A Study On The Relationship Of China’s Financial Services Trade And Economic Growth

The third industry (services) has developed rapidly since the1960s in the world wide, which has become a powerful engine for the economic structural adjustment and the industries optimization and upgrading. Along with economic globalization, the international service trade which has developed faster than the trade in goods is becoming a new trade development mode and a new economic growth point. Financial services as the core component of a country’s economy have many affections on economy, such as change the speed of capital accumulation, affect product efficiency of other department, influence the country industrial policy goals and economic goals, and influence of a country’s economy security. It is obvious that financial services have strategic significance to economic growth and development.5years after China’s entry into WTO, Chinese government, as promised, lifted its restrictions on the financial industry, but china has to face new opportunities and challenges because of the2008global financial crisis started in the United States. In such a background it is very realistic and meaningful to research on theories of financial services trade and its relationship with China’s economic growth. This paper is based on the correlated studies of the financial services trade and economic growth, which have been reviewed as an important part. The researches of trade and economic growth are summarized firstly, Secondly, the related researches of the services trade and economic growth are summarized as theoretical and empirical research. Finally, we reviewed the studies of relationship between financial services trade and economic growth at home and abroad.It is necessary for us to understand the related contents of financial services trade and the present situation of China’s financial services trade. The concept, pattern, and contents of international trade in financial services, in addition with the main mode, statistical situation, promissory notes and fundamentals of Chinese financial services trade are introduced in detail in this paper. And we can learn that the vast majority of china’s financial services trade is insurance services trade which is mainly achieved by cross-border supply and consumption abroad. A statistical data analysis has been made refers to the indicator of Contributing Rate and Pulling Rate of GDP at first. But the volume of import and export of china’s financial services is so small that effect is not obvious. At second, the empirical study was made on the relationship between financial trade and economic growth using the data of Chinese BOP statistics form1997to2009. The resulting estimates show that both of China’s import and export financial trades are promoting economic growth. Then, this paper accounted for the positive relationship between economic growth and Chinese financial trade deficit for factor supply and economic demand reasons. At third, financial services trade’s affections on consumption, investment and commodity trade have been studied in which the same research method was used as above. The empirical study would find out the businesslike approach that financial services trade promotes economy growth. The results show that the financial trade’s affections are positive, and affection on commodity trade is the most, followed by investment and consumption.This paper argues that financial services trade acts as a bridge in economic growth. Financial services trade especially the import can facilitate the commodity trade, which also can improve the efficiency of investment and consumption, and promote economic growth in effect. Based on the conclusion some suggestions were given at the last part of this paper, include creating conditions for the development of financial services trade, encouraging financial services import trade such as insurance, banks and other financial products, increasing R&D investment in financial products and improving financial services trade’s statistics system. Governments, organizations and enterprises should actively collaborate to improve external economic environment, and develop our country’s financial service trade, ultimately drive economic growth soundly and rapidly.