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Services to be opened up

By Song Shengxia (Global Times)

07:59, May 29, 2012

Chinese Premier Wen Jiabao said yesterday that China will further open up its service sector to private capital and increase the sector's contribution to the economy.

China will extend financing channels for the service sector and encourage established companies in the industry to get listed, Wen said at the opening ceremony of the first Beijing International Fair for Trade in Service.

The country will give preferential consideration to the demand for land use of the service sector and will also cancel unreasonable charges and tax levies, which will include extending the pilot value-added tax reform program in order to reduce the tax burden for companies in the sector, Wen said.

"Fostering growth in the service sector is the main direction for China's economic transformation and restructuring, as well as an internal call to improve people's living standards," Wen said.

Wen's call followed a series of announcements by government agencies in recent weeks that have promised an opening up to private investment in key State-controlled sectors including banking, railways and healthcare, to help boost the economy amid signs of a slowdown.

"As the country's economy is slowing down, there will be high expectation for more stimulus to boost the economy, as happened in 2008 and 2009, but this time the focus will be on cutting taxes and revitalizing the private sector," Li Huiyong, chief analyst at Shanghai-based Shenyin Wanguo Research & Consulting, said in a research note.

"There is a stereotype that the country's service sector is more open than industries dominated by State-controlled firms," Liu Yuhui, director of the Finance Key Laboratory under the Chinese Academy of Social Sciences, told the Global Times.

"The fact is the country has currently only opened some low-end areas of the sector, such as catering and tourism. In high-end areas such as financial and securities service sectors, there are still considerable barriers."

Wen also called for service outsourcing in areas of software, information and construction, while actively expanding imports to bring advanced technology and management experience from overseas.

Over the coming five years, the value of China's services imports will top $1.25 trillion, Wen said.

The country's service trade volume reached $419.1 billion in 2011, ranking the fourth highest in the world.

However, the service sector's contribution to GDP remains at 43 percent, much lower than the 70 percent seen in most developed countries, Assistant Minister of Commerce Qiu Hong said at the fair.

China aims to bring the service sector's proportion of GDP to 47 percent by 2015, when the country will become the world's largest consumer market, with retail sales surpassing $5 trillion, Minister of Commerce Chen Deming said at the same event.

"Further opening up the country's service sector and expanding service trade will provide an impetus for industrial restructuring and upgrading of consumption," said Liu.

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