Abstract
The development of the service sector in the People’s Republic of China has not kept pace with the country’s overall economic development. The share of employment in services is still lagging behind that of output and is also below the international norm. Moving from traditional services to modern business services has been the focus in recent decades, but the current structure is still dominated by low-end, traditional industries. In addition, due to the ongoing government strategy to make pilot reforms industry by industry, state-owned service providers still have a large market share, especially in some important service industries, and there are great disparities in development among nonstate-owned service providers across various industries. Complicated institutional restrictions and a lack of effective institutional support and regulatory enforcement require in-depth reforms if the sector is to realize its potential. Strategic measures and policy options for promoting the sector in the next 10 years are suggested.
Highlights
Market-oriented reforms in the People’s Republic of China (PRC), along with its opening up to the outside world, brought rapid industrialization urbanization, and integration in international trade
This change indicates that the service sector in the PRC is undergoing a structural upgrade similar to the one that the Organisation for Economic Co-operation and Development (OECD) members experienced in the 20th century
Rapid growth in knowledge-intensive service industries represents the main direction of structural upgrading of the service sector worldwide; the aggregate share of such industries in gross domestic product (GDP) can reflect the level of development of the service sector in an economy
Summary
Market-oriented reforms in the People’s Republic of China (PRC), along with its opening up to the outside world, brought rapid industrialization urbanization, and integration in international trade. The service sector has likewise witnessed rapid, sustained development and has made great contributions to the overall economy in terms of its share of gross domestic product (GDP) and employment. As the contributions of the service sector to GDP growth and employment have increased and have caught up with manufacturing, clearly the PRC is moving into a new stage of development with both sectors propelling economic growth. The level of development of the service sector in terms of output and employment shares in the economy varies in different countries and is positively correlated with per capita income. As a developing country with a middle-income status, the development of the service sector in the PRC has been insufficient and has lagged behind its overall stage of development according to international norms. The government should prioritize in developing the sector and adopt further reforms in the near future if it wishes to build a creative and modern society with higher income levels by 2030
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