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.

Keywords

trade in services, China, European Union, comparative advantage, trade position

References

1. Aoyama, R. (2016). ?One belt, one road?: China's new global strategy. Journal of Contemporary East Asia Studies, 5(2), 3?22. doi: 10.1080/24761028.2016.11 869094. DOI: https://doi.org/10.1080/24761028.2016.11869094
   View in Google Scholar
2. Ando, M., & Hayakawa, K. (2022). Impact of COVID-19 on trade in services. Japan and the World Economy, 62, 101131. doi:10.1016/j.japwor.2022.101131. DOI: https://doi.org/10.1016/j.japwor.2022.101131
   View in Google Scholar
3. Balassa, B. (1965). Trade liberalisation and ?revealed? comparative advantage. Manchester School of Economic and Social Studies, 33(2), 99?123. doi: 10.111 1/j.1467-9957.1965.tb00050.x. DOI: https://doi.org/10.1111/j.1467-9957.1965.tb00050.x
   View in Google Scholar
4. Baláž, P., Královičová, M., & Steinhauser, D. (2020). Foreign trade as a tool to strengthen the EU?s competitiveness against China. A case of the service sec-tor. Prague Economic Papers, 29(2), 129?151. doi:10.18267/j.pep.731. DOI: https://doi.org/10.18267/j.pep.731
   View in Google Scholar
5. Bloom, N., Draca, M., & van Reenen, J. (2016). Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity. Review of Economic Studies, 83(1), 87?117. doi: 10.1093/restud/rdv039. DOI: https://doi.org/10.1093/restud/rdv039
   View in Google Scholar
6. Casarini, N. (2016). When all roads lead to Beijing. Assessing China?s New Silk Road and its implications for Europe. International Spectator, 51(4), 95?108. doi: 10.1080/03932729.2016.1224491. DOI: https://doi.org/10.1080/03932729.2016.1224491
   View in Google Scholar
7. Caselli, P., & Zaghini, A. (2005). International specialization models in Latin America: the case of Argentina. Economic Working Papers. Bank of Italy, 558.
   View in Google Scholar
8. CCCEU (2019). Report on the development of Chinese enterprises in the EU. Roland Berger: China Chamber of Commerce to the EU.
   View in Google Scholar
9. Chen, H., & Whalley, J. (2014). China?s service trade. Journal of Economic Surveys, 28(4), 746?774. doi: 10.111/joes.12081. DOI: https://doi.org/10.1111/joes.12081
   View in Google Scholar
10. Chen, J., Cui, F., Balezentis, T., Streimikiene, D., & Jin, H. (2021). What drives international tourism development in the Belt and Road Initiative?. Journal of Destination Marketing & Management, 19, 100544. doi: 10.1016/j.jdmm.2020. 100544. DOI: https://doi.org/10.1016/j.jdmm.2020.100544
    View in Google Scholar
11. Chen, Y., Kan, T., Wu, Y., & Zheng, X. (2019). Analysis on the value-added share of China?s service export from the USA, Japan and the EU: a study of China?s service trade. Transformations in Business & Economics, Vol. 18, No 3C (48c), 447?467.
    View in Google Scholar
12. Choi, K.-S. (2021). The current status and challenges of China railway express (CRE) as a key sustainability policy component of the Belt and Road Initia-tive. Sustainability, 13(9), 5017. doi:10.3390/su13095017. DOI: https://doi.org/10.3390/su13095017
    View in Google Scholar
13. Christiansen, T., & Maher, R. (2017). The rise of China ? challenges and opportu-nities for the European Union. Asia Europe Journal, 15, 121?131. doi: 10.1007 /s10308-017-0469-2. DOI: https://doi.org/10.1007/s10308-017-0469-2
    View in Google Scholar
14. Dadush, U., Domínguez-Jiménez, M., & Gao, T. (2019). The state of China-European Union economic relations. Bruegel Working Paper, 09 20.
