Further Promoting the Institutional Opening-Up of Trade in Services in China
On September 2, 2024, the General Office of the State Council released the Opinions on Promoting High-Quality Development of Trade in Services Through High-Standard Opening up (hereinafter referred to as Opinions), which is an important policy document issued by the State Council concerning the foreign trade after the Third Plenary Session of the 20th CPC Central Committee. It provides an overall and systematic plan for the high-quality development of trade in services under the current circumstances, further clarifying the mechanism, support, path, and priority for China's institutional opening-up of trade in services. This points out the direction for opening up China's trade in services to the global market in the future. China should keep up the momentum to improve the negative list management system for cross-border trade in services, promote cross-border flow of resource elements, facilitate international cooperation in the field of trade in services, optimize measures supporting the opening up of trade in services, and further boost the high-standard opening up and high-quality development of trade in services.
Increasing Level of Opening-up of China's Trade in Services through Development
The volume of China's trade in services is growing steadily, with increasing competitiveness in the global market. Following its accession to the World Trade Organization (WTO), China has fully fulfilled its WTO commitments. With the accelerated opening up of the service sector and the gradual maturity of the management structure and promotion mechanism of trade in services, the development of trade in services has entered a fast track. According to the statistics from the Ministry of Commerce, the total volume of China's trade in services has experienced remarkable growth, increasing from just over US$4 billion in 1982 to US$933.10 billion in 2023, a 233-fold increase. From 2012 to 2023, in US dollar terms, the compound annual growth rate of China's trade in services reached 6.2%, surpassing both the global average growth rate and the growth rate of China's trade in goods during the same period.
In this context, China has opened up new areas for trade in services. In traditional service sectors, openness in areas such as travel and transport is deepening, more and more convenient entry and exit procedures in China have stimulated the rapid growth of travel services. According to the statistics of the Ministry of Commerce, the import and export of China's travel services totaled RMB 1.48562 trillion in 2023, marking a year-on-year increase of 73.6%. In the first half of 2024, this figure reached 961.70 billion yuan, representing a year-on-year increase of 47.7%, which secures travel services as the largest segment of trade in services. In addition, as China continues to enhance international cooperation, the import and export of transport services have maintained steady growth. In emerging service sectors, the opening up of knowledge-intensive services, such as telecommunications, computer and information services, financial services, insurance and pension management, and intellectual property utilization, has accelerated, with a sustained increase in the scale of related imports and exports. According to the statistics of the Ministry of Commerce, the import and export of China's knowledge-intensive services totaled 2.7 trillion yuan in 2023, representing an increase of 8.5% from the previous year, and the percentage of knowledge-intensive services in the total volume of trade in services rose to 41.4%. In 2023, the total export of China's knowledge-intensive services reached 1.5 trillion yuan, and its share in the export of trade in services rose to 57.5%. Insurance services emerged as the fastest growing export segment, with a notable 67% increase. In 2023, the total import of China's knowledge-intensive services reached 1.1 trillion yuan, marking a year-on-year increase of 7.8%. Notably, personal, cultural, and entertainment services exhibited the most significant growth rate, with an increase of 61.7%.
The role of platforms for opening trade in services in China has become increasingly prominent. On the one hand, the pilot free trade zones in China are at the forefront of expanding liberalization of trade in services in an orderly manner. Since the launch of the China (Shanghai) Pilot Free Trade Zone on September 29, 2013, China has successfully created and established a total of 22 pilot free trade zones (ports) by the end of October 2024. These zones are continuously deepening and broadening stress tests in trade in services while ensuring that risks remain manageable. On the other hand, the expansion of comprehensive pilot programs to open up the service sector in China has yielded some reproducible and transferable experiences. Since 2015, 11 provinces and municipalities have successfully implemented pilot programs, involving more than 1,300 pilot tasks in total. These pilot programs have progressively facilitated the opening-up of 13 critical industries, including technology, communications, culture and tourism, and finance. As a result, an open network covering the five regions of eastern, western, southern, northern and central China has taken shape, leading to industrial development.
Priorities in Institutional Opening up of Trade in Services Facilitated by the Opinions
The Opinions lists 20 major tasks in five aspects, including 4 clear tasks to promote the institutional opening-up of trade in services, which will have a far-reaching impact on the mechanism, support, path, and priority for the opening up of trade in services.
The key to the opening-up mechanism for trade in services is enhanced the negative list management. The negative list management model represents an institutional innovation that departs from the traditional approval-based model to create a more flexible and efficient institutional environment for the development of trade in services. In 2024, China initiates a special management strategy for cross-border trade in services across the country, including in pilot free trade zones. This marks the first nationwide adoption of the negative list management mechanism in China and the establishment of a hierarchical and progressive opening-up structure for cross-border trade in services. In the field of cross-border trade in services, the negative list of overseas services and their providers incorporates various service delivery models relevant to cross-border, international consumption, and movement of natural persons. It upholds the principle of non-discrimination and equitable access for all domestic and foreign service providers to ensure equal opportunities for market access. The Opinions advocates the establishment of a robust negative list management system for cross-border trade in services. This will significantly enhance the efficiency of list management and stren