Demonstration Paper on Foreign Investment in Service Industry 1: Dual Effects of Transnational Investment in Service Industry and Countermeasures of Host Country Abstract: With the further opening of China's service industry, more multinational companies will be attracted to enter this field. Multinational companies' investment in service industry has both positive and negative effects on the development of host country's service industry. This paper mainly discusses the dual impact of transnational investment in service industry on China, analyzes the advantages and disadvantages, puts forward countermeasures, and puts forward suggestions for the service industry market that will be fully opened soon.
Keywords: service industry; Spillover effect; Introversion effect
First, the dual impact of transnational investment in service industry.
Positive impact: spillover effect
Spillover effect refers to the indirect impact of foreign direct investment on the economic interests and economic growth or development capacity of the host country. This spillover effect can be expressed as both positive and negative. This paper mainly discusses the positive spillover effect. The spillover effect of foreign direct investment is mainly manifested in other factors that affect economic growth except capital and labor, thus improving total factor productivity and promoting economic growth. The contribution of total factor productivity to economy can be divided into three aspects: industrial structure change, technological progress and institutional change.
1. industrial structure effect. The change of industrial structure mainly refers to the change of the proportion of output value of primary industry, secondary industry and tertiary industry in the gross national product. According to the theory of economic growth, the process of a country's economic development is the process in which industry and service industry replace agriculture in the national economy. The smaller the proportion of the output value of the primary industry to GDP, the faster the industrial structure changes and the higher the degree of industrial structure upgrading. On the industrial structure effect of foreign direct investment —— Based on the research of Japanese scholar Kaname Akamatsu? Goose flying mode? The most famous. Kaname Akamatsu believes that the development of an industry in a country generally goes through several stages, such as import, local production, export development and export growth. With the increasing import of an industry, domestic production and export have appeared one after another, and its graphics are like a wild goose. ? Goose flying mode? It shows that the industrial structure effect of foreign direct investment comes from the effective use of the comparative advantage of the host country. What does foreign direct investment bring? A package? Resources, especially technology and management skills, will not only help China to establish new industries, but also upgrade traditional industries, and turn inward-oriented industries into export-oriented and internationally competitive industries.
With China's accession to the WTO, the openness of most tertiary industry sectors has been improved, and the adjustment of the policy of utilizing foreign direct investment, the proportion of investment in the primary industry has decreased year by year, while the proportion of manufacturing in the secondary industry has increased day by day, which is closely related to the concentration of transnational investment in the manufacturing field in previous years. Although the growth rate of service industry as a new investment hotspot in the tertiary industry is not obvious, investment in service industry has become a global investment trend. Therefore, the proportion of tertiary industry investment in GDP will increase day by day, which will drive China to upgrade its industrial structure and transform from a manufacturing country to a service-oriented country.
2. Technology spillover effect. Technology is a broad concept, including not only production technology and methods, but also management technology and the improvement of workers' quality. Therefore, human capital and R&D; Capital to measure technological progress. According to the analysis of endogenous growth theory, technological progress mainly comes from human capital and R&D investment; Production of capital. Therefore, the technology spillover effect of foreign direct investment should also be realized through human capital and R&D; D capital two channels to achieve. The impact on human capital is mainly the training of local employees by branches of multinational companies in China. And well-trained employees? Job hopping? It is the main way of technology diffusion. Foreign direct investment in research and development; The influence of D capital is mainly manifested in two aspects: first, the R&D activities carried out by foreign branches of multinational corporations in China have enhanced the technology diffusion effect to some extent; Secondly, the competitive effect of multinational companies participating in China market competition. In the long run, when foreign companies and local companies compete with each other in the same market, local companies will inevitably increase research and development funds and improve the technical level of enterprises in order not to be at a disadvantage in the competition. Foreign direct investment in service industry brings advanced technology, knowledge and skills, including hard technologies such as equipment and process flow, and soft technologies such as management and marketing. However, the technology combination contained in the service industry is different from that in the manufacturing industry. FDI is not the main way for service industry to acquire hard technology, but soft technology is the main form of knowledge and technology transfer. For example, in banking, insurance, catering and other industries, investors will train their subsidiaries in a series of skills and knowledge.
