Editorial | Opening up services sector is a win-win

President Xi Jinping has called for opening the nation’s services industry to foreign investors and for domestic expansion. It comes as the economy is facing a downturn and the international environment is fraught with geopolitical risks.

The services industry is a major creator of jobs. It is especially needed to stabilise the economy as high youth unemployment has alarmed the central government. Eliminating red tape and bureaucratic restrictions will help create a powerful growth engine.

In the past decade, Beijing has emphasised the need to divert resources to the so-called real economy, by which it often meant advanced manufacturing. Although some services fall into the “real economy” category, the manufacturing sector has enjoyed much greater state support. Its strength is sometimes contrasted with weaknesses at the services front.

While China has a giant market for high-value services such as telecoms, e-commerce, finance, education and tourism, service standards have lagged behind.

Trade in services grew 8.1 per cent year on year to about 3.67 trillion yuan (HK$3.96 trillion) in total value in the first seven months of this year, with the services trade deficit standing at 589.9 billion yuan. There is surely more room for growth.

Barriers remain high for foreign investors. China has banned Google, Twitter, Facebook and Netflix, among others. In financial services, it continues to impose restrictions on foreign banks and financial institutions despite recently eased access for selected firms. New national security concerns have also created barriers to expansion and scared off investors, especially in finance and tech.