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Interpretation of the Principal of the Department of Trade in Services and Commercial Services under the Ministry of Commerce on the 13th Five-Year Plan for the Development of Service Trade

Original text of policy: Circular of Thirteen Authorities including the Ministry of Commerce on Issuing the 13th Five-Year Plan for the Development of Service Trade

On March 2, 2017, 13 departments, including the Ministry of Commerce (the "MOFCOM"), issued the 13th Five-Year Plan for the Development of Service Trade (the "Plan"). Recently, the principal of the Department of Trade in Services and Commercial Services under the MOFCOM have made an interpretation with respect to the Plan.

I. Background for Preparation of the Plan

The Central Committee of the CPC and the State Council attach great importance to the development of service trade. The Several Opinions of the Central Committee of the Communist Party of China and the State Council on Building a New Open Economic System (Zhong Fa [2015] No.13) set forth the requirement to "enhance the strategic position of service trade". At the 1st Plenary Session of the Inter-ministerial Conference of the State Council on Development of Service Trade, all departments are required to jointly prepare the "13th Five-Year Plan" for service trade through the coordination and cooperation.

With the rapid development of service trade in China during the period of the "12th Five-Year Plan", the average increase rate of annual import and export of services was 15.7%. In 2015, the amount of service import and export reached USD 752,900,000,000 with the world ranking raising from Rank 4 (at the end of the period of "11th Five-Year Plan") to Rank 2, including USD 286,700,000,000 for service export (world ranking: 3) and USD 466,200,000,000 for service import (world ranking: 2). The proportion of service trade in China's foreign trade (total of import and export of goods and services), the proportion of China's service export in global service export and the proportion of China's service import in global service import have risen, for which the target assignments have been successfully completed. Service trade has become an important support to the transformation and upgrading of China's foreign trade, a significant opportunity for cultivation of new driving forces, and a major carrier for mass entrepreneurship and innovation. At the same time, China is also facing with some problems in the development of service trade, such as the relatively weakness in the international competitiveness, great deficit and the scale and quality of export to be improved.

During the period of the 13th Five-Year Plan, China's service trade will enter a golden period of comprehensive development, in which the opportunity and challenge co-exist. In order to implement the significant arrangements made by the Central Committee of the CPC and the State Council, make a comprehensive implementation of the 13th Five-Year Plan for Economic and Social Development of the People's Republic of China and the 13th Five-Year Plan for the Commercial Development and promote the service trade to a new stage, the MOFCOM, jointly with other 38 member units of the Inter-ministerial Conference of the State Council on Development of Service Trade, has prepared the Plan.

II. Process of Preparation and Main Characteristics of the Plan

Activated in the second half of Year 2015, the preparation of the Plan was completed for over one year. In advance, the MOFCOM entrusted the University of International Business and Economics, the CAITEC ("Chinese Academy of International Trade and Economic Cooperation") of the MOFCOM and other research institutions to launch a preliminary research on the overall trend of service trade development during the period of the 13th Five-Year Plan, in which a series of research achievements were formed. On such basis, the MOFCOM formed the first draft by holding several special sessions for preparation of the Plan, launching multiple investigations and researches in regions, listening to the opinions from all parties and inviting the members of the Inter-ministerial Conference of the State Council on Development of Service Trade to provide the work content. After completing the first draft of the Plan, the MOFCOM also sought opinions from relevant departments under the State Council, competent departments of commerce in regions, relevant industry associations and the expert group of the Plan. According to the feedback, we modified and improved the first draft and formed the draft for review of the Plan, which was adopted in principle upon the deliberation at the ministerial meeting of the MOFCOM on December 19, 2016. On March 2, 2017, the Plan was formally issued by the MOFCOM, jointly with 13 departments including the Publicity Department of the Central Committee of the CPC and the National Development and Reform Commission.

