'Served by China' targets 'Made in China'

As China catches heat for amassing a huge foreign trade surplus by allegedly "manipulating its currency," the country is dealing with widened losses in its service trade with foreign countries.

China's foreign trade deficit for services increased 75.5 percent in the first three quarters of 2012 to reach 70.2 billion U.S. dollars, according to data from the State Administration of Foreign Exchange.

At this rate, the deficit is expected to top 100 billion U.S. dollars for the full year.

The service trade mainly includes tourism, transportation, finance and intellectual property products.

"Made in China" can be seen in every corner of the globe and has largely become a symbol of the country as the so-called "world's workshop," but "Served by China" has lagged behind as the country's service exports remain weak.

"The imbalanced situation won't change in the near future," Wang Jun, a senior expert with China Center for International Economic Exchanges, told Caijing Magazine.

China's service trade of tourism, transportation, insurance, patents and franchises reported major losses in the first three quarters.

Outbound trips made by Chinese tourists, which are considered tourism imports, will hit 82 million this year, up 16.7 percent year on year, according to a report by the China Tourism Academy.

However, inbound trips are expected to fall 2.2 percent to 132 million this year, partly due to a faltering global economy, the report said.

The academy forecast that China will likely see a tourism trade deficit of more than 40 billion U.S. dollars in 2012.

Liu Feng, an expert with the Development Research Center of the State Council, said that apart from the substantial amount of Chinese going abroad, the huge consumption appetite of Chinese tourists abroad has added to China's tourism deficit.

Services closely linked to the manufacturing sector also had a hard time this year due to the contracted world economy.

China's transportation service exports saw a deficit of up to 34.8 billion U.S. dollars in the first three quarters, and the insurance sector lost 12.9 billion U.S. dollars in foreign trade.

Despite the sluggish global economy, China's foreign trade volume of goods remains one of the world's largest, creating great opportunities for the country's productivity service providers.

Chinese enterprises with weak global competitiveness, however, did not seize this opportunity and let orders go to their foreign counterparts, Long Guoqiang, another expert with the center, told Caijing Magazine.

Along with traditional services like tourism, transportation and insurance, foreign trade in "emerging services," including patents, franchises, movies and other video products, widened the deficit for China.

China spent 12.9 billion U.S. dollars in obtaining patents and franchises in the first three quarters, and it spent 2.5 billion U.S. dollars importing ads, movies, audio and video products.

China is likely to import more emerging services in the coming years, according to Liu Yuhui, chief economist with Huatai Securities.

By contrast, the U.S. sold 52.8 billion U.S. dollars worth of services in August, marking a record high.

Liu Xuede, vice president of China International Freight Forwarders Association, suggested that Chinese enterprises should invest directly in overseas ports, airports and logistics facilities.

International transportation relies on these infrastructures, Liu told Caijing Magazine.

The Ministry of Commerce is mulling a guideline to help leading logistics enterprises track opportunities overseas.

Chinese enterprises invested 42.2 billion U.S. dollars in non-financial sectors in foreign countries during the January-July period this year, with 56.8 percent of the capital put into the commercial service sector.

Besides traditional services, China is trying to improve emerging services, which industry insiders believe are key to reversing the country's deficit-laden service trade.

China's trade volume of emerging services, including advisory services, communication services and IT services increased rapidly in 2011, up 24, 26 and 30 percent, respectively, year on year.

Service outsourcing has been developing most rapidly in 2012. Chinese enterprises took service outsourcing orders of 30.8 billion U.S. dollars in the first three quarters, said Li Rongcan, assistant to Commerce Minister Chen Deming.

Service outsourcing has become the major advantage and engine for China's service exports in the first three quarters, said Mei Xinyu, a foreign trade expert at the Ministry of Commerce.