China is increasingly focusing on trade in services as a new driver of its foreign trade. While international trade in goods is under pressure due to increasing protectionism and economic uncertainty, Chinese knowledge-intensive, digital and tourism services in particular are growing strongly. The development is central this week during the China International Fair for Trade in Services (Ciftis) in Beijing.
Text and image Ivan Cairo
The five-day international fair, which opened on Wednesday, brings together representatives from around ninety countries and international organizations. More than eighteen hundred companies have a physical presence, according to the Chinese Ministry of Commerce. Ciftis must offer foreign service providers more opportunities in the Chinese market and at the same time support Chinese companies in their expansion abroad.
“China has recently lifted or relaxed visa requirements for travelers from more and more countries. This has contributed to the popularity of what is increasingly referred to internationally as ‘China Travel’”
Knowledge and technology are gaining ground
The growing importance of the sector is evident from the trade figures. In the first half of the year, China’s combined imports and exports of services amounted to 3.78 trillion yuan, about 557 billion US dollars. That was 8.3 percent more than in the same period last year. Compared to ten years ago, the volume of trade in services has increased by almost half. In 2024, China’s annual trade in services exceeded one trillion US dollars for the first time. Services trade includes international transportation, tourism, telecommunications, education, financial services, advertising, information technology and accounting.
Exports in particular are growing strongly. In the first six months, Chinese service exports increased by 17.6 percent to 1.5 trillion yuan, equivalent to about 224 billion US dollars. Within this, the export of knowledge-intensive services is playing an increasingly important role. This category grew by 12.8 percent to 805.67 billion yuan, approximately 120 billion US dollars, and now represents 53.5 percent of all Chinese service exports.
Experts say this points to a structural change. China, which is mainly known internationally as an exporter of industrial products, is increasingly trying to shift towards activities with higher added value. Digitalization and artificial intelligence accelerate that process.
Foreign companies seek Chinese market
Improvements in intellectual property protection can also strengthen the international position of Chinese service providers, according to Zhou Mi, senior researcher at the Chinese Academy of International Trade and Economic Cooperation. Ciftis must act as a showcase for new technology.
This year, more than ninety companies and institutions will present new products, technologies and services in areas such as information and communications technology, fintech and digital healthcare. A number of innovations will have their world premiere in Beijing or will be shown for the first time in China.
At the same time, the fair attracts foreign companies seeking access to the extensive Chinese market. Norway is this year’s host country and several Norwegian companies are using Ciftis to forge new partnerships.
Norwegian technology company Falkor is participating for the fifth time. The company, which provides industrial intelligence for the energy sector, entered into a strategic partnership with China Oil HBP Science & Technology during the previous edition. Both companies are now working on a digital industry platform.
Johnson & Johnson MedTech is also prominently present and presents more than sixty products. About a third of these will be shown for the first time during Ciftis.
An example of the commercial significance of the fair is Impella, a minimally invasive heart pump that was presented last year. The device was subsequently given temporary permission for import and is now used in specialized heart centers in Beijing.
Tourism benefits
Not only technological services are on the rise. Exports of travel services rose 31.1 percent to 229.2 billion yuan in the first half of the year, equivalent to about 34.2 billion US dollars. This made it the fastest growing category among the five largest Chinese service export sectors.
According to the authorities, the growth is related to the expansion of visa-free travel, easier tax refunds for foreign visitors and improved payment options. China has recently lifted or relaxed visa requirements for travelers from more and more countries. This has contributed to the popularity of what is increasingly referred to internationally as ‘China Travel’.
Rapid export growth has also reduced China’s traditional services trade deficit. In the first six months, it amounted to 770.35 billion yuan, about 115 billion US dollars. That is 161.42 billion yuan, equivalent to about 24.1 billion US dollars, less than a year earlier.
However, there are still weaknesses. Services trade is highly concentrated in economically developed eastern China, while central and western regions play a much smaller role. The domestic supply in certain knowledge-intensive areas, including intellectual property services, is also still limited.
The Chinese government wants to tackle these backlogs. In April, the State Council presented new guidelines for expanding and modernizing the service sector. The goal is for its total size to reach 100 trillion yuan by 2030, equivalent to approximately US$14.9 trillion.
Work is also underway on further market opening, national demonstration zones for innovative services trade and adjustment of rules for cross-border services.
For the first time this year, Ciftis also has a special zone where companies can receive support when expanding to foreign markets. The fair therefore reflects Beijing’s broader economic ambition: in addition to its position as a global industrial producer, China also wants to acquire a greater international role in the areas of knowledge, technology and services. The strong growth in services exports shows that this shift is now clearly visible in foreign trade.
