Original text of policy: Circular of Five Departments Including the Ministry of Commerce on Issuing the 13th Five-Year Plan for the Development of the International Service Outsourcing Industry

On April 28, 2017, five departments, including the Ministry of Commerce, issued the 13th Five-Year Plan for the Development of the International Service Outsourcing Industry (the "Plan"). Recently, the principal of the Department of Trade in Services and Commercial Services under the Ministry of Commerce made an interpretation with respect to the Plan.

I. Background for Preparation of the Plan

The Central Committee of the CPC and the State Council attach great importance to the development of the service trade industry. The Several Opinions of the Central Committee of the Communist Party of China and the State Council on Building a New Open Economic System (Zhong Fa [2015] No.13) require the "promotion of service outsourcing upgrading". The Plan was formulated after study in accordance with the requirements of the Opinions on Promoting the Accelerated Development of the Service Outsourcing Industry (Guo Fa [2014] No.67) issued by the State Council, to put forward main fields, main tasks and security measures for the service outsourcing industry during the 13th five-year period.

During the 12 five-year period, the service outsourcing industry in China saw rapid development with average annual growth of executed amount of offshore service outsourcing being 28%, constantly optimized industrial structure, steadily expanded international market, increasing number of market players, and proportion in the total service export value up from 13% in 2011 to 23% in 2015, becoming a new power for promoting foreign trade development. In 2015, the executed amount of international service outsourcing in China reached USD64.6 billion, ranking second in the world, and the service outsourcing industry played an increasingly important role in stabilizing growth, adjusting structure and promoting employment.

The 13th five-year period is a crucial stage for China to comprehensively enhance the competitiveness of the service outsourcing industry. In order to implement the important deployment of the Central Committee of the CPC and the State Council on accelerating the development of the service outsourcing industry and comprehensively execute the Outline of the 13th Five-year Plan for National Economic and Social Development of the People's Republic of China and the Outline of the 13th Five-year Plan for the Commercial Development, and boost further development and going-abroad of "Chinese Service", the Ministry of Commerce has prepared the Plan in concert with four departments including the National Development and Reform Commission.

II. Compiling Process and Main Characteristics of the Plan

To prepare the Plan, the Department of Trade in Services and Commercial Services under the Ministry of Commerce formed the leading group for preparation work which started the preparation work from the second half of 2015. The preparation work lasted more than one year. The Ministry of Commerce entrusted the China's Service Outsourcing Research Center to comprehensively assess the implementation of the 12th Five-Year Plan for the service outsourcing industry, sort out problems and sum up experiences, and carry out preliminary research on the development trend during the 13th five-year period, forming a series of research results. On this basis, the leading group for preparation work held several forums on the preparation of the Plan, repeatedly went to local regions for investigation and survey, solicited opinions from all parties, and formed the first draft of the Plan, and formally sought opinions and suggestions of the National Development and Reform Commission and other departments and all local competent departments of commerce. We amended and improved the Plan according to feedback opinions and formed the draft for review. After the draft for review was adopted after deliberation at the executive meeting of the Ministry of Commerce, the Ministry of Commerce formally issued the Plan on April 28, 2017 in concert with the National Development and Reform Commission, the Ministry of Education, the Ministry of Science and Technology and the Ministry of Industry and Information Technology.

With five major development concepts as the guide, the promotion of supply-side structural reform in service outsourcing as the main line, and standardized, digital, intelligent and integrated service outsourcing as the main direction, the Plan aimed at highlighting and perfecting system and mechanism, policy framework, promotion system and development mode, boosting the extension of service outsourcing to higher value chain, optimizing the layout of international market and domestic regions, fostering and increasing market players, giving full play to the role of service outsourcing in leading and driving the modern service industry, and making greater contributions to the construction of a trade power.

III. Domestic and International Situation of Service Outsourcing
Development in the 13th Five-year Period
During the 13th five-year period, the service outsourcing industry in China will generally face a good opportunity for development.

From the international point of view, the theme of peace and development has not changed, world multi-polarization, economic globalization, cultural diversity, and social informatization are undergoing in-depth development, and a new round of scientific and technological revolution and industrial change are "shovel-ready". Driven by the new generation of information technology, service outsourcing, as an important way for enterprises to integrate and utilize global resources, is becoming a new driving force to promote the global layout of the industrial chain. However, the impact and deep influence of the international financial crisis still exist and will exist for a long time, the world economy recovers with difficulty amid deep adjustment and sees sluggish growth, the global trade is in continued depression, trade protectionism rises, external environment instability and uncertainty factors increase significantly.

From the domestic point of view, the economic development enters a new normal, and becomes more advanced in format, more optimized in division of labor, and more reasonable in structure. The further deep promotion of supply-side structural reform will accelerate the aggregation of all kinds of resource elements in the modern service industry, to create a more favorable environment for the development of service outsourcing industry. But China develops economy in an extensive mode with reduced traditional comparative advantage, and issues like weak innovation ability are still prominent.

