Steadily promote the opening up of the service industry
2025-01-09
The high-quality development of the service industry is closely related to people's well-being. The Central Economic Work Conference held at the end of 2024 proposed to steadily promote the opening up of the service industry. Previously, the State Council issued the "Action Plan for Solidly Promoting High level Opening up and Attracting and Utilizing Foreign Investment with Greater Efforts", which made a series of deployments around expanding the opening up of the service industry, proposing to "continue to promote the expansion of opening up in telecommunications, medical and other fields" and "expand the access of foreign financial institutions in the banking and insurance fields". This issue invites experts to discuss relevant issues. What are the main areas for better integration into the global service trade network and service industry? Why emphasize "steadily promoting the opening up of the service industry"? Jin Ruiting (Researcher at the Institute of Foreign Economic Research of the National Development and Reform Commission): The service industry is a concept corresponding to agriculture and industry. The scope of China's service industry mainly includes other industries except for agriculture, forestry, animal husbandry and fishery (primary industry), and industry and construction (secondary industry), which is basically consistent with the concept of the tertiary industry. From the perspective of content composition, the service industry includes productive service industry, life service industry, and public service industry. From the perspective of knowledge and technological content, the service industry includes both traditional and modern service industries. The traditional service industry is an industry that provides various services for people's daily lives, such as medical and health services, catering and accommodation, repair industry, etc., with the characteristics of large scale and stable development. The modern service industry is an industry developed based on information technology, big data, and artificial intelligence, such as e-commerce, fintech, digital creative industries, etc. It has the characteristics of fast development speed and high added value, and is one of the important indicators to measure the degree of economic and social development. From the establishment of the People's Republic of China to before the reform and opening up, China vigorously developed industry and agriculture, with the service industry in a supporting position. The added value of the service industry was 19.5 billion yuan in 1952, and increased to 90.5 billion yuan in 1978, with an average annual real growth rate of 5.4% from 1953 to 1978. During this period, the added value of the service industry accounted for a relatively low proportion of the gross domestic product (GDP), only 24.6% in 1978, which was 3.1 and 23.1 percentage points lower than the primary and secondary industries, respectively. After the reform and opening up, the service industry developed rapidly and comprehensively. In 2012, the added value of the service industry increased to 2.44856 trillion yuan, with an average annual real growth rate of 10.8% from 1979 to 2012. The growth rate was 0.9 percentage points higher than the average annual GDP growth rate of the same period, and twice the average annual growth rate of the service industry from 1953 to 1978. During this period, the proportion of added value of the service industry to GDP continued to rise, surpassing the primary industry in 1985 and the secondary industry in 2012. Since the 18th National Congress of the Communist Party of China, the Party Central Committee has formulated a series of policies and measures to promote the development of the service industry. New industries, new forms, and new models of the service industry have emerged in large numbers, entering a new stage of development. In 2023, the added value of the service industry will grow to 688238 billion yuan, with an average annual real growth rate of 6.9% from 2013 to 2023, which is 0.8 percentage points higher than the average annual GDP growth rate of the same period. During this period, the proportion of added value of the service industry to GDP further increased, exceeding 50% for the first time in 2015 and reaching 54.6% in 2023, occupying half of the national economy for several consecutive years. Opening up is a distinctive symbol of Chinese path to modernization. Currently, steadily promoting the opening up of the service industry is an inevitable choice to adapt to the deepening development of economic globalization, and it is also an important lever to promote the high-quality development of China's economy and build a new system of higher-level open economy. One is the inevitable requirement to respond to changes in the international situation. Service trade has become an important component and new growth point of international trade. Steadily promoting the opening up of the service industry will help China better integrate into the global service trade network, improve the quality and level of international circulation, deepen the integration of interests with major trading partners, maintain the stability of the global industrial and supply chains, and more effectively address the uncertainty of the external environment. The second is the inherent