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The city’s efforts to promote construction of an international trade center

May 17, 2017

The Shanghai Municipal Government’s Information Office held a press conference on April 12 on the city’s efforts to promote construction of an international trade center.

Shang Yuying, director, Shanghai Commerce Commission
Wu Xingbao, deputy director, Shanghai Commerce Commission
Shen Weihua, deputy director, Shanghai Commerce Commission

Xinhua News Agency: Foreign trade has increased noticeably this year. Could you reveal some highlights of the foreign trade increase in detail? What new measures will Shanghai take to innovate in foreign trade restructuring?

Shen Weihua: Shanghai’s foreign trade is carried out in three fields; port trade being one of them. Shanghai’s port trade volume has generally been above US$1 trillion each year in recent years, accounting for about 28 percent of the national total. Shanghai has become the largest international trading port city in the world.

The other two fields are trade from Shanghai Customs and the city’s trade. The volume of Shanghai’s trade has been maintained t above US$440 billion each year in recent years, making Shanghai the largest international trading city in China. Shanghai’s foreign trade is stabilizing from the second half of last year. Customs statistics of the previous two months reveal that total volume of imports and exports in the previous two months reached 480.80 billion yuan, up 23 percent. Imports rose 31.6 percent while exports grew 12.5 percent. The two months of import and export volume represented 12.4 percent of the total national import and export volume in the same time period. The customs has not released statistics for the first quarter of this year but general information suggests that Shanghai’s trade volume in the first quarter exceeded 750 billion yuan, a 20 percent increase year on year, accounting for 12.5 percent of the total market share in China. The Shanghai Municipal Government has put foreign trade development as top priority in recent years. The municipality’s foreign trade development has played a great role in promoting the city’s industries, employment, in opening up the economy and in restructuring and upgrading relevant industries. The municipality’s foreign trade development also plays a key role in GDP growth. The Shanghai government has launched a set of policies to promote and support foreign trade: Shanghai was the first Chinese city to replace processing trade approval with processing trade registry; Shanghai has also released an action plan to develop cross-border e-commerce comprehensive pilot zones for new types of trade; Shanghai also released a set of guidelines to implement the central government’s documents for stabilizing foreign trade. These policies have helped the municipality to adopt the central government’s policies and further helped the city’s foreign trade to stabilize with joint efforts from all parties. Shanghai’s new measures to innovate in foreign trade restructuring will include the following:

Shanghai will restructure and upgrade industries and technologies relevant to foreign trade and following the need of its efforts to become a global innovation center and industry upgrades. Shanghai has eight national and municipal export bases in fields such as high-end automobile-making, textile and garments, light industry, chemical industry, biomedicine and shipbuilding. The eight bases’ total exports now account for about 40 percent of local exports. The city will increase research, development and investment in advanced technologies, key equipment and key spare parts as well as import technologies and encourage exports to further improve international competitiveness of key industries in Shanghai. These key industries’ exports will rise and their share in the export market will also increase.

Second, build Shanghai companies’ own brands and make these companies more influential through intellectual property rights efforts such as promoting unique trademarks. This also follows a national strategy to build brands during foreign trade. Companies in the manufacturing industry and the garment industry have expanded their exports and use ways such as brand-building, brand-nurturing or mergers to boost the global influence of Shanghai’s foreign trade companies. Vice Premier Wang Yang did a field study in July last year; he especially studied some companies in Shanghai which mainly export consumer goods. Wang pointed out that he could see the trend of foreign trade through the field study wherein Shanghai’s foreign trade was transformed into brand and technology export. Wang continued that the Chinese government was building overseas platforms to encourage Shanghai companies to participate in overseas trade fairs and set up international marketing networks. These efforts help these companies to further improve their internationalization levels.

Shanghai’s foreign trade development has received support from all fields. Customs, inspection and quarantine authorities, foreign exchange authorities, tax authorities and commerce authorities have all promoted convenience in trade and set up a high-standard supervision system for convenient trade. Average customs clearance time for imports has been reduced to 29.5 hours and average clearance time for exports has been cut to 2 hours. Inspection and quarantine authorities have 10 reform policies: one of them is testing airlifted samples from a shipment to determine results along with considering its company’s commitments: companies importing luxury bags will first airlift cloth samples to Shanghai for testing and once the samples clear testing the shipment of bags will be let go. Inspection and quarantine authorities also launched China Compulsory Certification approval exemption for importers: If they pass an approval once, they will enjoy a three-year exemption. This policy can reduce operation costs for honest importers and each year about 10 million yuan has been saved for importers. All these measures have benefited a number of Shanghai companies. Shanghai’s export tax-refund volume reached 90 billion yuan, raising the actual tax refunding rate by 2 percent. Foreign exchange authorities also have carried out honest administration on 158 multinational corporations in Shanghai, which improved MNCs’ competitiveness and raised trade convenience levels noticeably. These measures have played a major role in stabilizing, restructuring, upgrading and optimizing the city’s foreign trade industry.

