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Services trade push critical to high-level opening-up
2022-11-09 11:14:00
China Daily | Updated: 2022-11-07 
Services trade push critical to high-level opening-up
Han Bing 
According to the report delivered by Xi Jinping, general secretary of the Communist Party of China Central Committee, at the 20th CPC National Congress, the country will promote high-standard opening-up, steadily expand institutional opening-up with regard to rules, regulations, management and standards, and accelerate its transformation into a trader of quality.
The highlights in the report not only demonstrate China's unswerving determination to expand high-level opening-up, pointing out the direction and clarifying the path for the development of China's foreign trade in the next five years or even longer, but also reveal that under the current international background of unilateralism and anti-globalization sentiments, China will continue to deeply integrate into the world economy through its own opening-up policy and promote an economic globalization that is more open, inclusive, balanced, win-win and beneficial to all.
Since the 18th CPC National Congress in 2012, China's status as a major trading country has been further consolidated, laying a solid foundation for moving faster to turn the country into a trader of quality. In the past decade, China has maintained its status as the world's top trader in goods for five consecutive years since 2017; in contrast, although trade in services has been the second-largest in the world for eight consecutive years in scale and has increasingly become a new engine for China's development of foreign trade, the problem of unbalanced and insufficient development remains prominent.
For instance, an analysis by Rhodium Group, a market research provider, noted that European service sector investors are absent from the Chinese market, and their data indicated that "between 2018 and 2021, business services made up less than 2 percent of the value and just 7 percent of the total count, while software and information technology services made up 0.5 percent and 3 percent, respectively."
The institutional opening-up clearly proposed for the first time at the Central Economic Work Conference at the end of 2018 is not only driven by the need for China's reform and opening-up to enter the "deep water zone" in the new era to adapt to the new situation at home and abroad, but also the need for China to deeply integrate into globalization and cultivate new advantages in international economic cooperation and competition.
The goal of institutional opening-up is to build a higher-level open economy, the core of which is to align with international rules and form a basic institutional system and supervision model that is connected with international investment and trade rules.
According to the General Agreement on Trade in Services (GATS) of the World Trade Organization, there are four modes of supplying services: cross-border trade, consumption abroad, commercial presence, and presence of natural persons. Since the opening up of trade in services involves sensitive issues such as national sovereignty and security, politics and culture, countries mainly rely on domestic laws and regulations for supervision, which makes barriers to trade in services more hidden and difficult to eliminate than trade in goods. Therefore, steadily expanding institutional opening-up with regard to rules, regulations, management and standards will help further enhance the facilitation and liberalization of China's trade in services.
In October 2021, the 14th Five-Year Plan (2021-25) for the Development of Trade in Services issued by 24 government departments pointed out that one main goal is to further improve the institutional environment. Laws, regulations, policy systems, promotion mechanisms and regulatory models for trade in services have been improved, the marketization of trade in services, the rule of law and the international business environment have been optimized, the level of liberalization and facilitation has been further increased, and institutional opening-up has taken important steps. In order to achieve the services trade development goals listed in the five-year plan and accelerate the country's transformation into a trader of quality, it is necessary to continue to deepen the reform of the services sector in the following aspects.
First, China should continue the liberalization of market access in the services sector.
The 14th Five-Year Plan for the Development of Trade in Services points out that the opening up of related businesses in telecommunications, the internet, education, culture, medical care and other fields should be promoted in an orderly manner. In order to reduce any risks, China should promote piloting free trade zones as pioneers and increase alignment with international high-standard trade and investment rules.
For example, in the China-EU Comprehensive Agreement on Investment reached in principle at the end of 2020, China is committed to opening wholly foreign-owned medical institutions in some cities and will remove the equity ratio restrictions on foreign capital, which are breakthroughs. China can conduct pilots and risk assessments in the corresponding free trade zones.
Second, China should continue establishing and improving the system of laws and regulations in the field of trade in services with reference to international rules.
Trade in services involves a country's domestic regulatory systems such as finance, banking, foreign exchange, investment, talent and standards. To deepen the reform of trade in services, it is necessary to eliminate cumbersome domestic procedures that hinder the operation of foreign enterprises, reduce service trade costs caused by regulatory differences and opacity and optimize the business environment.
On Dec 2, 2021, 67 WTO members, including China, the United States and the EU, adopted a declaration announcing the successful conclusion of negotiations for the Joint Statement Initiative on Services Domestic Regulation. The disciplines agreed upon by the participants are detailed in the Reference Paper on Services Domestic Regulation. The paper proposes new, concrete trade rules that focus mainly on transparency, predictability and effectiveness of procedures that businesses have to comply with when obtaining authorization to supply their services. The paper has important reference significance for China, which can refer to its provisions to improve regulatory transparency.
Third, China should actively participate in the formulation of international rules in the field of trade in services.
With the continuous innovation and development of services trade formats arising from technological progress and the new industrial revolution, China needs to actively participate in the formulation of corresponding trade rules, thus having a greater say and participation in decision-making in rules and standards, and maintain a rules-based, open, fair, transparent, predictable, inclusive and nondiscriminatory multilateral trading system. A good example is China's official application to join the Digital Economy Partnership Agreement in November 2021, which establishes new approaches and cooperation on digital trade issues.
Last but not least, in the process of promoting the liberalization of trade in services, it is necessary to coordinate openness and security to build a solid national security barrier.
In the course of reshaping the new generation of international trade and investment rules, national security has become an important consideration in the adjustment of the economic and trade policies of various countries. According to the United Nations Conference on Trade and Development's World Investment Report 2022, most developed countries have introduced or strengthened investment screening regimes for investment based on national security criteria, which has brought the total number of countries conducting FDI screenings for national security to 36.
Against such international backdrop, China also attaches great importance to national security during the process of expanding highlevel opening-up. In November 2021, the Resolution of the CPC Central Committee on the Major Achievements and Historical Experience of the Party's Centennial Struggle proposed "five overall plans", one of which is to coordinate openness and security.