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The Ministry of Commerce Convenes a Press Conference on Trade in Services and Opening Up of Service Sector

On January 9, the Information Office of the Ministry of Commerce convened a press conference (hereinafter referred to as the "Conference") on trade in services and opening up of service sector. Yao Jian, Spokesperson of MOFCOM, Zhou Liujun, Director-general of Department of Trade in Services and Commercial Services, Qiu Guangling, Deputy Director-general of Department of Foreign Investment Administration, and Gu Jun, Vice Chairman of Shanghai Municipal Commission of Commerce attended the Conference and took questions from journalists. Actual records of the Conference are as follows:

Yao Jian: Dear friends from the press, Good morning! Welcome to attend the Conference on trade in services and opening up of the service sector today. I am Yao Jian, Director-general of the General Office and Spokesperson of MOFCOM. Those who attend the Conference today are Zhou Liujun, Director-general of Department of Trade in Services and Commercial Services, Qiu Guangling, Deputy Director-general of Department of Foreign Investment Administration, and Gu Jun, Vice Chairman of Shanghai Municipal Commission of Commerce.
Firstly, let me introduce to you the overall situation of China’s trade in services and opening up of service sector in 2013.

In 2013, China’s trade in services remained upward trend, and the scale hit a record high. According to the rough statistics, in January-November 2013, China’s import and export of services reached USD484.7 billion, going up by 12.4% year-on-year. It is estimated that the import and export of services of the whole year will exceed USD520 billion, growing by over 11% year-on-year. The main features are as follows:

1. The scale was expanding rapidly, and the international standing was promoting. The statistics of China’s trade in services began from 1982, with the initial import and export of only USD4.4 billion. Since the entry into WTO, the scale of trade in services expanded quickly. In 2003, the total import and export exceeded USD100 billion for the first time; 2007 USD200 billion; 2008 USD300 billion; 2012 USD470.6 billion and in 2013, the volume will over USD520 billion. At the same time when the scale was expanding, the international standing of China’s trade in services was promoting. In 1982, China’s trade in services only accounted for 0.6% in the world, and in 2012, it reached 5.6%, ranking the third in the world. It is estimated tentatively that in 2013, China’s trade in services will still rank the third in the world.

2. High value-added trade in services kept a rapid growth, and traditional trade in services developed steadily. The rapid growth of high value-added services was an obvious feature of China’s development of trade in services. In January-November 2013, the import and export of services for consulting, royalties and license fees, and computer and information service reached respectively USD56.5 billion, USD19.1 billion and USD19.2 billion, increasing by 20%, 15.9% and 16% respectively. Traditional trade in services developed steadily. In January-November 2013, tourism service kept a rapid growth as in 2012, accounting for 36.3% of China’s total volume of trade in services, and still being the largest services item in terms of import and export; in the same period, transportation service grew slightly, accounting for 24.1%. Tourism and transportation were still the main source of deficit of China’s trade in services.

3. China’s service outsourcing business kept a rapid growth. In January-November 2013, the amount of service outsourcing contracts signed by China reached USD83.16 billion, increasing by 60.6% year-on-year; the execution amount reached USD53.38 billion, increasing by 37.8% year-on-year. Among that, the amount of international service outsourcing contracts undertaken reached USD53.41 billion, representing a year-on-year growth of 47.8%; the execution amount reached USD37.55 billion, representing a year-on-year growth of 38.3%. Among that, Knowledge Processing Outsourcing (KPO) business grew rapidly. In January-November 2013, the amount of international service outsourcing contracts undertaken of Information Technology Outsourcing (ITO), Business Process Outsourcing (BPO) and Knowledge Processing Outsourcing (KPO) reached respectively 41.4%, 34.7% and 66.3%.

In 2013, the growth of trade in services was still pulled mainly by domestic demands, with a faster growth of imports than that of exports. In terms of international demand, the global downturn remained hard to pick up in the short term and the gliding trend of growth of trade in goods will create pressure on the supporting imports and exports of trade in services. Though a sign of recovery was seen in the U.S. economy, the tight fiscal policy restricted its speed; the recovery in Euro Zone lacked power and the recession situation has not changed fundamental. Based on the development law, service sector accounts for 70% of the global economic aggregate at present and even around 80% in some main developed economies; service exports account for 20% of the global exports, while in China, they account for less than 9% of its foreign trade exports, with much room to increase. With the domestic industrial structures adjustment, service sector will play a continuous role in supporting the trade in services and improve the competitiveness of service exports gradually and obviously.

China’s trade in services has made positive achievements. First, trade in services has become a new growth point of China’s foreign trade. In 2012, China’s foreign trade in services totaled USD470.6 billion, growing by 12.3% year-on-year, accounting for 5.6% of the total global trade in services and ranking the third in the world. Among that, export was USD190.4 billion and import USD280.1 billion, increasing by 4.6% and 18.2% year-on-year respectively. The trade deficit reached USD89.7 billion, increasing by 63.3% year-on-year. According to the development trends in the first eleven months of 2013, the growth rate of trade in services was five percentage points faster than that of trade in goods. For some time to come, trade in services tends to maintain a rapid growth, faster than that of trade in goods. Trade in services is expected to exceed USD600 billion in 2015 and hit USD1 trillion in 2020. Second, trade in services will be the impetus to drive the economic transformation and upgrading. In 2006-2012, imports and exports of high value-added services such as finance, computer and information service, consulting, advertise publication, and royalties and license fees grew at an annual average rate of 54.1%, 25.4%, 22.0%, 20.9% and 18.3% respectively, all higher than that of the total imports and exports of services year-on-year (16.1%). The development of high value-added services like computer and information service and consulting service has improved the overall competitiveness of industry chains effectively, has extended the value chains involved in international division of labor and has become an important driving force of China’s economy transformation and upgrading. According to the latest research by UNCTAD on global value chains, service sector contributed almost half of the global export-added part. Thirdly, trade in services has served as an important container to stimulate employment, especially on graduates’ employment. According to the statistics, in 2009-2011, China’s trade in services accommodated employment for 1.84 million, 2.09 million and 2.11 million graduates in each year respectively. As at the end of November 2013, service outsourcing sector alone employed 5.113 million persons, of which 3.442 million were college degree or above, accounting for 67.3% of the total. Trade in services has been an important channel for solving graduates’ employment.

