Trade in services forecast to benefit from growth in demand

Prompted by various factors such as new foreign trade formats, consumption upgrades and a recovering exhibition economy in China, the trade in services between China and Germany is expected to maintain robust growth in the coming years as business activities expand, said experts and business leaders.

Unlike the trade in physical goods, trade in services involves the exchange and transaction of various services.

These sectors, as defined by the World Trade Organization, including transportation, communication, construction and related engineering, finance, entertainment, culture, sports, tourism, education and the environment.

By prioritizing the expansion of trade in services, China aims to tap into its substantial domestic demand, enabling emerging businesses to engage in innovative activities within its markets, said Lin Meng, director of the Modern Supply Chain Research Institute, which is part of the Beijing-based Chinese Academy of International Trade and Economic Cooperation.

Lin said this approach will encourage the importation of technologies and services for sectors like high-end manufacturing, energy and carbon reduction.

"As the educational level of the young workforce continues to rise across China, the country's role in the global industrial chain is shifting from being a 'world factory' to a 'world office'," she said, adding that this transformation could help businesses in fields like software design and modern logistics to create more jobs in China.

Wu Dongming, CEO of DHL Express China, a German courier service provider, said the company will continue to invest in its logistics infrastructure in China and launch intercontinental cargo routes between major Chinese cities and other global locations this year.

After putting its latest China gateway into operation in Wuxi, Jiangsu province, in January, DHL began expanding its Shenzhen gateway in Guangdong province. The primary objective of these projects is to offer local businesses quicker transit times and simplified access to global markets.

With numerous Chinese companies rushing to participate in trade shows at home and abroad this year, Wolfgang Marzin, president and CEO of Messe Frankfurt, the largest trade fair and event organizers by sales revenue in Germany, will hold more than 40 business exhibitions across China in 2023.

Due to the effects of the COVID-19 pandemic, the German company managed to hold only 11 trade fairs in the country in 2022.

Many opportunities have come from China's optimization of its COVID-19 response, stimulus foreign trade and investment policies, and the support for the private sector, said Marzin.

Messe Frankfurt will organize several major trade fairs and events, such as the China (Shenzhen) Cross-Border E-commerce Fair in September in Guangdong province and the Shanghai International Trade Fair for Automotive Parts, Equipment and Service Suppliers in November.

As the Regional Comprehensive Economic Partnership pact has created favorable conditions to boost two-way investment and foreign trade, Marzin predicted companies from signatory countries will want to participate in various trade shows in the Asia-Pacific region in the years ahead.

Zheng Wei, assistant researcher at the Shanghai-based China Service Outsourcing Research Center, said that China has strengthened its role in the services sector by increasing its foreign trade in creative and cultural industries and high-tech services. Many foreign business leaders believe that the country's service trade will be a lasting driver of its economic growth. The country's future economic growth could benefit from the increasing exports of services that need more knowledge and skill. These services could involve technology advice, engineering, and research and development, he said, adding that China's trade in services still has a clear advantage as it now covers artificial intelligence, the metaverse and other areas, with great potential for high growth.

China's trade in services grew by 9.1 percent year-on-year to 2.08 trillion yuan ($290.41 billion) in the first four months of 2023.

Meanwhile, the country saw its trade in knowledge-intensive services expand 13.1 percent on a yearly basis to reach 905.79 billion yuan, according to data released by the Ministry of Commerce in early June.