Opening to spur service sector growth
China's move to expand the opening up of the service industry in four regions will accelerate the growth of the modern service sector, and create new competitive edges in international cooperation and competition, government officials and business leaders said on Friday.
They made the remarks after the State Council approved the launch earlier this month of comprehensive pilot programs to further open up the service sector in Hainan province, as well as in Tianjin, Shanghai and Chongqing municipalities in order to develop new systems for a higher-standard open economy.
According to an approval statement released on Tuesday, the three municipalities, together with the southern island province of Hainan, can proceed with 203 comprehensive opening-up trials in the service sector in the next three years.
Zong Changqing, director-general of the department of foreign investment administration at the Ministry of Commerce, said the local governments will be urged to serve major national strategies and carry out differentiated exploration under the premise of secured risk control, with the goal of creating replicable practices in the development of a modern industrial system as well as a higher-level open economy.
The added value of the service industry currently accounts for around 55 percent of China's GDP, about 20 percentage points lower than that of developed countries. The official said the sector still faces problems such as insufficient integration with the manufacturing sector and the slow growth pace of the modern service industry.
The service sector produces intangible goods such as information, professional, social assistance, waste management, healthcare, warehousing and transportation services.
Under the new policies, governments in these regions will support foreign firms to establish wholly owned financial companies, allow them to invest in travel agencies to do outbound tourism business, and give the green light to foreign banks to participate in import and export tax payment services.
Shanghai will rely on its regional advantages supported by factors such as the China (Shanghai) Pilot Free Trade Zone and Shanghai Hongqiao Central Business District to continuously optimize the layout of its service industry, especially in the areas of business services, logistics and transportation, finance, healthcare, education, tourism and telecommunications, said Gu Jun, director-general of Shanghai Municipal Commission of Commerce.
The flow of foreign direct investment into Shanghai surged by 20.5 percent year-on-year to $5.63 billion in the first quarter of this year, and about 95.3 percent of this went to the service sector.
In the meantime, multinational companies including Switzerland's ABB Group and Germany's Fuchs Petrolub AG had established 14 regional or country headquarters, as well as five innovation centers within the city.
In addition to electronic information, life science, automobiles, high-end equipment, new materials and consumer goods, modern service industries such as finance, cultural and creative businesses will be Shanghai's priority development sectors during China's 14th Five-Year Plan (2021-25), according to the 2021 Shanghai Foreign Investment Guide, recently released by Deloitte China.
Vorwerk Group, the German industrial and technology company, will establish a digital solution center in Shanghai in the second half of this year to facilitate its transformation from a manufacturing company to a service-oriented manufacturer to better adapt to China's changing market environment.
"We hope to seize the fresh opportunities arising from China's dual-circulation development paradigm via introducing more personalized products and services that add value and health relevance to people's lives," said Cha Sheng, general manager of Vorwerk China.
Jens Eskelund, managing director of Maersk China Ltd, the shipping and logistics service provider of A. P. Moller-Maersk Group, said while China's ports and maritime transport are efficient, there is still a gap between the inland areas and major port cities.
Instead of investing heavily in shipping operations, the Danish company has been busy expanding its rail freight services, land assets and airfreight services across China. It has opened 35 railway terminals in inland China over the past two years. The company to date has arranged a total of 210 freight trains from various Chinese locations to European countries including Germany and France.
China's service sector attracted 237.79 billion yuan ($36.62 billion) of foreign investment in the first quarter of this year, soaring 51.5 percent year-on-year, according to the Ministry of Commerce.
