Washington, January 24:
In contrast to the massive deficit in trade in goods, the United States is chalking up a rare surplus in services trade with China that could balloon to $67 billion in eight years, says a report commissioned by American companies.
The United States enjoyed a $2.6 billion surplus in services trade with China in 2005, compared to its colossal goods deficit of $201.6 billion.
But US service sector exports to China are growing faster than to any other country and â€œby 2015, the service sector current account balance with China could be worth $67 billion,â€ said a study by global economic forecasting firm Oxford Economics.
The study on often-overlooked US expansion of trade and investment in services was commissioned by the China Business Forum, the research arm of the US-China Business Council (USCBC), a key group of US companies engaged in business with the worldâ€™s most populous nation.
It showed that the United States could add as many as 240,000 new, high-paying service industry jobs by 2015 amid the rapidly growing trade.
Despite the deficit, China also stands to gain as its service sector expands, the report said. By 2015, it said, if all the impediments to growth in service sector imports and inflows of investments were removed, the average Chinese household would be better off by between $300 to $400 per year, and up to seven million â€œhigh-paying, high productivityâ€ jobs would be created.
The benefit would amount to an additional $138 billion in Chinese gross domestic product, it said.
â€œThis study shows that the future benefits are clearly significant for both the US and Chinese economies if China continues to open its service sector to foreign providers,â€ John Frisbie, president of the USCBC, told a news conference in Washington where the findings were released.
â€œThe US is the worldâ€™s leading service economy and this is an important area for growth,â€ he said. US service sector exports to China are to a large extent focused in IT, management consultancy and financial services as well as building international transport networks.
China is obliged to open up its market to increased service sector imports and inflows of investment in order to comply with its World Trade Organization (WTO) agreement.
â€œOur research shows that implementing Chinaâ€™s WTO commitments is an essential first step to maximizing the advantages for both economies of service sector trade and investment,â€ said Erik Britton, director of Oxford Economics and lead author of the study.
â€œIf China increases the pace and scope of reform in the sector, the benefits will be even more substantial and long-lasting,â€ he said.
By 2050, according to the study, China will become the worldâ€™s largest market for services.
US service sector exports to China â€œin the long runâ€ could reach between 1.5 per cent and 3.5 per cent of US gross domestic product.
In 2010, the average US household would be better off by about 500 dollars a year as a result of growth in services trade with China, the study said. It identified â€œserious impedimentsâ€ to the growth of Chinaâ€™s service sector, including â€œexcessively opaque and inconsistentâ€ application of rules and regulations governing foreign exports and investment.
Other restraints were Beijingâ€™s â€œexcessiveâ€ support for domestic state-owned service providers and bureaucratic burdens for foreign service providers.