Dual Circulation of Digital Intelligence Creates New Momentum for Trade in Services

By Lily Wang

Data shows that in the past decade， Chinas trade in services has been growing by 6.1% each year and the trade volume with countries along the Belt and Road has increased by 33%. The Belt and Road cooperation has made important contributions to the growth of trade in services of China.

On September 3， the fifth Belt and Road Cooperation Forum on Trade in Services was opened. The forum this time had the theme of “dual circle of digital intelligence-the new momentum of Belt and Road cooperation on trade in services”. The forum consisted of an opening ceremony， keynote speeches， result releases and high-end dialogs. Participants in the forum held deep discussions around the topic of “driving the digital and intelligent development of trade in services”.

Trade in services becomes important source of power for world economic growth

“As an important part of international trade and an important area of international economic and trade cooperation， trade in services is an important source of power for world economic growth. At present， global trade in services has been undergoing twists and turns caused by the impact of the pandemic， and has shown great resilience of growth.” At the opening ceremony， Zhang Shenfeng， Vice Chairman of the CCPIT， explained that the rapid growth of Chinas trade in services is benefitting from the continuous expansion of the opening up of the service industry and the improvements in Chinas scientific and technological innovations. He suggested that efforts should be made to better promote the cooperation in trade in services under the Belt and Road Initiative from three aspects： first， ways of conducting trade in services should be constantly innovated， promoting the deep and innovative integration between digital technology and trade in services. Second， cooperation should be increased in key areas of trade in services and efforts should be made to work with more countries along the Belt and Road in key areas such as transportation and logistics， scientific and technological innovation and the digital economy. Third， the docking of policies and rules on trade in services should be strengthened. He highlighted Chinas plan to work with countries that have jointly built the Belt and Road to study and formulate standard rules and systems in the fields of trade and investment facilitation and intellectual property protection， and to strengthen soft connectivity.

Zhou Chenghu， Director of the China Association of Trade in Services and academician of the Chinese Academy of Sciences， said that in order to promote the development of trade in services under the Belt and Road framework， first， China should grasp the development potential and broad market brought about by the Belt and Road for trade in services， and give play to the role of trade in services as an engine for the recovery and development of the world economy； second， it should promote communication and exchange， make precise efforts， and find the breaking point for developing trade in services. The capital and technology intensive modern service industry represents the trend in the development of trade in services and will meet the needs of the service industry in China and across the rest of the world. Third， China should release the dividends of the digital economy， promote the steady and sustainable development of trade in services， and build a high-level open market for the digital economy.

“In recent years， the Belt and Road cooperation in trade in services has yielded fruitful results and shown strong vitality，” said Zhu Guangyao， the second level inspector of the Department of Trade in Services and Commercial Services of the Ministry of Commerce， when expressing his belief that the world is facing great changes， the likes of which have not been seen in a century. The development of trade in services is not only facing challenges from the changing global situation and the spreading pandemic， but also the opportunities posed by the strong growth of the resilient digital economy. The theme of this forum is highly inspirational and is expected to explore new methods and channels for international cooperation in trade in services under the framework of the Belt and Road.

The COVID-19 pandemic has propelled digital trade to develop against the trend and become a new engine for growth in trade in services across the world and the Belt and Road region. Jiang Xiaojuan， a member of the Standing Committee of the National Peoples Congress and Chairman of the China Public Administration Society， emphasized that in recent years， international trade frictions have been increasing， and the pandemic has hit the global economy hard. However， international trade， which has shaken off the impact of the pandemic， has become a powerful engine for global economic recovery. In her view， the promotion of trade in services will be conducive to the construction of a new development pattern for China. It has also played a positive role in creating high-quality jobs， transforming the trade structure towards a low-carbon model， meeting the peoples aspirations for a better life， and promoting the transformation and upgrading of the manufacturing industry. Chinas industrial base， market scale and enterprise competitiveness have provided a solid foundation for the development of the service trade， in particular the digital service trade. In addition， digital producer services are also exhibiting very good conditions for development.

Yi Xiaozhun， former Deputy Director General of the World Trade Organization and former vice minister of the Ministry of Commerce， said that at present， while Chinas manufacturing industry is developing closer connections with trade in services， there are still many barriers to international trade. He suggested that China actively participate in the formulation of rules for the global trade in services， motivate the WTO to reach an investment facilitation agreement and e-commerce agreement as soon as possible， conscientiously implement the RCEP， and exercise more trade in services during the construction of the Belt and Road. It is also important for the national government to follow the trend towards a service-oriented manufacturing industry and digitalized trade in services， and to introduce more policy measures to embed China in the global industrial chain and value chain.

K. K. Yoganaadan， Deputy Chief of the mission from the Embassy of Sri Lanka in China， reiterated that China has advanced technology and is able to further cooperation with countries along the Belt and Road region. He also stated that China can work with its global partners to jointly develop and lead the global digital economy and build a shared digital economic world. He said that countries around the world， especially developing countries， can use these digital technologies to increase productivity and achieve economic inclusion and inclusiveness. He believes that， in order to give full play to the role of trade in services， Sri Lanka must make full use of the Internet of Things， artificial intelligence and biotechnology to enable future economic development.“For Chinese digital companies， there are many investment opportunities in Sri Lanka. Companies investing in Sri Lanka can not only serve customers and markets in Sri Lanka， but also have the chance to enter larger markets in South Asia and other regions，” he said.

