1. China Service Sector: Opportunities & Challenges Yang Li Yang Li Trade Representative Trade Representative Embassy of Iceland, Beijing Embassy of Iceland, Beijing

2. Controversies about China  China Miracle vs China Collapse  China Threats vs China Opportunities

3. 1700 18201830185019001950 19782000 2005 2010 40% 35% 30% 25% 20% 15% 10% 5% 0% % of GDP Opium War 1839-1842 Second Opium War 1856-1860 Invasion of Allied Armies 1900 Cultural Revolution 1966-1976 Opening-up & Reform 1978 Civil War 1945-1949 Japanese invasion 1937-1945 China Economic History in the World

4. 27 Peaceful Years of 9% Average Annual Growth 20-30 More Years of 8-10% Growth expected China Economic Growth China Economic Growth

6. Top 10 Economies in 2050 USD Billion

7. Top 10 Exporting Countries 2006

8. Top 10 Importing Countries 2006

9. Top 10 Trading Countries 2006

10. China Foreign Trade 1978 - 2006

11. Top 10 Service Importing Countries 2005

12. Top 10 Service Exporting Countries 2005

13. Top Service Trading Countries 2005

14. China Service Trade Balance 1982-2006

15. Balance of Trade Service 2005

16. Service Sectors of Biggest Export

17. China Service Trade: Sector Break-down 2005 Export (USD Million) Import (USD Million) Balance All service sectors 73,90983,172-9,263 Transportation 15,427 20.87 % 28,44834.20%-13,021 Tourism29,296 39.64 % 21,75926.16%7,537 Communications4850.66%6030.73%-118 Construction 2,5933.51%1,6191.95%974 Insurance5490.74%7,2008.66%-6,650 Financial service 1450.20%1590.19%-14 Computer and IT 1,8402.49%1,6231.95%218 Royalties & license fee 1570.21%5,3216.40%-5,164 Consulting service 5,3227.20%6,1847.43% -861 Advertisement1,0761.46%7150.86%361 Movies, Audio & Visual 1340.18%1540.19%-20 Other business services 16,885 22.85 % 9,38811.29%7,497

18. China Service Trade – Growth Rate By Sector

19. Foreign Investment in Service Sector

20. Sector Actual investment (USD Million) New Foreign companies Financial sectors 12,081 18 18 Total Non-financial companies 11,6797,445 - Commercial service - Commercial service 1,078 1,0782,597 - Real Estate - Real Estate 5,390 5,3902,120 - Transportation - Transportation 924 924 80 80 - Computer and IT - Computer and IT 928 9281,295 Total service sector 23,760 Foreign Investment in Service Sector 2005

21. SectorValue (USD Million) % Leasing and commercial service 4,94260.87% Wholesale and retail 2,26027.84% Transportation, warehousing and postal service 577 5777.11% Science research, technical service and geological survey service 129 1291.69% Real Estate development 116 1161.43% Other services, including 94 94 1.06% - Public management and social organization service - Public management and social organization service 1.73 1.73 - Resident service and other services - Resident service and other services 63 63 - IT, computer service, software - IT, computer service, software 15 15 - Water conservancy, environmental and public facility management - Water conservancy, environmental and public facility management 0.13 0.13 Total8,118 China Investment Abroad 2005

23. Great Potentials  Domestic Market: 1. Market potential 2. Fast development 3. Minimum market share for foreign companies 4. Wider market opening

24. Great Potential: International Market

25. Obstacles  Insufficient legislation: Monopoly & governmental effort  Sector and regional imbalance  Cultural factors  Long-term strategy: Fish-go vs Sow-harvest

26. The Diaspora 55 million people GDP: USD 1000bn The Coast 375 million people GDP: USD 550 bn The Hinterland 580 million GDP: 400bn The margins 20 million people GDP: USD 110bn The Rust Belt 110 million people GDP: USD 120 bn China multitude: the Very Basic

27. Opportunities & Challenges ? Know the enemy and know yourself; in a hundred battles, you will never be defeated -- Sun Wu, 551 – 479 B.C.  How much do I know about the sector  Where are the customers & competitors  Do I have the resources  Is it the right time  Do I have the time frame  ….

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