China’s National Bureau of Statistics updated its official website in mid-April stating that its service industry is the driving force of China’s economic development. In 2017, the GDP of the Chinese service industry (a tertiary industry) reached 42 trillion 703 billion CNY, accounting for 51.6% of the country’s total GDP. This figure is 11.1% higher than the 40.5% of the next largest industry. In addition, it has been said that the value of the (digital) economic scale has reached 32.9%. Because of this, various sites such as the news website “Yi Gang”, “China Economic Network”, and others, have posted articles analyzing the subject.
A Service Industry that Contributes to the National Economy
In 2017, the growth contribution to the GDP of the service industry was 8.0%, 1.1 points higher than the overall growth of 6.9%, meaning that the service industry has surpassed the growth of the next largest industry for five consecutive years. Its contribution to the economic growth rate was 58.8%, 1.3 points higher than the previous year.
Within the service industry, software and information technology services showed a large growth value of 26.0% with rental and business services increasing by 10.9%. In addition, sales of service companies on a standardized scale have grown steadily by 13.6% with profits growing by 16.1%. Furthermore the cost to raise incomes by 100 CNY is 93.62 CNY, down 0.47 CNY from 2016, which is the lowest it has been in the last three years.
As a result, the service industry’s contribution to the national economy has become prominent and accounts for 56.1% of total tax revenues, a significant 9.9% increase from the previous year.
The Three New Economic Elements that Account for 15% of China’s GDP.
The manufacturing industry (a secondary industry) accounted for 40.5% of the GDP, which is still a considerable amount. However, it has only had a few instances of media coverage.
2013 to 2017: The Average Annual Growth Rate of the Advanced Technology Manufacturing Industry- 11.7%
2015 to 2017: The Annual Growth Rate of the Emerging Strategic Manufacturing Industry- 10.5%
2013 to 2016: Investments in the Advanced Technology Manufacturing Industry, Average Annual Growth rate- 14.8%
2013 to 2016: The Average Annual Investment in the Equipment Manufacturing Industry- 13.4%
Based on the above numbers, the growth rates of the manufacturing and service industries match and both seem to be doing well. Meanwhile, references to agriculture (a primary industry) accounting for 7.9% of the GDP, are not seen at all.
Instead of the agriculture industry, the National Bureau of Statistics has, for the first time, picked up on three new ecomonic elements- new business models, new industries and new schematics. According to them, these three new elements amounted to 11,037.1 billion CNY in 2016, equivalent to 15% of the GDP. The proportion of these 3 new economic elements to the service industry is said to be 52%. This value has not been verified.
Perhaps they have incorporated them as a way to introduce new concepts into economic statistics.
The Service Industry: “The Central Stage” for Investment and Trade
The National Bureau of Statistics has also mentioned the momentum of the service industry. In 2017, the number of newly registered companies was 16,600 a day on average, of which 80% were service industries. In the period from 2013 to 2016, the number of newly registered companies in the service industry increased to 128.3 million companies, and the average annual growth rate was 31.5%. Now, the service industry is the “central stage” for fixed asset investments.
Investment into the service industry increased by 9.5% in 2017, accounting for 59.4% of total fixed asset investments. Furthermore, the service industry is increasing its imports and exports. In 2017, the share of imports in the service sector totaled 14.5%, an increase of 3.4 points from 2012. As a result, exports of technology-related services increased by 30% and intellectual property royalties rose by 316.6%.
China’s overseas investments, foreign investments into China, and its service industry exceeded 50% of its fixed assets. This year’s Boao Asia Forum (Hainan Island) also emphasized that China clearly showed a willingness to open up its financial markets for the future growth of the service industry.
Recently, Yi Gang, the new chairman of the People’s Bank of China (a central bank) has been moving towards opening China’s financial industry to the world. Following this will be the service industry, which can be said to act as the main mechanism for opening a country’s doors. The service industry has taken on a leading role in China’s commerce and has the potential to situate itself in the center of world trade. Though this may seem like a small move to Japan, it should not be overlooked. (Takano Yusuke, a Chinese trade consultant)
(By ZUU Japan)
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