China promotes wider opening-up in service sector

The State Council, China’s cabinet, recently allowed six more cities to launch comprehensive pilot programs aimed at opening up the service sector.

The six cities -- Shenyang, Nanjing, Hangzhou, Wuhan, Guangzhou and Chengdu -- will run the pilot programs for a period of three years.

Photo shows Pazhou high-tech development zone in Guangzhou, capital of south China’s Guangdong Province in December 2022. The added value of Guangzhou’s service sector reached 2 trillion yuan in 2021, accounting for over 70 percent of the city’s GDP. (Photo/Wang Meiyan)

China started pilot programs aimed at opening up the service sector in Beijing in 2015, accelerating the implementation of a range of new projects and promoting higher-quality development of the service sector in the capital. On Sept. 8, 2020, the State Council issued a plan to build Beijing into a national integrated demonstration zone for greater openness in the service sector. The country added Tianjin, Shanghai, Hainan and Chongqing to the list for the pilot programs in 2021.

The opening up of the service sector has led to an increase in foreign investment, promoted the upgrading of the industrial structure, better met people’s needs for upgrading consumption, and made great contributions to stabilizing foreign investment, said an official with China’s Ministry of Commerce (MOFCOM). “That’s one of the important reasons for the country to continuously expand opening-up in the service sector and add more cities to the pilot programs for opening up the service sector,” the official added.

Over the past years, the service sector has been the “main engine” of China’s foreign investment growth.

Photo shows the Chongqing International Logistics Hub Park in Shapingba district of southwest China’s Chongqing Municipality, Dec. 26, 2022. (People’s Daily/Sun Kaifang)

During the 13th Five-Year Plan period (2016-2020), China’s service sector reported an average annual growth of 4.4 percent in attracting foreign direct investment (FDI), and the actual use of FDI in the sector exceeded 70 percent of the country’s total FDI in actual use.

In the first 11 months of 2022, actually used FDI in China expanded 9.9 percent year-on-year to nearly 1.16 trillion yuan (about $168.1 billion). During the same period, the service industry saw the actual use of FDI reach 842.61 billion yuan, accounting for 72.9 percent of the country’s total FDI in actual use.

A MOFCOM official explained that the added value of China’s service industry accounted for about 55 percent of its GDP, nearly 20 percentage points lower than that of developed countries. The official noted that China needs to speed up reform and opening-up of the service sector, accelerate the development of modern services, and create new advantages in international competition and cooperation.

Since 2015, Beijing has implemented nearly 70 pioneering policies and over 140 flagship projects in the fields of scientific and technological research and development and financial services for the real economy. Based on Beijing’s experience, Tianjin, Shanghai, Hainan and Chongqing have implemented pilot programs according to their local conditions.

In the first three quarters of 2022, the total added value of the service sector in Beijing, Tianjin, Shanghai, Hainan and Chongqing reached 6.9 trillion yuan, accounting for 70.6 percent of the five cities’ total GDP, 17.1 percentage points higher than the national average.

The new pilot cities can explore paths for expanding opening-up in the service industry according to their geographic advantages, development advantages and industrial characteristics. This will be conducive to working toward new heights in opening up China’s service sector and gaining more experience suited to regional realities, thus driving accelerated development of domestic service enterprises, said Zhang Yong, deputy director of the Shanghai Institution for Finance & Development.

Photo shows an assigned station for autonomous driving inside the Beijing Economic-Technological Development Area in Beijing. (Xinhua/Peng Ziyang)

Li Jun, head of the Chinese Academy of International Trade and Economic Cooperation under MOFCOM, suggested that the new pilot cities should create new advantages by integrating wider opening-up of the service sector with the development of modern services.

The new pilot cities can obtain more experience that can be replicated and become exemplars in the opening-up of China’s service sector by harnessing reform, innovation, and pioneering spirit, said a MOFCOM official.