Study on the Impact of CAFTA Trade in Services Liberalization on the Servitization of Inputs in Chinese Manufacturing Industry

Anqi Zheng; Xiulian Chen

doi:10.6981/FEM.202502_6(2).0010

Authors

Anqi Zheng
Xiulian Chen

DOI:

https://doi.org/10.6981/FEM.202502_6(2).0010

Keywords:

CAFTA; Trade in Services Liberalization; Servitization of Inputs in Chinese Manufacturing Industry; Production Factors.

Abstract

With Chinese deepening participation in international regional economic integration, the input of regional service intermediates has increasingly become an important factor driving the servitization development of Chinese manufacturing industry. Taking the upgraded liberalization of trade in services under the China-ASEAN Free Trade Area (CAFTA) as an example, this paper proposes a theoretical analysis and foundational hypotheses on how regional trade in services liberalization affects the servitization of manufacturing inputs from the perspective of production factor mobility and conducts an empirical analysis. The results show that reducing service trade barriers within the CAFTA region and expanding trade in services liberalization contribute to promoting the servitization of inputs in Chinese manufacturing sector. Mechanism testing reveals that CAFTA trade in services liberalization enhances the servitization of manufacturing inputs by facilitating the free flow of production factors such as physical capital, human capital, and technology. Based on this analysis, the paper suggests policy recommendations for enhancing the servitization level of Chinese manufacturing industry under the CAFTA 3.0 upgrade framework by deepening service trade cooperation and expanding openness.

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