By Bruno Grangier & Peggy Wu
China has long been seen as the world’s factory. For decades, its economic engine was powered by manufacturing, exports, infrastructure, and industrial scale.
It’s easy to overlook the fact that since 2015 the service sector has been the largest component of China’s economy. Data from the National Bureau of Statistics of China show that its value-added share of GDP exceeded 50% for the first time in 2015 and has remained above that level ever since. Expanding and improving services is closely linked to upgrading China’s manufacturing base, and the two reinforce each other.
A new State Council policy document sends a strong signal: China wants to upgrade its service industry by moving producer services toward greater specialization and higher-value activities, while expanding high-quality consumer services that are more diverse and convenient. For foreign service companies, this could open a significant window of opportunity.
A new strategic direction for China’s economy
The State Council’s “Opinions on Promoting the Expansion and Quality Improvement of the Service Industry” sets an ambitious target: by 2030, China wants the total scale of its service industry to reach RMB 100 trillion.
The policy covers a wide range of areas such as logistics, software, data, R&D services, environmental services, healthcare, elderly care, professional services, finance, tourism, hospitality…
The government wants to improve quality, standards, specialization, digitalization, and international competitiveness.
Why this matters for foreign service companies
For foreign companies, especially European and international service providers, the message is clear: China is looking for higher-quality services. So, in many areas, foreign expertise may become more valuable.
China’s policy priorities overlap with areas where foreign companies often have strong advantages:
Industrial services.
Companies providing engineering, industrial software, testing, certification, maintenance, automation, and supply chain optimization may find growing demand as China upgrades its manufacturing base.
Environmental services.
Businesses focused on recycling, carbon accounting, energy efficiency, waste treatment, circular economy, and ESG consulting are aligned with China’s green development priorities.
Healthcare and elderly care.
The policy highlights healthcare, preventive care, long-term care, elderly services, and even international medical services. These are areas where foreign operators, technology providers, and management models may have room to develop.
Professional services.
Consulting, accounting, tax, legal support, intellectual property, supply chain management, and quality consulting are all identified as areas for improvement and expansion.
Tourism, sports, hospitality, and lifestyle services.
As China seeks to improve domestic consumption and service quality, foreign brands with premium service models may find opportunities in selected cities and pilot zones.
Two things stand out for foreign companies
Pilot openings in previously restricted sectors
The document explicitly mentions expanding pilot programs in value-added telecommunications, biotechnology, and wholly foreign-owned hospitals. These were heavily restricted.
Recent pilot policies (including a 2024 circular) have already relaxed foreign‑ownership caps for certain value‑added telecom services in designated pilot areas, allowing qualified foreign investors to hold up to – and in some cases 100% of – the equity, compared to previous 50% limits in many VATS segments. The 2026 Opinions confirm this opening‑up trajectory and suggest that such relaxations could gradually be extended to more zones and sub‑sectors.
Moreover, the document urges the removal of unreasonable standards, overly restrictive measures, and opaque barriers to fair market entry in areas such as factor access, business licensing, public tendering and government procurement. This will undoubtedly further optimize an effective regulatory framework, while also sending a clear message of strong support for investment.
Joint ventures may become a practical route to market
One of the most important points for foreign companies is market entry structure. In some service sectors, foreign companies may be able to operate through wholly foreign-owned enterprises, depending on the specific activity and applicable negative list. But in more sensitive or regulated sectors, joint ventures may remain the most practical route (healthcare and medical services, data-intensive services, telecommunications-related service, biotechnology…).
Also, distributors in China are still very active and are looking for strategic partnerships with brand owners eager to distribute in China, develop their offer and open to provide enough comfort to such distributors on the profit sharing generated by the upside generated by such market entry on the value of the brand. New joint ventures business models are emerging in this relation in the garment, sport or beauty industries for example.
For foreign companies, this means the right question is not simply: “Can we enter China?”
The better question is: “Where is China opening, under what structure, and with which local partner?”
From scale to sophistication: where foreign service firms fit in
China already has massive domestic service providers. That creates demand for know-how.
Foreign companies may bring Brand trust in premium service categories, proven operating models, advanced service standards and sector-specific management experience, for example.
In professional services, they may bring international standards in compliance, IP, risk management and governance.
In industrial services, they may help Chinese manufacturers shift from product-based competition to service-enabled value creation.
China has identified services as a strategic priority. That means selected sectors may receive policy support, investment, pilot openings, and regulatory experimentation. Foreign companies that bring real expertise, high standards, trusted brands or operational know-how may find new ways to enter or expand. And in sectors that were previously restricted, the next few years may bring gradual but meaningful openings.
China’s service economy is entering a new phase. Foreign companies should watch it closely. More importantly, they should prepare now.
At Leaf, we advise European and international companies on China market entry, joint venture structuring, regulatory compliance, and cross-border transactions. If you are assessing opportunities in China’s service sector, please contact Bruno Grangier (b.grangier@leaf-legal.com).
