Relationship Between Openness And Competitiveness Of China's Service Trade

With the rapid development of practice of international trade in services, the trend of progressive liberalization of international trade in services has been strengthened under the framework of "General Agreements on Trade in Services", and Member States have been more active on multilateral or regional negotiations for the trade liberalization in services. As a member of WTO, the opening up of China's service industry is irreversible. However, China's services sector, although gradually developed in the past 20 years, but the overall size, level of development are still relatively backward. As a result of trade in services include the provision of cross-border delivery, consumption abroad, commercial presence and movement of natural persons, opening up trade in services means trade liberalization, liberalization of the movement of people and investment liberalization, therefore the impact mechanism on competitiveness of service trade would be more complex. Trade in services is often related to national sovereignty, confidentiality and security, so they have greater risk. Therefore, how to measure the openness of China's service trade, how to measure China's service trade competitiveness, how to determine the openness of China's service trade is reasonable, and thus provide a powerful basis for decision-making for policy-makers on a reciprocal basis to participate actively in multilateral or bilateral negotiations on liberalization of trade in services have become one of the focal point of research for our government and scholars.In this paper, the author studied the relationship between openness and competitiveness in service trade on basis of the previous theoretical studies, and found that opening up in services can promote the service of the host country through competition effect, spillover effect, personnel effects, etc., while the host country also has to face the risks that the national competitiveness of trade in services is inhibited because the degree of openness would be more than their affordability. The paper also found that a country's open policies of trade in services, if rational, that is, following the principle of maximizing net income, then the degree of openness of trade in services and degree of competitiveness in services should be positively correlative.In the empirical context, the paper used the financial indicators to measure the openness of trade in services, and used Revealed Comparative Advantage Index (RCA), Trade Competitiveness Index (TC) and Export Market Share (ES) to measure the competitiveness of trade in services of China, then combined the three indicators to a composite indicator with the principal component analysis method. Finally the paper made econometric analysis on the relationship between the openness of China's service trade and competitiveness of China's service trade by constructing industry-sectional panel data model , then came to the conclusion: openness of China's service trade and the competitiveness of trade in services were positively correlative; cointegration relationship exists between the two variable; in the Granger causality test, the openness of China's service trade was the reason of the competitiveness of trade in services , and the competitiveness of trade in services was not reason of openness of trade in services.