IT, digital economy, blocs will boost developing countries

People visit the 2022 China International Fair for Trade in Services at the China National Convention Center in Beijing. [Photo by Zhang Wei/chinadaily.com.cn]

With the deepening of economic globalization and industrial restructuring, trade in services has played an increasingly vital role in China's economic growth in recent years. Riding on the momentum, the country has been keen on boosting and innovating trade in services to keep foreign trade and investment stable.

However, the disruption caused by the COVID-19 pandemic has created many challenges to the global economy. While protectionism and unilateralism are on the rise, international trade and investment activities have sharply declined.

To confront these challenges, China has taken a series of measures in recent years, including the implementation of policies to promote innovation in trade in services, the expanded opening-up policy in the services sector, the establishment of a negative list management system for cross-border services trade and greater efforts to develop digital trade. All these have contributed to the increase in the country's trade in services.

It is also worth mentioning that the pandemic has pushed many businesses across the world to shift their focus to digitalization. China, supported by 5G technology and "new infrastructure"-related projects, has been earnest to work with all sides to explore the effective path toward a cross-border digital governance framework.

An artificial intelligence product displays during the 2022 China International Fair for Trade in Services at the China National Convention Center in Beijing, on Sept 1, 2022. [Photo/VCG]

The country's vast population base has helped push the growth of the digital economy. Because data have become a key element like oil and electricity in the economic sphere, countries with large populations and wide data applications have advantages and, with effort, can become major markets for developing the digital economy.

This creates greater possibilities for developing countries to catch up with the developed economies and gain fresh momentum that may alter the global economic development pattern.

The new generation of information technology has greatly promoted trade in services. Along with the continuous integration of manufacturing and services, and the notable improvement in the quality and efficiency of service supply, IT can promote the coordinated development of trade in services.

With China establishing a working team in late August to push its accession to the Digital Economy Partnership Agreement to broaden the latter's role in developing international rules for the digital economy, trade in services can be a key driving force for the country to sustain its economy and cultivate fresh competitive advantages in the coming years.

Signed by New Zealand, Singapore and Chile in June 2020, the DEPA coordinates policies on the digital economy and is the first of its kind in the world. It covers almost all key sectors of the digital economy, ranging from facilitation of commerce and trade to personal information safety.

Even though the scale of the DEPA is relatively small at present, China's likely accession to this agreement could highlight the need for cooperation on rule-making in trade in digital services and the digital economy.

Following the implementation of the Regional Comprehensive Economic Partnership agreement at the beginning of the year, RCEP members have pledged to gradually open more than 100 services sectors to trade. These include finance, telecommunications, transportation, tourism and innovation, with a six-year transitional period.

There has also been mutual recognition of professional qualifications, with obligations and frameworks for increased cooperation between signatory countries, according to the Beijing-based China Council for the Promotion of International Trade.

This broadened access will usher in greater growth opportunities for RCEP members to further support their trading openness in services, especially in areas such as cross-border e-commerce, online education, business exhibitions and healthcare consulting services.

Travel services have been one of the reasons for China's trade deficit in services for a long time. In the short term, restrictions on cross-border mobility because of the pandemic are to blame for the drop in China's deficit in this category.

However, as new growth drivers in the services sector have been gradually stimulated and export competitiveness has been enhanced, China's trade deficit in services will gradually decrease.