Liu Cheng: High-Quality Development of Trade in Services Boosts Economic Modernization
The 2022 China International Fair for Trade in Services (CIFTIS) recently concluded. The ten years of CIFTIS coincide with a decade of rapid development in our country’s trade in services. From 2012 to 2021, the value added of China’s service industry grew by 149%, with cumulative service imports exceeding US$4 trillion, further strengthening the advantages of our ultra-large-scale market. At this year's CIFTIS, a batch of cutting-edge high-speed rail products, including new intelligent electric multiple units (EMUs), made a concentrated appearance. This not only refreshed "Chinese speed" and demonstrated the strength of "Made in China," but also redefined high-quality and efficient "Chinese service," propelling it onto the global stage.
Trade in services is a key domain for expanding global opening up. Looking across the history of human social development, the world economy flourishes through openness and withers through isolation. In recent years, faced with spreading protectionism and the headwinds of counter-globalization [1], trade in services has increasingly become a new engine for global open development. From 2011 to 2020, global trade in services grew at an average annual rate of 2.3%, 0.9 percentage points higher than trade in goods. The growth rates for certain types of service trade, such as IT services, business services, and intellectual property royalties, were two to three times that of trade in goods.
Trade in services is an important driver for stabilizing our country’s economic growth. Commercial logistics, cultural tourism, and finance are traditional fields of service trade that have radiated new vitality in the era of the digital economy; for instance, the cross-border e-commerce industry is developing in full swing [2]. Meanwhile, emerging fields such as cross-border data flows and low-carbon technology patent transactions have also achieved rapid development. From 2012 to 2021, China’s personal cultural and entertainment services, telecommunications, computer and information services, and intellectual property royalties grew by 5.8, 3.2, and 2.1 times respectively; the scale of offshore service outsourcing grew by 2.9 times, with the service outsourcing industry cumulatively absorbing 11.27 million jobs.
Trade in services can improve the quality of industrial development and enhance the level of economic modernization. The foundation of a prosperous people and a strong nation lies in industry [3], yet when we discuss high-end manufacturing, we are to a large extent also discussing modern services, such as technology, intellectual property, and data production factors. Trade in services involves not only trading traditional "services" but also trading the "value-added content of high-end manufacturing." For example, the operating system, industrial design, and brand logo of a certain foreign mobile phone brand account for more than half of its retail price. Furthermore, trade in services helps satisfy the diverse needs of the people. For example, since 2020, the online fitness industry has risen against the trend [4]; the domestic online yoga teaching platform "Daily Yoga," which integrates Indian culture, has surpassed 600 million users across more than 200 countries and regions. Therefore, trade in services has not only taken up the mantle of foreign trade—supporting macro data for foreign investment, foreign trade, and imports and exports—but also serves to boost the high-quality development of all sectors of the national economy.
Trade in services is continuously improving the development landscape globally and across various domestic regions. It concerns not only trade but also the drivers of economic growth and levels of high-quality development in each region. For many years, the World Trade Organization (WTO) has treated trade in services as a primary negotiating subject, and regional cooperation agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) also include trade in services as major provisions. Developed economies in Europe and America focus on R&D services, marketing, and design within the international division of labor, while outsourcing processing and assembly stages—which sit at the low end of the value chain. China’s provinces and cities are also actively aligning their regional strategic layouts with the development trends of service trade. For instance, Guangdong and other regions have released action plans to promote the high-quality development of trade in services, and Hainan has formulated a negative list for cross-border trade in services in its Free Trade Port. It is particularly important to point out that trade in services reduces the importance of geographic location compared to general trade and alters the terms of trade, providing inland regions with equal opportunities for rapid development. Much like the "East Data, West Computing" project [5], there is no substantive difference whether service activities such as cross-border data flows and technical patent transactions occur in inland or coastal areas. Currently, provinces such as Shaanxi and Sichuan are dedicated to building "inland highlands of opening up" through trade in services, accelerating the construction of the new development pattern through high-level opening up.
The journey ahead is long, and only through struggle can we prevail [6]. Looking toward global trends in service trade, we must continuously expand opening up and enhance the quality of development. On one hand, we must rely on producer services trade to strengthen the resilience of domestic industrial and supply chains. In recent years, the COVID-19 pandemic has driven technological changes in online services, further highlighting the importance of resilience in producer services. On the other hand, we must seize the initiative in formulating rules for digital services trade. Compared to trade in goods and other services, the content of digital services trade is newer, and relevant international rules are currently in the gestational and negotiation stages. We should fully utilize international platforms such as the WTO, RCEP, and G20 to raise China's voice and propose Chinese solutions on issues like cross-border data flows. CIFTIS, which "adds the finishing touch" [7] to China’s high-level opening up, will surely encourage all nations to join hands in promoting an open and shared service economy, injecting strong momentum into the recovery and development of the world economy.