3. The influence of institutional change. The influence of institutional factors on economic growth is mainly manifested in institutional changes. The changes of China's economic system are mainly manifested in four aspects: the change of property rights system, the improvement of marketization, the change of distribution pattern and the degree of opening to the outside world. A country's economic growth is achieved within a certain institutional framework. Utilizing foreign direct investment is one of China's opening behaviors, which is itself a kind of institutional change. In addition, foreign direct investment mainly comes from developed market economy countries. In order to attract more investment, we must improve the market environment, so as to promote the continuous improvement of China's marketization. According to the viewpoint of new institutional economics, institution is an important factor of economic growth, and a country will promote economic growth and development through institutional changes, thus producing institutional performance. The institutional performance of foreign direct investment in China mainly means that it promotes the economic development of China by influencing some factors that determine the supply and demand of China institutions.
(B) Negative effects: introverted effects
1. Most foreign direct investment in services aims at developing markets, seeking non-transactional activities, and possibly remitting profits in the form of external payments. Therefore, it may not only have no effect on increasing foreign exchange income, but may have a negative impact on the balance of payments. Many multinational companies avoid taxes through profit transfer, which seriously interferes with the market order of the host country. At the end of 1990s, the tax evasion of multinational corporations reached 30 billion yuan a year, equivalent to one twentieth of China's fiscal revenue in recent years. More than 60% of foreign companies have abnormal losses. At present, there are more than 400,000 foreign-funded enterprises in China, with annual losses exceeding 65.438+20 billion yuan. However, a considerable number of foreign enterprises transfer profits through various tax avoidance methods, resulting in a large number of losses on their books.
2. The related industries in the host country have been greatly impacted. Under the original high protection of the host country, such as banking, telecommunications, tourism and other industries, their domestic markets are not completely competitive or even monopolized, so their ability to adapt to the market and improve their competitive advantages is limited. With the entry of foreign capital into these industries, the original domestic enterprises in the host country have been greatly challenged in terms of capital, experience, skills and innovation. Multinational companies often rely on abundant funds to acquire local enterprises in the same industry or even leading enterprises and their original brands on a large scale, thus forming a monopoly of technology, brand, market and industry in the local area. This situation exists in many industries in China, and some of them are still very prominent, which not only seriously suppresses the development of national industries, but also infringes on the rights and interests of consumers after the formation of brand market monopoly, posing a severe challenge to China's economy and industrial security.
3. The competition for human resources between foreign-funded service agencies and local enterprises in the host country will be more intense, and their working conditions and salary conditions may lead to a large number of outstanding talents flowing to foreign-funded enterprises, which will bring more difficulties to the development of local enterprises. Take the financial industry as an example. After foreign banks entered China, a large number of backbone Chinese banks jumped ship or hired foreign banks with high salaries, which brought double risks and pressures to underdeveloped Chinese banks.
4. Foreign M&A in service industry may bring three major risks. If the host government is weak in control and lacks effective rules and regulations, it may bring serious domestic economic turmoil in the system; If there is no strong control in the management and privatization of public utilities, it may lead to private monopoly; In addition, due to the great differences in social and cultural backgrounds among countries, the operation of foreign capital in these fields is likely to cause conflicts and injuries.
Second, the development of China's service industry countermeasures
From 2000 to 2002, the average inflow of FDI in service industry was $654.38+02.805 billion, and the stock in 2002 was $259.689 billion. Service industry accounted for 24.7% of the total FDI inflow in 2002, accounting for 31.4% of the total stock; China will fulfill its WTO commitments and further open its service industry, so the service industry has great potential to attract more foreign direct investment. Go out? It's still in its infancy, so in this? Bring it in? And then what? Go out? On the premise that opportunities and challenges coexist, we should scientifically analyze the environment, establish and strengthen our own comparative advantages and competitive advantages, maximize the positive effects of FDI in services, and improve the level and ability of China's foreign direct investment.
1. Further enhance the industrial structure of domestic service industry and improve its ability to undertake international direct investment.
According to the general law of industrial investment, under other conditions unchanged, investors' equivalent capital investment may get higher returns in areas with the same or higher level of industrial development structure than in areas with lower level of industrial development structure. As far as international direct investment in service industry is concerned, because the structure of international service industry is developing in the direction of knowledge-intensive, only countries (regions) that develop knowledge-intensive service industry can provide higher income for international direct investment and attract more international direct investment. In view of the low level of service industry structure in China, traditional labor-intensive and resource-intensive services such as catering, commercial retail and transportation still occupy the main position, while the proportion of modern service industries such as telecommunications services, information technology services, modern logistics and modern finance is low. No matter from the perspective of China's future industrial restructuring or attracting more international direct investment, it is necessary to vigorously develop modern service industries, transform and upgrade traditional service industries, continuously optimize the service industry structure, and improve the overall quality and international competitiveness. There are two aspects to improve the industrial structure of domestic service industry and the ability to undertake international direct investment in service industry.
