Plan to boost Beijing's service sector
Updated: December 6, 2023 09:26 China Daily

China's latest measures to open up the service sector in Beijing will pave the way for expanded market access nationwide and facilitate the nation's push to join high-standard free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, according to officials and analysts.

The plan to support Beijing in its efforts to move forward with the development of a demonstration zone for the opening up of the service sector has been endorsed by the State Council, China's Cabinet, according to an official statement published on Nov 23.

The move, which comes three years after the Chinese capital was chosen to host the demonstration zone, involves about 170 measures such as deepening reform and opening-up, exploring rules and regulations for emerging business models and optimizing institutional trade and investment arrangements.

Key measures include lifting foreign ownership restrictions on — and further opening up — value-added telecommunications services such as information and internet access services, and exploring the possibility of building new internet exchange centers.

Ling Ji, vice-minister of commerce and China's deputy international trade representative, said at a news briefing last month that the priority of the latest measures is to align the service sector with high-standard international economic and trade rules.

The new plan will help facilitate the building of an open world economy, enabling the nation to build a higher level, open economic system and capitalize on its strengths to promote growth, he said.

China has so far piloted the opening up of the service sector in its four municipalities — Beijing, Tianjin, Shanghai and Chongqing — as well as Hainan province and six cities, introducing steps to open up key sectors such as the science and technology, telecommunications, tourism and finance industries, according to the Ministry of Commerce.

From September 2020 to September this year, the demonstration zone in Beijing attracted total foreign investment of $45.75 billion, accounting for 11.2 percent of the national total in the service sector, according to the ministry. The added value of the service industry accounted for 85.9 percent of Beijing's total GDP in the first half of this year.

The latest plan specified opening up measures in the healthcare industry, including steps to support eligible doctors from abroad to open clinics in Beijing and facilitate international cooperation in the research and development of stem cell and gene therapies.

In the financial sector, the plan pledged to level the playing field for foreign investors who are looking to provide financial services and explore steps to support insurance asset management companies in their efforts to issue RMB-denominated asset management products overseas.

As for services in the culture and education sectors, Beijing will delegate approval for the establishment of entertainment venues and internet service facilities by foreign investors to district-level authorities, the plan said.

Sima Hong, vice-mayor of Beijing, said the capital will give greater priority to exploring steps for institutional opening-up, especially in the digital economy, green finance and intellectual property sectors.

Reforms in the oversight of customs duties, financial services work, the cross-border flow of data, border entries and exits of businesspeople, and government procurement will also be prioritized to serve as the catalyst for similar practices at the national level, she said.

According to the plan, the capital will explore the development of rules on the governance of artificial intelligence and participate in the drafting of international, national and sectoral standards.

Efforts will be made to increase the exchange of data in Beijing, where regulations to make data trade easier will be introduced and the opening up of public data will be expanded.

The number of cargo and passenger flights between Beijing and Western countries will be increased, and more measures will be taken to ease the cross-border flow of capital.

Li Mingtao, head of the research institute at the China International Electronic Commerce Center, said the latest measures will set the stage for the further opening-up of China's service sector, with the nation having already opened up its manufacturing sector across the board.

"Beijing is at the forefront of the domestic service industry, with a high concentration of talent, technology and capital, and the city can leverage its advantages in the service industry by aligning with higher international standards in the trade in services sector," he said.

He explained that one of the highlights of the policy measures lies in the internet sector, as it encourages Beijing authorities to launch special services to enable the transfer of data across the border through lawful channels.

The move is a key step for the Chinese capital to improve its business environment as the cross-border flow of data has been one of the key areas of concern for some global businesses, he added.

Li said the latest policy document has also sought to address some important issues in the service sector, including the mutual recognition of digital signatures across the border, which would greatly improve the efficiency of oversight of international trade.

The officials and analysts have underscored that the measures laid out in the policy document could eventually pave the way for China's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement.

The nation's top leadership has made clear, on a number of occasions, China's commitment to joining the two high-standard free trade agreements.

Ling, the vice-minister, said about 40 percent of the measures align with the regulations of the CPTPP and the DEPA.

Beijing will offer one-stop services for its foreign talent, including the issuance of work permits and residential permits for expatriates in the city.

International students at higher education institutions in Beijing will also receive the green light to obtain part-time jobs in accordance with relevant regulations, the document said.

Ouyang Rihui, a professor of digital economics at the Chinese Internet Economy Research Institute at the Central University of Finance and Economics, said he believes the latest measures will help deliver a timely boost to the confidence of businesses as the nation ramps up measures to attract foreign investment.

Foreign direct investment into the Chinese mainland in terms of actual use dropped 8.4 percent year on year to 919.97 billion yuan ($125.74 billion) from January to September, according to the Ministry of Commerce.

"The plan is a clear signal to foreign investors that China's strides in opening-up will only become greater," Ouyang said, adding that piloting the measures in Beijing will be more significant as the city relies overwhelmingly on the service sector for economic growth.

He added that Beijing, home to some of China's top universities and endowed with a rich abundance of talent, can also lead the nation's sci-tech innovation efforts.

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