China should make the services sector the next major frontier of its reform and opening-up agenda, according to Yin Yanlin, a former deputy director of the Central Financial and Economic Affairs Commission and current vice chair of the Economic Affairs Committee of the Chinese People’s Political Consultative Conference.
In a recent policy paper, Yin argued that while China has largely removed foreign investment restrictions in manufacturing, significant barriers remain in services. He said expanding access to sectors such as telecommunications, education, healthcare and finance would not only attract foreign investment but also help drive domestic reforms, improve service quality and strengthen China’s long-term economic competitiveness.
Services Sector Emerges as New Reform Priority
Yin described the services industry as a critical component of China’s economic transformation, noting that rising incomes and changing consumer preferences are driving growing demand for higher-quality services.
He argued that China’s next phase of opening-up should focus on reducing administrative barriers, encouraging private investment and creating a more competitive market environment. This includes expanding the use of negative-list management systems, under which sectors are open to investment unless specifically restricted.
According to Yin, services now represent the area where institutional reforms are most needed. While manufacturing has become increasingly open to foreign investment, sectors such as telecommunications, healthcare, education and finance continue to face more complex regulatory requirements and market-access restrictions.
He believes broader opening in these sectors could serve as a catalyst for wider economic reforms while supporting China’s goal of achieving high-quality development.
Progress Made in Telecommunications, Education and Healthcare
Yin highlighted significant progress already achieved in opening several service industries.
In telecommunications, China has gradually expanded foreign participation through pilot programmes in Beijing, Shanghai, Shenzhen and Hainan. Foreign investors have gained access to a growing range of value-added telecommunications services, contributing to a steady increase in foreign-funded enterprises operating in the sector.
The education sector has also become more internationally connected. China has established thousands of cooperative programmes with overseas institutions and has become both the world’s largest source of international students and Asia’s leading destination for study abroad programmes.
Healthcare reforms have similarly advanced. Pilot initiatives now allow wholly foreign-owned hospitals in selected cities, while increasing numbers of overseas medical professionals are practising in China through specialised programmes designed to attract international expertise.
Yin said these developments demonstrate the benefits of gradual opening while providing valuable experience for future reforms.
Challenges Remain Despite Recent Reforms
Despite progress, Yin acknowledged that important obstacles continue to limit foreign participation in many service industries.
In education, restrictions remain on school ownership structures, governance arrangements and the recognition of foreign qualifications. He noted that demand for international educational opportunities remains strong, with hundreds of thousands of Chinese students continuing to pursue studies abroad each year.
Healthcare faces similar challenges. Regulatory requirements, licensing procedures and restrictions on ownership structures continue to limit the expansion of foreign medical providers. At the same time, demand for specialised international healthcare services continues to grow among Chinese consumers.
The financial sector also faces barriers despite significant liberalisation in recent years. Foreign institutions continue to encounter lengthy approval procedures, limits on certain activities and restrictions related to cross-border capital flows.
Yin argued that addressing these issues would help improve service quality, attract additional investment and better meet growing domestic demand.
Expanding Opening-Up to Support Future Growth
Looking ahead, Yin proposed a new round of reforms aimed at accelerating service-sector opening across the country.
His recommendations include further liberalising telecommunications services, expanding foreign participation in education, allowing greater foreign involvement in healthcare institutions and deepening financial-sector reforms. He also called for stronger recognition of international qualifications, greater mobility for professionals and improved cross-border investment mechanisms.
Particular emphasis was placed on the role of pilot free-trade zones and demonstration areas, which Yin described as important testing grounds for future reforms. He argued that successful policies introduced in cities such as Beijing should be gradually expanded nationwide.
According to Yin, broader opening of the services sector will be essential if China is to strengthen domestic consumption, improve productivity and integrate more deeply into the global economy.
"As China enters a new stage of development, institutional opening-up in the services sector will become an increasingly important driver of reform, innovation and international cooperation," he concluded.
Written by:
*Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*Cole Jackson
Director of International Relations, Sekunjalo Group Africa Holdings
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
** MORE ARTICLES ON OUR WEBSITE https://bricscg.com/ (https://bricscg.com/)
** Follow @ (https://x.com/brics_daily)brics_daily (https://x.com/brics_daily)on Twitter for daily BRICS+ updates and instagram @brics_daily (https://www.instagram.com/brics_daily?igsh=bmhvbTd0YzA4a2wx)