First, give priority to the development of producer services such as information services, modern finance, modern logistics and e-commerce that support the efficient operation of the national economy, vigorously develop intermediary services such as consulting, legal services and scientific and technological services, and actively develop industries with great demand potential such as tourism, culture and sports. These are knowledge-intensive service industries. Only by fully developing these industries can we form a high-level and reasonable modern service industry structure system.
The second is to make full use of various forms of international industrial transfer of service industry. Generally speaking, there are three levels of international industrial transfer: project outsourcing, offshore and foreign direct investment, and the specific forms include newly established investment, merger and acquisition, venture capital and so on. The international industrial transfer of service industry is no exception. Create a good policy environment, support China enterprises to undertake international engineering outsourcing, relevant departments provide necessary information and consulting services for domestic enterprises, guide domestic enterprises to actively participate in the international engineering outsourcing market, undertake outsourcing projects, and effectively cooperate with foreign service enterprises; Allow and encourage foreign investors to invest in China through mergers and acquisitions, create an institutional environment conducive to absorbing M&A investment, and create favorable conditions for service multinational companies to participate in enterprise restructuring and transformation.
2. Make full use of the spillover effect of FDI and minimize the inward effect.
Whether the spillover effect is easy to realize depends on the ability and motivation of host companies to invest and learn to absorb foreign knowledge and skills. Foreign capital has not only brought abundant capital, technology and knowledge, but also advanced professional skills, marketing concepts and scientific management experience can be learned through the operation and training of foreign capital in China. There are two indirect effects, one is to serve the development of China's manufacturing industry, and the other is to set an example for the development of China's service industry. China enterprises can try to join the strategic alliance of multinational companies, participate in their industrial chain and localization process, and gain the ability to improve their independent R&D and innovation.
Establish and improve domestic institutions and mechanisms, supervise the development of foreign capital in China, and reduce inward effects. UNCTAD believes that developing countries must be cautious in attracting foreign investment in services. Because in some monopolistic industries (such as telecommunications services) or public utilities and infrastructure fields, if there is no effective supervision, it is easy to abuse market power and lead to private monopoly. In addition, the use of transfer prices by multinational companies will also cause damage to the domestic economy. In terms of human resources, the Chinese government should increase investment in education, improve the overall level of talents, reform the household registration and talent management system, and reduce the cost of talent flow, which can not only provide human resources for multinational companies to invest in China, but also reduce their advantages in competing for outstanding talents with Chinese-funded enterprises to some extent, and ensure that Chinese-funded enterprises have sufficient human capital, knowledge accumulation and technological innovation capabilities.
3. Improve the domestic service consumption level and relieve the worries of international direct investment in service industry.
Whether the products invested in production can be cleared in the market is the ultimate limiting factor affecting investment. Theoretically, only when all products can be sold and the market is cleared can the investment be successfully reproduced. Investment in service industry is no exception. At present, China's per capita income level is not high, the urbanization process is slow, and the gap between urban and rural areas is too large, which objectively limits the demand space for service industry development; On the other hand, due to some prejudice against the service industry and service consumption in the past, the service industry was regarded as intangible production and its high added value was ignored, and simple industrialization was equated with industrial development, while the supporting role of the service industry in improving industrial competitiveness was ignored, and the consumption of the service industry was overemphasized and its industrialization was ignored, resulting in insufficient attention to the development of the service industry for a long time, and service consumption hovered at a low level. Some domestic service industries are underdeveloped and unable to attract foreign investment, which is not unrelated to the lack of market demand. Therefore, cultivating residents' service industry consumption ability and improving domestic service industry consumption level will become an important measure to relieve the worries of international direct investment in service industry and attract more international direct investment.
References:
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Fan Wener, Foreign Investment in Service Industry: Opening Process and Policy Enlightenment of China's Service Industry Investment I. Definition of Service Industry Investment Barriers
According to the Agreement on Trade-related Investment Measures (TRIMS), investment barriers refer to measures taken to promote foreign investors to meet certain performance standards, including investment access barriers, investment operation barriers and investment exit barriers. Investment barriers referred to in trade-related investment measures are limited to investment measures that distort international trade in goods. The United Nations Conference on Trade and Development (UNCTAD) classifies the barriers to foreign direct investment into three categories: market access restrictions, ownership and management restrictions, and operational restrictions. Therefore, generally speaking, investment barriers are mainly policies and measures formulated by the host government to hinder foreign enterprises from investing in their own countries. In other words, any policies and measures that directly or indirectly increase the production or sales costs of foreign-funded enterprises may be considered as investment barriers by foreign service providers.