    View in Google Scholar
15. Dalum, B., Laursen, K., & Villumsen, G. (1998). Structural change in OECD export specialisation patterns: de-specialisation and ?stickiness?. International Review of Applied Economics, 12(3), 423?443. doi: 10.1080/02692179800000 017. DOI: https://doi.org/10.1080/02692179800000017
    View in Google Scholar
16. Deb, K., & Sengupta, B. (2017). On empirical distribution of RCA indices. IIM Kozhikode Society & Management Review, 6(1), 23?41. doi:10.1177/22779752 16676125. DOI: https://doi.org/10.1177/2277975216676125
    View in Google Scholar
17. Devonshire-Ellis, C. (2019). How Chinese contractors are winning EU infrastruc-ture projects. Retrieved from https://www.silkroadbriefing.com/news/2019/0 7/23/chinese-contractors-winning-eu-infrastructure-projects/ (20.06.2020).
    View in Google Scholar
18. Du, Y., Zhou, W., & Lian, F. (2022). A scheme for passenger service-like back-haul for China railway express trains. Transport Policy, 120, 56?68. doi: 10.1016/j. tranpol.2022.03.006. DOI: https://doi.org/10.1016/j.tranpol.2022.03.006
    View in Google Scholar
19. Duan, H., Bao, Q., Tian, K., Wang, S., Yang, C., & Cai, Z. (2021). The hit of the novel coronavirus outbreak to China's economy. China Economic Review, 67, 101606. doi:10.1016/j.chieco.2021.101606. DOI: https://doi.org/10.1016/j.chieco.2021.101606
    View in Google Scholar
20. Eurostat (2022). Balance of payments - international transactions (BPM6). Re-trieved from http://ec.europa.eu/eurostat/web/balance-of-payments/data/datab ase (6.05.2022).
    View in Google Scholar
21. Freeman D. (2017). Redistributing the EU-China economic relationship: the role ofdomestic change in China. Asia Europe Journal, 15, 187?198. doi: 10.1007/s 10308-017-0474-5. DOI: https://doi.org/10.1007/s10308-017-0474-5
    View in Google Scholar
22. Gan, X., Liu, L., & Wen, T. (2022). Evaluation of policies on the development of prefabricated construction in China: an importance-performance analysis. Journal of Green Building, 17(1), 149?168. doi: 10.3992/jgb.17.1.147. DOI: https://doi.org/10.3992/1943-4618.17.1.147
    View in Google Scholar
23. Gari, G. (2020). China?s preferential treatment on trade in services: is the sleep-ing dragon about to wake up? Journal of World Trade, 54(6), 889?917. doi: 10.546 48/TRAD2020038. DOI: https://doi.org/10.54648/TRAD2020038
    View in Google Scholar
24. Hoekman, B., & Puccio, L. (2019). EU trade policy: challenges and opportunities. Robert Schuman Centre for Advanced Studies, European University Institute, Policy Paper, 2019/06.
