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By Yu Bin and Wu Zhenyu, Department of Macroeconomic Research, the Development Research Center of the State Council (DRC)

Research report No 89, 2014 (Total No 4588)

Abstract:

The GDP of the service industry and its contribution to economic growth was greater than that of secondary industries, in 2013, which is a sign that there has been a historic shift in China's economic structure. Service industry products are characterized by a short production chain, few intermediates, and increasing expenditures and they requires a real-time supply and demand balance, and are slow in increasing efficiency.

The industry's increased percentage of GDP will influence economic growth and operations and reduce the speed of investment and technological progress, and, ultimately, growth. It will reduce stocks, promote steady increase in consumer spending, and halt economic fluctuations, while increasing employment and relieving the country of the employment structure problems. It will also encourage enterprises to integrate resources by "going out" and change China's traditional relations with foreign economies and trade.

As the service industry’s percentage of GDP increases, the country will need to adjust its economic goals in a more reasonable, scientific way, and improve statistics gathering with a monthly index. If it makes a greater effort to develop the service industry, China can improve its economic efficiency and be more innovative in opening up to the outside world.