Full transcript of policy briefing of the State Council on Jan 16, 2015

Zhong Shan:

The second question is on trade friction. In recent years, China has been the country most affected by trade friction, as well as "transitional product-specific safeguard mechanisms" and "anti-dumping and countervailing". The stand of the Chinese government is against trade protectionism. We advocate resolving trade disputes through negotiations and consultations.

You asked how we can solve the problem in our trade surplus. I think we attach great importance to the trade surplus and deficit problems, and we will carefully study the matter.

But there is one thing I'd like to make clear to the news media: China never pursues a trade surplus on purpose. The Chinese government encourages imports. To this end, last year and the year before, we made policies that encourage imports.

I believe that, through joint efforts, the trade imbalance will not get worse. It will gradually reach a balance. The trade surplus will not go up as you indicated. I believe it will be more balanced.

As for trade frictions, I believe they will not decrease in the future due to any side's efforts. On the contrary, all sorts of trade protectionism will increase as the economy grows and competitiveness improves.

But we still hope to have, with an open mind, more communication and cooperation with other countries. I believe that healthy and sustainable trade is in line with our common interests. Thank you!

Economic Daily:

The State Council Executive Meeting this week announced that an investment fund will be set up to support startups in emerging industries. My question is, how can the investment fund be coordinated with private funds more properly and play a strategic role, to make full use of innovation-driven power in economic development?

Ge Wei:

The State Council Executive Meeting on Jan 14 decided to establish an investment fund to support startups in emerging industries. This differs from the past practice in the following aspects:

First and foremost, the major measure supporting the development of emerging industries in the past used to be administrative grants. Now it turns to market mechanisms. Administrative grants need enterprises from emerging industries to declare projects and then funds are allocated through various administration levels. In the market mechanisms, part of the capital will be put into some fund companies, and these fund companies will decide whether to grant the funds or not depending on the development and profitability of different projects. Fund companies seek profits while administrative grants do not. Market measures will produce more profits. The recollected capital can be used continuously to support emerging industries.

Second, the specific administrative capital granted by the government in the past was scattered. This time we integrate the capital and use it efficiently.

Third, the fund will play an important role as a driving role. This time the government has decided to invest 40 billion yuan ($6.45 billion) in various related funds, to stimulate other private funds and institutional investors. If the government invests 40 billion yuan, it will be magnified in a 1:5 ratio, which means other private funds or companies can invest 200 billion yuan. With 200 billion yuan capital invested, these emerging industries can be activated. These enterprises can then get one trillion yuan through bank loans and investment from other institutions. So the government fund will play the role as a driving force. It will also play an active driving role in mass entrepreneurship and innovation.

Thank you.