China's service trade hits new highs in the first half

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01:58

China's service trade reached a new high in the first half of the year amid complications at home and abroad.

The Ministry of Commerce (MOFCOM) said Tuesday the country's service trade rose by 8.5 percent year-on-year to stand at 2.53 trillion yuan (369 billion US dollars in today’s exchange rate) in the first half of the year.

Specifically, service exports amounted to 842 billion yuan, up 13.6 percent year-on-year, and service imports reached 1.69 trillion yuan, up 6.1 percent, resulting in a deficit of 848 billion yuan.

It is also the first time that China recorded a deficit that is narrowing on a semi-annual basis.

Li Yuan, senior official with the Ministry of Commerce, says there are three reasons for the shrinking gap.

"First, China's economy did pretty well in the first half of 2018. The rapid development of the service industry laid a solid foundation for the expansion of service trade. Secondly, the service trade pilot programs centered on supply-side reform yielded positive results. Thirdly, we put service trades, especially those led by Internet plus, as our top priority in foreign trade," Li said.

Li Yuan, deputy director of the Department of Service and Trade of the Ministry of Commerce. /CGTN Photo

“Service trade came to be a major part of economic growth, because of the slowing down in the goods trade and the restructuring of Chinese economy,” said Hong Hao, chief China strategist at BOCOM International Holdings.

06:22

China's service trade accounted for 15.2 percent of the total foreign trade in the first six months, up 0.1 percentage point year-on-year. The growth rate of service trade is 0.6 percentage points, which is higher than the growth rate of the import and export of goods.

“I think the financial service sector, in particular, is the most promising sector,” Hong said, “In 2016 for example, the value-added of financial service sector contributed eight percent to GDP. So it’s rather substantial if you compared with other developed countries, such as Japan. They see four to five percent of GDP growth coming from financial service sector,” Hong explained.

China's trade structure has been further optimized as well. The combined total import and export market of emerging services reached 846 billion yuan, up 19 percent, 10.5 percentage points higher than the total growth rate. Exports of emerging services achieved 440 billion yuan, up 23.6 percent, accounting for 52.3 percent of the total trade service export.

The US-China trade dispute arose in July. The two sides have mainly imposed extra tariffs on goods, so there has been little impact on the trade in services so far, but in the long run, the effects will show, said Li Xilin, associate researcher with the Chinese Academy of International Trade Economic Cooperation.

“It depends on how far the trade war goes. If it goes like it’s been, it will first affect goods-related services, such as transportation, manufacturing services on physical inputs owned by others, and maintenance and repair services. After that, more areas in the trade in services will be affected, including information services, computer and telecommunication.”