Regional imbalance, financial incentives included in new guideline

Excluding tourism, a sector that was dealt a heavy blow by the COVID-19 pandemic, in the first eleven months of 2020, China's trade in services rose 2.2 percent year-on-year, according to data from the Ministry of Commerce.

While such growth was notable in a year when the impact of COVID-19 was most pronounced and international trade in general was severely disrupted, experts believe there are still weaknesses in China's current development of the sector that need to be shored up.

Guo Meixin, a researcher at Tsinghua University, pointed out that one prominent issue is the uneven development of the sector across regions. The majority of trade services cluster in megacities like Shanghai and Beijing, and the eastern coastal regions.

"Regional imbalances in the development of the trade in services are closely related to regional levels of economic development and opening up," she said. "In 2019, eight of the country's top 20 cities in terms of total GDP were also among its top 10 cities in foreign trade, all of them eastern coastal cities. The uneven growth of trade between regions has brought about regional imbalances in incomes and economic growth, creating income gaps between eastern, central and western regions."

Guo believes that one solution would be to improve the competitiveness of transportation. Efforts should be made to increase the construction of infrastructure, particularly as related to the digital economy, and to develop service trade formats and models with comparative advantages, while enhancing technology and capital investment. Local governments, particularly in the western and central regions, need to work to attract talented individuals to the sector and to accelerate the sector's transformation and upgrading through digitalization.

Li Shunbo, an executive responsible for engineering projects with the publicly traded Anhui Jiangnan Chemical Industry, said that as a manufacturing plant and service provider operating globally, the company has been working actively in recent years to grow business more closely with trade in services, and has made efforts to develop new service-oriented business. He said the new national guideline places an incentive on this kind of development.

"Our company's growth has accelerated in the process of turning from manufacturing to services. For example, digitalization and the Internet of Things have become integral to our growth in the past few years, and the new guideline has shed light on this," he said, adding that the company will do more to embrace the trend.

Li was delighted that the plan contains more financial support for trade in services companies.

"The guideline said that policy support will be provided to encourage financial institutions to create new products and services catering to the needs of trade in services businesses, and to widen the scope of asset-light trade in service enterprise loan collateral. These will greatly help us with our financing woes when it comes to loan applications," he said.