IV. Main Goals of Service Outsourcing Development in the 13th Five-year Period

The Plan proposes the development goals for the service outsourcing industry in the 13th five-year period. Chinese enterprises shall realize the goal of USD100 billion of offshore service outsourcing contracts by 2020, with an average annual growth of more than 10%. Industrial structure shall be optimized, and the percentage of outsourcing of digital and intelligent services with high technology contents and high added value shall increase significantly. Enhance the standardization of service outsourcing, and develop a number of core enterprises and well-known brands at the international advanced level. By centering on service outsourcing demonstration cities, support a batch of major parks with prominent leading industries, great innovation capability and perfect institutions, and form a new pattern of the service outsourcing industry with distinct regional characteristics, and perfect functions and differentiated development. In combination with the Belt and Road Initiative, foster service outsourcing markets, and promote and spread China's technologies and standards. Encourage the outsourcing by governments and enterprises, expand onshore outsourcing markets, and impel the harmonious development of offshore and onshore business.

V. Key Tasks for Development of Service Outsourcing during the Period of the 13th Five-Year Plan

In order to ensure the smooth achievement of the goals for the development of service outsourcing during the period of the 13th Five-Year Plan, the Plan proposes seven key tasks with respect to the innovative development of service outsourcing.

1. Impelling innovative promotion. Accelerate the promotion of technology innovation, mode innovation, form innovation and system innovation of service outsourcing to form a new development pattern of service outsourcing with leading technologies, cross-border integration and innovative promotion.

2. Optimizing industrial structures. Actively propel the supply-side structural reform of the service outsourcing industry, orderly expand the scale of the service outsourcing industry, highlight advantageous, key and emerging fields, enhance the competitiveness of labor-intensive service outsourcing business, focus on the development of comprehensive service outsourcing with high technologies and high added value, and extend it to the high end of the industrial value chain.

3. Carrying forward regional collaborative development. Construct a regional development pattern with Chinese service outsourcing demonstration cities as subjects, a reasonable structure, distinctive characteristics and complementary advantages, strengthen the connection between contracting and outsourcing enterprises and parks in all the regions, keep industry transfer channels smooth, and conduct promotion activities for transfer undertaking.

4. Optimizing international market layout. As oriented by international market demands, deeply implement the Belt and Road Initiative, actively impel market diversification, and realize an all-round, wide-ranging and multi-level pattern of mutual benefits and cooperation.

5. Cultivating and developing market players. Encourage the specialized, scale and brand development of service outsourcing enterprises and cultivate a batch of leading enterprises with great influence and international competitiveness, a batch of large enterprises with a large scale and prominent advantages as well as a batch of small- and medium-sized enterprises with sufficient vitality and distinctive characteristics.

6. Reinforcing the cultivation of compound talents. Innovate systems and mechanisms, greatly cultivate medium- and high-ranking compound talents with technical capability and rich management experience in vertical fields, build a perfect service outsourcing talent development system and tamp talent foundations for the accelerating development of China's service outsourcing industry.

7. Enhancing standardization. Establish and perfect service outsourcing standard systems, enhance the internationalization of China's service standards, participate in the formulation of global digital trade rules and reinforce the voice of China in the global standardization field.

VI. Security Measures for Development of Service Outsourcing during the Period of the 13th Five-Year Plan

The Plan proposes the security measures in six aspects.

1. Improving fiscal and tax policies. Optimize capital use directions and support methods, give stronger support in enterprises' independent research and development, innovation in business modes, overseas merger and acquisition, etc., and establish a sub-fund in support of the development of service outsourcing under the funds for guiding the innovation development of service trade.

2. Innovating financial services. Encourage financial institutions to innovate and financial products and services adapting to the characteristics of the service outsourcing industry, encourage insurance institutions to innovate their insurance products, support eligible service outsourcing enterprises to make use of the capital market for financing and realize the diversification of financing channels.

3. Enhancing facilitation. For the purpose of launching the international service outsourcing business, research and expand the bonded supervision mode of imported goods, innovate the supervision mode of the inspection and quarantine, guide enterprises to settle accounts in RMB for international service outsourcing business and provide conveniences for middle- and high-level foreign managers and technicians in respect of their exit, entry and residence.

4. Giving play to the role of demonstration cities. Support the demonstration cities to realize institutional innovations and form highlands of system innovation and policy innovation, conduct phased conclusions, and accumulate successful experience and promote policies for the construction of demonstration cities and promulgate dynamic adjustment measures for demonstration cities.

5. Enhancing the capacity of public services. Build a legitimate and international business environment, and create an atmosphere favorable for the development of the service outsourcing industry. Establish credit records and a credit evaluation system for service outsourcing enterprises. Reinforce the construction of think tanks including China's service outsourcing research centers.

6. Strengthening organization and implementation. Include the promotion of development of the service outsourcing industry in the important issues of the Inter-ministerial Conference of the State Council on Development of Service Trade, strive to eliminate institutional obstacles constraining industry development, and coordinate the solution of major problems during work progress.

VII. Key Fields of Service Outsourcing

In order to highlight the orientation for development of service outsourcing industry, the Plan, based on the Guiding Catalogue for Key Development Fields of the Service Outsourcing Industry approved by the State Council in 2016, determines 12 fields, including the data analysis service and cloud computing service, as key fields for development of international service outsourcing industry during the period of the 13th Five-Year Plan for the purpose of highlighting the key, preponderant and potential fields, guiding the development of outsourcing business on comprehensive service solutions with high technologies and high added value, promoting the extension to the high end of the industry value-chain and form a new pattern with leading technologies, cross-border integration and innovative promotion. In 2016, the proportion of executed amount of offshore service outsourcing in 12 key fields in total offshore amount was 70%.