The Shanghai government will make every effort on “key companies, key brands and key new-type trade enterprises and service firms” to help foreign trade companies grow and optimize their scale.

Oriental Financial Pudong Channel: Import tariff and consumption tax were adjusted last year. Have these adjustments affected the market of daily consumer goods such as imported food and imported cosmetics?

Shen Weihuai: Residents are concerned about consumer goods’ imports for the following reasons: First, as the economy grows and people’s lifestyle changes, demand for consumer goods such as garments, cosmetics and milk powder has gradually increased. Second, as social and economic development goes further, consumer demand has been upgrading and has become much more personalized and diversified.

For various reasons, the central government adjusted the import tariffs and consumption tax on consumer goods. These adjustments are in the following fields: first, the tariff has been lowered. The central government lowered import tariffs on garments, cosmetics and daily necessities from June 1, 2015. These tariffs were on average cut by half. Second, the Ministry of Finance ordered the lowering of consumption tax for cosmetics from October 1, 2016. Some luxury cosmetics’ consumption tax rate has been reduced from 30 percent to 15 percent. Third, procedures have been streamlined and supervision has been enhanced. The Shanghai government launched the policies to carry out a pilot program in Pudong New Area to replace non-special purpose cosmetics import approval with registry. Companies registered in Pudong are allowed from March 1 to make registry for first-time import of non-special purpose cosmetics from ports in Pudong instead of the previous approval procedures. Cross-border e-commerce companies have also benefited from similar policies in Shanghai. These measures designed by the central government have successfully promoted the import of consumer goods. After adoption of these measures, consumer goods imported from ports in Shanghai represented one third of the total national consumer goods imports. Cosmetics imported from ports in Shanghai represented half of the total national cosmetics imports. These measures not only optimized product structures in Shanghai but also improved the quality of imported products. Shanghai imported 14.6 billion yuan of cosmetics in 2016, an increase of about 40 percent year on year. Shanghai imported 2.2 billion yuan of cosmetics in the first two months of this year, higher than the average import growth rate in all fields of the city. These measures have played a positive role in meeting people’s increasingly diversified and personalized consumer demands.

Jiefang Daily: Companies in Shanghai have benefited from many policies in utilizing the platform of the China (Shanghai) Pilot Free Trade Zone to invest overseas. Could you provide us with some relevant statistics and cases?

Shang Yuying: The China (Shanghai) Pilot Free Trade Zone first reformed the overseas investment approval system to offer convenience to companies’ efforts to invest overseas. The pilot zone first adopted the policies on financing overseas investment to support domestic companies’ allocation of global resources and improve their international competitiveness. In just two years, the FTZ’s overseas investment accounted for 70 percent of the total in China. The zone’s overseas investment has become domestic firms’ bridgehead in overseas investment to some extent. Meanwhile, Shanghai companies’ investment in “Belt and Road” countries also accounted for a higher percentage in the city’s total overseas investment compared with before. Shanghai companies have more prominent achievements in contracting projects in “Belt and Road” countries and regions. Shanghai companies signed US$8.9 billion worth of contract agreements with “Belt and Road” countries and regions in 2016, an increase of 66.5 percent year on year. The total represented 75 percent of the city’s total worth of contracting agreements with foreign countries. Shanghai companies have completed about US$4 billion of operation revenue in contracting projects in “Belt and Road” countries in the last two years, representing 60 percent of the city’s total revenue of contracting projects in foreign countries. These data show that Shanghai companies have made significant achievements in direct overseas investment and contracting projects abroad.

The central government will deepen relevant measures to promote pilot zones to serve the national “Belt and Road” initiative. Measures will include further deepening the overseas investment cooperation management system to offer more convenience to companies to invest overseas.

Shanghai will further improve the public service system for overseas investment, which consists of talent services, IT services, risk control services, financing services and investment promotion. The government, through the purchase of services, will offer training for companies: for example, it will invite internationally-renowned professional institutions such as Ernest & Young to offer training. The training really meets the companies’ requirements and has been welcomed by companies.