So far, there is no specific international multilateral agreement to define the investment barriers in service industry, but the investment measures stipulated in many international and regional trade agreements are actually investment barriers in service trade. This paper mainly analyzes the evolution of policy investment barriers in China's service industry.
Second, the opening process of China's service industry investment
(1) access is strictly restricted: 1979 ~ 1987.
In the early days of reform and opening up, China's economic development level was relatively low, so it adopted? Cross the river by feeling the stones? Therefore, the international opening path of industry first and service second is implemented. This stage is the primary stage for China to utilize foreign capital. A policy framework for managing foreign direct investment has been initially established, a basic investment environment has been created, laws and regulations for managing foreign direct investment have been formulated and promulgated, a preliminary foreign direct investment policy framework has been formed, a regional foreign direct investment advantage policy has been implemented, and industries that allow foreign direct investment have been strictly restricted. During this period, the main industries allowed to enter were manufacturing, and the overall investment barriers in service industry were high, but the restrictions on foreign investment in tourism, real estate and catering services were relatively loose. At the end of 1987, the former State Planning Commission issued the Interim Provisions on Guiding the Direction of Foreign Investment Absorption, which classified foreign-invested projects into four categories: encouraged, permitted, restricted and prohibited. Among them, the field of foreign investment has been greatly restricted, the opening of service industry has not been put on the agenda, and the barriers to prohibiting and restricting investment are high.
(II) Subsequent development: 1988 ~ 1995.
After a period of development, the investment environment in China has been gradually standardized and improved, but the sectors opening to the outside world are still concentrated in the secondary industry, the foreign direct investment policy in the service industry has not been significantly relaxed, and the investment barriers are still high. Most service sectors, especially producer services, have not yet been opened to foreign-funded enterprises. 1990 article 4 of the detailed rules for the implementation of foreign-invested enterprises in People's Republic of China (PRC) stipulates that the establishment of foreign-invested enterprises is prohibited in the following industries: (1) news, publishing, broadcasting, television and movies; (2) Domestic commerce, foreign trade and insurance; (3) Posts and telecommunications; (4) Other industries in which foreign investment is prohibited by the China Municipal Government. Article 5 stipulates that the establishment of foreign-funded enterprises is restricted in the following industries: (1) public utilities; (2) transportation; (3) real estate; (4) Trust investment; (5) lease. It can be seen that the prohibited and restricted industries are mainly concentrated in the service industry. Although the export regulations for foreign-funded enterprises and their restrictions on the export ratio have been fundamentally changed, from 70% in the past to 40%, due to the high barriers to investment in the service industry, these regulations have not produced substantial incentives for the service industry to use foreign capital.
1992 ~ 1995 is the stage of rapid development of China's foreign direct investment liberalization, but this stage is mainly to relax the investment barriers of the secondary industry. For the service industry, on the one hand, the importance of the service industry to the development of the national economy has not been paid attention to because of the idea of heavy industry neglecting the service industry; On the other hand, because the service industries such as finance, telecommunications and transportation are considered as natural monopoly areas, they are not suitable for opening to foreign-funded enterprises and domestic-funded enterprises, so strict market access restrictions are imposed. During the period of 1995, China re-issued the Interim Provisions on Guiding the Direction of Foreign Investment, and at the same time issued the Catalogue for Guiding Foreign Investment Industries, which clearly defined the encouraged, restricted and prohibited projects, and all other projects were allowed to open to the outside world. The Catalogue of Industries Directed by Foreign Investment has become an important legal document to guide foreign investment.
(3) Gradually decreasing: 1996-200 1 year.
