Impact of Digital Economy on China’s Service Trade: Comparison
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Please note this is a comparison between Version 2 by Alfred Zheng and Version 1 by Changya Di.

High-quality development of service trade (HDST) is becoming increasingly important for China’s high-quality development (HD). This builds new development patterns and cultivates new competitive advantages. In the digital economy (DE) era, HDST ushers an important opportunity. The use of DE to promote HDST is the focus of China’s current economic development strategy.

  • service trade
  • high-quality development
  • digital economy
  • human capital

1. Introduction

High-quality development (HD) is a development theme of China’s 14th Five-Year Plan. Concerning this, promoting the quality of foreign trade is an important starting point for implementing the Plan. It is proposed to improve the quality of China’s foreign trade by innovating service trade (ST), accelerating the development of new trade forms, and improving the level of trade digitalization to provide important support for HD in economies. HD is a development mode with quality and efficiency as the main goals, which means lower production input cost, better resource allocation efficiency, and better development efficiency. HD emphasizes coordinated development between people, the economy, and society [1]. It is a more efficient and sustainable way of social development supported by innovation [2]. After years of rapid development, China’s economic development has turned to the period of HD [3[3][4],4], and new growth momentum for HD is the focus of general attention. High-quality development of service trade (HDST) contains two meanings. The first is the static indicators’ growth such as the scale and performance of ST, and the second is the optimization of dynamic indicators such as trade structure and innovation ability [5]. These are important for enhancing the competitiveness of foreign trade and improving HD. The means of promoting HDST is a problem that requires urgent solutions presently.
With the continuous improvement of the information technology level, digital economy (DE) is deeply integrated into various fields of economic development [6]. DE refers to components of economic output based solely or primarily on digital technologies [7]. The convergence of a series of innovations has led to the transformation and development of DE [8]. In this process, DE injects new development momentum into traditional industries [9] and gradually nurtures new business models and development advantages [10], which promotes HD [11,12][11][12]. DE can effectively improve economic development levels [13]. At present, China’s ST is in a bottleneck development period, and a vigorous DE brings new momentum for promoting ST. In the global value chain, the position of China’s service industry has been enhanced by developing DE, and DE has become an important momentum for HDST in China [14]. Through the deepening integration of digital technology (DT) and various fields of the service industry, new driving forces for promoting HDST will be stimulated. Additionally, important technologies and elements will be provided to support HDST, thus driving the improvement of the overall economic level.

2. Impact of Digital Economy on the High-Quality Development of China’s Service Trade 

2.1. High-Quality Development of Service Trade

With the rapid development of the service economy, ST has been increasingly valued by various countries, which can effectively promote transformation and growth of the economy and trade [15]. The development of contemporary ST has condensed more advanced production factors such as knowledge and technology. In comparison, the service sector with lower trade costs tends to have higher production efficiency [16].
With the continuous expansion of the ST scale, its structure also tends to be technology and knowledge-intensive industries [17], and its influence on economic growth continues to increase [18]. The development of ST is increasingly important [19] and becomes an important momentum for improving the economy [20]. The development level of ST is also an important reflection of the country’s economic level and international competitive advantage [21]. Developing ST is an important cornerstone for building a strong trading country and an important channel to improve the economy and enhance comprehensive strength. The HDST provides important support for enhancing international competitiveness [22], and is of great significance for improving the economy and enhancing the voice of the global value chain.
For a long time, America has taken a leading position in the field of ST, especially in technology and knowledge-intensive industries, with strong competitive advantages [23,24][23][24]. After years of attention and development, the scale of China’s ST has been expanding and remarkable results have been achieved. As an important part of China’s foreign trade, ST has played an important role in optimizing and upgrading the trade structure [25]. The results of Figure 1 show that China’s ST presents a positive and stable development trend. Except for a slight decline in the proportion of ST in foreign trade due to COVID-19 in 2020 and 2021, China’s emerging ST (excluding tourism and transportation) has a good momentum of development in general. The proportion of its ST in foreign trade also shows a steady growth trend. However, compared with America and other powerful countries, China’s ST has long been in a deficit. This indicates weak international competitiveness [26], especially in technology and knowledge-intensive industries such as intellectual property usage fees, without a competitive advantage [27]. The HDST in China still faces many difficulties. In this regard, Li and Lv [28] pointed out that the service industry was an important basis for promoting ST, and the added value of ST could be improved by optimizing and upgrading the service industry structure.
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Figure 1.
Development of China’s ST from 2012 to 2021.
At present, the digitalization trend of ST is significant, and digital elements play an important role in promoting the development of ST [5], which can inject new momentum into HDST.

