China’s service trade has kept a rapid growth this year. Next year, how will China drive service trade to a higher level? This year, the Belt and Road economic and trade cooperation has made active progress. In the next year, which aspects will the Belt and Road economic and trade cooperation concentrate on? This year, the consumption structure is making profound changes. The change of consumption demands will propose new requirement to the development of retailing industry. How will the new demands of the development of retailing industry be satisfied? On December 27, the directors of relevant departments of Ministry of Commerce introduced service trade and the Belt and Road construction, and sketched the development blueprint for the next year at the 2016 National Business Work Conference Media Communication Meeting.

At the 2016 National Business Work Conference, Commercial Minister Gao Hucheng said that China’s total service imports and exports increased 16% in the first eleven months year on year with 2.3 percentage points growth in its share in foreign trade total (goods + service imports and exports). In 2017, the comprehensive competitiveness of foreign trade will be further intensified to consolidate the good trend of foreign trade’s stability and pickup.

Researchers believe that service trade, as a part of trade, has great importance in boosting foreign trade’s stability. Meanwhile, service trade boosts the development of goods trade and real economy, and can speed up the improvement of comprehensive competitiveness in foreign trade and other fields. While having a rational understanding to current service trade deficit, we should strengthen the efforts in boosting the supply side reform in the service sector.

 

Service trade is under the “golden era” for development

“This year, China’s service trade has kept a rapid growth. The growth speed is higher than those of global major economies. The trend is expected to maintain in the next year,” said Xian Guoyi, director of Department of Trade in Services and Commercial Services, during the progress period of the 2016 National Business Work Conference.

Service trade has become the new engine for foreign trade development and opening-up intensification, and the new energy for boosting supply side structural reform and economic transformation and upgrading, said Xian Guoyi. In 2016, the service trade development had five major characteristics: first, rapid growth in scale; second, continuous optimization of industrial structure; third, rapid development of service outsourcing; fourth, further diversification of international market; and fifth, more reasonable in regional distribution.

From January to October, the total imports and exports of service trade achieved 4.2915 trillion yuan. China becomes the world’s 2^nd biggest service importer and 3^rd biggest service exporter.

The rapid development of service trade is boosted by China’s economic transformation and upgrading, policy incentives and other momentum, said Li Jun, deputy director of Chinese Academy of International Trade and Economic Cooperation of Ministry of Commerce, at the interview by a reporter from International Business Daily. China is under the “golden era” of service trade. The rapid growth of service trade will boost the development of real economy, improve the quality and added-value of the trade, drive the structural reform of supply side, and has great significance in the structural adjustment, transformation acceleration, economic development, cost reduction and efficiency improvement of Chinese economy.  

In 2016, the Ministry of Commerce mainly applied three major measures in boosting the development of service trade, said Xian Guoyi. First, comprehensively deepening reform, starting service trade’s innovative development pilot programs, boosting service outsourcing city’s market expansion, and driving new steps in innovation and development of service trade; second, activating service trade’s new power for growth through promulgating new incentives and policies in finance, tax, financing, funds and facilitation; third, deepening international cooperation. So far, China has established service trade communications with more than 20 countries and regions, set up service trade cooperation promotion mechanism, and made new achievements in international market exploitation.

 

Rational understanding to service trade deficits

With the rapid increase of service trade, the service trade deficits are expanding.

As for this, Xian said, “we should have a rational and objective understanding to the service trade deficits.” The service trade deficits are mainly in tourism, transport and intellectual property sectors, which is determined by China’s present development stage.

Currently, Chinese people’s income and consumption levels are increasing. More and more consumers select overseas tours. As China becomes a big goods trade country, the transport demands are increasing. With Chinese enterprises’ acceleration in transformation and upgrading and emphasis in innovation and R&D, the imports of intellectual property is expanding. The development experiences of the US, Germany, Japan and other countries indicate that service trade deficits also emerged when their economy developed to a certain degree. Comprehensively speaking, service trade deficits just indicate that China’s economy is accelerating transformation and upgrading.

However, the insufficiency of domestic supply should also be concerned. With the accelerated transformation of China’s economy and society, the supply of service industry, especially high-end service industry, is in severe shortage, Xian added. Meanwhile, China’s service trade starts late, and the policy system took shape late. The development of China’s service trade still has a long way to go. “We will continue deepening the supply side reform of service trade, actively expand export, strive to optimize structure, and further improve international competitiveness in the service sector,” said Xian Guoyi. In 2017, the Ministry of Commerce will adopt five major measures to boost the development of service trade: first, further carrying out relevant policies issued by the State Council to boost the development of service trade, actively expanding service export, especially, expanding the service exports in service outsourcing, technical service, cultural service, traditional Chinese medicine service and other key fields; second, energetically pushing forward the innovative development of service trade, boosting the test and pilot work of service trade innovative development; third, adapting to global service trade’s digitization trend to dig potentials, reduce cost and increase efficiency; fourth, deepening the foreign cooperation of service trade, improving strategic layout and expanding international market; fifth, intensifying the statistics of service trade and continuing the consolidation of the work basis.

 

Source: Translated from Invest Guangzhou, Dec. 28, 2017