MOFCOM Department of Trade in Services and Commercial Services Comments on the Operation of Service Trade in 2017

On February 5, official from MOFCOM Department of Trade in Services and Commercial Services made a statement on the import and export of service trade and service outsourcing in 2017, and the service trade of the subsidiary organizations of service industry in 2016.

The official introduced that the import and export of trade in service in 2017 reached 4699.11 billion yuan, up 6.8% year on year. Among these, the export was 1540.68 billion yuan and the import was 3158.43 billion yuan. The deficit was 1617.74 billion yuan, staying the same as in the previous year. The import and export of services maintained its steady and rapid development. The structure of trade continued to be optimized and the features of high-quality development gradually emerged. The scale of China's service import and export is expected to rank the second worldwide for 4 consecutive years.

The official from MOFCOM Department of Trade in Services and Commercial Services pointed out that the major features of the development of service trade in 2017 were as follows:

1. The growth of service export was obviously higher than that of the import. With China's manufacturing capability gradually expanding towards productive service and the gradual improvement of China’s competitiveness in the professional service field, China's service export increased by 10.6% in 2017, reaching the highest level since 2011; the export growth was 5.5 percentage points higher than that of import. The growth of China's service export was higher than that of the import for the first time in seven years.

2. The structure of trade in services was further optimized. The advantages of emerging service with technologies, brand, quality and service as its core are constantly emerging. In 2017, the import and export of the emerging services reached 1460.01 billion yuan, up 11.1%, 4.3 percentage points higher than the overall growth, taking up 31.1%, 1.2 percentage points higher; while the proportion of the three traditional services such as tourism, transportation and construction decreased by 1.1 percentage points.

3. The import and export of emerging service field grew rapidly and steadily. In 2017, the import of emerging services reached 727.17 billion yuan, up 10.6% and the export of emerging services reached 732.84 billion yuan, up 11.5%. Among these, the import of telecom, computer and information services, intellectual property royalty and that of personal entertainment increased by 54.9%, 21% and 30.6% respectively year on year while the exports of intellectual property royalty and financial service increased by 316.6% and 18.2% respectively.

4. The import and export of services in central and western regions increased rapidly. The import and export of service in central and western regions reached 657.57 billion yuan, up 8%, 1.2 percentage points higher than the national growth, and the growth of export reached 23.5%. The service import and export of 11 provinces and cities along the eastern coast reached 3998.68 billion yuan, accounting for 85.9% of the national amount. Among these, the import and export of services in Shanghai, Beijing and Guangdong were 1020.05 billion yuan, 967.75 billion yuan and 831.6 billion yuan respectively, ranking the top three nationwide.

5. The guiding role of the pilot zones was gradually strengthened. Since 2017, MOFCOM and all the related departments and regions have paid special attention to the related policies and documents to promote the development of service trade innovation pilot zones, which aims to create favorable business environment. The policy effect further appears. In 2017, the import and export of service in pilot zones reached 2440.55 billion yuan, and the import-export, export and import increased by 8%, 11.1% and 7.4% respectively year on year, higher than the national level.

The official from MOFCOM Department of Trade in Services and Commercial Services introduced that the development of China’s service outsourcing industry in 2017 mainly showed five “new points”.

1. The “new” engine of the service export growth. The service outsourcing contracts undertaken by China’s enterprises reached 1218.24 billion yuan and the performed amount reached 850.16 billion yuan, hitting a record high, increased by 26.8% and 20.1% respective year on year. Among these, the offshore service outsourcing contracts amounted to 749.55 billion yuan with 536.98 billion yuan implemented, up 18.3% and 14.7% respectively year on year. The offshore service outsourcing accounted for 73.3% of the export of emerging service and contributed 46% to the growth of service export.

2. The new platform for the integrated development of new businesses and new models. Promoted by the national strategies such as “Internet +”, big data and artificial intelligence, the service outsourcing enterprises have extensively applied a new generation of information technology to speed up the cross-border integration with traditional industries. The new models of new service formats such as data analysis, e-commerce platform, internet marketing and supply chain management have been rapidly developed. The implementation volume increased by 55.4%, 44%, 40.6% and 17.8% respectively and gradually formed a new ecosystem of mutual infiltration and coordinated development.