2.2. Digital Economy

DE is the product of integrating DT and economic activities [29]. With the support of information technology, DE presents remarkable advantages in terms of development momentum, development efficiency, and development quality [30]. The development of the DE has redefined national competitive advantages [31], and become the key force in changing global economic structure and reshaping the global competitive landscape [32].
From the perspective of promoting domestic economic development, DE is an important momentum [33] and has a significant impact on production and lifestyle. There are some bottlenecks in the process of transitioning from a linear economy to a circular economy [34], and digitalization can play an important role in supporting a circular economy [35]. The digital transformation of enterprises can reduce costs and improve innovation capabilities, thus improving production efficiency [36]. While improving the production efficiency of enterprises, consumer data can be better analyzed, and matching efficiency for supply and demand can also be effectively improved [37], thus promoting the expansion of consumption. In addition, by actively promoting the speed of industrial transformation [38] and improving the rationalization level of industrial structure [39], DE can effectively optimize industrial structure [40[40][41],41], improve the ability of industrial innovation, and provide important support for improving quality and efficiency of the economy [42]. For HD of China’s economy, DE plays a important positive role by promoting innovation development [43]. DE can effectively reduce economic costs such as search and transportation [44], and the development of the internet can better promote companies’ R&D and innovation [45]. Regardless of economic level, digital development can exert a positive influence on the growth of a country’s economy [46].
From the perspective of promoting the development of foreign trade, digitalization has swept all trade models, and digital transformation has given new development vitality to traditional trade models and spawned new models [47]. DE can effectively promote the export scale and improve export quality [48]. The convergence of industrial digitalization and digital industrialization has promoted the improvement of export technology [49] and significantly improved the export competitiveness of China’s manufacturing industry [50]. This means DE has become an important momentum for promoting HD of foreign trade. On the one hand, digital transformation has effectively reduced trade costs and created more new opportunities for enterprises and consumers [51]. On the other hand, the vigorous development of digital trade is promoted based on the in-depth development of DT. The development of digital trade has improved the efficiency of traditional trade [52]. Compared with traditional trade, digital trade is faster, cheaper, and can generate higher economies of scale [53]. Digital trade not only helps to promote innovation and reduce trade costs but also forms new trade contents and trade benefits through innovation [54]. It also becomes an important engine to promote growth of foreign trade [55]. Meanwhile, the development of DE has an important impact on human capital [56], promotes transformation and upgrading of human capital [57], and significantly improves the level of human capital structure [58]. The upgrading of human capital structure actively promotes the improvement of regional innovation ability [59], improves the technical level of export products, and promotes the improvement of foreign trade competitiveness. For the development of ST, DE can enhance the export competitiveness of ST [60], and provide an important driving force for promoting HDST.
While DE brings opportunities, there are also some risks worth noting. Digital technologies such as big data are now widely used in various industries, which has led to big loopholes in data privacy and security. Additionally, personal data privacy cannot be effectively protected. Meanwhile, the development of DT allows data to flow more quickly and freely across the world, which also poses a threat to a country’s national security and financial system. The state also faces greater challenges in financial regulation. Besides, some digital giant platforms may form market monopolies, preventing potential companies from entering the market, which is adverse to innovation and fair competition. In addition, the development of DT will also eliminate some low-skilled industrial workers, which has a certain impact on the stability of the job market [37]. With digital transformation, enterprises also face information security challenges and risks such as security vulnerabilities [61]. Shang et al. [62] found that enterprises mainly faced 21 risk factors in the digital transformation process, such as risk caused by information lag or distortion, and the risk of data exposure.
Due to the influence of economic level and investment in DE construction, there are obvious differences existing in developing levels of DE in the world. For developed countries, DE has been considered important for a long time and has become an integral part of economic development [63]. For developing countries, DE is becoming increasingly important [64]. However, many developing countries have shortcomings, such as weak digital infrastructure and a lack of development funds for enterprises. This makes the development advantages and potential of DE not well tapped and utilized in these countries [65]. After years of attention and development, the development of China’s DE has achieved remarkable results, although the overall digitalization level is still far behind developed countries. However, in e-commerce and some other fields, China has a certain leading advantage. The development of DE injects new impetus into the economy, which can only alleviate but not reverse the downward trend of potential growth of the economy in China due to economic maturity. With the development of DE, facing challenges such as invasion of privacy, oligopoly, labor unemployment in traditional industries, and financial risks, the Chinese government needs to strengthen monitoring and maximize the benefits of digital development [66].

2.3. High-Quality Development of Service Trade and Digital Economy

DE has brought a new round of opportunities for ST. Digital transformation is crucial [67]. The most prominent feature of contemporary ST is digitalization, and the in-depth application and reform of digitalization have promoted the innovative development of ST. Through research, Choi [68] found that increasing internet usage and access in a country could promote the growth of ST. Zhang [69] found that the increase in the level of internet use actively promoted the growth of China’s ST. DT has effectively reduced the cost of service provision [70], and the distance cost of ST has been reduced with the development of the internet and improved connectivity between countries [71]. On the basis of greatly improving the cross-border trade ability of services [72], DT has actively promoted the transformation of the ST mode and the form of industrial organization. Using sample data from 49 countries, Nath and Liu [73] studied the impact of ICT on 10 ST projects, such as finance and transportation, and found that the development of ICT had positive impacts on these 10 ST projects to varying degrees.
HDST is an important engine for HD of China’s economy. HDST not only refers to the expansion of trade scale but more importantly, the optimization of trade structure, development of innovation ability, and the improvement of competitiveness. The development and application of DT reduce the cost of ST, expand its scope, and create new services [5]. It thus provides a superior development environment for ST and significantly improves the development efficiency of ST. With the development of DE, the internal momentum for promoting HDST in China has become increasingly prominent, and new business forms and advantages have emerged. With the development of DE, digital infrastructure is continuously improved, which promotes technology innovation, significantly improves regional total factor productivity [74], and provides important material and technical support for HDST. Qian [75] found that service industries with different degrees of digitalization have great differences in efficiency loss; the higher level of digitization, the less loss of efficiency. DE plays a positive role in optimizing the service industry structure and its HD [76]. The structure of ST continues to be optimized and upgraded, laying a solid foundation for HDST when the continuous development of DT is relied on. In addition, the continuous development of digital communication technology while reducing trade costs has also promoted the trading ability of a wider range of services [77]. Meanwhile, the development of DE deepens the integration of DT and ST and gives birth to new business forms such as digital service trade [78]. Compared with traditional ST, digital service trade is more extensive in application space and more advanced in production factors. Digital service trade is conducive to technological innovation [79], and its development can actively promote economic growth [80]. With the continuous deepening of the digital development of the global economy, digital service trade is increasingly important. It is an effective means to reshape national competitive advantages [81] and an important starting point for promoting HDST in China.

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