The position of China in trade in services within the European Union

Abstract

Research background: In recent decades, services in international trade have been growing steadily in importance, and there has been strong growth in China?s trade in services as a result of the ?opening up? policy. China has become the European Union?s second biggest trading partner in services with the European Union (EU), being China?s largest trading partner. The EU is one of the addressees of the Chinese Belt and Road Initiative, which creates opportunities and threads to the European Internal Market in services. Purpose of the article: The aim of this paper is to contribute to the literature and fulfil the research gap on the position of China in intra-EU trade in services. Methods: We identified the most important types of services offered by China to purchasers from the EU countries. By using the Revealed Symmetric Comparative Advantage (RSCA) and trade balance (LFI) indices, we classified the Chinese exports to the EU Internal Market by types of services and by their trade position. Findings & value added: We found out that China might be perceived as a strong competitor for intra-EU trade in selected services, especially those concerning low-end service tasks, that use relatively low-skilled labour and are less knowledge- and capital-intensive. However, China?s attitude is changing towards more sophisticated services for example R&D. It creates a need for a new approach to the EU economic policies (in terms of both protectionism and interventionism) in trade relations in services with China.