BEIJING, Feb. 20 (Xinhua) -- China's service outsourcing industry reached a new growth milestone last year as the country maintains its support for the sector seen as important to economic upgrading and job creation.
Chinese firms inked service outsourcing contracts worth about 1.57 trillion yuan (about 223.7 billion U.S. dollars) in 2019, up 18.6 percent year on year, while the annual executed contract value topped 1 trillion yuan for the first time with a year-on-year growth of 11.5 percent, the latest data from the Ministry of Commerce (MOC) showed Thursday.
Of the total, offshore service outsourcing contracts reached 920.7 billion yuan in value last year, rising 15.6 percent year on year. The United States, the European Union and the Hong Kong Special Administrative Region ranked the top three largest markets in business volume, accounting for 54.5 percent of the total, said MOC spokesman Gao Feng during an online news conference.
The executed value of contracts with the United States rose 10.3 percent year on year to 132.5 billion yuan in 2019, he said.
Outsourcing, which is usually taken to cut costs, is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. In China, service outsourcing is typically divided into three sub-sectors: information technology outsourcing (ITO), business process outsourcing (BPO) and knowledge process outsourcing (KPO).
China sees the development of service outsourcing as helpful in keeping foreign investment and employment stable and promoting economic upgrading. Though it started relatively late in outsourced services, China has its own advantages and has made swift progress.
The country has pledged to step up efforts to promote the transformation and upgrading of outsourced services, with the view to achieving better structure and higher quality of the services sector.
As the novel coronavirus (COVID-19) begins to show its dampening effect on China's economy, the commerce ministry has rolled out favorable policies to ensure the stable development of the service outsourcing sector, which acts as a pillar of China's productive service exports and an important job creator for college graduates.
A circular released by the ministry on Feb. 11 promised dedicated support to service providers suffering from virus-caused cash flow strains and business drops.
The ministry urged local commerce departments to fully understand the importance of supporting service outsourcing enterprises in fighting the epidemic and take the initiative to do their best to solve problems for enterprises, according to the circular.
New efforts include helping the sector benefit more from the country's new supportive tax, financial and human resources policies, pushing the targeted supply of disease prevention gear, supporting work and production resumption, and streamlining administrative services.
Intensifying macro-policy support for the broader economy would also reduce bumps ahead for the sector. For example, China's financial authorities have enhanced targeted support for micro, small and medium-sized enterprises to steer their funding costs down in a bid to tackle short-term cash flow challenges.
Lian Ping, chief economist at the Bank of Communications, said the innate resilience of the Chinese economy, as well as the use of counter-cyclical adjustments, will help the country maintain stable growth despite the COVID-19 outbreak.
The outbreak may exert a short-lived downward pressure on consumption and investment, but won't change the country's sound economic fundamentals, Lian told Xinhua in an interview, adding that the country has sufficient policy room to keep growth stable.
"Pessimism over the epidemic's impact on China's long-term growth doesn't hold water," Lian said.