requirement of improving the high-level opening-up system and mechanism. Compared to goods trade, the degree of openness in China's service trade is still relatively low. Steadily promoting the opening up of the service industry is conducive to introducing international advanced concepts, technologies, and management experience, promoting the improvement and efficiency of the service industry, while forcing reforms, promoting innovation in relevant fields' institutional mechanisms, and improving the legal and regulatory system. The third is the practical requirement for China to participate in global economic governance. With the implementation of the Regional Comprehensive Economic Partnership Agreement, the market access conditions for China's service trade continue to decrease, and the level of service trade openness continues to improve. Steadily promoting the opening up of the service industry, strengthening cooperation in service trade and digital trade with the countries jointly building the "the Belt and Road", and exploring the expansion of cooperation in service trade under the BRICS, SCO and other mechanisms will significantly improve China's ability to formulate rules, set agenda, and coordinate in new areas of global economic governance. The opening up of the service industry is an important area and key direction for China to promote high-level opening-up to the outside world. In the future, we should promote inclusive development through service openness, promote linkage and integration through service cooperation, cultivate development momentum through service innovation, create a better future through service sharing, and fully unleash the driving role of the service industry as an engine for economic and social development in open cooperation. Specifically, there are three key areas of focus. Actively promote the institutional opening-up of trade in services. Fully implement the negative list for cross-border service trade, promote the establishment of corresponding management systems, and manage cross-border service trade outside the negative list in accordance with the principle of equal treatment for domestic and foreign services and service providers. Strengthen the coordination of rules and regulations, promote efficient and reasonable flow of resources such as capital, talent, technology, and data, and provide sufficient space and flexibility for the opening up and development of the service industry. We will focus on leveraging the comprehensive pilot demonstration and leading role of the service industry in expanding opening up. In line with the trend of digital and green development of service trade, we will deepen the comprehensive pilot demonstration of expanding the opening up of the national service industry, coordinate the three articles of "on the border" and "behind the border", operation and access, and policy and service, promote exploration of opening up on a larger scale, wider fields, and deeper levels, and form more innovative achievements in the reform and opening up of the service sector. Intensify the opening up of key service areas. Actively connect with international high standard economic and trade rules, deeply explore the "top-down" and "bottom-up" opening paths of the service industry, focus on telecommunications, the Internet, education, culture, medical care and other fields, give full play to the role of the pilot free trade zone and Hainan Free Trade Port in opening up and pressure testing, steadily promote the gradient opening of cross-border service trade across the country, and better expand the open space in adhering to mutual benefit and win-win results. What is the current progress in expanding the opening up of telecommunications, healthcare, education, and other fields that are closely related to people's lives? Zhou Nianli (Researcher at the National Institute of Opening up, University of International Business and Economics): The Central Economic Work Conference held at the end of 2024 proposed to expand pilot projects for opening up in fields such as telecommunications, healthcare, and education. In recent years, China has carried out pilot projects in the fields of telecommunications, healthcare, and education, which have been effective. The pilot program for opening up the telecommunications sector is an important measure to consolidate China's competitive advantage in the telecommunications industry and integrate into global industrial cooperation. Telecommunications services mainly include two parts: basic telecommunications and value-added telecommunications. In the field of basic telecommunications, China has basically completed its commitment to join the World Trade Organization (WTO) and opened up 6 out of 12 basic telecommunications services, requiring foreign ownership not to exceed 49%. In the field of value-added telecommunications, open pilot projects beyond the commitments made after joining the WTO have been carried out in an orderly manner. In April 2024, the Ministry of Industry and Information Technology of the People's Republic of China issued the Notice on the Pilot Work of Expanding the Opening up of Value added Telecommunications Business, which lifted the restrictions on foreign shares in five types of value-added telecommunications business, including Internet data center, content distribution network business, Internet access service business, online