China's industrial structure has a new linchpin — trade in services — and it's injecting vitality into its value-added dimension. That's the consensus which emerged from the halls and conference rooms of the 2023 China International Fair for Trade in Services, which took place in Beijing in early September.

Amid the relentless march of the technological revolution and the ever-expanding global trade, trade in services is fueling the transformation of China's industrial structure and propelling its ascent to higher industrial echelons.

Driven by a strong desire to refine its economic structure, China has steadfastly pursued the expansion and liberalization of its services sector and trade in services in recent years. Notably, substantial progress has been made in the systematic opening-up of the services sector, marked by growing value of trade in services and relaxation of foreign market entry restrictions. These efforts have positioned China as a key driver of global trade in services.

In comparison to trade in goods, which involves the physical movement of tangible products via various transportation modes such as sea, land and air, trade in services exhibits distinct characteristics. It is often characterized as environmentally friendly, low-carbon, high value-added and knowledge-intensive. Moreover, it typically experiences limited fluctuations, maintaining a relatively stable trajectory that remains less influenced by external environmental changes.

With the exception of traditional services like travel, transportation and construction, most other nonphysical transactions can be executed seamlessly through online payment systems. These transactions are not hindered by challenges related to cross-border transportation or other external factors.

As a result, during periods of robust global trade, the growth rate of trade in goods tends to outpace that of trade in services. However, when global trade experiences a downturn, the growth rate of trade in services tends to surpass that of trade in goods.

To address various challenges, including diminishing global demand for goods and unexpected geoeconomic shocks, China has implemented a range of policies aimed at fostering innovation in trade in services. These initiatives involve opening up the services sector, establishing a negative list management system for cross-border services trade and intensifying efforts to promote digital trade.

In addition, the disruptions caused by the COVID-19 pandemic over the past three years have accelerated the global trend toward digitalization. China has been a pioneer of this shift, leveraging its advanced 5G technology and "new infrastructure" projects to develop effective frameworks for cross-border digital governance.

In contrast to traditional infrastructure such as railways, roads and water management, "new infrastructure" pertains to critical facilities rooted in information technologies like 5G, AI, the industrial internet and the internet of things, which enables interconnections among networks of devices for data exchange.

China's sizable population has also played a pivotal role in fostering the growth of its digital economy, with data emerging as a key economic resource. This phenomenon presents opportunities for developing nations to narrow their gap with developed economies and emerge as significant players in the global digital economy.

After years of growth, the integration of the manufacturing and services sectors, coupled with enhancements in service supply, has further contributed to the synchronized development of trade in services.

China's 14th Five-Year Plan (2021-25) for the Development of Trade in Services highlights the need to systematically encourage the opening-up of various sectors, including telecommunications, internet services, education, culture and healthcare. This opening-up should be executed in an organized fashion, utilizing pilot free trade zones as trailblazers.

Given the ongoing technological advancements and the impact of the new industrial revolution, which continuously foster innovation and transformation in service trade formats, China has been actively involved in the development of relevant trade regulations, in order to exert more influence and participate significantly in the decision-making processes related to the formulation of rules and standards, as well as reduce associated risks.

A noteworthy example of China's proactive stance is its formal application to join the Digital Economy Partnership Agreement in November 2021. This move paves the way for novel collaborative approaches and cooperation on matters related to digital trade, setting a precedent for tackling emerging issues in this domain.