Services bring cheer to trade amid tough times

Back in action: Tourists are seen exiting the Forbidden City in Beijing. Travel services continued to recover last year as trade in this segment rose more than 8% y-o-y to nearly 856 billion yuan (RM551.4bil). — AFP

BEIJING: Between 2012 and 2022, a period that included nearly three years of Covid-19 disruptions to various economic activities, China’s trade in services notched up an outstanding record.

It grew more than 6% annually on average – three percentage points more than the global growth rate – helping China to extend its position as the world’s second-largest trader in services for nine consecutive years.

More than 200 countries and regions are involved in trade in services with China, which covers purchase and sale of services like transportation, communication, construction and related engineering, finance, entertainment, culture, sports, tourism, education and environment.

According to data from the Commerce Ministry, China’s trade in services last year was worth 5.98 trillion yuan (US$872.81bil or RM3.86 trillion), up nearly 13% year-on-year (y-o-y), bringing cheer to the overall trade sector that seemed to be weighed down by tardy trade in goods and slowing export growth.

Despite Covid-19, softening global goods trade and geo-economic tensions, China’s trade in services bloomed on the back of continuous opening-up, the stable recovery of the services sector and digitalisation, experts said.

Segments like human capital-intensive services, knowledge-intensive services and travel services – education, tourism, aircraft and vessel maintenance, TV and film production, and so forth – have been particularly active.

Proof of this shines bright at Xiamen Gaoqi International Airport in East China’s Fujian province.

There, standing in front of two huge pieces of aircraft landing gear at a maintenance plant, Frenchman Christian Pinter, general manager of Taikoo (Xiamen) Landing Gear Services Co Ltd, and his local colleagues recently engaged in a passionate discussion with airport representatives on the expansion of their company’s new workshop.

“Our current capacity allows for the completion of about 300 aircraft legs per year and we aim to increase that number to 365 later this year, or one leg a day on average through the year. However, we need additional space to reach this goal,” said Pinter.

To address shortage of space in the current building and support its growth plans, the company may need to consider external storage options, he said.

Over the past several months, China’s optimised Covid-19 response has generated more business not only for the company but also providers of aviation consumables, aircraft repair and engine maintenance, catering firms, and both cargo and passenger airlines.

For instance, Xiamen Customs, a local unit of China’s General Administration of Customs, supervised 385 inbound and outbound maintenance flights in 2022, up nearly 14% on a yearly basis.

The actual import and export value of aviation maintenance and processing trade had more than doubled last year. These businesses continued to grow at a high rate in the first two months of this year.

To support its anticipated workloads, Taikoo (Xiamen) will explore outsourcing some of its workshops and relocating some activities to other locations in Xiamen. This approach will create remote jobs rather than jobs within the airport.

In January alone this year, China’s trade in services reached 459.5 billion yuan (RM296bil), with transport and travel propelling the sector, said the State Administration of Foreign Exchange.

In the 2012-21 period, the figure increased more than 70% to US$821.2bil (RM3.6 trillion), with its global share rising from 5.4% to 7.1%.

For perspective, trade in goods climbed from 24.4 trillion yuan (RM15.7 trillion) in 2012 to 39.1 trillion yuan (RM25.2 trillion) in 2021, data from the General Administration of Customs showed.

Market watchers and business executives said China’s influence in the services sector has been bolstered by factors like soaring growth in foreign creative and cultural trade and knowledge-intensive services.

They are convinced China’s trade in services will be a long-term thriving force that will shore up the country’s economic growth.

They also noted that China’s trade in services has emerged as a big hope in the global market, contributing to the ongoing global economic recovery, thanks to government policies that seek to make opening-up broader and deeper.

One potential driver of China’s future economic growth could be the rising exports of human capital-intensive services, which require a higher level of expertise and skill.

These services could include technology consulting, engineering, and research and development, said Zhang Wei, chief expert of the Shanghai-based China Association of Trade in Services.

He said rising demand for high-quality foreign services among the country’s growing middle-income earners will be another factor to contribute to the national economy.

These services could include education, tourism, healthcare and entertainment.

Echoing the sentiment, Zheng Wei, assistant researcher at the Shanghai-based China Service Outsourcing Research Centre, said a distinct upside still exists in the growth of trade in services in China as its scope now extends to artificial intelligence, the metaverse and other such fields, with huge potential for high growth.

China’s trade in knowledge-intensive services rose nearly 8% y-o-y to 2.51 trillion yuan (RM1.6 trillion) in 2022, said the Commerce Ministry.

Travel services continued to recover last year as trade in this segment rose more than 8% y-o-y to nearly 856 billion yuan (RM551.4bil).

Phillipa Harrison, managing director of Tourism Australia, a government agency responsible for attracting international visitors, said with the easing of Covid-19 measures for international travel to and from China, the agency remains optimistic about the outlook for the industry this year and beyond.

“We believe the industry will recover in an orderly manner,” she said, adding that early indications suggest there is strong interest in visiting Australia among Chinese travellers and a steady return of visitors is expected in the weeks and months ahead.

During her trip to China in early March, Tourism Australia signed agreements with Chinese airlines, including Air China Ltd and China Eastern Airlines Corp Ltd, to boost recovery of travel between China and Australia.

China was Australia’s largest source market for both international visitation and spending in 2019.

Some 1.44 million Chinese residents travelled to Australia, making up 15% of all international arrivals in the country. In all, they spent around A$12.4bil (US$8.3bil or RM36.7bil). By offering more market access to global service providers, China will be able to offer consumers a wider range of options and improve the overall quality of services available. — China Daily/ANN

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!


Next In Business News

Sime Darby Property wins gold and silver at FIABCI World Prix d'Excellence Awards 2023
ABM: Banking industry will thrive under Abdul Rasheed’s leadership at Bank Negara
Delinquent office loans trouble commercial mortgage bond market
Second half 2023 likely bodes well for Bursa
Calls for clear reforms
Pioneering sustainability in property and construction
Bond market key to ending Sri Lanka’s crisis
Another washout quarter
Tech firms face challenges from weak ringgit, softening markets

Others Also Read