Services offer new avenues for investment

Visitors interact with a robot at the 2025 China International Fair for Trade in Services at Shougang Park in Beijing,广西巴马政府新闻网 on Saturday. The event, open to the public on Saturday and Sunday, offered free admission to visitors with reservation. ZOU HONG/CHINA DAILY

China's push to open up its service sector is unlocking new growth avenues for foreign investors, as the country pivots toward more innovation-driven and consumption-led growth, said market watchers and business executives.

They also said that eased market access, a broader business scope and improved returns will enhance China's appeal to multinational companies.

To support this shift, China will further open its service sector, widen market access and accelerate pilot projects in areas such as telecommunications, healthcare and education in 2026, according to the Ministry of Commerce.

The State Council, China's Cabinet, issued a work plan in January to optimize and expand the supply of services, foster new drivers of services consumption, and promote quality upgrading and broader public access.

Denis Depoux, global managing director of German management consultancy Roland Berger, said the concept of "Service in China" is increasingly paired with "Made in China" to signify a strategic shift toward high-value integration.

He said that further opening the service sector will help unlock the potential of modern services, a major source of employment and growth.

This policy push comes as China's service sector has already emerged as a major driver of economic growth, providing a strong foundation for further opening-up.

China's value-added services output rose 5.4 percent year-on-year to 80.89 trillion yuan ($11.8 trillion) in 2025, accounting for 61.4 percent of overall economic growth, data from the National Bureau of Statistics showed.

According to forecasts released last month by the National Development and Reform Commission, China's service sector is expected to exceed 100 trillion yuan during the 15th Five-Year Plan (2026-30) period.

"While opening the market creates opportunities, it also intensifies competition with domestic firms and can foster new partnerships and drive innovation across the industry," Depoux added.

Economists said that a greater focus on the service sector underscores a natural stage in China's economic development toward higher-quality growth.

Nie Pingxiang, a researcher specializing in trade in services at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said that advanced economies tend to shift toward services as manufacturing approaches saturation. "As digital technologies drive industrial upgrading and deepen integration with advanced manufacturing in China, they are expected to draw more foreign service providers," she said.

From a structural perspective, this transformation is also reshaping how companies expand globally and upgrade their value chains.

Chen Jianwei, a researcher at the University of International Business and Economics in Beijing, said the opening of China's service sector is lowering the cost of going global by enabling companies, particularly small and medium-sized enterprises, to expand overseas without heavy up-front investment.

In regions with strong industrial bases, services that support manufacturing can help extend manufacturing value chains both upstream and downstream, support upgrading and foster new clusters, he said.

This structural shift is already translating into tangible investment flows. China's service sector attracted 111.22 billion yuan in foreign direct investment in the first two months of this year, with foreign investment in research and development and design services soaring 171.8 percent year-on-year, statistics from the Ministry of Commerce showed.

Multinational companies are responding to these changes by expanding investment, upgrading operations and deepening their presence in China's service-related sectors.

French industrial group Schneider Electric will increase its investment in innovation and provide more tailored services to integrate advanced digitalization, electrification and automation technologies across many industries in China. The company will also build two additional plants in Xiamen, Fujian province, and Wuxi, Jiangsu province, this year.

"With the right products and services, we are also building bridges to connect China's competitive industries with global markets, jointly exploring third-party markets with Chinese partners across projects in the Middle East and Southeast Asia," said Yin Zheng, executive vice-president of China and East Asia operations at Schneider Electric.

In the logistics sector, global players are also stepping up investments to capture growing demand for efficient supply chain services.

German logistics group DHL will put its super gateway in Shenzhen, Guangdong province, into operation in the second half of the year, amid shifting trade patterns and rising demand for faster logistics services.

The facility will expand capacity for e-commerce and time-critical shipments, improve efficiency and strengthen links between China and the rest of the world, while adding new cargo routes from Shenzhen to major global destinations once operational, said John Pearson, CEO of DHL Express.

"Chinese companies are increasingly exporting goods alongside innovation and brands, while robust domestic demand continues to draw high-quality imports, including advanced machinery, consumer products and healthcare items," he said.

Financial service providers are likewise tapping into the opportunities created by the expansion of cross-border trade and digital commerce.

Payoneer Inc, a United States-based financial services group, sees China as a key and fast-growing market, with more than one-third of its 2025 revenue coming from the country, underpinned by a large base of small and medium-sized enterprises driving cross-border commerce.

"We will continue to support Chinese manufacturers in diversifying trade corridors and enabling localized market entry, offering a one-stop financial platform to help them operate across markets without a physical footprint," said Cheng Dandan, Payoneer's senior vice-president and general manager for China.