[Introduction] Will the US's "containment" and "blockade" of Chinese companies and industries be "effective"? How do you view the impact of the new round of tariffs on China's manufacturing industry? Wang Zhijun, Vice Minister of the Ministry of Industry and Information Technology, recently accepted a joint interview with news media.

Recently, the United States started to impose a 25% tariff on approximately $200 billion worth of Chinese goods imported into the United States, and under the guise of "national security", it suddenly issued a restrictive trade order against Chinese companies such as Huawei. This series of actions shocked the world.

Will the US's "containment" and "blockade" of Chinese companies and industries be "effective"? How do you view the impact of the new round of tariffs on my country's manufacturing industry? Wang Zhijun, Vice Minister of the Ministry of Industry and Information Technology, recently accepted a joint interview with news media.

The impact of additional tariffs on my country's manufacturing industry is generally controllable

Reporter: What impact will the new round of tariffs imposed by the United States have on my country's manufacturing industry?

Wang Zhijun: According to statistics, about $200 billion worth of exports to the United States accounted for 41.8% of China's exports to the United States in 2018, but only 8% of China's total exports. To a certain extent, the imposition of tariffs will lead to increased operating costs, reduced competitiveness and fewer orders for enterprises, but the impact is generally controllable at present.

It should also be noted that among the companies affected by the additional tariffs of about US$200 billion, foreign-funded companies account for about 50%. Many of these foreign-funded companies are American companies, and a large part of the market for their products is in the United States. It can be said that the US's imposition of additional tariffs not only affects the interests of Chinese companies and consumers, but also harms the interests of American companies and consumers, and even endangers the security of the global industrial chain and supply chain.

Wang Zhijun, Vice Minister of MIIT (MIIT)

Reporter: The US said that imposing additional tariffs on Chinese goods will cause some companies to relocate from China to other Asian countries, and some American companies will move back to the US. What do you think? How will China deal with the negative impact of additional tariffs on the industrial chain?

Wang Zhijun: At present, some companies have indeed relocated or moved from China to other regions. Some of them made this choice due to rising labor costs, while others were due to considerations of the company's global business layout. We have always respected the independent choices of companies and encouraged them to make decisions based on their own circumstances.

It should be noted that China has formed a relatively complete infrastructure and supporting industrial system, the business environment is constantly improving, new technologies and new businesses are being actively applied, the consumer market is upgrading, and the prospects are broad. It remains the most attractive investment destination in the world.

From January to April this year, the actual utilization of foreign capital in my country's manufacturing industry increased by 11.4% year-on-year. Some companies, including Tesla and BASF, are increasing their investment in my country. This fully demonstrates the firm confidence of foreign investors in my country's economy. my country, as always, welcomes foreign companies to invest in China, and we will continue to provide foreign investors with a more stable, fair, transparent and predictable investment environment.

In the next step, we will further implement the "Six Stability" policy to help companies solve the difficulties they face in the short term; further promote all-round and high-level opening up of the manufacturing industry, continue to deepen the "deregulation, decontrol and service" reform, and strive to optimize the business environment; further promote industrial transformation and upgrading, increase the intensity of technological transformation of traditional industries, vigorously cultivate and strengthen emerging industries, and promote high-quality economic development.

Chip industry achieves breakthroughs and will adhere to opportunity sharing, open cooperation

Reporter: How is the development of my country's chip industry? What impact will the relevant US measures have on China's chip and downstream application industries?

Wang Zhijun: Since 2012, China's integrated circuit industry has grown rapidly at an average annual rate of more than 20%. In 2018, the industry's sales revenue reached 653.2 billion yuan, and its technological level has continued to improve.

At present, my country's chip design level has been improved by more than 3 generations. HiSilicon Kirin 980 mobile phone chip adopts the world's most advanced 7-nanometer process; the manufacturing process has been improved by 1.5 generations, 32/28 nanometer processes have achieved large-scale mass production, and 16/14 nanometer processes have entered the customer introduction stage; storage chips have been initially laid out, and 64-layer 3D NAND flash memory chips are expected to be mass-produced in the second half of this year; the scale of advanced packaging and testing accounts for about 30% of the packaging and testing industry; breakthroughs have been made in high-end equipment such as etching machines and key materials such as targets. Of course, compared with the international advanced level, my country's overall design, manufacturing, testing and related equipment and raw material production of integrated circuits still have a considerable gap.

The integrated circuit industry is a highly internationalized industry, and no country can develop the integrated circuit industry independently. The United States has recently taken a series of measures to grossly interfere with the normal order of the international integrated circuit industry, disrupt the normal international division of labor system, reduce the efficiency of resource allocation and the speed of industrial development, and undermine the stable development of the world's integrated circuit industry. These measures are a great irony to its claim to be a market economy system. We once again urge the United States to stop its unreasonable suppression of Chinese companies on the grounds of security risks, and to restore a fair and just environment for Chinese companies to carry out normal investment, business and other activities in the world, including the United States.

In the next step, my country will integrate into the global integrated circuit industry ecosystem on a larger scale and at a deeper level. Adhere to open, innovative and cooperative development, and promote open innovation and development in all links of the industrial chain. Adhere to optimizing the environment, sharing opportunities, treating domestic and foreign investment equally, strengthen intellectual property protection, and share the development opportunities brought by the Chinese market with the global integrated circuit industry.

my country's industry is stable and improving, with high-end growth being faster

Reporter: What is the current situation of my country's industrial operation and what are its characteristics?

