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Seek service-led growth
(China Daily)
Updated: 2008-02-26 07:27

The service sector witnessed its fastest growth in more than a decade last year. Yet, it was still not fast enough to support the transformation of the country's growth pattern into an energy-saving, environment-friendly and sustainable one.

Vice-Premier Zeng Peiyan touched on the necessity of speeding up the development of the service sector in an article published in the People's Daily on Sunday.

Such calls for efforts to build the service sector into a key growth engine of the national economy are more than welcome.

The total output of the service sector expanded to 9.6 trillion yuan ($1.34 trillion) in 2007, up 11.4 percent year-on-year. While the sector was growing at its fastest pace since 1996, its share of the GDP, however, continued to decline due to the sizzling growth of the industrial sector. Statistics show that the service sector accounted for only 39.1 percent of China's GDP last year, 0.3 percentage points lower than in 2006.

As a rising global manufacturing power, China is keenly aware of the increasing environmental costs and other deficiencies of energy-and-resources intensive growth.

In a bid to both upgrade its industrial structure and reduce energy intensity and pollution discharges, the government has set a target to increase the service sector's share of the GDP by 3 percentage points by 2010.

A sound service sector is essential to the advancement of modern economies. According to the World Bank, services account for about 60 percent of global GDP and topped 70 percent in developed countries.

With a per capita GDP of more than $2,000, China is now positioned for its service sector to undergo a period of fast development.

The benefits of fast service-led growth are obvious.

A labor-intensive sector, services have created about 60 million new jobs since 2000 and will continue to absorb most of the 10 million new laborers the country will have each year.

And as a knowledge-intensive one, the service sector will not only create growth with a lower cost in resources, but also provide the services needed to help the country consume fewer resources and emit less pollution.

This year will present big chances to boost the service sector because the country will rely more on domestic consumption than export-led industrial investment for economic growth.

But to decisively reverse the decline of the service sector as a share of GDP, policymakers should press ahead with economic reforms in an all-round way to create a favorable environment for all kinds of service-providers.

(China Daily 02/26/2008 page8)



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