According to data released by the Ministry of Commerce, the total value of service trade import and export in China reached 1158.19 billion yuan in the first quarter of this year, up 0.5% year-on-year; the service import and export in March registered a positive growth for the first time in 14 months.
Liu Ying, a researcher at the Chongyang Institute for Financial Studies, Renmin University of China, said in an interview with China Trade News that the growth of service trade in the first quarter was in line with expectations and showed a positive trend. This reflects the steady recovery of economy and positive trend in trade in China with the routine prevention and control of the pandemic.
The service trade deficit in China continues to narrow. In 2020, the figure in China fell by 53.9% to 692.93 billion yuan. In the first quarter of this year, the service exports in China increased by 36.3 percentage points higher than imports, cutting down the service trade deficit by 74.7% to 66.69 billion yuan, a year-on-year decrease of 197.05 billion yuan.
“The service trade deficit in China had continued to expand for multiple years before 2018, and it began to narrow in 2019. By the first quarter of this year, the international service trade deficit in China has further declined partly because of the continuation of this trend, but this sharp fall of 74.7% is largely due to the impact of the Covid-19 pandemic.” Luo Libin, a visiting researcher at the Institute of Service Economics and Digital Governance at Tsinghua University and deputy dean of the School of Economics at Beijing International Studies University, analyzed in an interview that the service trade deficit fell by US$24.842 billion in the first quarter of 2021, among which the trade deficit in tourism and transportation services fell by US$ 17.354 billion dollars and US$ 8.179 billion, respectively. The fall in trade deficits in tourism is due to restrictions on the cross-border movement of people during the pandemic, thus bringing down the imports of tourism services sharply; the decrease of trade deficits in transportation services has benefited from China’s success in containing the pandemic and rapid development of trade in goods, which has driven the growth of exports of transportation services.
The increase in the proportion of knowledge-intensive service trade is a highlight in the development of service trade. Statistics show that China’s trade value in knowledge-intensive service in the first quarter of this year amounted to 539.5 billion yuan, an increase of 15.5%, accounting for 46.6% of total services trade, an increase of 6.1 percentage points, of which knowledge-intensive services exports reached 301.03 billion yuan, an increase of 14.7%.
Liu Ying believed that the strong resilience of service export, especially the rapid growth of knowledge-intensive service export also contributes to the continued narrowing of the service trade deficit. She said that the rapid development of the digital economy has promoted the development of knowledge-intensive service trade. As a comparative advantage of China in the global information industry, digital economy has led to the rapid growth of knowledge-intensive service trade including information service. In addition, China continuously supports the opening and innovative development of service trade, makes efforts from the supply side and the demand side, and vigorously promotes the development of service trade under the new dual-circulation development pattern. This also reflects the continuous optimization of service trade structure and the improvement of the industrial structure in China.
Luo Libin said, “Knowledge-intensive service trade has maintained a relatively high growth rate in recent years, which is a medium and long-term development trend. In addition, the pandemic has also shifted some service trades that were originally conducted in the form of movement of natural persons and consumed in different places to be carried out through cross-border delivery. For example, many international conferences are held online, and overseas education services are delivered through remote learning. This may also lead to a rapid increase in the volume of knowledge-intensive service trade.”
“China enjoys unique advantages in the development of knowledge-intensive service industries.” According to Luo Libin, with the increase in service and the rise of digital trade, China enjoys an obvious cost advantage with the same skill level in certain service trade fields. For example, the offshore service outsourcing volume accounts for more than 70% of service trade export in emerging sectors in recent years; the contract and execution value of offshore service outsourcing have increased by 86.5% and 68.8% year-on-year respectively in the first quarter of 2021. Furthermore, China’s domestic service market has grown faster than the overall economic growth, and China has increased the opening-up of the service industry in recent years. These are all conducive to attracting global high-quality service factors into Chinese market, thus providing China with knowledge-intensive services and meanwhile promoting the export thanks to the “local market effect”.
When asked about the future development of service trade, Liu Ying responded that with the acceleration of vaccination in many countries, the service trade in China is expected to show a positive momentum given that some countries are expected to have herd immunity in the second half of this year and open their borders if these countries can gradually control the pandemic. With the gradual easing of cultural exchanges between China and the United States, the service trade is expected to further increase, and achieve rapid growth in scale and continuous optimization of structure.
Luo Libin believes that the development of service trade in 2021 will largely depend on the global pandemic containment efforts. If there is no obvious improvement in global pandemic prevention and control, the service trade deficit in China will further narrow, but the rate of contraction may slow down. Meanwhile, the proportion of knowledge-intensive service trade will continue to increase.
(Source: CCPIT / www.chinatradenews.com.cn)
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