Significance of trade in services grows rapidly

Workers at the construction site of the 2021 China International Fair for Trade in Services, which will kick off on Sept 2 in Beijing. [Photo by Jiang Qiming/China News Service]

With China further widening the opening-up areas in the services sector, trade in services will be a key driving force for the country to sustain its economy and cultivate new competitive advantages in the coming years, said government officials and business leaders on Tuesday.

Since the restructuring of the global value chain is accelerating, services like research and development activities, finance, logistics, marketing and branding have all become more prominent in both global and China's economic growth, said Chen Chunjiang, director-general of the department of trade in services and commercial services at the Ministry of Commerce.

The official said surging foreign direct investment is another factor propelling the vigorous growth of trade in services in China.

In contrast to merchandise trade, trade in services refers to the sale and delivery of intangible services like transportation, tourism, telecommunications, construction, advertising, computing and accounting.

Powered by trade in knowledge-intensive services, China's overall trade in services rose 6.7 percent year-on-year to 2.38 trillion yuan ($367.97 billion) in the first half of 2021, according to the Ministry of Commerce.

While the global spread of traditional manufacturing has been hindered by uncertainties such as COVID-19 and the disruption of the global supply chain, the trend of services trade going global has gathered momentum, said Li Jun, a researcher at the Beijing-based Chinese Academy of International Trade and Economic Cooperation.

He said China's efforts for the high-quality development of its manufacturing industry will mean that demand for services related to innovation, technical aspects, information, professional assistance and design will continue to expand, stimulating new business formats, industries and operational models at home and abroad.

Although foreign investment strategies have long focused on global-scale supply chains and leveraging China's advantages, many multinational corporations have already begun to deploy new resources in innovation, logistics and digital solutions in China in recent years, in order to enlarge their market presence and boost the two-way trade in services, he said.

Apart from further broadening foreign investment access in the financial services sector, China last month unveiled its first negative list for the cross-border trade in services for its Hainan Free Trade Port, a major measure in the country's administrative model for trade in services. The new policy-the Negative List of Hainan Cross-Border Trade in Services-will take effect on Thursday.

Facilitated by these policy measures, the advantages of China's super large market will be further reinforced and attract more foreign capital, said Su Qingyi, who researches world economics and politics for the Chinese Academy of Social Sciences in Beijing.

Since services-based digitalization has significantly expanded the growth space for trade in services, digital technologies have promoted innovation on the supply side and consumption on the demand side, greatly improving the ability to trade in services, he said.

Newborn Town Inc, a Beijing-based mobile internet service provider, plans to focus more on user value growth in developed markets, including North America and Europe, over the next five years. The company has already built a market presence in Southeast Asia, the Middle East, South Asia, and countries like Japan and South Korea.

Li Ping, the company's president, said Chinese companies' pursuit of innovation-driven high rates of growth and "go global" moves will shore up the country's trade in services, and continue to contribute to the world's services trade growth and economic recovery from COVID-19.

"Many opportunities also arise from surging overseas demand for social media apps that facilitate real-time audio or video interactions in the 'stay-at-home economy', which is riding the rising global wave of commercial 5G networks," he said.

The views don't necessarily reflect those of Qiushi Journal.