3. The new examples of regional coordinated development. The preferential tax policies of technology advanced service enterprises in service outsourcing demonstration cities have been promoted to the whole country, which has further created a steady, fair, transparent and predictable business environment. The demonstration cities continued to maintain the trend of gathering and attracting and the implementation volume of offshore service outsourcing accounted for 91.6% of the total. The business continued to transform and have been upgraded towards the middle and high end of the value chain. The enthusiasm of non-demonstration cities significantly improved with the implementation of offshore services outsourcing reaching 44.89 billion yuan, up 46% year on year, accounting for 1.8 percentage points of the national total.

4. The new channels to deepen the Belt and Road cooperation. By the end of 2017, the business scope of China’s service outsourcing had covered more than 200 countries and regions on five continents, and the number of countries and regions whose implementation volume exceeded 100 million yuan in service outsourcing has reached 130. Under the Belt and Road Initiative, China and other countries along the routes have stepped up their service outsourcing cooperation in the fields of information technology, industrial design, engineering and technology and the implementation volume reached 102.93 billion yuan, exceeding 100 billion yuan for the first time, up 27.7% year on year, speeding up the going out of China's world-leading technologies and standards, such as high-speed rail, nuclear power, communications and mobile payment.

5. The new power to promote the transformation and development of real economy. Relying on the advantages of information technology and utilizing the advanced technologies such as cloud computing, big data and artificial intelligence, China’s service outsourcing enterprises supported its manufacturing enterprises to reform the R & D, production, sales and after-sales service processes and gradually shifted the manufacturing from being production-oriented to service-oriented. The implementation volume of China's R & D, design, repair and maintenance services and other productive service outsourcing amounted to 290.26 billion yuan, up 24% year on year. The cloud outsourcing services provided by leading IT companies reached 20 billion yuan, making it the key infrastructure change from made in China to intelligent manufacturing in China.

The official pointed out that in 2016, the service trade scale of China’s subsidiary organizations of service industry ranked the second globally and the sales scale reached 10.25 trillion yuan, up 10.5% year on year, 2.3 times of the total amount of service import and export in the same year. It is estimated according to the current data of main countries that the sales scale of China’s subsidiary organizations is only second to the US, ranking the second in the world.
The Belt and Road has played an important role in promoting the “going out” of China’s service industry and facilitating the development of service industry in the local area. In 2016, the sales of the subsidiary organizations of outward service sector in the countries along the Belt and Road reached 892.9 billion yuan, taking up 19.4%. Among them, China’s subsidiary organizations of outward service industry in Singapore, Saudi Arabia, Pakistan and Kazakhstan ranked the top ten regarding sales amount, with the growth rate over 30% year on year. In addition, the sales of the US’ subsidiary organizations of outward service sector in China reached 209.62 billion yuan, 3.1 times of China’s sales income in the US over the same period of time. This shows that the U.S. service industry has entered into the Chinese market with a higher degree and more benefits.

The sales income of the subsidiary organizations of inward service industry were 1.1 trillion yuan more than that of the outward service industry. In 2016, the sales income of China’s subsidiary organizations of inward service industry was 5.66 trillion yuan, up 3.2% year on year and that of the outward service industry was 4.59 trillion yuan, up 21% year on year, 1.1 trillion yuan less than that of the inward service industry. The fact that the sales income of the subsidiary organizations of inward service industry is higher than that of the outward service industry shows that the opening up of China's service industry has reached a certain level. At the same time, it also shows that the China’s service sector needs to further enhance its providing ability to the outside world and has a vast space for development.

The development of the subsidiary organizations of inward and outward service sector showed significant differentiation. Among the top ten subsidiary organizations of inward service industry regarding sales, the real estate, financial and construction sectors enjoyed the fastest growth, up 27.5%, 18% and 17% respectively. Among these, the growth of construction industry was 2.8 times faster than that of the domestic construction industry. Among the top ten subsidiary organizations of outward service industry regarding sales, culture, sports and entertainment industry, information technology services enjoyed the fastest growth, up 1257.7% and 423.1% respectively, indicating that the outward providing ability of China's productive services gradually increased. The "going out" of culture achieved remarkable results.