As China opens wider to the outside world, especially the further opening of service sector, in terms of the absorption of foreign capital, service sector takes up a higher percentage to 51.4% of China’s total absorbed foreign capital at present, with twelve percentage points higher than that of manufacturing industry. It’s a tendency of development. China’s service sector will account for the most of the foreign capital intake. With wider opening-up to promote further development of China’s service sector, the foreign capital absorbed in service sector and opening-up will provide stronger impetus for China’s economy development.

That's a briefing of the general situation. Now Mr. Zhou Liujun, Director-general of Department of Trade in Services, will brief on the priorities and work plan of the Ministry of Commerce to promote the development of trade in services.

Zhou Liujun: Dear friends from the press, good morning! Now I will make a briefing on the efforts of the Ministry of Commerce to promote the development of trade in services.

In recent years, under the support of the CPC Central Committee and the State Council, the Ministry of Commerce has grasped the opportunity of global industrial restructuring and the accelerated transferring of service sector, targeting at achieving a positive interaction and coordinated development of trade in services and trade in goods, and constantly pursuing orderly opening-up of service sector, and fostering a policy environment which is conductive to the development of trade in services, so as to promote the rapid development of China's trade in services.

I. Efforts of the Ministry of Commerce to Promote the Development of Trade in Services

Trade in service involves different sectors, and industrial administration and trade promotion are responsibilities of different ministries and commissions. The Ministry of Commerce has given full play the role of lead department in trade in services, and strengthened communication and coordination with relevant competent departments of the sector to promote positive interactions between industrial policies and trade policies, and has made much effort in establishing and improving administration mechanism for trade in services, releasing policy measures for trade in services, building platforms to promote trade in services, and promoting exports of services in key sectors.

(A) Improve the coordination and administration mechanism for trade in services. In 2006, the Ministry of Commerce set up the Department of Trade in Services which is in charge of promotion and coordination of China's trade in services. In 2007, the Ministry of Commerce, in concert with 34 departments including the National Development and Reform Commission and the Ministry of Finance, established across-department contact mechanism for trade in services. The Ministry of Commerce released and improved the Statistical System of International Trade in Services, and successively revised the regulations on technology import and export administration. The Ministry of Commerce established and improved a work contact mechanism with international organizations and foreign governments, and established a dialogue mechanism for working departments of trade in services with EU. The Ministry of Commerce also established work relations with six international organizations and the governmental departments of major developed countries including the U.S., UK and Japan, and signed a memorandum of understanding on trade in services cooperation with Germany, Australia, UK, Ireland and India.

(B) Release supporting policies on trade in services. A number of policy papers, including the Several Opinions of the State Council on Accelerating the Development of the Service Sector, Opinions on Implementing Several Policies and Measures to Accelerate the Development of the Service Sector and the 12th Five-year Development Plan for the Service Sector, have put vigorously promoting the development of trade in services as an important part. In 2011, the Ministry of Commerce, in concert with 34 departments, formulated the Outline of the 12th Five-Year Development Plan for Trade in Services. The Ministry of Commerce also issued the Guiding Opinions on Finance Supporting the Development of Trade in Services jointly with the Export-Import Bank of China, and signed the Agreement on Comprehensive Cooperation in Supporting the Development of Trade in Services with China Export &Credit Insurance Corporation.

(C) Further explore the platform to promote trade in services. The Ministry of Commerce set up the network of China Trade in Services in 2006, providing such services as information consultation and market supply and demand. In 2007, the State Council approved to establish China Association of Trade in Services, which was a breakthrough in building intermediary organization in the area of trade in services. In 2012, the Ministry of Commerce, in concert with Beijing Municipal People's Government, sponsored the first session of China Beijing International Fair for Trade in Services, which was the first international comprehensive expo for trade in services across the world. In 2013, the Ministry of Commerce sponsored the first session of China (Shanghai) International Technology Fair. Moreover, the Ministry of Commerce has emphatically participated in the provision of support for a number of large-scale fairs in recent years, including China (Shenzhen) International Cultural Industry Fair, International Trade in Services (Chongqing) Summit, China (Dalian) International Software & Information Service Fair and China (Hong Kong) International Fair for Trade in Services, gradually forming a pattern for fairs of trade in services with extensive coverage and emphasis.

(D) Promote service exports in key sectors. In service outsourcing, the General Office of the State Council has made reply to relative policies on three occasions, and the Ministry of Commerce has, in concert with relevant ministries and commissions, released supporting policies in financial funds, preferential tax, financial support, personnel training and special working hours. In cultural exports, the Ministry of Commerce has, in concert with relevant ministries and commissions, formulated supporting policies in fiscal support, sales tax, income tax and financial support so as to promote culture exports. At present, a new series of policy measures have been formulated and submitted to the State Council. In technology imports and exports, discount policies on technology imports and exports have been released in succession so as to promote sound and rapid development of technology trade by giving play the guiding role of the central government funds. In trade in services of Chinese medicine, the Ministry of Commerce has carried out building of key projects, key enterprises (institutions) and regions.

II. The work plan of the Ministry of Commerce to promote trade in services

The 12th Five-Year Plan period is an important period of strategic opportunities for China’s development of trade in services. Vigorously developing trade in services is of great significance to comprehensively deepening reform, accelerating the transformation of economic development mode, enhancing international competitiveness of industrial chains, overall participating in cooperation in value chain, increasing employment of undergraduates and creating an “updated version” of Chinese economy. The Ministry of Commerce will fully implement the spirit of the Third Plenary Session of the 18th CPC Central Committee seize the opportunity to give full play to the decisive role of the market in allocating resources, adhere to combining the opening-up of the service sector with improving the international competitiveness of trade in services, smoothen the administrative mechanism of trade in services and improve the policies and regulations for trade in services so as to promote the sustainable, healthy and rapid development of China's trade in services.

(A) Establish the strategic position of trade in services. The Ministry of Commerce makes the trade in services as one of the strategic priorities for future economic development and expands export of services. In addition, the Ministry of Commerce, focusing on expanding trade scale, optimizing trade structure and promoting trade balance and targeting on Chinese Services for International sharing, foster a development pattern with features of Chinese Services and Made in China, accelerate to improve the international competitiveness of Chinese services and to improve the value increment capacity of China in international industrial chains by developing trade in services so as to create an “updated version” of China’s foreign trade.