III. Domestic and Overseas Environment for the Development of Service Trade during the "13th Five-Year Plan" Period

From an international perspective, the strategic positions of service industry and service trade are more prominent, and the integration trend of service industry and other industries is more significant; the scope and depth of service trade and investment cooperation continue to be expanded, and open cooperation is still the strategic choice for various countries in the world to develop their service economy; in the digital era, the tradability of the service has been greatly improved, and business form, business model and trading manner of service trade have undergone profound reform, and the innovation of service trade has been accelerating. Meanwhile, the in-depth impact of the international financial crisis still exists. The world economy makes continuous adjustment with slow growth, and the trade protectionism revives; the international competition of service trade has become fiercer. The developed countries in succession have seized the commanding height of international competition of service trade, and developing countries have also enhanced the support for service trade; The international economic and trade rules in the field of service trade are facing to the reconstruction, and the competition for the right to formulate the international rules is more intense.

From a domestic prospective, the supply-side structural reform is further promoted, and the industrial foundation for the development of service trade is more solid; The network advantages of international market formed in the foreign trade and economic cooperation are more obvious; the development environment of service trade is continuously optimized, and the innovative development pilot of service trade is further promoted, and the policy system of service trade becomes more perfect. At the same time, China's traditional trade advantages continue to be weakened, the new competitive advantage remains to be cultivated; the service industry, especially the producer service industry, is relatively backward; the international competitiveness of service trade is relatively weak. The trade structure needs to be optimized, and the promotion system of service trade still remains to be improved.

The Plan proposes to recognize the current development trend of service trade, comprehensively raise the strategic position of service trade, more actively and effectively respond to various risks and challenges, and strive to promote service trade to march towards a new stage.

IV. Major Targets of the Development of Service Trade during the "13th Five-Year Plan" Period

The Plan puts forward the development targets of service trade during the "13th Five-Year Plan" period through focusing on the target set forth in the "13th Five-Year Plan" for the national economic and social development and the main targets of the business development during the "13th Five-Year Plan" period, and comprehensively considering the international economic development situation and the actual development of China's service trade: further consolidate the power status of service trade, and accelerate the construction of service trade powerful nation; strive to achieve the average annual growth rate of service trade higher than the average growth rate of global service trade during the "13th Five-Year Plan" period, achieve the continuous increase in the export proportion of technology and knowledge-intensive and high value-added services, and further consolidate the export superiority of the intensive human resource and services with Chinese characteristic, as well as significantly improve the strategic position of service trade in the development of open economy.

V. Strategic Layout of the Development of Service Trade during the "13th Five-Year Plan" Period

The Plan, based on the overall utilization of two kinds of resources in the international and domestic markets, and focusing on the formation of a new pattern of service trade with internal and external linkage and open development, puts forward an overall arrangement for optimizing the domestic regional layout and overseas market layout.

With respect to the optimization of the domestic layout, focus on the overall strategy of national regional development to build the Beijing-Shanghai-Guangdong service trade core regions and the service trade cluster surrounding Bohai Sea, Yangtze River Delta and Pearl River Delta, and on this basis, actively develop "two transversal and one longitudinal" radiation belts of service trade, namely, China eastern coastal radiation belt of service trade, radiation belt of service trade along the Yangtze River and "One Belt and One Road" radiation belts of service trade facing Central Asia and West Asia, in order to make great efforts to form a new pattern with the leadership by three core regions, longitudinal and transverse radiation and overall development.

For the optimization of the overseas layout, actively explore the market along the "One Belt and One Road", and expand the mutual opening in the service industry; further consolidate the traditional market, improve the cooperation level of service trade with Hong Kong, Macau and Taiwan, strengthen the service trade cooperation with the developed countries, and deepen the service trade cooperation with neighboring countries; accelerate the cultivation of emerging markets, strengthen the service trade contacts with countries with unique industrial advantages, actively develop the service trade with Latin America, and promote Sino-African service trade development via the Sino-African Ten Cooperation Plans.

