A State Council document released Wednesday indicated that the
services sector should speed up its growth whilst allowing more
investment from private and foreign sources.
Sectors including telecommunications, railways and civil
aviation, which remain largely state-owned, will be opened up to
foster increased competition emerging from a wider bracket of
investment sources, the document read.?
The document specified that China’s market access system would
be "open, fair and rule-based", which further appealed local
authorities to welcome foreign investment and improve the sector’s
legal bases.
Further encouragement was targeted at private investors which
were asked to "raise the proportion of non-state output in the
national services industry". The broad appeal called for no domain
to remain off-limits to private investors unless specific
legislation existed forbidding such action
The State Council wishes to see foreign trade growth, now
dominated by exports low-end manufactured goods, be reconfigured by
a larger reliance on the services trade.
Some local governments came under attack for favoring heavy
industries and disregarding the services sector, despite it being
responsible for 40.2 percent of China’s GDP last year. The sector
captures around 70 percent of the GDP in more developed
economies.
The idea behind pushing the service sector is to shift the
economy’s style of growth from being industry-driven to relying
more on domestic demand, thus alleviating the burden for the
environment and exports. The sector’s importance is cast into even
sharper relief when looking at China’s attempts to shift its
economic growth mechanisms whilst lowering energy and resources
consumption and addressing a sluggish job market.
Given those benefits, "developing the services sector is
imperative for China," Liu Xiahui, an economist with the Chinese
Academy of Social Sciences, told China Daily. "But for the
moment, it still has to rely on the industrial sector to generate
more tax revenues and achieve a high rate of economic growth."
Liu said that despite encouraging growth in sectors of the
general services industry, such as the catering trade, the
variations in China’s economic topography see many regions far from
ready to accommodate high-end value-added services, such as
finance.
"Our economic reality must be contended with. But I do hope the
country can make bigger strides in developing the services sector,
which is in line with China's future needs," Liu added.
One of the steps outlined by the State Council is for livelihood
sectors, such as real estate, non-state nursing homes for the aged
and culture, to be boosted.
To address the gap between rural and urban areas, China’s
cabinet is pressing for the development of the services industry in
rural areas, such as increasing farmers' incomes and a relaxation
of the urban household registration system.
(China Daily March 29, 2007)