data processing and transaction processing, and information service business, in Beijing, Shanghai, Shenzhen, Hainan and other pilot areas. This means that foreign-funded enterprises can deeply participate in cloud computing services, computing services and other markets in the pilot areas to support the development of digital technologies such as artificial intelligence and blockchain in China. Various regions have successively introduced supporting measures. The "Guidelines for Implementing Fiber to the Home Operation in Qianhai Shenzhen Hong Kong Cooperation Zone" issued by Shenzhen requires that the access and use of legitimate telecommunications operators shall not be restricted, ensuring the right of telecommunications operators to use communication infrastructure for free, and further reducing the threshold for telecommunications business operation. According to statistics, as of September 2024, 2220 foreign-funded telecommunications enterprises have been approved to operate telecommunications services in China, injecting new vitality into the country's telecommunications market. The pilot program for opening up the medical field is of great significance for introducing new medical technologies and services from around the world. In September 2024, the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration jointly issued a notice on expanding the pilot work of opening up in the medical field, further opening up foreign investment access in the fields of wholly-owned hospitals and biotechnology. The Pilot Work Plan for Expanding the Opening up of the Sole Proprietorship Hospital Field allows the establishment of wholly foreign-owned hospitals in pilot areas such as Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, and Shenzhen. In December 2024, Pengruili Hospital was granted the first foreign-owned tertiary comprehensive hospital medical institution practice license issued by Tianjin, becoming the first foreign-owned tertiary comprehensive hospital in China to officially operate. It has 500 beds and has introduced a team of high-level medical experts from abroad, focusing on providing customized medical services covering the entire life cycle, such as health maintenance, chronic disease management, and major illness rehabilitation. Its service scope covers the Beijing Tianjin Hebei region. In the field of biotechnology, pilot areas such as Beijing, Shanghai, Guangdong, and Hainan allow foreign-invested enterprises to engage in the development and application of human stem cell, gene diagnosis, and treatment technologies, which can be used nationwide. As of November 2024, the first batch of six foreign-funded enterprises engaged in the stem cell industry have completed the change of business license scope in China, incorporating the development and application of human stem cell technology into their business scope. The "In depth Analysis and Investment Prospect Analysis Report of China's Stem Cell Beauty Industry Market from 2024 to 2030" released by Zhiyan Consulting shows that the scale of China's stem cell related market exceeds 120 billion yuan, and this field may become a blue ocean for attracting foreign investment in the future. The pilot program for opening up the education sector is an inevitable choice for building a strong education country. Hainan Province's pilot program for opening up education to the outside world is at the forefront of the country. Bielefeld University of Applied Sciences is the first overseas university in China to operate independently. The province not only pioneered the joint approval model for Sino foreign cooperative education institutions, but also became the only pilot area for access to open education in China. It has issued the "Implementation Plan for Supporting Hainan's Deepening Education Reform and Opening up", proposing to pilot overseas engineering universities and vocational colleges to operate independently in Hainan under mature conditions, and explore the sole proprietorship of high-level overseas enterprises in Hainan. From a practical perspective, the pilot program of opening up education in Hainan Province not only provides talent support for the construction of a free trade port, but also facilitates the introduction of advanced educational concepts and models from overseas, creating a new highland for China's education opening up to the outside world. It should also be noted that there are still some problems and challenges in expanding the pilot opening up of telecommunications, healthcare, education and other fields. Firstly, the number of pilot areas is relatively small. Secondly, the business scope of pilot opening is relatively limited. For example, there are few opening initiatives in the Internet and cultural fields. At this stage, the telecommunications field is only limited to value-added telecommunications services, not involving basic telecommunications services. The education field pilot only opens the pilot of wholly-owned higher education institutions, and there is still much room for expansion in the future. Once again, the entry of foreign capital may have a certain impact on related industries. Currently, the pilot areas follow the management principle of "consistency between domestic and foreign capital", but the influx of foreign capital will undoubtedly increase the competitive pressure on domestic enterprises. Finally, foreign investment