Last month, China’s Ministry of Commerce (MOFCOM) issued a circular which outlined new measures to reform and open up its service sector. Here’s what it included:
The circular included eight pilot tasks and 122 measures to promote innovation in the service industry, and 16 measures to remove bureaucratic hurdles for new market entrants. Most importantly, it also included 26 measures to facilitate the entry of foreign service providers.
The sectors that have been prioritised in this new round of reforms are:
- Land Planning
- Industrial Design
- Finance and Insurance
- Business Services
The document singles out four areas in particular: financial and insurance services, RMB internationalisation, Belt-and-Road-Initiative, and Intellectual Property Protection
Financial and Professional Services
The opening up of the financial sector is a major objective of China’s new service sector reforms. In further improving access and cross-border trade in this area, the reform aims to promote cross-border payment solutions, allow the mutual recognition of professional qualifications, improve market access for overseas professionals to the Chinese market, and promote international cooperation.
Initial reform will be rolled out in pilot areas such as the Greater Bay Area and the Yangtze River Delta. Initially, banking and insurance companies from Hong Kong and Macao will be granted priority treatment but other international firms will probably benefit as well.
Finally, the reforms also want to let foreign private equity funds get more opportunities to participate in the funding of new technology companies.
The second area of reform concerns the international use of China’s currency, the Renminbi. The Chinese government wants to reduce the economy’s dependency on the dollar and therefore supports the establishment of a RMB cross-border trade financing and refinancing service system.
The new digital RMB pilot projects will play a crucial role in this reform and the circular designates the Beijing-Tianjin-Hebei region as the pilot area to promote the use of new digital currency and financing, and cross-border payment transactions.
Belt and Road Initiative
Although initially focused on infrastructure projects, China’s ambitious Belt and Road Initiative will now also include projects that deepen the cooperation in the international trade in services.
For that purpose, pilot areas will set up so-called ‘Belt and Road’ legal service centres and commercial arbitration centres, and promote cross-border trade in finance, insurance, intellectual property, e-commerce, and transportation.
Intellectual Property protection has long been a top priority for Chinese policy makers, not least to safeguard China’s own increasingly advanced technology sector. To improve the protection of innovative patents, Chinese brands, and copyrights, China wants to establish a systematic, institutionalised, and comprehensive policy system.
In particular, China wants to expand the use of a digital copyright verification and the use of its social credit system, which, among other things, records IP infringement and aims to improve the compliance of both domestic and international producers.