Shanghai issues service trade negative list

The Shanghai municipal government released a negative list for cross-border service trade on Tuesday, the first of its kind in China.

A total of 159 detailed regulations have been included in the new negative list, covering 31 industries. The new list defined cross-border service trade as "commercial activities delivered by overseas service providers to consumers in the China (Shanghai) Pilot Free Trade Zone".

There will be three major business models covered by the new list, including cross-border service directly delivered to the FTZ, overseas service provided to consumers in the FTZ and overseas service delivered via natural persons in the FTZ.

Different from service trade negative lists adopted in other parts of the world, which are compiled in descriptive wordings, the new list introduced in the Shanghai FTZ is based on industries. In this sense, the list in Shanghai will be more transparent and can be implemented more easily, said Shen Weihua, deputy director of Shanghai Municipal Commission of Commerce.

Countries and regions which have signed free trade agreements with more favorable opening-up polices for service trade, Closer Economic Partnership Agreement, or Economic Cooperation Framework Agreement, should stick to the previous regulations.

Wu Qing, vice-mayor of Shanghai, said the newly released negative list will help to speed up the supply-side reform for ongoing service trade in Shanghai and promote the upgrading of foreign trade.

For the next step, the municipal government will look to further opening-up in tourism, education, telecommunications, professional services and qualifications for professional technicians in certain areas.

"The manufacturing industry has become more service-oriented and the service industry has become more high-end by involving more outsourcing, digitalization and integration with other industries. In this sense, the service trade has become the new driving force of world trade," said Wu.

"The introduction of the negative list for cross-border service trade will help China better cope with global economic and trade changes and further integrate into the world value chain.

"Given the sluggish world economy and rising trade protectionism, the negative list will help to remove the barriers in service trade and create a more open and free market," he added.

Statistics provided by the Ministry of Commerce showed that China's total volume of service trade amounted to $695.68 billion in 2017, up 5.1 percent year-on-year. Shanghai surpassed all other cities in the nation in terms of the transaction volume of service trade, with the number coming at $195.5 billion. Service trade contributed up to 29.1 percent to the city's total outbound trade volume last year.

This year marks the fifth anniversary of the establishment of the Shanghai FTZ. The form of negative list, which was first introduced in the Shanghai FTZ in September 2013, has been promoted nationwide. On top of that, there have been 127 reform and innovative policies adopted in the city or all over the country.

Shanghai Party Secretary Li Qiang said at a meeting in late September that the Shanghai FTZ has taken the lead in the country in terms of further reform and opening-up since its establishment. Efforts should be made to accelerate the opening-up in key areas, including the integration between commodity trade and service trade, in order to create an equal, united and highly efficient market environment.