Wang Zhijun: As the central government's timely and appropriate strengthening of counter-cyclical regulation and the "six stability" measures have shown results, monetary credit and social financing scale have maintained reasonable growth, and the implementation of tax and fee reduction policies has greatly enhanced the confidence of enterprises. The industrial economy has maintained an overall stable and steady trend with progress. The main indicators have remained in a reasonable range, market expectations have improved significantly, and a smooth start has been achieved.

In terms of growth rate, industrial production is generally stable. Although the added value of industrial enterprises above designated size increased by 5.4% year-on-year in April, it dropped significantly compared with March. The main reason is that the value-added tax rate for manufacturing was lowered in April. In order to fully enjoy the deduction policy, some enterprises prepared stocks and increased production in March in advance. Judging from the situation in the first four months, the growth rate of added value of industrial enterprises above designated size was higher than the expected industrial growth target for the whole year.

From a structural perspective, the growth of medium and high-end manufacturing industries has accelerated. In April, high-tech manufacturing grew by 11.2%, and investment in high-tech manufacturing grew by 11.4%. The output of new industrial products with high technological content and high added value continued to grow rapidly. The output growth rates of products such as 3D printing equipment and mobile communication base station equipment remained above 30%.

From a regional perspective, the central region maintained a relatively fast growth. In April, the industrial added value of the central region increased by 7.7% year-on-year, 0.2 percentage points faster than the same period last year, and 2.3 percentage points higher than the overall industry. Among them, the growth rates of industrial added value in Hubei, Jiangxi and Hunan reached 9.6%, 9.5% and 8.5% respectively.

From the perspective of expectations, the confidence of enterprises in development continues to improve. The policy dividends are gradually released by fully implementing preferential tax reductions and exemptions for small and micro enterprises, significantly relaxing the preferential income tax standards for small and micro enterprises and raising the threshold for value-added tax, clearing the accounts owed to private enterprises and small and medium-sized enterprises. The PMI in April has been in the expansion range for two consecutive months, and enterprises are generally optimistic about the future market prospects.

In the next step, we will unswervingly advance supply-side structural reform, promote the implementation of tax and fee reduction measures, optimize the supply structure to guide the release of domestic demand growth potential, accelerate the cultivation and expansion of new momentum and high-quality enterprises, and achieve stable operation of the industrial economy and high-quality development of the manufacturing industry.

Unswervingly expand the opening up of the manufacturing industry and strengthen the research and development of core technologies

Reporter: In the industrial field, what measures will my country take to continue to expand opening up?

Wang Zhijun: In accordance with the decisions and arrangements of the CPC Central Committee, the pace of opening up the manufacturing industry has been accelerating. The two negative lists for foreign investment access revised and issued in 2018 opened up major equipment such as aircraft and ships, clarified the timetable for opening up automobiles, and removed restrictions on foreign investment in the smelting of rare earth and other mineral resources. The general manufacturing industry has been fully opened up.

Next, we will continue to promote and improve the level of opening up in the industrial sector. First, we will fully implement the pre-entry national treatment plus negative list management system, and implement the opening-up policies in the fields of aircraft, ships, automobiles, telecommunications, etc.; second, we will promote the revision of the negative list for foreign investment access in the whole country and the free trade pilot zones, and further reduce the items in the negative list; third, we will expand the areas and scope of encouraging foreign investment, and promote the accelerated implementation of major foreign investment projects; fourth, we will adhere to the principle of "equal treatment" for domestic and foreign-funded enterprises, deepen the "delegation, regulation and service" reform, and comprehensively clean up and cancel the access restrictions on foreign investment in areas outside the negative list, and build a market environment of "consistency inside and outside" and fair competition.

Reporter: What specific measures will the Ministry of Industry and Information Technology introduce to accelerate the development of core manufacturing technologies?

Wang Zhijun: The current Sino-US economic and trade friction has made us more aware that we must persevere in solving the problem of "stuck neck" in key core technologies in China. The Ministry of Industry and Information Technology will strengthen policy coordination with relevant departments, actively give play to the main role of enterprises, and vigorously promote the research and development of core technologies in key areas.

First, we must adhere to the combination of market mechanisms and government roles, give play to the decisive role of the market in the direction of technological research and development, route selection, and the allocation of various types of innovation factors, and at the same time guide more innovation factors to be invested in core technology research, accelerate the cultivation of a group of highly competitive leading enterprises and "specialized, precise, innovative and cutting-edge" small and medium-sized enterprises, and vigorously create a fair and competitive market environment.

Second, we will adhere to the close integration of production, learning, research and application, and build an ecological system of collaborative innovation across the entire industry chain. We will place the improvement of original innovation capabilities in a more prominent position, increase the central government's stable support for basic research, establish a consortium of production, learning, research and application, promote institutional and mechanism innovation, and carry out core technology research.

Third, we will adhere to the combination of deepening open cooperation and relying on self-reliance, and make better use of both international and domestic resources to enhance scientific and technological innovation. We will continue to expand the scope, level and mode of mutually beneficial cooperation, and integrate into the global industrial chain and innovation chain at a higher level. At the same time, we will do a good job in self-reliance and independent research and development, and strive to promote the solution of major technical problems that restrict the development of our country's industry.

[Source: Science and Technology Daily] Editor: Wei Dongyu