Third, Shanghai will further improve the overseas investment supervision system, which puts risk control as the bottom line. We will enhance coordination with all supervision departments such as foreign exchange authorities and financial authorities to prevent risks. No effort will be spared to support real highly-efficient and high quality overseas investments and make these investment activities more convenient.

Fourth, we will strive to support or continue to encourage multiple overseas investment ways which focus on global economic element resources allocation. Firms will be particularly supported to use merger and acquisitions to invest in new innovation elements in global science and technology, brands, markets and channels.

Xinmin Evening News: The city will implement 90 projects for business transformation with an investment totaling 79.3 billion yuan. Can you introduce these key projects? Besides, what further measures will the city take to build an international consumer city?

Wu Xingbao: A few years ago, Shanghai began making great efforts in business transformation by actively promoting projects.

After the goal of building an international consumer city was set, the city has shown increasing advantages in commerce. We have several guidelines for stimulating consumption: Firstly, we shall remain innovative. Secondly, we shall continue to improve the consumption level of the city. Thirdly, we will keep up with the rapid changes in consumer demand. Fourthly, we shall set “fast” as our goal. With these guidelines, the city has made great achievements in business transformation last year. Also in the first quarter, the city’s total retail sales of consumer goods is expected to rise 7.8 percent with a yearly goal of 7 percent.

We will promote the development of the following seven dimensions to build an international consumer city: brand clustering, consumer contribution, innovative ways of consumption, leading role of fashion, convenience of consumption and honesty of the market. Shanghai came third in the ranking of international retailers and sixth in the ranking of most attractive retail destinations around the world.

Meanwhile, we will improve three industries in accordance to the characteristics of Shanghai as an international metropolis. Firstly, we will develop the weekend economy by building new scenic spots and new business modes. Secondly, we will further develop the holiday economy by stimulating consumption during national holidays. Thirdly, we will accelerate the development of the moonlight economy. Four or five iconic night markets will be built to meet international standards and various demands of locals and visitors. We are also seeking to transform traditional business by combining commercial goods with service, online mode with offline mode, experiences with retailing as well as brands with scenes.

Next, we will promote development in the fields of diversified consumption, quality consumption as well as consumptions on fashion, information and experiences.

We are now exploring the idea of total amount of social consumption and have set improvements in life service and experiencing consumption as our goals to build an international consumer city. During recent years, Shanghai has built some non-local vegetable production bases. What measures has the city taken to ensure vegetable supply?

Wu Xingbao: About 90 percent of green vegetables are from local production bases. However, the city has seen an increasing percentage of vegetable supply from non-local bases.

Big market, big circulation, large bases, mass cooperation and big data have been characteristics of Shanghai. We have several reasons for building production bases.  Firstly, there are four distinctive seasons in Shanghai. Secondly, we have two slack seasons of local vegetable supply due to the bad weather, including typhoons, high temperatures and rain. It is necessary to establish bases outside the city to ensure the stability of vegetable prices. Goods from production bases will be stuck with a tag of tracing information to ensure food safety. We will also ensure cold-chain preservation during the whole process. Thirdly, goods can be delivered directly from bases to retailers without intermediate links to reduce the cost. Last year, we planned to build production bases in Yunnan, Hainan, Jiangsu and Shandong. We have achieved good results as vegetable prices have remained stable since the Spring Festival this year. Next, we will continue to expand these bases.

Shang Yuyin: To ensure vegetable supply, we established vegetable production bases last year to supply the two wholesale markets of the city: Xijiao International and Shanghai Agricultural Products Wholesale Market. We took into consideration two conditions in choosing the location. Firstly, Shanghai residents prefer leafy greens. Secondly, the production bases of green leafy vegetables should not be far from Shanghai to ensure freshness. For example, we chose Xuzhou as one of the locations. Xuzhou grows good vegetables when Shanghai is in the slack season for vegetable production. Besides, our production bases, including Hainan Chengmai County and Changjiang County, have good and clean soil to grow quality vegetables. We can also enjoy seasonal vegetables from Hainan during winter.

We have also made another achievement. Shanghai has implemented the toughest-ever food safety regulations, including the food tracing system which has been adopted by many production bases. Non-local production bases will be equipped with a monitoring system to supervise the whole process of production and delivery. Meanwhile, products from these bases will have unified packages and QR codes which record relevant tracing information. The new system is under trial at some non-local bases and will be applied to large suppliers. Next, we will keep exploring and gradually improve the system.