Service Industry Drives Economic Growth in China
China’s economic development roadmap is facing significant changes, and the service trade is gradually becoming the driving force behind the economic upgrade.
According to the data released by the Chinese Ministry of Commerce, the total import and export value of products and services from China has reached 27.8 trillion CNY, up 14.2% from 2016. In this, the total import and export value of the service industry was 4,699.11billion, accounting for 16.9% of the gross trade value in 2017. Furthermore, official figures suggest the export segment is growing at its fastest rate in 8 years, up 10.6%, indicating the expanding global use of Chinese services. This also indicates that the international competitiveness of the Chinese services sector is continuously improving, along with the quality and added value provided.
With the current trend of decreased labor-intensive industries and increased service and technology-intensive industries, China has expanded its trade with the rest of the world on a variety of services. The service industry refers to the sale and delivery of intangible assets, including transportation, logistics, tourism, telecommunications, construction, advertising, computing and accounting.
The international cooperation on service trade has been improving in conjunction with the development of The Belt and Road Initiative. Meanwhile, the government has deployed many resources to booster the service sector, including a total of 15 service trade pilot projects and continuous investment funding for the service trade industry. In addition, the government is offering tax exemptions and reduced tax rates on exported services. All of these actions will aid in facilitating the transformation of China’s long-standing foreign trade pattern and fostering new momentum for growing the economy.
In China, the focus of the international service market is typically found in eastern coastal cities, which account for 85.9% nationwide. The top cities with outstanding trade value are Shanghai, Beijing and Guangdong. In the Midwest, there is a higher than average growth in the service trade, suggesting the huge potential market that exists.
At present, China’s exported and imported services are connecting the country with more than 200 regions across the world, offering a growing diversity of service content.
With the improved perception of “Made in China”, China’s service outsourcing to other countries has been increasing in recent years. Key exports are ITO (International Technology Outsourcing), BPO (Business Process Outsourcing), and KPO (Knowledge Process Outsourcing). Leading IT companies in China are providing service to the world, making it vital to the service outsourcing industry.
The development of the service trade in China could be seen as a favorable indication for service-focused enterprises globally, particularly for professional services. At present, the current Chinese service industry cannot meet the growing domestic demand, so the business potential for foreign service providers is great. In the meantime, this trend also offers global companies the possibility to explore cost saving potentials with qualified Chinese service providers.