Head of the Department of Trade in Services and Commercial Services of the Ministry of Commerce on Services Trade Development in the First Half of 2020

COVID-19 has posed severe challenge since the beginning of this year. Under the strong leadership of the Central Committee of the Communist Party of China with Comrade Xi Jinping at its core, MOFCOM has been firmly implementing the policies and plans of the CPC Central Committee and the State Council in preventing and controlling the disease while ensuring economic and social development. We have worked with other authorities to promptly introduce and implement policies to stabilize trade in services. Our efforts to push for innovation-driven development have made sound progress. In the first half of this year, overall trade in services remained stable despite a drop in volume. The export of services significantly outperformed the import, trade deficit decreased, and knowledge-intensive service now takes up a larger share. From January to June, China’s total trade in services reached RMB2.22728 trillion, down by 14.7% year-on-year, with an export of RMB912.79 billion and an import of RMB1.31449 trillion, down 2.2% and 21.7% respectively. Some major trends include:

- Significantly lowered trade deficit. From January to June, the export of services declined steadily, whereas the import had been on a steeper slope. The decrease in export was 19.5 percentage points lower than that in import, and consequently, the deficit of trade in services was slashed by 46.1% (RMB344.01 billion) year-on-year to RMB401.71 billion.

- Larger share of trade in knowledge-intensive service. From January to June, China exported knowledge-intensive service worth RMB974.43 billion, up 9.2%. The share of knowledge-intensive services in services trade rose by 9.6 percentage points to 43.7%. Specifically, the export of knowledge-intensive service was RMB512.87 billion, up 9.7%, accounting for 56.2% of services export, up 6.1 percentage points. The fastest-growing areas were charges for the use of intellectual property, insurance services, and telecommunication, computer and information services, growing by 37.2%, 18.7% and 15.2% respectively. The import of knowledge-intensive service was RMB461.56 billion, up 9.7%, accounting for 35.1% of services import, up 9.8 percentage points. The fastest-growing areas were telecommunication, computer and information services, and financial services, growing by 31.1% and 15.7% respectively.

- Sharp decrease in the import and export of travel-related services. Since the pandemic broke out, countries have enforced tight restrictions on cross-border movement. The import and export of travel-related services have thus been greatly impacted. From January to June, China’s trade in travel-related services was RMB558.08 billion, down by 42.9%. Specifically, the export and import decreased by 45.0% and 42.6% respectively. Travel-related services constituted a major component in the drop of overall trade in services. Excluding this area, China’s trade in services expanded by 2.1%, with import and export up 3.7% and 0.5% respectively.

The coronavirus is still spreading across the world. Its shock has sent the world economy into severe recession, and global demand into contraction. All these make the situation ever more challenging for the development of China’s trade in services. In the second half of this year, MOFCOM will continue to follow the policies and plans of the CPC Central Committee and the State Council. In deepening reform, we will press ahead with pilot areas on innovation-driven development of trade in services, demonstration cities of outsourcing, and export bases of characteristic services to achieve high-quality development of trade in services. In expanding opening-up, we will speed up formulating a national negative list for cross-border trade in services and hold a successful China International Fair for Trade in Services with regular COVID-19 control measures, so as to lend new impetus to trade in services. In stepping up innovation, we will promote new modes such as digital trade and online exhibitions to make our trade in services better and more efficient.