(B) Orderly Expand the opening-up in service sector. The Ministry of Commerce will orderly expand the opening-up in service sector through the early and pilot implementation of China (Shanghai) Pilot Free Trade Zone in combination of the implementation of the strategy of free trade zone on the basis of national treatment of pre-accession and negative list in the China-U.S. Investment Agreement Negotiations, so as to push forward reform through the opening-up. The Ministry of Commerce will promote the opening-up gradually in such areas as finance, shipping, education, medical treatment and culture and further expand utilization of foreign capital in service sector so as to improve the quality and level of foreign capital utilization. The Ministry of Commerce will also encourage competent enterprises in service sector to go global.

(C) Strengthen the construction of laws and regulations on trade in services. The Ministry of Commerce will speed up the legislation process for trade in services in accordance with the Law of Foreign Trade. The Ministry of Commerce will give priorities to the macro planning and top-level design in trade in services and start researches for the 13th Five-Year Plan. The Ministry of Commerce will strengthen inter-ministerial coordination in trade in services and coordinate the opening-up in service sector, strengthen macro-guidance and coordinate the policies of different departments to support exports so as to promote trade facilitation and liberalization. Moreover, a system composing of relevant government departments, chambers of commerce and associations, trade promotion organizations and enterprises will be established to promote trade in services.

(D) Foster a fair and competitive market environment. It is necessary to attach the same importance to trade in services as to trade in goods. The Ministry of Commerce will improve the intellectual property rights system related to trade in services, build platforms for public services, trade promotions and financing for SMEs, actively promote trade in services facilitation and strengthen international exchanges in personal mobility, mutual recognition of professional qualifications and formulation of industrial standards so as to facilitate professionals and professional services to go global. The Ministry of Commerce will also resolutely break through the "glass door" and "spring door" that hinder the development of private enterprises and transnational investment.

(E) Improve the policy system of trade in services. Establish supporting policies for finance, taxes and dues and foreign exchange fit for the development of trade in services; strengthen the guidance for key fields of service export and formulate Guideline Directories for Key Service Export Fields; strive to establish a special fund for trade in services; expand the scope of value-added tax in lieu of business tax, and implement zero tax for the export of services of industries that accord to the favorable conditions of value-added tax in lieu of business tax; innovate financial supporting polices and develop new financial products according to the features of enterprises of trade in services; improve the statistics system of trade in services and improve and innovate the statistical approach for trade in services and establish a management mode of port customs clearance suitable for the features of trade in services.

(F) Improve the international standing and discourse right of China's trade in services. Actively take part in negotiations on related international rules organized by WTO and other organizations to accelerate the realization of thesynergyof international rules and China's industrial development; play the role of "key member" in multilateral negotiations, strengthen the communication and cooperation with BRICS and safeguard the special and differential preferential treatment of developing countries. Promote the transparency of administrative examination and approval for service sectors in the world and promote the convergence of industrial technical standard to create a more favorable external environment for the development of trade in services.

Thank you.

Yao Jian: Next, Let’s welcome Qiu Guangling, Vice Director-general of the Department of Foreign Investment, to introduce to us the opening up and utilization of foreign investment of China’s service sector.

Qiu Guangling: Good Morning, all friends from the media. Next, I will introduce the utilization of foreign investment in 2013 of China's service sector and the work plan for the next step.

I. Foreign investment absorption in 2013 of service sector

In January-November 2013, newly-established foreign-funded enterprises were 20,434 all over the world, going down by 9.19% year-on-year; the actual utilization of foreign investment was USD 105.506 billion, going up by 5.48% year-on-year. Among that, actual utilization of foreign investment of service sector kept rapid growth. In January-November, newly-established foreign-funded enterprises in service sector were 12,337, accounting for 60% of all the foreign-funded enterprises in the whole country, growing by 0.72% year-on-year; actual utilization of foreign investment was USD 54.247 billion, increasing by 14.04% on year-on-year basis, among which, electric machine repair industry (a year-on-year increase of 259.94%), culture/entertainment and sports service industry (a year-on-year increase of 80.89%), production and supply of electric power/gas and water (a year-on-year increase of 54.82%) saw comparatively rapid growth.

Since the reform and opening-up, service sector has become the main attraction of foreign investment instead of manufacturing industry, and modern service sector has become a new hot spot of the opening-up. The proportion of service sector is growing every year; in 2011, the proportion was 47.62%, surpassing the manufacturing industry for the first time; in 2012, the proportion was 47.66%, 3.6 percentage points higher than that of the manufacturing industry; since 2013, the proportion of service sector has kept surpassing manufacturing industry, and now stays at the highest level, more than two times of the proportion at the beginning of China's entry into WTO (24% in 2001).

In 2013, on the basis of stabilizing the scale of foreign investment, the Ministry of Commerce continued to make efforts to the improvement of the quality of foreign investment utilization and guide the direction of foreign investment reasonably. In terms of foreign investment utilization of trade in services, the Ministry of Commerce actively and stably promoted the opening-up of finance, telecommunication, education and medical care, and further expanded the opening-up of the fields above under the framework of ECFA and CEPA; improved related laws, regulations and provisions, formulated related provisions on foreign-funded lease finance company, establishing profit-making nursing institution for the aged and for the disabled and market management of publication; supported Shanghai Free Trade Pilot Zone to expand the opening-up of financial services, shipping services, commerce and trade services, professional services, cultural services and social services; and coordinated with related departments in formulating the industrial access catalogue of Qianhai modern service sector.

II. Work plan for the next step

Since 2013, China's absorption of foreign investment has been relatively stable and has gradually picked up. From February to November, the absorption of foreign investment for a single month has kept a positive growth for 10 consecutive months. The scale of absorption of foreign investment for the whole year will still keep steady, which has benefited from the comprehensive advantage of China's introduction of foreign investment.

