Since the beginning of this year, due to the COVID-19 pandemic and multiple other factors, the overall volume of China's trade in services has declined, but the deficit has narrowed, the structure improved, and the proportion of trade in knowledge-intensive services continued to increase.

The main reasons for the significant decline in China’s deficit in trade in services in the first eight months of this year are as follows:

First, the trend in recent years continues. As China’s trade in services becomes more competitive internationally, since 2017, China's services export have registered higher growth rates than its services import, and the deficit in 2019 fell by RMB176 billion compared with the previous year. Since the beginning of this year, despite the impact of COVID-19, this trend has continued, with the decline in services export 21.8 percentage points smaller than that in services import, further narrowing the deficit.

Second, services export shows strong resilience. From January to August this year, China's services export fell 2.2%, a decline smaller than that of the world's major services traders. In particular, export of knowledge-intensive services grew 8.5% against the trend, reaching RMB 692.89 billion, accounting for 56% of total services export, an increase of 5.5 percentage points. Intellectual property royalties, export of telecommunications, computer and information services, as well as insurance services grew fast, up 29.9%, 15.8% and 13.4% respectively.

Third, sharp decrease of tourism import. Tourism is a major part of China’s services import, accounting for over 50% in 2019. This year, due to the COVID-19 pandemic, outbound trip has plummeted. From January to August this year, China’s tourism import dropped by 46.2%, leading to a 24% decrease of total services and, consequently, sharp decrease of services trade deficit. Thank you.