saving and environmental protection, scientific and technological innovation, high-end manufacturing, fiscal and financial sector, sharing economy, medical care and elderly care and upgrade the economic relations between the two sides.

Triangular cooperation is also high on the Dialogue agenda. At different linkages of the global value chains, China and Japan have economic structures that have a lot to offer each other. Triangular cooperation not only serves the interest of the two economies, but also brings benefits to regional and global economy. In order to implement the important consensus reached by the leaders, the two sides will explore establishment of a platform for exchanges in both private and public channels so that business communities can leverage the complementarity and their competitive edges, speed up communication for cooperation programs and strive for progress and outcomes as soon as possible.

Not long ago at the Boao Forum for Asia, President Xi Jinping announced new major measures for further opening up and stressed that China will not close its door but only open it even wider. This will bring along new opportunities of trade and economic cooperation between China and Japan. This year marks the 40th anniversary of the reform and opening up and of the signing of Treaty of Peace and Friendship between China and Japan. Going forward, China is willing to work together with Japan to put into practice leaders’ consensus, focus on priority areas, step up practical cooperation and keep injecting new impetus into bilateral trade and economic relations and create positive energy for the overall bilateral relationship. Thank you.

Central Radio and Television Networks: We’ve taken note of the evening news yesterday that according to an available WTO document, the US expressed willingness to consult with China over tariff measures based on Section 232 and 301 investigations within the WTO dispute settlement mechanism. Is that true? Analysts said it indicated the US’s attitude has softened. What do you make of it? Will China and the US enter into negotiations?

Gao Feng: We’ve noticed relevant reporting. Some interpretations do not accord with the facts. The US, based on its domestic laws, initiated Section 232 investigations and slapped tariffs on Chinese products and then Section 301 investigations and announced a proposed list of Chinese goods subject to tariffs. These actions seriously deviate from the spirit and principle of the WTO. China sued the US’ tariff proposals based on Section 301 and 232 investigations to the WTO on April 4 and 5 respectively under the WTO dispute settlement mechanism. Consultation is a necessary procedure in dispute settlement. According to the dispute settlement process, the US should give response within 10 days from the date it received China’s request for consultations.

On April 13, the US WTO ambassador wrote to his Chinese counterpart saying the US is willing to consult with China over the aforementioned cases. This action simply meets the procedural requirements for China’s request under the WTO dispute settlement mechanism. China will follow the DS procedure and move forward in the suit against the US.

I want to be clear that the US announcing the suggested list of Chinese products subject to tariffs based on its Section 301 in complete disregard of multilateral rules is typical unilateralism and trade protectionism. The two sides have not conducted any bilateral negotiation on the Section 301 investigations and the US tariff list. Thank you.

National Business Daily: We’ve noted that at a meeting with Hiroshige Seko, Japan’s Minister of Economy, Trade and Industry on April 15, Minister Zhong Shan mentioned the RCEP negotiations will speed up and hopefully make substantial progress this year. Could you please brief us on the current stage of negotiations? Does it have something to do with the US’ plan to rejoin the TPP?

Gao Feng: Since the beginning of this year, RCEP negotiating parties have followed instructions of the first summit last November, stepped up efforts and actively pushed forward the process. On March 3, ministers expressed appreciation for the progress in market access and rules and reaffirmed their commitments to work together to strive for an early conclusion of the negotiations at a gathering in Singapore.

RCEP negotiations are moving forward smoothly. Substantial offers and requests have been submitted on core sectors including goods, services and investment. All parties have shown a positive attitude towards negotiations. The pace of talks is picking up. The 22nd round of negotiations will take place in Singapore from April 28 to May 8. China will, as always, respect and support the core status of ASEAN and play a constructive role in the negotiations.

As for the relation between the RCEP and TPP, they belong to different legal systems. Some parties are involved in both negotiations but there is no connection between the two. All the 16 negotiating parties of the RCEP hope to promote trade and investment liberalization and facilitation of this region and push for regional economic integration and economic globalization through the agreement. China will work with all parties to get on with negotiations, strive for more progress and achieve a modern, comprehensive, high-quality and reciprocal agreement as soon as possible. Thank you.

Due to time restraint, last question please.

Shanghai Securities News: From tariff cut to increasing import, an array of policies show the country is stepping up efforts to expand domestic demand. Mr. Spokesman, what measures will MOFCOM take in this regard? It is reported that a comprehensive consumption upgrade program has been launched. How is it progressing?

Gao Feng: As you said, upgrading consumption is a very important part of expanding domestic demand. Since the start of this year, MOFCOM has been worked on a comprehensive action plan to upgrade consumption in six aspects. First, we have been building convenient consumption services centers in rural and urban areas to improve overall services for people’s life in the communities and facilitate convenient consumption. Second, we give business circles a leading role to play in driving consumption upgrade and encourage brick-and-mortar retailers to innovate and transform. Third, platforms and cities featuring international consumption are built to bring in quality and special foreign goods and services and attract overseas spending back to China. Fourth, we advocate green consumption and put in place a spending model and life style that is green, low-carbon, diligent and frugal. Fourth, we form a modern supply chain, reduce cost and enhance efficiency of logistics, and elevate the level of IT application, standardization and intensiveness of circulation. Sixth, we create a safe environment for consumers, strengthen credit building in commercial sector, advance the development of traceability system in logistics and firmly combat infringement and counterfeiting in order to provide a safe and reassuring environment for consumers.

MOFCOM will soon hold a meeting to give a comprehensive plan for further upgrading consumption. Thank you.

That is all for today’s conference. Thank you.