China continues to pursue opening up of services sector
China is expected to further open up its services sector to the rest of the world as it looks to boost economic growth during the current 14th Five-Year Plan period (2021-25).
Industry experts said China signing up to the Regional Comprehensive Economic Partnership agreement (RCEP) will usher in a new era of liberalization in its services industry, while at the same time improving the quality of the services it offers.
Signed by 15 Asia-Pacific countries – the 10 member states of the Association of Southeast Asian Nations and their five major trading partners, namely China, Japan, South Korea, Australia and New Zealand – the RCEP agreement represents the world’s largest free trade area, accounting for about one-third of GDP and population.
The agreement mandates that member countries fully open at least 65% of their services sector and ensure transparency of regulations, said a report by Ernst & Young Global Ltd.
It has already come into force in China, Japan, Australia, New Zealand, South Korea and six ASEAN member states – Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam. It will become effective in Malaysia on March 18.
“China will fully honour its RCEP commitments to open the market up and strengthen cooperation with other member economies,” said Wang Tuo, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation’s Institute of International Trade in Services.
“As the nation continues to expand high-level opening-up, it will deepen reforms and pursue greater institutional opening-up, including aligning domestic regulations, management and standards with high-level international ones. Free trade agreement commitments are part of such efforts,” Wang said.
Under the deal, Japan, South Korea, Australia, Singapore, Brunei, Malaysia and Indonesia have opened market access to foreign services suppliers (unless exceptions have been applied). Other members committed to fully opening up within six years of the agreement entering into force.
China’s Ministry of Commerce (MOC) said the country’s commitments under the RCEP are “of the highest level among all the free trade agreements it has signed”.
The MOC said foreign investment into China in 2021 surged by 14.9% year-on-year to about 1.15 trillion yuan ($180.72 billion), of which the services sector accounted for about 79%.
China has about 45 million companies in the services sector, about 70% of which were founded in the past five years.
The annual growth rate of newly registered services-related companies has been above 15% since 2016, while the growth rate of newly registered foreign-funded services enterprises was above 5.8% during the same period.