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Yearlong 'upswing' expected for trade in services

A tourist shops at a duty-free store in Hainan province. [Photo/for China Daily by Meng Zhongde

The promising performance of China's trade in services in the first quarter demonstrated the strong growth momentum of the country's economy in terms of high-quality development, officials and analysts said.

Growth in China's services trade is predicted to continue, helping stabilize international supply chains and sustain the world economic recovery amid the COVID-19 pandemic.

The country's trade in services was about 1.16 trillion yuan ($180.2 billion) in the first quarter, up 0.5 percent year-on-year, while the sector's deficit declined to 66.69 billion yuan, down 74.7 percent from a year earlier, according to the Ministry of Commerce.

Trade in services accounted for 12.05 percent of China's total foreign trade in the first quarter. The proportion was about 12.4 percent last year.

March alone saw services trade rise by 7.9 percent year-on-year, becoming the first month with an increase since the outbreak of the pandemic.

Excluding the tourism sector, China's services trade in the first three months expanded by 21.1 percent on a yearly basis. Without tourism, exports and imports of services during the period surged by 28.2 percent and 13.6 percent respectively year-on-year.

"As various policies to stabilize services trade take effect, and the business environment continues to improve, China's services trade is expected to be on the upswing throughout the whole year," said Gao Feng, a spokesman for the ministry, at a news conference in Beijing on Thursday.

Gao said the ongoing technological revolution led by digital technology has been injecting new impetus into China's trade in services.

Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges, forecast that China will witness increasing competitiveness in international services trade within the next five to 10 years, due to the country's pursuit of high-quality development.

"The core of high-quality development lies in promoting innovation, boosting producer services, and the thriving of smart cities, which means the upgrading of the Chinese economy and the transformation and optimizing of the services trade sector," he said.

Wang Tuo, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation's Institute of International Trade in Services, said the decline in overall services trade deficits and growth in the knowledge-intensive services sector indicated an improvement in the structure of China's services trade.

The country's trade of knowledge-intensive services saw robust growth in the first quarter, surging by 15.5 percent year-on-year to 539.5 billion yuan. That accounted for 46.6 percent of the total volume of trade in services, or 6.1 percentage points higher than that of a year ago.

Among them, knowledge-intensive service exports hit 301.03 billion yuan, up 14.7 percent year-on-year and accounting for 55.2 percent of the total service exports.

Oscar Wang, head of the Shanghai office of Teneo, a global advisory company, has observed robust demand growth from multinational companies seeking advice to further cement their presence in the Chinese market.

Wang Tuo, the researcher, said COVID-19 has accelerated the digitalization in China's services trade, leading to the thriving of various new business forms such as telemedicine and online education to shore up the knowledge-intensive services trade.

In addition, digital transformation in other economies has expanded demand for related knowledge-intensive services from China, leading to fast growth in the sector, Wang said.

"While international trade has declined sharply due to the pandemic, China has become an important driving force for global economic growth, thanks to demand recovery in its huge market. It also provides high-quality services to other economies," he said.

According to Zhang, China's services trade is providing important support to global development, especially its high-quality but inexpensive services in the logistics and smartphone sectors for economies involved in the Belt and Road Initiative.