|
 |
|
Trade in service |
A modern service industry
As technology advances, emerging modern service industries, like financial, communication and new energy services, are playing an increasingly important role in China-Africa service trade. By the end of 2012, there were over 2,000 Chinese enterprises operating in Africa. These companies require more diverse and convenient financial services, like settling cross-border trades in yuan, the Chinese currency, to advance their businesses.
Yao notes that cross-border settlements in yuan will be one of the most promising banking services in the future. Currently, trades between China and Africa are generally settled in U.S. dollar, which has become risky as the United States credit rating was downgraded in recent years. "This is a great opportunity for Chinese financial institutions exploring business in Africa," Yao noted.
According to a report by the Standard Chartered Bank, China-Africa trade settled in yuan amounted to $5.7 billion in 2012. The bank estimates that 20 percent of China's foreign trade will be settled in yuan by the end of 2015, including $15 billion worth of cross-border trades between China and Africa.
Chinese banks haven't missed this business opportunity, and have opened branches on the African continent. By the end of 2009, Chinese banks had branches providing banking services in over 50 African countries. Meanwhile, African financial institutions have also set their sights on the Chinese market. By the end of 2011, six banks from five African countries - South Africa, Egypt, Morocco, Nigeria and Cameron - had set up one branch and five offices in China.
More supports
China's huge foreign trade in goods overshadows the scale of its trade in service sectors, and China's trade with Africa is no exception. "This is largely blamed on the underdevelopment of China's domestic service industry," Xue Rongjiu, Vice Chairman of China Society for World Trade Organization Studies, told ChinAfrica. He noted that China's service industry plays a relatively small role in the nation's GDP when compared with other countries. Official statistics show that in 2012, China's service sector accounted for 44.6 percent of its GDP.
"[China's] domestic service industry should be upgraded to promote service exports," Xue added.
To promote China-Africa trade in the service sector, experts also proposed more support be given to the nascent and underdeveloped service industry to allow more enterprises to start businesses in Africa. "More legal consulting services and financial services are also necessary to facilitate Chinese enterprises' business in Africa," Xue noted.
Traditional Chinese medicine (TCM) provides a prime example of the problems hampering the international expansion of some Chinese businesses. Due to restrictions on exporting Chinese herbs, the industry cannot easily expand on the overseas market, despite its huge potential. "This doesn't mean that there is no room for TCM to develop in Africa. Promoting TCM therapies like massage and skin scraping, which have curative effects with minor negative side effects, can be the starting point for promoting TCM outside China," said Zhang Zhen, who works at the China Association of Chinese Medicine, calling for government support for such promotion. CA | 
