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The Connection between China’s Service Trade Competitiveness and Open-Oriented Service Industry (No.55, 2019)


By Lu Gang & Lin Jiaxin, Research Team on “Strategic Policy on Improving China’s Competitiveness of Service Trade”, Research Department of Foreign Economic Relations, DRC

Research Report, No.55, 2019 (Total 5555) 2019-4-19

Abstract: Based on the indexes of international market shares and trade competitiveness, this paper notes that China’s service trade competitiveness stands at a medium level among major countries measured by the statistical benchmark of international balance of payments (BOP), whereas China’s service trade has a weak competitive power according to foreign affiliates trade in services statistics (FATS). In terms of the scope of openness, including commitment to openness, policy-oriented openness and factual openness, China also stays at a medium level and shows a lower level of openness under FATS than under BOP. By comparing the competitiveness and openness of various countries, this paper narrows down to the conclusion that opening up can enhance competitiveness. Such a conclusion is adaptable not only to service trade under BOP, but also conformable to service trade under FATS. Namely, broadening the access of service industry to foreign investment could enable China’s enterprises to provide more local services through overseas subsidiaries. Therefore, the future task for China to enhance its service trade competitiveness is to increase access to more areas and strive to make China become the most attractive destination for foreign investment.

Key words: service trade, competitiveness, openness