    View in Google Scholar
25. Holslag, J. (2017). How China?s new silk road threatens European trade. International Spectator, 52(1), 46?60. doi: 10.1080/03932729.2017.1261517. DOI: https://doi.org/10.1080/03932729.2017.1261517
    View in Google Scholar
26. Jiang, L., & Lin, C. (2020). Analysis on the international competitiveness of Chi-na?s trade in services. Emerging Markets, Finance and Trade, 56(13), 3033?3043. doi: 10.1080/1540496X.2019.1611558. DOI: https://doi.org/10.1080/1540496X.2019.1611558
    View in Google Scholar
27. Kung, M.J., Li, Y.-Z., & Tai, W.-P. (2016). The political economy analysis of China?ASEAN in service industrial cooperation and open policy. Chinese Economy, 49(6), 414?428. doi: 10.1080/10971475.2016.1207979. DOI: https://doi.org/10.1080/10971475.2016.1207979
    View in Google Scholar
28. Lafay, G. (1992). The measurement of revealed comparative advantages. In M. G. Dagenais & P. A. Muet (Eds.). International trade modeling. London: Chap-man and Hill. doi: 10.1007/978-1-4757-2150-8_10. DOI: https://doi.org/10.1007/978-1-4757-2150-8_10
    View in Google Scholar
29. Langhammer, R. J. (2004). Revealed comparative advantages in the services trade of the United States, the European Union and Japan: what do they tell us? Journal of World Investment & Trade, 5(6), 887?896. DOI: https://doi.org/10.1163/221190004X00092
    View in Google Scholar
30. Laursen, K. (2015). Revealed comparative advantage and the alternatives as measures of international specialization. Eurasian Business Review, 5(1), 99?115. doi: 10.1007/s40821-015-0017-1. DOI: https://doi.org/10.1007/s40821-015-0017-1
    View in Google Scholar
31. Lawless, M. (2021). Cross-border trade in services. The Economic and Social Research Institute (ESRI), Research Series, 129. doi: 10.26504/rs129. DOI: https://doi.org/10.26504/rs129
    View in Google Scholar
32. Li, X., Clemes, M. D., & Hu, B. (2020). Fostering China's expanding trade in services. International Journal of Services, Economics and Management, 11(4), 371?389. doi: 10.1504/IJSEM.2020.111940. DOI: https://doi.org/10.1504/IJSEM.2020.111940
    View in Google Scholar
33. Li, Y., & Schmerer, H.-J. (2017). Trade and the New Silk Road: opportunities, challenges, and solutions. Journal of Chinese Economic and Business Studies, 15(3), 205?213. doi: 10.1080/14765284.2017.1347473. DOI: https://doi.org/10.1080/14765284.2017.1347473
    View in Google Scholar
34. Lim, D. J., Ferguson, V. A., & Bishop, R. (2020). Chinese outbound tourism as an instrument of economic statecraft. Journal of Contemporary China, 29(126), 916?933. doi:10.1080/10670564.2020.1744390. DOI: https://doi.org/10.1080/10670564.2020.1744390
    View in Google Scholar
35. Liu, Q., Yang, Y., Ke, L., & Ng, A. K. Y. (2022). Structures of port connectivity, competition, and shipping networks in Europe. Journal of Transport Geography, 102, 103360. doi: 10.1016/j.jtrangeo.2022.103360. DOI: https://doi.org/10.1016/j.jtrangeo.2022.103360
    View in Google Scholar
36. Liu, X. Y., Chen, Y. N., & Li, R. (2019). The development of China's service trade under the "One belt and one road" strategy. In 4th international conference on social sciences and economic development (ICSSED 2019), Atlantis Press, 177?179. doi: 10.2991/icssed-19.2019.32. DOI: https://doi.org/10.2991/icssed-19.2019.32
    View in Google Scholar
37. Lu, L., Peng, J., Wu, J., & Lu, Y. (2021). Perceived impact of the Covid-19 crisis on SMEs in different industry sectors: evidence from Sichuan, China. International Journal of Disaster Risk Reduction, 55, 102085. doi: 10.1016/j.ijd rr.2021.102085. DOI: https://doi.org/10.1016/j.ijdrr.2021.102085
    View in Google Scholar
38. Malmström, C. (2016). The EU and China: trade and investment in the global economy. Retrieved from https://trade.ec.europa.eu/doclib/docs/2016/february /tradoc_154322.pdf (20.06.2020).
    View in Google Scholar
39. Nan, Z., & Shuiyu, J. (2018). China's services trade achieves record. Retrieved from https://www.chinadaily.com.cn/a/201808/10/WS5b6cd0bfa310add14f38 4f8f.html (20.06.2020).