The period from the end of 1995 to the end of 200115 is a crucial stage for China to join the World Trade Organization. With the development of bilateral relations between China and the United States and the exchange of high-level visits, the authority of the China government delegation has increased and political decisions have been made at critical moments. 1999 reached a bilateral agreement with the United States, which removed the main obstacles to the demise of China. Later, China and the European Union reached a package agreement on China Life. The obstacles in these negotiations are mainly reflected in: tariff concessions for agricultural products, and the scope and extent of opening up trade in services. During this period, China promulgated some new foreign-related laws and regulations, some of which specifically targeted at foreign direct investment in service industries. For example, on August 4th, 20001year, MOFTEC issued the Interim Measures for the Administration of Examination and Approval of Foreign-invested Leasing Companies, allowing investment companies to provide relevant technical training for domestic enterprises. However, it is required that foreign-invested leasing companies can only be established in the form of joint venture or cooperation, and introduce the management experience of international advanced leasing companies to promote the development of China's leasing industry and produce good economic and social benefits. On June 23, 2000, the Ministry of Health and the Ministry of Foreign Trade and Economic Cooperation jointly issued the Interim Measures for the Administration of Sino-foreign Joint Venture Cooperative Medical Institutions, which appropriately relaxed the conditions for establishing joint venture hospitals in the central and western regions of China or in the old, underdeveloped, marginal and poverty-stricken areas. In addition, the relevant departments have also promulgated the Interim Measures for the Pilot of Sino-foreign Joint Venture Foreign Trade Companies, the Pilot Measures for Foreign-invested Commercial Enterprises, the Interim Measures for the Administration of Examination and Approval of Foreign-invested Railway Freight Transportation, and the Interim Measures for the Administration of Examination and Approval of Wholly Foreign-owned Shipping Companies. By publishing these regulations, foreign investors are allowed to engage in railway freight transport by joint venture; It has expanded the equity and management rights that investors can have in medical institutions, leasing, shipping companies and other industries in China.
The Catalogue of Foreign Investment-oriented Industries was revised again in 1997, which greatly increased the number of industries and departments open to foreign investment, and many new fields gradually began to open to foreign investors. For example, transportation, post and telecommunications, mineral development and other industries are regarded by many countries as areas related to their own economic lifeline and national security, and China lists them as industries to encourage foreign investment. The most striking thing is the limited opening to banking, insurance, foreign trade, accounting firms, law firms, retail business and other service industries, which is at the forefront in many developing countries. The industries that completely prohibit foreign investment have been limited, among which the service industry is mainly news, radio, film and television.
At this stage, China also began to realize the important role of the service industry in the national economic growth. At the same time, due to the pressure of opening up to the outside world in the world negotiations, it began to relax the control of the service industry and reduce the restrictions on the use of foreign capital in the service industry.
Strictly abide by WTO commitments: 2002-2006
200165438+February1KLOC-0/,China joined the World Trade Organization and became a member of the WTO. In the laws of various countries in the world, China has made considerable commitments to trade in services, most of which are directed at foreign direct investment in services. In accordance with the commitments made to the world, the service industry will be opened wider to the outside world, and restrictions on foreign investment will be further relaxed in various intermediary services such as commerce, foreign trade, transportation, medical care, education, finance, insurance and telecommunications. So that foreign investors can play a role in promoting China's economic development on a broader level. At the same time, the relevant state departments have formulated or revised the Regulations on the Administration of Foreign-invested Telecommunications Enterprises, the Measures for the Administration of Foreign-invested Commercial Fields, and the Interim Provisions on Foreign-invested Cinemas. , strengthen the management of opening up the service industry.
In order to meet the needs of joining the WTO,
In March 2002 1 1, the Regulations on Guiding the Direction of Foreign Investment and the Catalogue for Guiding Foreign Investment Industries were revised again, further opening up investment access. The main changes are as follows: First, the list of encouraged categories has been increased from 186 to 262, and the list of restricted categories has been reduced from 1 12 to 75, which has greatly relaxed the restrictions on industry access. The most prominent one is that the construction of urban pipe networks such as telecommunications, gas, heat, water supply and drainage, which were previously prohibited from foreign investment, has been listed as an open field for the first time. Second, further opening up the service trade, such as foreign banks, insurance, securities, funds, finance, commerce, foreign trade, transportation, tourism, legal services, accounting and auditing, audio-visual products, foreign commercial franchising, direct sales and other industries, have all made more relaxed provisions in terms of open areas, quantity, business scope and share ratio requirements in accordance with China's commitment to join the WTO, making service trade a new one. Accordingly, in the construction of legal system in the field of foreign investment in service trade, market quasi-regulations and relevant laws and regulations are being formulated in construction, accounting services, education, commerce, logistics, medical care, education, civil aviation and other industries. In 2004, according to the needs of development, the State Council revised the Catalogue of Industries for Foreign Investment for the fifth time, further narrowing the scope of restrictions and prohibitions on the service industry.
