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China's services deficit in 2021 hit a new low since 2011. What is MOFCOM's take on that? Why? Will new measures be introduced this year to boost trade in services?(2022-02-10)

In 2021, MOFCOM implemented the decisions and plans of the CPC Central Committee and the State Council in earnest and coordinated ongoing Covid response with the development of trade in services around the six stabilities and six guarantees, introducing a slew of policy measures with related departments to stabilize trade in services. Trade in services continued to grow rapidly throughout the year. Total services imports and exports reached RMB 5.29827 trillion, with the deficit narrowed down to RMB 211.27 billion. This fully speaks to the positive effects of China’s efforts to restructure services trade and improve its export competitiveness.

Overall, the main factors behind a narrowing services deficit are as follows.

First, the fast growing services sector laid a solid foundation for the balanced development of trade in services. According to the National Bureau of Statistics, in 2021, the value added of services was up 8.2% year-on-year, accounting for 53.3% of the GDP. With renewed momentum for services growth, new business types and models keep emerging. Meanwhile, the new generation of information technology has greatly enhanced the tradability of services, with continuous integration of manufacturing and services and markedly better quality and efficiency in services supply. All these provide a good foundation for the balanced development of trade in services.

Second, the export competitiveness of China’s knowledge-intensive services improved considerably. Covid-19 has profoundly affected people’s life and work, fueling the surge in online services provision and consumption, such as audiovisual services, healthcare, education and online retail. The wide adoption of digital payment creates space for the rapid growth of knowledge-intensive trade in services. In 2021, it was up 18%. In breakdown, personal culture and entertainment services, intellectual property royalties, and telecommunications, computer and information services exports were up 35%, 26.9% and 22.3%, demonstrating strong export competitiveness.

Third, transport services exports grew rapidly. Thanks to trade in goods and the price factor, transport services exports continued to grow fast throughout the year. In 2021, transport services exports amounted to RMB 820.55 billion, up 110.2%, which makes it the fastest growing sector in trade in services. along with knowledge-intensive services exports, transport drove the rapid growth in services exports for the whole year, which hit 31.4%, 26.6 percentage points higher than services imports, and drove down the deficit by 69.5% on the previous year.

Fourth, tourism services deficit fell sharply. Until recently, tourism services had been the biggest source of China’s tourism services deficit. Since the outbreak of Covid, the deficit had plunged to RMB 643.04 billion in 2021 from RMB 149.416 billion in 2019, which makes it a key factor behind China’s dramatically narrowing services deficit.

This year, in accordance with the arrangements of the CPC Central Committee and the State Council, the Ministry of Commerce will give top priority to stability, pursue progress while ensuring stability, continue to promote the reform, opening up and innovation of service trade, and focus on the following aspects: First, MOFCOM will work with relevant departments to implement the "Development Plan for Service Trade during the 14th Five-Year Plan Period" and implement various tasks and initiatives. Second, MOFCOM will study and promote the introduction of a number of new policies and measures to vigorously promote the high-quality development of digital trade, technology trade and foreign cultural trade. Third, MOFCOM will explore the path for institutional opening up of service trade and promote the introduction of the national negative list of cross-border service trade. Fourth, MOFCOM will continue to promote the implementation of various policy measures under the pilot program of innovative development of service trade, and sum up and roll out more institutional innovations. Fifth, MOFCOM will select the pilot areas with remarkable results and upgrade them into national service trade innovation and development demonstration zones. We will vigorously develop digital trade, build demonstration zones for digital trade, and promote the innovation of science and technology and institutions. Sixth, MOFCOM will promote the upgrading and expansion of bases for featured services export, improve the management system and promotion system of these bases, and implement various policies and measures to support their development. Thank you.