    View in Google Scholar
40. Platania, M., Rapisarda, P., & Rizzo, M. (2015). Italian trade specialization: per-sistence and change in regional agri-food production. AGRIS on-line Papers in Economics and Informatics, 7, 101?109. doi: 10.7160/aol.2015.070410. DOI: https://doi.org/10.7160/aol.2015.070410
    View in Google Scholar
41. Ploberger, Ch. (2017). One belt, one road ? China?s new grand strategy. Journal of Chinese Economic and Business Studies, 15(3), 289?305. doi: 10.1080/14765 284.2017.1346922. DOI: https://doi.org/10.1080/14765284.2017.1346922
    View in Google Scholar
42. Song, C.-X., Qiao, C.-X., & Lee, Ch.-Ch. (2022). Application of gravity model to explain the effects of diplomatic relations on China?s service trade. Applied Economics Letters, 29(5), 431?436. doi: 10.1080/13504851.2020.1869162. DOI: https://doi.org/10.1080/13504851.2020.1869162
    View in Google Scholar
43. Stefaniak-Kopoboru, J., & Kuczewska, J. (2016). Export specialization in services of the Visegrad countries. Equilibrium. Quarterly Journal of Economics and Economic Policy, 11(2), 265?284. doi: 10.12775/EQUIL.2016.012. DOI: https://doi.org/10.12775/EQUIL.2016.012
    View in Google Scholar
44. Su, Y., Zou, Z., Ma, X., & Ji, J. (2022). Understanding the relationships between the development of the construction sector, carbon emissions, and economic growth in China: supply-chain level analysis based on the structural produc-tion layer difference approach. Sustainable Production and Consumption, 29, 730?743. doi: 10.1016/j.spc.2021.11.018. DOI: https://doi.org/10.1016/j.spc.2021.11.018
    View in Google Scholar
45. Tang, Y., Zhang, Y., & Findlay, Ch. (2014). What explains China's rising trade in services? Chinese Economy, 46(6), 7?31. doi: 10.2753/CES1097-1475460601. DOI: https://doi.org/10.2753/CES1097-1475460601
    View in Google Scholar
46. Veugelers, R. (2017). The challenge of China?s rise as a science and technology powerhouse. Retrieved from https://bruegel.org/wp-content/uploads/2017/07 /PC-19-2017.pdf (20.06.2020).
    View in Google Scholar
47. Wang, R. (2020). Analysis of China?s service trade competitiveness under the ?Belt and Road? Initiative. In 2019 3rd international conference on education, economics and management research (ICEEMR 2019). Atlantis Press. 553?555 doi: 10.2991/assehr.k.191221.134. DOI: https://doi.org/10.2991/assehr.k.191221.134
    View in Google Scholar
48. Wang, Z., Zhang, Y., Niu, M., & Zhong, Y. (2020). Dynamic changes of China?s functional specialization in export and international comparison under global value chains. China Finance and Economic Review, 9(3), 95?115.
    View in Google Scholar
49. Widodo, T. (2009). Comparative advantage: theory, empirical measures and case studies. Review of Economic and Business Studies, 2(2), 57?81.
    View in Google Scholar
50. World Trade Organisation (2022). WTO statistics database. Retrieved from http://stat.wto.org (20.05.2022).
    View in Google Scholar
51. Xl, F., & Ghauri, P. (2021). Trade in intangibles and the global trade imbalance. World Economy, 44(5), 1448?1469. doi: 10.1111/twec.13038. DOI: https://doi.org/10.1111/twec.13038
    View in Google Scholar
52. Yang, H., & Pang, S.-K. (2022). The impact of intellectual property protection on China?s import of computer and information service trade: empirical research based on panel data of 34 countries or regions. Lecture Notes on Data Engineering and Communications Technologies, 107, 605?612. doi: 10.1007/ 978-3-030-92632-8_56. DOI: https://doi.org/10.1007/978-3-030-92632-8_56
    View in Google Scholar
53. Yin, Z. H., & Choi, C. H. (2021). The effects of China?s cross-border e-commerce on its exports: a comparative analysis of goods and services trade. Electronic Commerce Research. Advance online publication. doi: 0.1007/s10660-021-09483-y.
    View in Google Scholar