2014 is the first year to implement the Decision of CPC Central Committee on Major Issues Concerning Comprehensively Deepening Reforms(hereinafter referred to as the "Decision") with great tasks, responsibilities and missions. It needs to be specially mentioned that the effect of reforms driven by the new administration of China begins to emerge, and the transformation of the government functions, economic restructuring and other social and economic reforms are conducive to the expansion of the reform and opening-up, development of real economy, boost of effective domestic demands, improvement of investment environment and will continuously bring institutional bonus to the real economy. The Decision deliberated and issued by the Third Plenary Session of the 18th CPC Central Committee proposes to broaden investment admittance, drive the orderly opening-up of fields like finance, education, culture and medical care and lift the restrictions on foreign access to services sectors such as nursery, old-age care, architecture design, accounting and auditing, trade and commerce and logistics and E-commerce. As for those subject to "orderly open-up" required by the Decision, the Ministry of Commerce will preferentially grasp the bottleneck of opening-up and study and formulate a timetable of opening-up in combination of the industrial reform goals and strive to gain progress in some major problems of major fields. As for those fields of service sector subject to "release of the foreign investment admittance restriction" required by the Decision, the Ministry of Commerce should make clear the key problem of the opening-up of such fields as soon as possible and learn from the pilot opening measures so that the foreign investment of related fields could not only come in, but also can be used to function under a market environment with fair competition.

Next, we will take "stable scale, optimize structure and improve level" as the acting and starting point, take a series of measures to attract foreign investment and implement more active strategies of opening-up; positively implement the requirements of the Decision of the Third Plenary Session of the 18th CPC Central Committee and aiming at different realities of different industries and following the principle of expanding opening-up and promoting deepening of the reform, speed up the study, formulation and release of the opening-up policies of related departments.

Amid the fiercer the competition of attracting foreign investment, the Ministry of Commerce will study to further expand the investment promotion strength of modern service sector and other industries and standardize the activities of attracting foreign investment. In terms of innovation of management mechanism, the Ministry of Commerce will make efforts to improve the service level, simplify the administrative examination and approval of foreign investment, deepen the management system reform of foreign investment, and well make the top-level design; continue to cut examination and approval affairs and simplify procedures to further promote the publicity of administrative examination and approval, create a transparent legal environment, a market environment with fair competition and high effective and convenient administration environment, protect the legal interests and intellectual property of foreign-funded enterprises and promote the combination of attraction of capital, technology and talents.

Thank you.

Yao Jian: Now, let’s welcome Mr. Gu Jun, Deputy Director-general of Shanghai Municipal Commission of Commerce to introduce relevant situation in Shanghai.

Gu Jun: All the friends from the press, I’ll brief on the development of trade in services in Shanghai from four aspects.

I. The basic information and characters of development of trade in services in Shanghai

Shanghai is the first municipality where the department of trade in services is set up, the first municipality where the thinking of “equal promotion of trade in services and trade in goods” is insisted and the first municipality where the enterprises group and industry association of trade in services are established among all the provinces and municipalities in national business system. Over years’ development, trade in services in Shanghai maintains a good momentum of “sound ground, rapid development, large scale and full categories” at present.

First, it enjoys a large scale and rapid development. The import and export of trade in services in Shanghai in 2010 broke through USD100 billion for the first time and surpassed USD150 billion in 2012 with an annual growth rate of more than 20%, higher than that of the trade in goods in Shanghai at the same period and also higher than that of the national average trade in services. According to the preliminary statistics by Shanghai Municipal Commission of Commerce, the import and export of Shanghai trade in services amounted to USD124.21 billion in the first three quarters of 2013, growing by 23.4% year on year.

Second, it covers various fields with many advantageous areas. All the 12 categories of Shanghai trade in services were involved in import and export; traditional areas like transportation and tourism took the lead in terms of total value; it also ranked the top in high value-added emerging service areas like consulting, advertisement publication, computer and information technology and finance and insurance sectors around the country.

Thirdly, it enjoys innovated modes and diversified kinds of business. Shanghai has gradually developed a new service outsourcing development mode centering on providing solutions and high-end R&D. The value of contracted offshore service outsourcing in the first ten months of 2013 reached USD1.789 billion, increasing by 23.5% year on year. Shanghai also positively encouraged to develop a serial of frontier business such as the intelligence service of bulk commodity trading, mobile web application development, cloud computing and big data platform to push an innovative, high-end and diversified development of trade in services.
 
II. The main approaches and experience of Shanghai for promotion of trade in services

Over the rapid development of trade in services, Shanghai municipality, under the guidance of central government, has strengthened researches and practice and found out some effective ways.
First, innovate the working mechanism. In 2008, the Ministry of Commerce and Shanghai municipality jointly signed the Agreement on Jointly Promoting the Comprehensive Development of Shanghai Trade in Services to form a close cooperation mechanism between the Ministry of Commerce and the city. The trade in services development joint meeting led by cantonal leaders around the city to strengthen the communication and coordination among different departments of government and together solve some big issues or bottleneck problems in trade in services was also set up in Shanghai.
 
Second, strengthen the planning and guidance. Shanghai complied Medium-term and Long-term Development Planning of Shanghai Municipality for Trade in Services successively, proposing to create a brand of “Shanghai service” gradually and make Shanghai the center of first-class trade in services around Asia-Pacific by 2020. Shanghai released the 12th five-year plan for trade in services and service outsourcing development, which confirmed the development goal, key areas, regional layout and strategic measures for the development of trade in services during the period of the 12th five-year plan.

Thirdly, focus on key breakthroughs. Shanghai set up municipal special fund to support the rapid development of some advantageous areas like information technology, international logistics, culture services, professional services and traditional Chinese medicine, etc. On the basis of promoting the offshore service outsourcing development, Shanghai also launched to identify the technological advanced enterprises and the best banking partner so as to provide the enterprises with tax reduction and finance support.

Fourthly, establish a public service platform. The public service platform construction could achieve twice of the results with half of efforts for the development of trade in services. At present, Shanghai has established three large public service platforms preliminarily, of which the language service platform for culture trade will break through the language bottleneck to accelerate the going-out of domestic cultural enterprises, while traditional Chinese medicine (TCM) service platform will realize the remote medical consultation and cross-border TCM service by way of modern scientific means and service outsourcing promotion platform will reduce the transaction cost of outsourcing enterprises by standardization and routinization operation.

Fifthly, optimize trade environment. Trade in services facilitation and trade in goods facilitation are equally important. Shanghai initiated early and pilot implementation policies to render more convenient environment for enterprises. For example, in foreign exchange management, Shanghai provided “a green channel for foreign exchange” for key enterprises to encourage them to pilot RMB cross-border trade settlement; in inspection and quarantine, Shanghai set up “a fast way to check” to simplify the import approval procedures; in personnel immigration service, facilitation policies on visa and residence permit for foreign executives in trade in services enterprises were released; in intellectual property, Shanghai released several opinions to deepen intellectual property protection in service outsourcing so as to improve the protection consciousness around the whole society.
  
