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China's service industry becomes dominant force for economic development

(People's Daily Online)    17:12, August 07, 2019


China's ever-growing service industry has become the dominant driving force for national economic development, according to data released by China's National Bureau of Statistics (NBS).

Statistics indicate that the service industry has become the top choice for foreign investors in China. In 2018, foreign direct investment (FDI) in the service industry accounted for 68.1 percent of the total FDI in China, up from 24.7 percent in 2005.

More investors were attracted to the Chinese market after a new round of opening-up policies were rolled out. China has endeavoured to open its market wider by implementing the management system of pre-establishment national treatment plus a negative list, which helped further relax restrictions on market access and improve trade facilitation and liberation across the country.

The increase of foreign capital in China's service industry is also attributed to some other factors, such as ample development space and stable market expectation.

China's service industry contributes 50 percent to its GDP, while the proportion of the service sector in GDP has reached 70 percent in developed countries.

The Chinese market, featuring a stable macro-economic environment, continued improvement of social and legal conditions, and advanced business environment, could help significantly reduce costs and guarantee stable return expectations for investment in the service industry.

"China's service industry will attract more foreign capital, and its proportion in GDP will remain stable and at a high level," said Sang Baichuan, director of the Institute of International Economy at the University of International Business and Economics.

China's service industry is opening further to the rest of the world, and is continuously enriched by the development of information technology. As such, China's foreign trade in services will maintain fast growth and enjoy rising global competitiveness over the years to come, according to Gao Lingyun, a researcher at the Institute of World Economy and Politics at the Chinese Academy of Social Science.

Thanks to the opportunities brought by the Belt and Road Initiative, China's emerging services, especially knowledge-intensive services in such fields as finance, technology, patents and standardization, will be exported to more countries, Gao said.

China's producer services industry has flourished in recent years. From 2016 to 2018, the revenue of producer services enterprises above designated size increased by an annual average of 13.3 percent.

In 2018, the revenue of enterprises above designated size in such fields as engineering design services, intellectual property services, human resources, and advertisement services rose by 18 percent, 25.1 percent, 20.1 percent, and 17.5 percent respectively on a year-on-year basis.

"With the deepening of industrial restructuring and the advancement in high-quality development, China's service industry will witness more integration and digitalization," said Wei Qijia, deputy director of the industrial economy research office, Department of Economic Forecasting of China's State Information Center.

The boundaries between producer services industry and other industries will become increasingly blurred, and the new generation information technology will play a more significant role in boosting the high-quality development of the industry, according to Wei.

China's service industry has become the most powerful driving force for employment. In 1978, the number of service sector employees in China accounted for 12.2 percent of the country's total workforce, while in 2018 the proportion reached 46.3 percent.

"China has various policies on stabilizing employment and promoting economic growth, the world's largest middle-income population, and new forms of business, including the digital economy, platform economy, and sharing economy. Its service industry is bound to generate more jobs thanks to these advantages," said Su Hainan, a researcher at the China Association for Labour Studies.  

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Xian Jiangnan, Bianji)

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