State headed fund to fuel service exports

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China has launched a 30 billion yuan fund (about 4.6 billion US dollars) spearheaded by the finance ministry to propel investments in service sectors as the nation strives to rebalance its economy and shift towards greater reliance on consumption as the primary driver of growth.

A total of seven limited partners committed to the fund including the ministries of commerce and finance, as well as insurance firms and finance management companies with direct government backing including China Merchants Capital Investment and Sino Life Amc.

The government-led fund is aimed at facilitating the transformation of China's foreign trade patterns and fostering new growth momentum for the economy and is the first of its kind. It has finally materialized after reports disclosed plans of a fund that would encourage high value-added service exports in February last year.

Transitioning towards service exports as opposed to traditional manufacturing has been one of the priorities for the nation’s trade as it hopes to boost margins, slash overcapacity in cumbersome sectors and upgrade its workforce. The Ministry of Commerce published in 2016 a catalog of sectors that would enjoy preferential policies as they export services.

Firms specializing in lab testing services, as well as consulting and sales, are some examples of service exports. / Reuters Photo.‍

Some of the critical areas that the state is backing in exporting expertise, information, maintenance and technology include consulting, sales and transfer of intellectual property, exhibition services, chemical testing, asset management, publishing and tax advising, to name a few.

The newly established fund will step up support for service trade businesses, build an efficient cooperation mechanism and improve the use of resources, said Hu Jinglin, the deputy minister of finance at a launch ceremony in Beijing on Friday.

China regularly registers a deficit in service trade due to substantial domestic demand. The service trade deficit stood at 120.8 billion yuan in November 2017, up from 117.5 billion yuan in October, official data showed.

Service sector growth in December grew at their fastest pace in over three years, showed the Caixin PMI, a private sector survey, earlier this week.