III. Trade in services is an important impetus to drive the innovation and transformation of Shanghai

Experience in the past tells us that trade in services has played a positive and important role in improving the level of service industry in Shanghai and promoting the development of four centers of international economic center, financial center, shipping center and trade center of Shanghai.
First, positively push the economic structure adjustment. Trade in services is both the result and impetus of service industry development. They promote each other in coordinated development. In the first three quarters of 2013, the value added of the tertiary industry in Shanghai increased by 9.1%, accounting for 61.6% of GDP. With this progress, the scale of producer services such as industrial design, logistics transportation, finance and insurance keep constant expansion, pushing into industrial integration and high-end value chains.

Second, speed up trade transformation and upgrading. Service-oriented Trade is an important tendency of modern international economic and trade development. Affected by the downturn in overseas market and the rising cost, Shanghai trade in goods shows a weak growth while trade in service maintains a good momentum and becomes a new growth point of Shanghai foreign trade development. Trade in services accounts for a higher percentage of the whole foreign trade, taking up 25.8% in 2012. The development of the trade in services reduces the dependence on energy and raw material and increases the added value of per-unit export, thus gradually making the extensive trade structure turn into intensive one and promoting the transformation and efficiency improvement of foreign trade.

Thirdly, effectively attract high-end talents. As a knowledge-intensive and technology-intensive industry, trade in services enjoys a natural attraction to high-end labor force. The rapid development of trade in services in Shanghai has employed a great number of middle and high-end labor force and played a positive role in creating job opportunities for graduates. More important, as more and more new models, new kinds of business and new areas spring out, middle and high-end talents of different types in trade in services also gather quickly to lay a solid foundation of talents for Shanghai’s innovation and transformation.

IV. Work for next step

Next, Shanghai will take the opportunities of comprehensively deepening reforms and building China (Shanghai) Pilot Free Trade Zone to actively accelerate the transformation of the government functions, form new competitive edges of trade in services and further promote Shanghai’s social and economic development.

First, carry out deep analysis and researches to expand new emerging areas. Shanghai will strengthen statistics analysis and dynamic industry researches to comb out and analyze the factors constraining the trade in services related to Shanghai’s transformation and also, improve the level of new emerging areas like education, professional service, finance and techniques on the basis of consolidation of the traditional ones.

Second, quicken to develop the main body of the market in Shanghai Pilot Free Trade Zone. Shanghai will make full use of various institutional arrangements for Shanghai Pilot Free Trade Zone, focus on national cultural trade base construction, fasten to form combined effects between cultural products and services and accelerate to develop new emerging business regarding trade in services like biological medicine, software information, management consulting and data processing.

Thirdly, positively explore international market to make a famous brand of “Shanghai service”. Shanghai will carry out a brand localization strategy for trade in services, provide enterprises with brand promotion and information consulting services, set up a sound brand protection mechanism for trade in services, improve implementing policies relating to brand promotion and lead the brand of “Shanghai service” to go out so as to improve the soft power of Shanghai.
Thank you all!

Yao Jian: Welcome for any questions.

Journalist from China Daily: As China’s trade in services grows fast, but still enjoys great potential with respect to its proportion in relation to trade in goods. It is also said that China is powerful in trade in goods but weak in trade in services, what’s your comment? Please update the latest progress of the Trade in Services Agreement. Thanks.

Yao Jian: Trade in goods and trade in services are two closely related forms of international trade. Trade in goods relies upon physical materials which can be stored, while the difference of trade in services lies in the non-storable property and the trade in services is always attached to the trade in goods. For the last year, turnover of our trade in goods was predicted to exceed USD 4 trillion and actually reached USD 4.14 trillion around. However, the turnover of trade in services was about 1/8 of that of trade in goods, or only USD 520 billion. It can be said that our trade in goods has arrived at the internationally-leading level and its proportion exceeded 11% and ranked the second in the year before the last. In recent years, trade in services also grew fast and ranked the third by dint of a percentage of 5.6% of global trade in services. However, we should be aware of that trade in services has greater space of development than trade in goods. Three aspects should be noted: firstly, regarding the competitiveness, traditional service trade takes a large proportion in our service trade, including tourism and transport that account for 56% in aggregate, while some newly-established service trades are growing, including professional services; secondly, trade in goods has a significant favorable balance, while the unfavorable balance of trade in services can not be neglected, as reaching about USD 110 billion in 2013 and thirdly, the proportion is small: at global level, trade in services accounted for about 20% of international trade and the most developed countries’ proportions were higher and ours only accounted for 9%-10%. We still need to make efforts for improvement.

In the following first and second decades, our trade in goods and trade in services will go forward together and complement with each other and, in particular, the trade in services will increase the added value of trade in goods. Currently, people around the world are making research on a new statistical concept of international trade which focuses on the added value. Trade in services will play an extremely important role in improving the overall competitiveness of a country. How to improve the subsequent development of trade in services? There are three key points. The first one is the expansion of opening-up. The development of trade in goods indicates that only the opening-up can strengthen the competitiveness of service industry; the opening-up of the service industry will be further expanded along with its trial in Shanghai Pilot Free Trade Zone, implementation of the strategy of free trade zone as well as the national negation on FTA. In a word, we will further develop the orderly opening-up of service industry based on the Third Plenary Session. The second is promotion. The competitiveness of our service industry is relatively poor globally, which needs to be promoted and supported by relevant policies. The third is further expansion of domestic consumption. The increase of domestic demand is important potential and power for development of service industry.
  
As for the negotiation on trade in services agreement, on last September 30, we officially reported to TISA negotiation participants the decision made by China to participate in the negotiation. China made clear in the report that China would actively and constructively participate in the TISA negotiation. Thereafter, parties concerned showed positive attitude and welcome for China’s participation. We will maintain close communication with negotiation participants.

