Service trade is an integral part of international trade and a driving force and engine for the high-quality development of trade. In his congratulatory letter to the 2024 China International Fair for Trade in Services, President Xi Jinping emphasized: “China will continue to drive high-quality development with high-level opening up, improve the system and mechanism for high-level external opening up, innovate and enhance service trade, align proactively with international high-standard economic and trade rules, promote the alignment and compatibility of rules, regulations, management, and standards in the service sector, expand service market opening in an orderly manner, enhance the function of service industry and trade opening platforms, and create a first-class business environment that is market-oriented, law-based, and internationalized.” The Third Plenary Session of the 20th CPC Central Committee's *Decision on Further Deepening Reform and Promoting Chinese-style Modernization* proposed the innovation and enhancement of service trade, the full implementation of the negative list for cross-border service trade, the promotion of pilot demonstrations for expanding service sector opening, and the encouragement of professional service organizations to enhance their international service capabilities. To innovate and elevate service trade, and to promote China’s service trade towards a higher level of openness, it is essential to position efforts within the new stage of development and shape new growth drivers and advantages.

Currently, with the deep integration of digital  intelligence technologies and foreign trade and China’s deep participation in global economic and trade governance, significant opportunities have emerged for the development of service trade:

1. The global wave of digitalization promotes innovative development of service trade.The widespread application of big data, artificial intelligence, and blockchain technology is reshaping the patterns and structures of service trade, enhancing cross-border mobility and lowering transaction costs. In 2023, China’s digitally deliverable services import and export volume reached 2.72 trillion yuan, an 8.5% year-on-year increase, while cross-border e-commerce import and export amounted to 2.38 trillion yuan, a 15.6% growth, making it a new driver of foreign trade.

2. Multilateral and regional economic cooperation frameworks advance service trade liberalization.With the implementation of multilateral agreements such as the Regional Comprehensive Economic Partnership (RCEP), the conditions for market access in service trade across participating countries have further optimized, and barriers to service trade within the region have gradually reduced, providing a stable international environment for the innovative development of service trade. The *Opinions on Improving the Market Access System* issued in August 2024 also expanded the breadth and depth of opening up in service trade, including continued expansion in education, healthcare, sports, and other public service areas.

3. Domestic economic restructuring supports high-quality development of service trade.As China’s economic structure continues to upgrade, market demand for knowledge-intensive services is growing. In 2023, the total trade volume of China’s knowledge-intensive services reached 27.19 trillion yuan, an 8.5% year-on-year increase. This trend not only provides a solid market foundation for service trade development but also creates key opportunities to accelerate the formation of new growth drivers.

Despite these significant opportunities, China’s service trade faces various challenges amidst increasing uncertainty in the global economic landscape：

1. The adaptability of policy coordination and regulatory frameworks needs improvement. Some service trade policies have problems such as lack sufficient inter-industry coordination, and legal and regulatory frameworks are incomplete, particularly in emerging fields such as digital services and cross-border data flows.The lack of sound regulatory frameworks and policy tools, coupled with the complexity of international rules and various delivery modes in service trade makes policy coordination more challenging.

2. Data security and privacy protection need to be strengthened.China's existing regulatory mechanisms still have shortcomings in addressing data breaches and cybersecurity risks. As countries place greater emphasis on data sovereignty, stricter cross-border data flow restrictions have emerged, raising the bar for reforms to enhance data security mechanisms.

3. The rise of anti-globalization sentiment and the proliferation of new non-tariff barriers.Some developed economies frequently use “national security” and “data privacy” as justifications for imposing various trade barriers. These barriers not only restrict cross-border data flows and digital services but also set higher thresholds for Chinese enterprises entering international markets.

To seize the new opportunities in service trade and actively address the many risks and challenges, China needs to further optimize the business environment for service trade development by focusing on coordination, innovation, and security while deepening reforms in foreign trade systems and striving to establish high-ground in service trade institutional innovation.

1. Enhance coordination. The Plenary Session highlighted the need to “strengthen coordination between trade policy and fiscal, financial, and industrial policies, create institutional support for building a strong trade nation, accelerate reforms for integrating domestic and foreign trade, and actively respond to the trends of trade digitization and green transformation.” Effectively addressing external risks requires coordinated policy measures from multiple angles, such as cultivating new business models for service trade through fiscal initiatives, strengthening cross-border financial service support, developing specialized financial products related to service trade, and nurturing professional service growth to build new competitive advantages in foreign trade.

2. Focus on innovation.Innovation is the primary driver of development, and amid the slowdown of traditional trade growth, enhancing service trade through innovation becomes particularly important. On the one hand, the innovative development of service trade depends on the deep integration with digital intelligence technologies and business model innovation, such as creating new scenarios like digital cultural tourism, smart education, and intelligent sports. On the other hand, leveraging platforms like the China International Fair for Trade in Services to showcase cutting-edge technologies, such as satellite internet, big data, AI-powered surgical robots, and metaverse applications, is key to fostering growth in service trade.In addition, taking more innovative means to ensure the convenient and efficient customs clearance of service trade and the reasonable optimization of service tax are all important connotations of deepening the reform of foreign trade system to promote the development of service trade.

3. Prioritize security.National security is the foundation for the steady progress of Chinese modernization. The Plenary Session also emphasized the need to “improve the trade risk prevention and control mechanism, enhance the export control system, and refine trade remedy measures.” Building a robust trade risk control mechanism is essential to strengthen enterprises’ resilience and their ability to withstand risks. Establishing early warning systems for service trade risks, constructing diversified and balanced service trade structures, and enhancing enterprises' risk response capabilities will become critical measures to combat tariffs or non-tariff barriers. Additionally, improving export control systems based on product sensitivity, enhancing data security and privacy protection, and conducting appropriate trade remedies will all be crucial steps in advancing service trade development.