China should open up its services sector to ease trade tensions with the US and bolster global trade, IMF Asia and Pacific Department director Changyong Rhee said.
The medical, health, legal and financial services sectors are among areas that could be liberalized, Rhee said in an interview at a gathering of finance and economy ministers in Washington.
“China can gain a lot by opening its services sector” and having more trade with the US, Rhee said.
The comments come after US President Donald Trump agreed to a 100-day review on trade relations with Chinese President Xi Jinping (習近平), and as the US Department of Commerce studies how to address its trade deficits with foreign nations, including the US$347 billion gap with China last year.
While China is the world’s biggest manufacturer and exporter, services are increasingly powering economic growth as part of a shift away from a reliance on heavy manufacturing and export-led growth toward services and consumer demand. Services now account for more than half of its GDP.
China’s better-than-expected 6.9 percent first-quarter economic growth suggests “upside risks” to the IMF’s current projection of 6.6 percent expansion this year, Rhee said at a separate briefing.
Trade between the world’s two biggest economies supports about 2.6 million American jobs, according to the US-China Business Council.
While the US has a goods-trade deficit with China, its exports of services to the country are growing rapidly. Between 2006 and 2014, they climbed more than 300 percent.
Rhee said he is expecting a road map to emerge from the 100-day trade review process.
“I hope that this road map will be constructive, having a win-win not for just China and the US, but for the global economy,” he said. “For high standards, high ambition, if we open up our markets for more competition with each other, this will be great for China’s development, rebalancing its development.”
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