Journalist from Beijing News: I have two questions. Firstly, as the Decision made in the Third Plenary Session required to accelerate the development of the new advantages in participating in and leading international economic cooperation and competition, how can trade in services takes effect in developing new advantages of competition? Secondly, as mentioned by Director-general Qiu Guangling we will work out a schedule for the orderly opening-up required in the Decision. What are the specific measures in this aspect? Thanks

Zhou Liujun: For the first question, it is very important that the Decision made in the Third Plenary Session of the 18th Central Committee of the CPC pointed out “to accelerate the development of new advantages in participating in and leading international economic cooperation and competition to promote the reform through opening-up”. We considered that trade in services will play an irreplaceable and active role in developing new advantages in participating in and leading international economic cooperation and competition. In specific, energetic development of trade in services can break the restrictions of resources and environment and drive the transformation of foreign trade development mode. The development of trade in services will further improve the developing level of our service industry, increase the proportion of service industry in the whole industry, facilitate the transformation from the extensive development mode in the way of scrabbling resources and environment and consuming a large quantity of energies to the development mode in the way of increasing talent quality, technical competitiveness and comprehensive competitiveness so as to strengthen the ability and level of economic development. This is a green development way for transformation, in which services will play an important role. For example, previously China always processed materials supplied by clients and produced products, which is called “Blue Collar plus Products”, while, in recent two years, China's service outsourcing business, which is called “Mind Plus Computer” that means high-end talents make research on data processing and business process, grew fast. In a word, it is the competition of human quality, competition of service industry and, in particular, the competition of high-end service industry.

Development of trade in services can support the transformation and upgrading of trade in goods. As mentioned by Director-general Yao Jian, China is a strong power in terms of trade in goods and the export tops other global players; During China's development from a large trade in goods country to a powerful one, trade in services plays an important role. For example, the development of trade in services including transport, financial business and insurance service will powerfully support the increase of trade in goods in quantity, quality and competitiveness and the development of productive services including R&D service and professional service as well as the development of service trade facilitate our industry forward the two ends of “Smile Curve” and improve the value adding ability in the international industrial Chain. For this awareness, both developed and developing countries attach great importance to the development of trade in services. Therefore, China shall grasp the opportunity of global industry transformation, especially the opportunity of global service industry transformation, to build favorable environment for the development of trade in services so that trade in services fully makes effects when China accelerates to develop new advantages in participating in and leading international economic cooperation and competition. Generally speaking, in the process of developing new advantages, trade in services has tremendous potential and space.

Qiu Guangling: For your second question, in the current year, the Ministry of Commerce will continue developing the orderly opening-up in service area, and the following measures will be considered. The first one is to research the orderly opening-up in financial, educational, cultural and medical areas, and release the access restrictions on the foreign investment in sectors of children education, retirement service, building design and commercial trade logistics. We will prepare the Interim Measures for the Management of Sino-foreign Medical Institutions in Joint Venture and Cooperation with the national competent authority for the industry, expand the opening-up of the operational retirement and disabled service institutions and the sales of non-store business including TV shopping, actively drive the departments of culture, press, publication, broadcasting and TV to further research the opening-up expansion in cultural area, promote the implementation of the opening-up policies of CEPA operational training institutions and further delegate the approval items of foreign investment in relation to service industry. The second one is to further simplify the filing procedures for investment by foreign merchants in real estates with relevant departments and carry out dynamic regulation and analysis work. The third one is optimize the administrative process, practically reduce the management of foreign investment, drive relevant departments to reform the approval management for investment by foreign merchants in line with the principle of the same foreign investment as the domestic investment, complete the linkage work in relation to reform of commercial departments’ foreign investment management, listing registration and foreign exchange management. according to the principle of “executing the unified market access system” specified in the Decision. Thanks.

Journalist from Central Radio Station: My question is for Director-general Gu Jun. As you said, the main experience of Shanghai formed three public service platforms. Please tell us the initial purposes for establishment of such three platforms. In practice, how do they operate and work? Thanks.

Gu Jun: Establishing such three platforms is mainly a demand-based behavior. Regarding the cultural trade language service base, as we all know, China has historical and glorious cultures and the modern culture after the reform and opening-up is richer and more diversified. To spread Chinese culture out and make the world understand the antique but brand new China, the language service at a high level becomes a necessity. However, the language service does not mean simple language switchover but the annotation and interpretation in the way acceptable to foreign clients. In this process, we found in all kinds of researches and communications that it is irresistible to spread the culture out, for which, the intermediate language service is critical. Hence, based on the general demand, we proposed to establish such cultural trade language service platform.

During the establishment of such three platforms, we focus on how to drive the formation of the market system in a certain area. The Third Plenary Session of the 18th Central Committee of the CPC pointed out to place the decisive effect of the market on resource allocation. What public service platforms reflect is the effect of resource allocation. All the public service platforms gathered resources and information of supplies and demanders and gathered the professional service elements of industrial chain. In effect, it is to form the industrial ecology in one certain area through the integrating functions of platforms. During the driving process, three developments are attached with great importance. The first is to drive the professional development. Regarding the traditional Chinese medicine service trade platform, as we all know, traditional Chinese medicine is both extensive and profound. One important study direction of the traditional Chinese medicine service trade platform is to combine the modern detecting techniques and the extensive and profound traditional Chinese medical theories and the platform has made efforts on such part. The second is to drive information application development. As most people believes that language service is absolutely under the face-to-face mode, but in the near future, the face-to-face mode may be unnecessary. Instead, we can enjoy the immediate and high-level language service through our smart phones. Now the cultural trade language service is making research on such part. The third is to drive the international cooperation development. For example, the service outsourcing trades facilitate the platform to actively cooperate with foreign peers, help foreign service outsourcing demand interface with the excellent domestic outsourcing enterprises. For another example, traditional Chinese medicine service trade platform makes more efforts to cooperate with World Health Origination in expanding the channel of traditional Chinese medicine to the outside world. Certainly, such three platforms are in groping process, I hope media friends could continue to follow them. Thanks.

Journalist from CCTV: I want to ask a question about festival markets. As Spring Festival is just around the corner, the market before Spring Festival is stable according to the detection of the Ministry of Commerce, and can you introduce us more detailed information? In addition, as far as we know, some of the red meat reserved by the central government has been put by the Ministry of Commerce onto such markets as Xinjiang. What other measures can we take to stabilize price and guarantee market supply? Thank you.