VI. Major Tasks of the Development of Service Trade during the "13th Five-Year Plan" Period

In order to ensure the smooth realization of the development targets of service trade during the "13th Five-Year Plan" period, the Plan focusing on the innovative development of service trade puts forward six main tasks.

1. Improve the development system. Accelerate the improvement of the management and coordination mechanism of service trade, make overall planning for the internal and external opening, and promote the positive interaction among the industrial policy, trade policy and investment policy. Accelerate the promotion of the innovative development pilot of service trade, promote the supply-side structural reform in the field of service trade, explore and adapt to the management system of innovative development of service trade, promote the mechanism, policy system and supervision mode, and create the innovation heights of service trade system.

2. Optimize the industry structure. Steadily promote traditional service export, and put forth effort on the international competitiveness of traditional service trade. Actively expand the emerging service exports, and cultivate new competitive advantages of service trade. Continue to improve the quality of service imports to create a convenient environment for promoting the import of important services.

3. Expand the main market players. Create the leading enterprises of service trade with great influence and strong international competitiveness, make the middle echelon of the service trade enterprises with primary business outstanding and leading in China become stronger, and actively support small and medium-sized enterprises of service trade which have distinctive features and are adept in the innovation.

4. Cultivate the innovative impetus. Promote the innovation of service trade transaction modes, and build a new platform for the promotion and transaction of service trade. Accelerate the form innovation of the development of service trade, and actively cultivate new growth points.

5. Expand openness and cooperation. Actively promote the opening up, and promote the new level of the internationalization of service market. Actively and steadily "going out" and expand the new frontier for the development of service trade. Actively participate in the formulation of rules, and actively integrate into the new pattern of international service trade.

6. Perfect the supervision system. Innovate the supervision measures, and perfect the operational and post-operational supervision system. Strengthen the construction of credit supervision system, and establish credit evaluation system of main market players of service trade and the corresponding mechanisms of incentive for keeping faith and punishment for losing faith.

VII. Safeguard Measures

The Plan proposes the safeguard measures in five aspects.

1. Optimize the business environment. Optimize the legal environment of service trade, promote market-oriented reform in the service sector, stimulate the vitality of main market players, and break the structural and institutional obstacles to the development of service industry.

2. Improve the promotion system. Improve the polices on the finance and taxation , finance, foreign exchange and facilitation of service trade and other policies, and perfect the promotion platform of service trade.

3. Improve cooperation mechanisms. Conduct dialogue and consultations with main service trade partners, promote mutually beneficial and win-win cooperation, and accelerate the promotion of service trade liberalization between China and partner countries of free trade zones.

4. Strengthen the talent support. Innovate the mode for the cultivation of service trade talents, enhance the cultivation and introduction of the talent, and strengthen strategic research and think tank building for service trade, so as to provide intellectual support for the development of service trade.

5. Strengthen statistics and evaluation. Improve the statistical system, and establish the statistical analysis system of service trade which is based on data from the comprehensive supervision service platform for service trade, refers to industrial data from various departments, relies on surveys on key fields, and is supplemented by research and judgment of experts and scholars. Strengthen the supervision over plan implementation, decompose tasks, implement responsibilities, and strengthen the assessment and evaluation.

VIII. Significant Fields for the Development of Service Trade

For the purpose of refining various work tasks and optimizing the industry layout, the Plan lists 24 significant fields for the development of service trade under 12 categories in the form of an appendix, and clarifies the development direction and main measures of various fields during the "13th Five-Year" period, which enables the Plan more instructive and operational. Regarding the classification of significant fields, they, generally based on the principle of classification set forth in the Statistical Monitoring System of International Service Trade, have comprehensively considered the internationally-accepted practices on the classification of service trade and the reality of the management of the sub-sectors of service trade in China and work needs, and have scientifically considered the correspondence of the classification of national economic industries and the trade classification at the same time.

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