by sub - industries, such as agricultural and animal husbandry, textile, light industry, machinery, and so on. they were in charge of import and export of their respective sub - industry and adopted different financial rules. there was no competition among the companies. in order to attract foreign investment, china introduced the first sino - foreign joint venture law in 1979, after which domestic companies competed from foreign companies and industry segmentation and monopolies began to fall apart. competition has driven the soes to make great progress. industries with more sufficient opening - up and fiercer competition have developed more rapidly. the manufacturing industry has flourished. 1 / 4 bis central bankers'speeches 2. opening - up has promoted domestic policy reform the opening - up has strongly impacted the traditional centrally planned policy making system, and triggered a series of major domestic reforms, including pricing system reform, value - added tax reform, export tax refund reform, market - based exchange rate regime reform, and negotiation for accession to gatt and wto. in the early 1980s, in order to attract foreign investment, the domestic policy system must move more closer toward the market rules and provide a level playing field. subsequent consideration was to make sure chinese enterprises compete fairly in the international market. fair competition and opening - up are inter - connected. it involves not only competition between chinese and foreign - funded companies, but also equal and adequate competition among chinese companies. opening - up accelerated the access of domestic private capital, and subsequently brought in the concept of national treatment. market access criteria should be the same for domestic and foreign - funded companies. the opening - up facilitated three major policy reforms, i. e., trade and investment liberalization, market - based exchange rate regime reform, easing of exchange control, including lowering the market access threshold. as a result, competition and market gradually became generally applicable policy mechanism. 3. service industry has opened up in a similar process in the past, economists treated the service industry as a non - tradable industry. however, with the rapid progress of information technology, transportation and globalization, many services became tradable. people began to say that “ the world is flat ”. the opening - up of the service industry in china followed a similar pattern of the manufacturing industry : opening - up brought in competition, boosted efficiency and quality of service, and facilitated domestic policy reform. in the industrial field, the market competition rules are not applicable to a very small number of industries such as defense industry,

but most industries can open up and bring in competition. in the service sector, there are also sensitive industries, and some services can ’ t be delivered across the border. thus, the market mechanism cannot cover all of them. but most other service industries can open up. the understandings of service industry opening - up and the necessary policy reform followed a similar process like that of manufacturing industry. the opening up to foreign capital started in industries such as hotels, restaurants, transportation, and etc., and expanded to other service industries. in terms of chinese services going global, the export products and their after - sale service of industrial companies were the first, followed by banking, insurance, medical, shipping, tourism, software, retail, payment, cultural services, and etc. shanghai ’ s shipping industry is a typical example. 4. the experience of regional pilot programs has enhanced the confidence in openingup in the early days, decisions were made to open up and develop four special economic zones, and there were different opinions at that time. later on, the successful experiences of special economic zones were introduced to other places. there were also different opinions regarding china's accession to the wto, but fact has proved that the wto membership had a profound and positive influence on china. the government advanced the experiment of shanghai free trade zone ( ftzs ) after the new leadership took office. there are 11 ftzs now. many experiences from the ftzs have been applied nationwide, the benefits of opening up has been tangible and well recognized. 5. financial service sector is a competitive service industry finance is an important component of the service industry, as reflected in its weight in the wto negotiation and in chinese statistical system ’ s classification of service industry. finance 2 / 4 bis central bankers'speeches is regarded by many at the core of any modern economy. in 1993, at the third plenary session of the 14th cpc central committee in 1993, the financial industry was described as the lifeline of country ’ s economy. i think this can be attributed to the background at that time. first, the financial sector, especially the banking industry, played a prominent role in resource allocation ; second, with each specializing in one field, there was little competition among the four specialized banks in the banking industry ; third, big financial institutions still undertook policy - related businesses and were not operating fully on a market - basis ; fourth, the absence of stability in the financial sector might trigger major chaos. would this affect