Yao Jian: The market issue is also an important part of trade in services. The development of service industry is closely connected with the life of people and the Department of Trade in Services and Commercial Services of the Ministry of Commerce has a strong job duties and mechanism construction and has the function of this aspect. As Spring Festival is around the corner, the Ministry of Commerce focuses on guaranteeing the stable operation and effective supply of the market during the festival. As for the question you asked about market values, we have the monitoring and reporting system of edible agricultural products. This system shows that, before Spring Festival, the overall commodity prices of the market are basically stable during this period with some prices increasing on some varieties. I have seen the detailed figures. For example, from December 30, 2013 to January 5, 2014, the grain prices were stable with some slight increase; pork price decreased; the price of red meat remained a high level and the price of egg increased a little. The prices of 18 kinds of vegetables we monitored ramped up by 2.9%, compared with those in the previous week, and declined by 0.2% compared to the same period last year. So, we made a general judgment that the market supply is stable as a whole and the prices of some varieties rise slightly.

Festival factor is an important factor of fluctuations in prices. We mainly take measures from three aspects to guarantee the stable supply and abundant varieties of festival markets: Firstly, we enhance market monitoring. Information is in the first place. We will carry out a daily monitoring system of festival markets to monitor the supply situation and price trend of the market from now to the working days of Spring Festival. By doing so, we can strengthen analysis and early warning and deliver information in time in order to guide production, consumption and circulation and guarantee market supply. Secondly, we will make a good arrangement of market supply. In addition to the reserve issue you mentioned just now, we will also strengthen the connection between producing areas and sales areas. China has a vast territory and the southern part of China is an important producing area of vegetables. We shall be kept updated on the market supply from the producing area to sales area in time. Thirdly, large enterprises shall play a role in guaranteeing market supply.

We shall carry out effective market monitoring and protection towards major commodities. We talked about the issue of putting red meat in reserve onto the market just now. The price of red meat is high, so we have put red meat in reserve onto the market. Meanwhile, we also noticed that import is another important factor for adjusting domestic market, so the arrival of the imported red meat commodities grew faster during this period. As the preliminary statistics showed, the import of red meat will increase by about 38% in last December and January and February of this year to guarantee the stable operation of the market. We hope to ensure an adequate market supply in the festive days by regulating the market and putting the government reserved commodities.

Journalist from International Business Daily: You talked about further increasing the level of opening up of service industry; especially Shanghai Pilot Free Trade Zone has strengthened the scope and level of opening up in the aspects of credit investigation and telecom value-added service recently. May I ask Director-general Gu Jun, what kind of opportunities and challenges has Shanghai met during the development of trade in services in the opening-up of these fields? What kind of measure is Shanghai going to take to deal with this problem and improve the service brand of Shanghai? Thank you.

Gu Jun: The establishment of China (Shanghai) Pilot Free Trade Zone is a major strategic deployment of China, and its core is institutional innovation. The opening up of service industry field is an important content in the general plan of Shanghai Pilot Free Trade Zone. At present, a majority of the 23 reform and opening-up measures of six fields have been implemented with the strong support of various ministries and commissions of our country, and we are accelerating the implementation of other measures by formulating the implementation rules.

The opening up of service industry field corresponds to two points: first, it corresponds to the new trend of international trade and investment. As shown by the foreign investment introduction in Shanghai, more than 80% of the investment was on service industry in these two years. Second, it corresponds to the new features of optimization and upgrade of China’s industrial structures.

The opening up of service industry field will not only further allow the market to play its decisive role in resource allocation and promote the free flow of various factors, but also bring a rapid aggregation of various subjects. A more sufficient market competition is certain to be made by factor flow and subject aggregation, which is to the benefit of motivating the innovation vitality so as to mobilize the promotion of the overall developmental level of service industry.

The core of Shanghai Pilot Free Trade Zone is institutional innovation. Some institutional arrangements of facilitation of trade and investment will effectively promote the full development of patterns of trade in services such as commercial presence and cross-border delivery by standing on a higher starting point with more space. It is also conducive to gathering various mid- and high-end talents, promoting the competitiveness of local enterprises and creating Chinese service brands and in other words, cultivating the new competitive edge of trade in services in China.

During this process, authorities of Shanghai will promote the opening up of service field of Shanghai Pilot Free Trade Zone in an orderly manner according to our country’s overall plan for opening strategy. The opening up of service industry will certainly bring direct and profound challenges to the transformation of government functions, especially from the previous regulation of tangible goods to the management of intangible services. The construction of Shanghai Pilot Free Trade Zone pays attention not only to the opening up but also to the way to strengthen the process and afterwards monitoring after enterprises enter the Shanghai Pilot Free Trade Zone. This will directly promote the transformation of government job functions and working modes. The opening up of service industry will promote the rapid development of service trade and from a perspective of government’s promotion of the development of trade in services, well shall consider where we should set about. Director-general Zhou explained the further major working consideration of the development of trade in services just now from the perspective of the Ministry of Commerce and we will careful study and carry out our research seriously combining with the characteristics of Shanghai to promote the structure optimization and level upgrade of Shanghai’s trade in services.

Journalist from National Business Daily: I have a question for Director-general Zhou. You just introduced the significance of fostering the development of trade in services during the fostering of new commercial advantages as well as the service outsourcing industry of mind plus computer. The focus of my question is that what kind of further promotion measure will the Ministry of Commerce take towards service outsourcing industry in 2014?

Zhou Liujun: We will further strengthen our support and promotion to service outsourcing in 2014. Specifically, the working measures contain the following aspects: firstly, we will strengthen the overall plan. We will sum up the successful experience of China’s development of service outsourcing in recent years, look for patterns and promptly start and complete the developing plan of service outsourcing during the 13th Five-year Plan period. We will make overall plans from the aspects of industrial scale, structure, focus, target and market to allow a new round of service outsourcing to further develop rapidly while standing on the higher starting point.

Secondly, we will promote the innovation in policy. We shall further carry out the reply issued by the General Office of the State Council concerning further promoting the industrial development of service outsourcing, i.e., GBH [2013] No. 33 of the General Office of the State Council, accelerate the construction of international marketing network and promote the introduction of income tax policies of service outsourcing as soon as possible. Meanwhile, we shall summarize and popularize the way of service outsourcing’s talent cultivation, intellectual property protection and information security protection on basic level.

