Wen urges services sector to prepare for competition
Premier Wen Jiabao has urged the services sector to restructure and prepare for increasing competition as it is opened up to global suppliers.
Speaking at the opening ceremony of the first Beijing International Fair for Trade in Services yesterday, Wen said China would allow local companies to source their software, information, and construction services from international suppliers, and also actively expand imports of advanced technology and managerial know-how from overseas.
China's service sector attracted US$55.2 billion in foreign investment in 2011, overtaking the manufacturing industry for the first time, Xinhua said.
Wen said there was great potential to develop the trade in trade in services, noting that the target for 2015 was to increase the value of trade in services to US$600 billion. In the coming five years, he said, total imports of services would amount to US$1.25 trillion.
China is currently ranked fourth in the world in terms of trade in services, which totalled US$419.1 billion in 2011. But its service trade accounted for just 43 per cent of its total trade - much lower than the average 70 per cent in most developed countries.
'Fostering growth in the services sector is the main direction for China's economic transformation and restructuring, as well as an internal call to improve people's living standards,' Xinhua quoted Wen as saying.
Also at the opening of the trade fair was Pascal Lamy, director general of the World Trade Organisation. He called on Beijing to further open its fledgling services sector to foreign investment to help sustain its economic rise. 'The WTO needs China to take the lead in pursuing greater services opening,' Lamy said.
In 2010, of the 12 categories of service trades, China had registered a trade surplus only in construction, while in all other areas, including banking, insurance, and professional services, it reported deficits amounting to billions of US dollars.
Foreign investors see a further opening-up of China's services sector as key to allowing them to expand their exports to the world's second-largest economy. Developed economies, and the United States in particular, run huge trade deficits with China and have been pushing Beijing to open its services market to allow them to increase their exports and achieve a balance of trade
State-owned service providers, such as commercial and investment banks and insurance companies, fear that opening the services market to foreign investors will expose them to stiff competition. Policymakers, on the other hand, believe more competition will provide a fresh impetus for growth.
The Beijing Fair is set to become an annual event offering a platform for trade in global services and parallelling the twice-yearly Canton trade fair, which is the world's largest manufacturing goods fair.
The proportion of GDP that the services sector will account for by 2015, according to the 12th five-year plan