(v) Overall decrease: from 2007 to present.
At the end of the transition period in 2006, China fully fulfilled its commitment of opening up its service industry. Subsequently, the newly revised Catalogue of Industries Directed by Foreign Investment came into effect on June 5438+February 1 2007. In the service industry, while fully implementing China's commitment to join the WTO, the new version of the Catalogue for the Guidance of Foreign Investment Industries has actively and steadily expanded its opening up, adding encouraging contents such as undertaking service outsourcing and modern logistics. Reduce the restricted and prohibited items, adjust the goods leasing, freight forwarding and foreign trade companies that originally restricted foreign investment into permitted items, and list the futures companies, power grid construction and operation that originally prohibited foreign investment as open areas; The restrictions on foreign investment in the financial industry have been relaxed, and the encouraged categories include banks, financial leasing companies, finance companies, trust and investment companies and currency brokerage companies; Insurance companies (the proportion of foreign-invested life insurance companies shall not exceed 50%); Securities companies (limited to underwriting A-shares, B-shares and H-shares, underwriting and buying and selling government and corporate bonds, with the proportion of foreign capital not exceeding1/3); Securities investment fund management companies (the proportion of foreign investment does not exceed 49%), insurance brokerage companies and futures companies (Chinese holding). However, for some strategic and sensitive industries involving national economic security, it is more cautious to open to foreign investment.
The new catalogue of industries guiding foreign investment indicates that China's service industry has entered the stage of full opening to foreign-funded enterprises, and investment barriers have been further reduced. However, in order to curb the real estate bubble, the new version of the Catalogue for the Guidance of Foreign Investment Industries lists the real estate industry as a restricted foreign investment industry to standardize the management of the real estate market.
Third, the policy impact.
Judging from the evolution of investment barriers in China's service industry, the opening-up of China's service industry is gradual. The establishment of investment barriers is not only related to the development level of China's service industry and national industrial policies, but also related to international pressure (such as WTO negotiations). At present, there are still many restrictions on the utilization of foreign direct investment in China's service industry. With the end of the transition period, the liberalization of foreign direct investment in service industry will face further pressure and challenges. Under the background of global liberalization of foreign investment in service industry, the government has two strategic choices: gradually reducing foreign investment barriers and promoting domestic service industry competition.
Reduce barriers to foreign investment
Under the background of service trade liberalization, reducing investment barriers in service industry has become an unavoidable problem for governments all over the world. However, in view of the negative effects of lowering investment barriers and the important position of some service sectors in national political, economic and cultural security, the host country will not blindly lower investment barriers. Under international pressure, opening up is inevitable, but it will not happen overnight. Because different service sectors have obvious heterogeneity, when setting investment barriers, we should choose different investment barriers for different service sectors. For mature service fields, you can choose those with lower investment barriers; For departments whose development is still in the primary stage, we can choose those with higher investment barriers. For service areas that do not involve national security, you can choose those with lower investment barriers; For the service fields involving national security, you can choose those with higher investment barriers. Moreover, for the same service sector, time can be used as a control means of liberalization, and different investment barriers can be chosen at different times. When the competitiveness of this sector is weak, choose higher investment barriers; When the department has certain international competitiveness, it can choose lower investment barriers. It can be seen that China can open its service market to foreign investors in a step-by-step and planned way by flexibly controlling investment barriers. At each stage, we should choose the most competitive departments to open first, so as to create conditions for those departments that do not have opening conditions in the future.
(b) Promoting competition in the service industry.
China's service industry has a high degree of monopoly and the market competition is seriously insufficient. While opening to the outside world, China should break the monopoly of domestic service industry, lower the barriers to market access, promote development by relying on its own competition and enhance its international competitiveness. Although promoting domestic competition in the service industry will increase the survival pressure of domestic service producers, domestic service consumers or users (for example, when services are used as intermediate inputs to produce goods or other services) will benefit from the decline in service prices. At the same time, encouraging competition will be beneficial to the development of domestic service industry, while restraining the expansion of foreign-funded enterprises in the domestic market. Therefore, the host government should actively take measures to promote full competition in other service sectors that are not suitable for opening to the outside world except those involving national interests, and take promoting competition as a long-term strategy to promote the development of its service industry.
Analysis of related articles on foreign investment in service industry;
1. China paper on trade in services
2. On the graduation thesis of international economy and trade
3. Papers on international trade in services
4. Analysis of the present situation and development ideas of modern service industry in Xiamen.
5. On China's trade policy documents.