Fostering Chinas expanding trade in services

Abstract

The expansion of China's trade in services has enhanced China's status in the international trade arena (Tang et al., 2013). The importance of the trade in services in China's economic development has been recognised and emphasised in China's Twelfth Five-Year Plan (2011-2015) (Chen and Whalley, 2014). We use structural modelling to analyse the impact of five key determinates on China's trade in services: foreign direct investment (FDI), tertiary education, employment in the services sector, the inflation rate and internet diffusion between 1983 and 2014. The findings in this study provide an improved understanding of the important linkage between the key determinates and trade in services in China. The empirical results reveal that tertiary education is the most significant determinant that impacts on the development of both China's services exports and services imports. Internet diffusion has the least impact on China's service exports, while, employment in the service sector has the least impact on China's services imports.