A Political Economic Analysis On China's Service Industry Openning Up

From the international environmental point of view,the international trade rules are being reconstructed.Multilateral and regional trade negotiations are more and more focus on the new trade issues of trade in services.It is clear that liberalization of trade in services will be the emphasis of the future trade liberalization.From the perspective of the domestic service industry development,with the decline of global market demand and China's manufacturing exports slowing down,China's service industry needs to play a more important role in the process of economic growth.This is an important part of China's new system of building an open economy.Compared with the manufacturing sector or the trade in goods,the openness of the service sector is more abstract.Because the service industry is highly divided,it is not only reflected in the producers,that is,the difference between service enterprises,but the service difference between individual consumers also.In particular,the opening level of trade in goods can be mainly measured by tariffs,and there are more detailed calculation methods easily to be expressed or compared.However,the protection of trade in services is often in use of non-tariff barriers,which is more complex and hidden.Furthermore,the characteristics or the nature of each service industry is quite different,and the differences between the various countries of trade in services can be very hard to compare.Therefore,we must find appropriate indicators to quantify the relative abstract policies in order to to measure the level of openness and change objectively.The researches on the opening up of China's service industry is mainly focused on the effect of opening up itself to the domestic economy,few have done political and economic analysis of the formulation and implementation process of trade in services' opening up.China's service industry opening up policy-making process has distinctive Chinese characteristics,while the service industry is quite different from the manufacturing industry's special properties.In addition,the classic political economic analysis framework applied to policy research in developed countries such as the United States has poor applicability of study the opening up process of China's service industry,which makes the analysis procedures more difficult.But in fact,exploring the effects of each interest groups on the opening process can have a strong practical significance.The development of China's service industry is later and lower than that of manufacturing industry.Therefore,this paper firstly evaluates the opening level of China's service industry under the different indicators of multilateral,regional and unilateral,and cross-border delivery,commercial presence based on outlining the multidimensional evaluation of service industry and the service trade barriers.These include the indexes under the multilateral and regional trade agreement,service trade restrictiveness indexs such as World Bank STRD database and the OECD STRI measurement,and opening level under different service modes of cross-border trade in services and business presence and so on.And through the analysis of OECD FDI restriction index and information of “foreign investment industry guidance catalog”,this paper focuses on studying commercial presence mode of China's service industry opening up.The results show that China's service industry isfastly developing,whether from the point of view of cross-border delivery or commercial presence.However,the degree of China's trade in services is still high in the world.To be specific,all China's restrictiveness index level of service sectors is higher than the global average,and significantly higher than developed countries.In addition,the opening of the various departments is uneven,for example,the construction services,engineering,road transport and rail transport services has the highest opening level which is basically the same as the global average,while the broadcasting,film and courier services enjoys very high restrictiveness.From the point of view of commercial presence,China's service industry opening restriction has increased first and then decresed since 1997,and the liberalization process of service industry is obviously slower than that of manufacturing industry.Becauese of China's institutional characteristics and the particularity of service trade,the making-process of China's service industry opening policy has prominent features.This paper organizes the changing characteristics of the central government's policy objectives,as well as the interest demands,incentives and changes of the central government,local governments,domestic enterprises,consumers,and foreign interest groups in the policy-making process.Moreover,this paper also try to find the political and economic reasons behind the low level of China's service industry openness by comparing the opening process of the service industry and manufacturing.The results show that the degree attention of central policy on China's service industry is closely related to the changes in the domestic and international environment: it had reached a high point after China's accession to the WTO,and then going through a more slowly path until a significant increase in 2015.There is a very clear export-oriented feature of China's central government's service trade policy,and no matter which point of view of the above analysis,the lower level of China's service industry is due to lack of incentives.From the analysis of policy documents relates to service industry openness announced by the central government,an obvious “export-oriented” characteristic can be found.Therefore,during the empirical analysis,this paper quantifies the information from the “foreign investment industry guidance catalog” to construct the foreign capital liberalization index,and examines the impact of the changes of opening level on China's exports and value-added exports.The results show that the liberalization of services is not only a significant contributor to China's exports and value-added exports,but can also strengthen the process through the upstream and downstream industry effects.Therefore,the further opening up of the service industry is in line with China's current open goal,the central government should give more incentives and weight.Finally,in order to examine the specific process of specific service industries and specific interest groups(local governments)in the process of service industry openness,this paper chooses the medical service industry and the Shanghai Free Trade Experimental Zone to carry out case studies.By making full use of the above-mentioned general political and economic analysis,this paper explores the local characteristics of the sub-sector and sub-area within the overall analysis,which can be complements and extends of the previous political and economic analysis.