China Making its Mark in Global Services Trade

China has expanded its share of global commercial services exports from 3 percent in 2005 to 5.4 percent in 2022, according to a report jointly released by the World Bank Group and World Trade Organization earlier this week.

Titled Trade in Services for Development, the report stated that the growth of commercial services trade has been driven by advancements in information and communications technologies. The global expansion of the internet, in particular, has significantly enhanced opportunities for the remote provision of various services, including professional, business, audiovisual, education, distribution, financial and health-related services.

It also found that India, another Asian country proficient in commercial services, has more than doubled its share of such exports in this category to 4.4 percent of the global total in 2022 from 2 percent in 2005.

In contrast to goods trade, trade in services refers to the sale and delivery of intangible services such as transportation, finance, tourism, telecommunications, construction, advertising, computing and accounting.

Despite a weakening demand for goods and geoeconomic fragmentation, China’s trade in services flourished on the back of continuous opening-up, stable recovery of the services sector and ongoing digitalization. The value of the country’s trade in services grew by 9.1 percent on a yearly basis to 2.08 trillion yuan ($287.56 billion) in the first four months, said the Ministry of Commerce.

Experts said that segments like human capital-intensive services, knowledge-intensive services and travel services — education, tourism, aircraft and vessel maintenance, TV and film production — have been particularly active in China in recent years.

Zhang Wei, chief expert of the Shanghai-based China Association of Trade in Services, said that future economic growth in China can be driven by growing exports of human capital-intensive services, which demand a higher level of expertise and skill. These services encompass areas such as technology consulting, research and development, and engineering.

China’s trade in knowledge-intensive services expanded 13.1 percent year-on-year to 905.79 billion yuan between January and April. The figure accounted for 43.5 percent of the country’s total volume of services trade, up 1.5 percentage points from the same period in 2022, said the Ministry of Commerce.

“Another contributing factor to the national economy will be growing demand for high-quality foreign services from the expanding middle-income population in China,” Zhang said, adding that these services may cover domains such as education, logistics, tourism, healthcare and entertainment.

Foreign service trade providers said that they remain optimistic about the outlook for the industry this year and beyond in the Chinese market.

The zero and low tariff rates brought by the Regional Comprehensive Economic Partnership pact and other free trade deals will boost consumers’ purchasing power and enable small and medium-sized enterprises to ship more products to other signatory countries, said Eddy Chan, senior vice-president of United States-based FedEx Express and president of FedEx China.

This trend will definitely generate more growth points for cross-border service trade providers, he said.

Dekra Group, a German testing, inspection and certification group with more than 48,000 employees globally, will expand its laboratory space in Hefei, Anhui province this year, to serve the fast-growing information technology, household appliances and electric vehicle industries in China’s eastern region.

Many opportunities come from China’s pursuit of sustainable growth and rapid industrial upgrading pace, said Mike Walsh, executive vice-president of Dekra and the group’s head of the Asia-Pacific region.