Closer int'l cooperation needed to promote global services trade

China Plus Published: 2019-10-11 22:40:09
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

The latest World Trade Report released by the World Trade Organization (WTO) shows that services have become the most dynamic component of international trade, and that they will continue to expand in the coming decades. But against the backdrop of rising trade protectionism and unilateralism, enhanced international cooperation is urgently needed to support this expansion.

The China Securities Regulatory Commission on Friday announced its timetable to lift foreign ownership limits on fund management firms, brokerages, and futures companies next year. [Photo: IC]

The China Securities Regulatory Commission on Friday announced its timetable to lift foreign ownership limits on fund management firms, brokerages, and futures companies next year. [Photo: IC]

According to the WTO report, services account for over one-fifth of global trade today - more than double what it was in 1970. The trade in services, ranging from financing to logistics, helps to facilitate economic development, streamline industrial structures, and create job opportunities. On average, services now account for about half of the global GDP. In developed countries, services make up about three-quarters of the GDP, and their share of the economy in developing countries is rapidly increasing.

But the fast growth that the service sector has enjoyed is being overshadowed by rising protectionist sentiment and unilateralism. The reading of the WTO's Services Trade Barometer issued last month stood at 98.4, below the baseline value of 100. That suggests the services trade has continued to face strong headwinds leading into the second half of the year. To inject new momentum into the global services trade, the WTO is urging all countries to strengthen their international cooperation.

First and foremost, countries need to eliminate barriers to trade. According to the WTO report, barriers to cross-border services trade are much higher than the barriers to the trade of goods. These limitations include overly restrictive limits on foreign ownership, restrictions on the movement of people, and complicated regulatory approval procedures. China has been committed to reducing and eliminating these kinds of barriers, having already significantly lowered the threshold for foreign investment in the banking, securities, and insurance sectors. Next year, restrictions over ownership in those sectors will be scrapped altogether. And the government has also moved to break down barriers to foreign investment in the urban gas supply, cinema, and value-added telecommunication service sectors.

The continuous expansion of platforms that facilitate international cooperation is also very much needed to promote the global services trade. In this regard, China's Belt and Road Initiative provides a good example: Last year, services trade between China and its Belt and Road partners surpassed 120 billion U.S. dollars, accounting for more than 15 percent of China's services trade revenue. China has also strived to promote the trade in cross-border services using other influential platforms such as the China International Import Expo and the China International Fair for the Trade in Services.

The WTO report predicts that by 2040, the trade in services will account for one-third of total world trade. It will take concerted and coordinated effort by all countries to eliminate policy barriers and make the most of the great potential in the sector. The results of this global effort will benefit developed and developing countries alike.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.