Speech by Weng Mengyong, Vice Minister of Communications

Ladies and Gentlemen,

Good morning.

I am very pleased to attend the Press Conference here and grateful for your continued interest in and support for transport industry. Today I would like to introduce to you our plans and policies of water transport. During the first half of this year, the State Council has approved the National Plan for the Layout of Inlands Waterway and Ports, the National Plan for the Layout of Water Traffic Safety Supervision and Rescue System and the Ad hoc Tax-free Registration Policy for the Chinese-owned Vessels Engaged in International Voyage. I think you have got relevant materials and I will here give a brief account.

Firstly, the State Council, in May 2007, approved the National Plan for the Layout of Inlands Waterway and Ports, jointly prepared by the National Development and Reform Commission and the Ministry of Communications. The Plan will serve as a framework document to guide the sound and orderly construction and development of inland water transport in the coming years.

The Plan categorizes inland waterways into two groups, namely high-grade waterways and waterways of other grades; it also divide inland ports into three categories, namely major ports, regionally important ports, and ordinary ports. The Plan, in line with the economic development of China , has given prominence to high-grade inland waterways and major ports. The layout is specified as follows:

There establishes across the country a layout composing of the arteries of Yangtze River, West River, Grand Canal and Yangtze River Delta high-grade waterways network, the Pearl River Delta high-grade waterway network, high-grade waterways of 18 arteries and tributaries (in short referred to as two horizontal, one vertical, two networks, and eighteen lines) and 28 major ports , which will thus form a waterway network with the waterways capable of accommodating vessels above 1,000 tons among all major river systems as the backbone, and an inland port system originating from the regional major cities. According to the Plan, the total length of high-grade inland waterways will reach around 19,000 km , of which the grade-three and above, and grade-four around 14,300 km and 4,800 km respectively.

With the implementation of the Plan, high-grade inland waterways and major ports will cover 20 provinces, regions and municipalities connecting 56 cities of a population of over 500,000 each and 27 class-one national border ports. In so doing, it will effectively link the major resource production and consumption regions, guide and promote the increase of the size of the ships, ship standardization, upgrading and modernization of inland water transport. In addition, it will save land resources, alleviate pressure on land resources and improve carrying capacity of the integrated transport system.

Second, in April 2007, the State Council approved the National Plan for the Layout of Water Traffic Safety Supervision and Rescue System jointly prepared by the National Development and Reform Commission and the Ministry of Communications.

Due to their sudden occurrence, the distance of accident location from land and difficulty of providing rescue services, the water accidents usually cause heavy losses or damages to human life, property and environment. Therefore, effective prevention and timely salvage and rescue are the major components of water transport safety. As the first national medium and long-term plan for water traffic safety supervision and rescue system, this Plan is an integral part of national public emergency response system and is also a crucial element of national public security system.

The Plan comprises three major aspects. Firstly, to build a tiered national traffic supervision and rescue system covering the coastal waters and main inland waters. Second, to distribute supervision and rescue equipments, which include three major systems of communication, monitoring and control, the forces of aircraft and vessels, and oil spill control, removal and salvage. Third, to identify the planned priority construction projects for the period from the Eleventh Five-Year Plan to 2020. I would like to point out that to better discharge our obligations under international conventions, strengthen the function of public services, and effectively safeguard the public security, all projects as identified in the Plan will be financed by the central government.

It is foreseen that the adoption of the two Plans would make water transport a more reliable means of transport, make marine resources development and utilization much safer, and travel and recreational activities on water more secure. By 2010, the overall framework of water traffic safety supervision and rescue system will largely take shape, and the supervision and rescue capability over key waters will also increase significantly. By 2020, an integrated safety supervision and rescue system composed of sea and air forces will come into being covering the coastal waters and such major inland waters as Yangtze River, Pearl River and Heilongjiang River . The System featuring all-round coverage, all-weather operation, quick response and effective rescue would enhance the capacity of guaranteeing water transport safety and bring about an improved safety situation.

Third, the Ad hoc Tax-free Registration Policy for the Chinese-owned Vessels Engaged in International Voyage

It is well-known that shipping is a predominant mode of transport for international trade. Over 90 percent of China 's foreign trade is carried by sea. In order to expand the national fleet to ensure a sound development of Chinese shipping as well as to tackle the problems arising from the operation of many Chinese-owned ocean-going vessels which have registered overseas and fly the foreign flags, the Ministry of Communications, in collaboration with the relevant Ministries of the State Council and on the basis of thorough investigation and analysis, proposed the Special Tax-free Policy to encourage the foreign-flagged but Chinese-owned vessels to register back in China and fly the Chinese flag. This policy was approved by the State Council in this February and will come into effect on 1 July 2007.

In accordance with this Policy and the implementation plan made by the Ministry of Finance, the Ministry of Communications recently released an Announcement on the Implementation of the Ad hoc Tax-free Registration Policy for the Chinese-owned Vessels Engaged in International Voyage, which sets out the applicable conditions and procedures. The vessels to which this Policy applies, which file Customs declaration within two years from the date this policy comes into effect, will be exempted from the Customs duty and import VAT. The eligible vessels may choose Shanghai , Tianjin or Dalian as the port of registry to go through the registration procedures. According to the rough estimation, within the two years of implementation, the Chinese-flagged shipping fleet will increase by 4 million dwt, which will be beneficial to enhance the standing of Chinese shipping and guarantee the economic development of China .

Water transport, as an integral part of the national integrated transport system and the comprehensive utilization of water resources, is characterized by large handling capacity, low cost, less occupation of land, low energy consumption, less pollution and safe and reliable operation. The above-mentioned Plans and the approval and implementation of the Policy well demonstrate the importance attached and the support given by the Central Party and the State Council to the development of water transport. These are also important measures to fully implement the scientific concept of development in a cost-effective and environment-friendly way, which is of guiding importance to the establishment of a well-structured and integrated transport system and the promotion of comprehensive development and rational utilization of water resources.

After this press conference, the Ministry of Communications will organize a national Water Transport Workshop in Beijing from July 5 to 7 as a follow-up activity for the further implementation of a series of policies and plans formulated by the State Council. Here, I would also like to welcome the presence of friends from the press.

Now, Vice Minister Xu and I would like to take your questions.