China to boost service outsourcing sector

China will boost service outsourcing industry to forge a new advantage in foreign trade and offset weakening exports, the central government announced on Wednesday.

China will bolster outsourcing businesses of high technology and high value added to facilitate structural adjustment and industrial upgrades, according to a statement released after an executive meeting of the State Council, China's Cabinet, chaired by Premier Li Keqiang.

The meeting described the sector as a "green industry" that will be a new engine for tertiary industry and a boon to increasing employment.

China is the world's second largest service outsourcing provider after India. The sector's growth has exceeded that of goods trade and the economy as a whole in the last two years despite the financial crisis and domestic overhaul, said Jiang Rongchun of the institute of international economics at the University of International Business and Economics.

Chinese enterprises signed over 150,000 contracts valued at 81.8 billion U.S. dollars in the first ten months, with the volume up 26.3 percent from a year ago, data from the Ministry of Commerce said.

The State Council suggested the government publish a catalogue to guide the development of major fields of the sector and support service outsourcing in software and IT, research and development, finance and government service, while encouraging projects of high value-added, including knowledge and business process outsourcing.

Jiang believes a top-down policy system like this is mostly of use to emerging industries.

China will nurture a number of leading service outsourcing enterprises and encourage small and medium firms to develop their own specialties.

The central government is also considering tax breaks for enterprises with advanced technology or engaged in international service outsourcing, and has pledged to expand financing channels via financing institutions, insurance companies and policy banks, as well as going public.

Zhang Dongwei, senior vice president of Pactera Technology International, expects the measures to relieve burdens of the company and bring benefits in the long run.

Companies in the sector are also likely to enjoy convenience in custom clearance, foreign exchange controls and foreign employees, the meeting said. Other favorable policies agreed include more intellectual property protection and government supervising efforts.