Innovation models bring new opportunities

Hong Xiaodong， former Director of the Department of WTO Affairs of the Ministry of Commerce and an expert from the China Society for World Trade Organization Studies， believes that digital technology drives economic growth in two aspects： on the one hand， with the technological innovation and application promotion of digital trade technology， the proportion of global digitized service delivery is increasing， reaching more than 60%. Similar things have also happened in China in recent years， as Chinas exports of telecommunications， software computers， information services， cultural tourism， and especially game services， have continued to grow. On the other hand， China has become the pioneer and leader in global cross-border e-commerce. It currently ranks first in the world in terms of the online retail market， the number of internet users and the scale of electronic payments. “These Chinese innovative models will certainly bring new opportunities for cross-border trade across the Belt and Road.”

Wang Xiaohong， Deputy Director of the Department of Information of the China Center for International Economic Exchanges， said that the development of digital technology， especially 5G technology， big data， cloud computing， artificial intelligence， blockchains and other new generation digital technologies， has provided broad developmental space for trade in both goods and services. In addition， digital technology has become increasingly powerful. In the past， the major traded products in the cross-border e-commerce sector were mainly retail consumption products such as milk powder and cosmetics， while nowadays， as B2B develops quickly， a lot of engineering equipment， mining products and raw materials can be traded through crossborder e-commerce platforms， the functions of which are much more powerful than before. “We can see that Chinas cyber security and artificial intelligence businesses are growing at a speed of 200-300%， which shows the magnetic effect of global digital technology on trade in services. In the future， the digital service trade will definitely be an important engine for the growth of the service trade.”

Wang also emphasized the need to focus on the ASEAN market， especially since the RCEP agreement came into force： “We will achieve connectivity of digital trade rules with the cooperation within the ASEAN market.”

Yan Lijin， Chairman of China Silk Road Group， said that the application of new technologies has led to changes in previous rules and orders of international trade. Now， due to the development of digital technology， the world rules and orders need changing in all aspects， especially in the field of international trade and cross-border trade， which calls for new rules， orders and even systems that are free， fair and honest.“In 2019， China Silk Road Group signed a cooperation agreement with the United Nations Conference on Trade and Development to build a global digital trade infrastructure and online dispute resolution system and platform based on digital technologies such as blockchains. The main purpose of this is to improve the infrastructure across all international trade， especially the digital infrastructure. The special focus of this is to improve the infrastructure of developing countries， and to also promote the development of crossborder trade and e-commerce.”

Yon explained that with the development of technology in recent years， digital technology has become the most important means and platform of competition for cross-border trade， especially against the backdrop of the pandemic. The proportion of digital trade is increasing and now accounts for approximately 50% of world trade. For example， Guangxi and ASEAN jointly built “two channels and two platforms”， which aims to establish a more advanced digital trade platform between China and ASEAN countries. Furthermore， several important ports in Xinjiang， such as the Alataw Pass and Khorgos， have established fast digital logistics and customs clearance channels. This has enabled Xinjiang to climb into the top 5 in terms of amount of cross-border e-commerce in the country.

Gabriel Wong， PwC Head of China Corporate Finance， highlighted the fact that the digital technology has fundamentally changed the entire global trade ecological environment： first， the attributes of products have changed， in particular， some contentbased products have changed into data. Second， the mode of product delivery in the ecological environment has changed. In the past， products were delivered through production and transportation， while now products can also be delivered through electronic and digital means. Third， the participants have changed. In the past， there were many different links in the delivery chain， including manufacturing and transportation. However， with the advent of digital technology， the participants have changed.

Issue research results

During the forum， the CCPIT Research Institute and Institute for Service Economy and Digital Governance， Tsinghua University issued two publications， namely the Important Role of Digital Cultural Trade in Building a New Development Pattern， and the 2022 Report on Chinas Trade in Services.

Zhao Ping， Deputy Director of the Research Institute of the CCPIT， said that Chinas digital culture industry has a very large market scale： by the end of last year， the number of online literature readers exceeded 400 million， the number of online game players exceeded 500 million， the number of online music users exceeded 600 million， the number of online news users exceeded 700 million， and the number of members of online video audiences exceeded 900 million. “The digital cultural industry has a very obvious driving effect on the digital economy and digital cultural trade. It has changed the development path of traditional cultural trade and has also led to the upgrading of the traditional cultural industry. It will play a positive role in promoting the development of digital cultural trade across the Belt and Road region.”

The Important Role of Digital Cultural Trade in Building a New Development Pattern provides specific suggestions for enterprises： first， optimize the mode of outbound investment and combine the two models of “going overseas through cooperation”and “going overseas by oneself”； second， enterprises should improve their digital capabilities and apply digital technology to all aspects of the trade； third， enterprises should produce premium digital cultural products， especially by means of integration with Chinas excellent traditional culture； fourth， enterprises should pay attention to cross-field cooperation and innovation， especially to meeting the needs of generation Z； fifthly， although digital culture trade is a type of crossborder trade， the overseas experiences of many enterprises show that if digital cultural products are to be a success in the international market， enterprises must make full use of the super large domestic market， develop more new products， improve their business models and increase their possibilities of success when going overseas.

The 2022 Report on Chinas Trade in Services includes several chapters of expert studies， including those on the current conditions and main trends of trade development across the world and in major economies， the international rules， development models and strategic deployment of the digital service trade， the trends in digital technology and the economy empowering service trade， and recommendations for development.

“In order to promote international cooperation in trade in services， especially in the digital service trade， we should play a greater role in formulating international rules for the digital service trade and building the governance system for the global digital economy and digital service trade. This is also the direction in which we should develop the digital service trade and occupy the commanding heights of the world industry，” said Gao Yuning， of the Institute for Service Economy and Digital Governance， Tsinghua University.