Thirdly, we shall create a good environment. We shall prepare the annual Report on China’s Outsourcing Development to guide the industrial development, play the role of social intermediary organization for service outsourcing, carry out evaluation of execution ability of enterprise, establish and perfect the evaluation system of business standing, standardize industrial order and strengthen industrial self-regulation. We shall also perfect the certification system of service outsourcing talent, the standard for primary talent and the relevant trade facilitation measures of foreign exchange and customs clearance appropriate to the characteristics of service outsourcing.

Fourthly, we shall strengthen the element tasks, including conducting the comprehensive assessment of model cities and perfecting service outsourcing industry’s statistics, monitoring and theoretical research, etc.

Fifthly, we shall expand the international market. Service outsourcing, especially offshore international outsourcing, is mainly determined by the demands of international market, so a diversified market is required. Market development will never stop. While we are confident on Chins’ service outsourcing’s talent advantage, environmental advantage and basic advantage, we shall also make our efforts to expand some potential contracting counties and expand potential markets. While consolidating the existing markets, we shall expand emerging markets to enlarge international offshore outsourcing and make the quality and structure of international offshore outsourcing better. Meanwhile, we shall conduct the profound development of onshore outsourcing and domestic market well.

The implementation of such measures above requires not only joint efforts of competent departments and enterprises, but only concerns and supports of news media. We hope that friends from media will pay more attention to the development of major fields of trade in services such as outsourcing, since it involves in the employment of university students, the promotion of the entire high-end service industry and the establishment of China’s service brand around the world. A batch of internationalizing enterprises with good competitiveness has emerged during the development of service outsourcing from place to place in the two years and we hope that friends from media can promote and report them.

Journalist from Agence France Presse: With respect to the field of cultural export, Director-general Zhou mentioned that supporting polices for the promotion of cultural export will be produced by the Ministry of Commerce and relevant ministries and commissions from the aspects of financial support, discount of business tax and income tax and financial support. We wonder to what degree are Ministry of Commerce and the relevant ministries and commissions determined to support the cultural export specifically? Are there some specific data of the last year we can share? Director-general Gu mentioned just now that Shanghai Pilot Free Trade Zone focuses on the construction of the country’s cultural and trade base. How large is the planned scale of the trade base? What kinds of cultural products are going to be transacted? Can you introduce some specific plans? Concerning foreign capital, can Director-general Chou provide us the data of the annual foreign investment obtained? Thank you.

Qiu Guangling: The data of the annual foreign investment are not available until the day after tomorrow. We only have the data for January to November.

Zhou Liujun: I will briefly introduce our works on cultural trade. Based on the functions, the Ministry of Commerce played its role of promotion and coordination and did some works with the coordination lead by some departments such as the Propaganda Department of the Central Committee of PRC.

Firstly, we established the working mechanism of cultural trade. Together with departments such as the Publicity Department of the Communist Party of China (CPC) Central Committee, the Ministry of Finance and the Ministry of Culture, we established the inter-ministerial connection mechanism of major enterprises of cultural export and project-related works. We let the resultant forces of each department play a role and promoted the development of cultural trade. This mechanism effectively influenced on determining the annual major enterprises, projects, the supporting system and direction and the guidance of the development of enterprise.

Secondly, we supported major enterprises to go out. Relevant departments and the Ministry of Commerce formulated Catalogue for the Guidance of Cultural Products and Services Export from 2007. Relevant departments and the Ministry of Commerce will determine a batch of national key enterprises and projects of cultural export every two years according to this catalogue. So far, three batches of key enterprises and projects have been determined. 485 key enterprises and 108 key projects had been determined from the year of 2011 to 2012. Eligible key enterprises of cultural export have received financial supports from central finance authorities from 2008. Relevant departments and the Ministry of Commerce have printed and distributed Guidance of Finance Supporting Cultural Export and Guidance of Further Promoting the Related Works of the Catalogue of Key Enterprises and Projects of Cultural Export from the year of 2009, and we supported the development of cultural trade enterprises by actively using comprehensive promotion methods such as finance, banking and facilitation. We introduced supportive measures with generality to enterprises and specific policies towards cultural enterprises. We determined annual key cultural enterprises and projects and focused on supporting them, especially some projects that are under the incubation period and have remarkable national cultural deposits and features. For example, Paper-cut of Shanxi Province has a rapid growth of cultural export in these two years. Similar competitive enterprises and projects in various regions of China that inherit traditional cultural deposits and combine with modern cultural carriers got our supports and help.

Thirdly, we set up the platform of trade promotion. The Ministry of Commerce actively participated in hosting exhibitions such as Shenzhen International Cultural Industries Fair from the year of 2007. With the help of the platform of Beijing International Fair for Trade in Services, we held cultural trade exhibition area and forum. We organized domestic enterprises to participate in Tokyo Game Show and gamescom by using non-commercial and overseas establishment funds to promote the expansion of international markets by cultural enterprises. We set up export information platform for cultural enterprises by using China Trade in Service. We organized various cultural trade training classes to develop talent teams of cultural trade.

Fourthly, we set up statistical system of cultural trade. Thank you for your concern.

Gu Jun: I will make a brief supplement. Waigaoqiao Cultural Trade Base was established in 2008 with the support and guidance of the Ministry of Commerce and the Ministry of Culture with the following two purposes: 1. How to promote the going out of Chinese culture and let Waigaoqiao become an intermediary for the going out of Chinese culture. 2. How to promote the introduction of foreign culture to China through Waigaoqiao. This is actually the converging of Chinese culture and foreign one. After the establishment of Waigaoqiao Cultural Trade Base, some positive explorations have been made in the aspect of expansion of cultural trade such as the transaction of cultural copyrights, bonded warehousing and auction of excellent works of art, overseas performance of excellent cultural programs and the overseas publication and distribution of excellent Chinese books. Great development has been made on Waigaoqiao Cultural Trade Base by now from 2008. The opening up of China (Shanghai) Pilot Free Trade Zone on the cultural field will greatly promote the development of the cultural trade base: the concentration of various cultural trade subjects will perfect the entire marketing system of cultural trade. In addition, the channel for the “going out” of local cultural trade subjects will become smoother and will bring positive energy to the major development of Chinese culture. Seeing is trusting, I have visited Waigaoqiao Cultural Trade Base for three times and I was inspired every time. Welcome friends from media to visit Waigaoqiao Cultural Trade Base hereon. Thank you.

Yao Jian: This is the end of today’s news conference. Thank you.

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