Services trade powers ahead
Knowledge-based industries shine as sector sees more structural improvement
Trade in services has become an important feature of China’s efforts to promote higher-level opening-up. It also helps optimize the presence of Chinese enterprises on the global industrial and value chain, according to a new report.
Since China became a member of the World Trade Organization in 2001, its services trade has seen consistent year-on-year growth and expanded rapidly in recent years amid the country’s efforts to open its doors wider to the rest of the world, the report noted.
Unveiled in January, the report was published jointly by Social Sciences Academic Press and the Beijing Enterprises’ Global Management Research Center, which is part of the University of International Business and Economics.
Official data on services trade for the first 11 months of 2020 showed prospects for growing business abound for both domestic and global players.
Excluding tourism services, which suffered a heavy blow due to the pandemic, China’s services trade rose 2.2 percent year-on-year in the January-November period, according to the Ministry of Commerce.
Services trade reached 4.08 trillion yuan ($630 billion) during the period, with 44.2 percent being generated by trade in knowledge-intensive services, up 9.9 percentage points from a year earlier.
“China’s trade in services has been undergoing structural improvement in the past few years, as the contribution of labor-intensive industries to the total trade in services has been declining constantly, while knowledge-empowered services are on the rise,” the report said.
Services trade volume from traditionally labor-intensive industries declined 1.6 percent on a yearly basis to 3.27 trillion yuan in 2019, accounting for 60.4 percent of the total trade in services.
Knowledge-empowered emerging services achieved swift development in 2019, with total trade volume surging 10.8 percent year-on-year to more than 1.87 trillion yuan.
Trade volume in those emerging services accounted for 34.7 percent of the total trade in services in 2019, up 2.5 percentage points from a year ago.
Exports of emerging services reached 991.68 billion yuan, up 13.4 percent over 2018, and the imports touched 886.09 billion yuan, up 8 percent.
Telecommunications, computer and information services, financial services, intellectual property royalties, and culture and entertainment services have all achieved robust development, thanks to rapid growth of the global digital economy, the report said.
“New business forms, such as crossborder e-commerce, have significantly offset the negative impact of the pandemic to inject new impetus into China’s foreign trade, although the pandemic has exerted severe negative impact on the global economy,” the report said.
As COVID-19 has disrupted global production activities, reduced market demand, damaged international supply chains, slashed international trade and investment, the stay-at-home economy is becoming part of the new normal, propelling development of cross-border e-commerce and injecting new impetus into China’s foreign trade, the report said.
The report estimated that the scale of global cross-border e-commerce transactions had exceeded $1 trillion in 2020, with average annual growth rate of recent years hitting 30 percent, much higher than the growth rate of trade in goods.
The rapid development of digital technologies like mobile internet, big data, the internet of things and cloud computing would mean that the digital economy will provide technical support for the digitalization of trade in services.
Together with enterprises’ accelerated adoption of online operations for enhanced management necessitated by the pandemic, this will create new development opportunities for the fast growth of trade in digital services and greatly accelerate the application of digital technologies in emerging trade in services, the report stated.
As China’s foreign trade expands, Chinese enterprises are also enjoying increasing presence in the world, the report said.
Around 129 Chinese enterprises made it to the 2019 list of Fortune Global 500, with their combined revenue surging 16.92 percent from 2017 to $8.37 trillion in 2018.
Among them are 39 manufacturing enterprises with combined revenue of $2.07 trillion in 2018, or nearly 25 percent of total revenues of the 129 Chinese enterprises on the Fortune Global 500 list. This shows that China is a manufacturing powerhouse, the report said.
There are also 25 Chinese enterprises on the list with wide-ranging businesses spanning sectors like industrial investment, financial investment, leasing and real estate. Their combined 2018 revenue was $1.13 trillion, or 13.5 percent of the total.
There are 22 Chinese financial enterprises on the list with combined revenue of $1.65 trillion, or 19.7 percent of the total.
Among the 129 Chinese enterprises on the list, 89 are State-owned, 27 are from the private sector, and the rest are sole proprietorship enterprises from Hong Kong, Macao and Taiwan.
The combined revenue of the Stateowned enterprises was $6.23 trillion in 2018, while that of the private enterprises was $1.53 trillion.
Although the majority of the enterprises on the 2019 list are from eastern China, the number of enterprises from other regions rose in recent years, the report said.
The report suggested that China should accelerate the implementation of policy measures facilitating growth and overseas presence of enterprises based in western, central and northeastern provinces and autonomous regions.
It also called for upgrading the industrial structure to improve Chinese enterprises’ competence and the business environment in the country.