Service sector vital to macro-economy
By Fu Jing (China Daily)
Updated: 2004-05-25 00:41

China should foster growth of its service sector through more positive policies that will aid sustainable development of the national economy.

That was the assessment of Ou Xinqian, vice-minister of National Development and Reform Commission in an interview with China Daily Monday.

Ou said China needs a thriving tertiary industry on its way to full industrialization.

"We used to ignore the development of the tertiary industry and mistake development of manufacturing for industrialization," said Ou. "But in fact, if there is no backing away from tertiary industry, or there is no healthy industrialization."

She said experiences from developed countries should be learned in the endeavor.

She stressed that the State will ease restrictions on market access and open sectors like foreign trade, tourism, banking, insurance, and other area gradually, in line with World Trade Organization rules.

The country will also encourage capital from various channels to the service sector and speed up reforms of railways, airlines, telecommunications, and public utilities.

The government's latest efforts are focused on the coming China International Conference on Tertiary Industry, which is scheduled to be held in Beijing between June 30 and July 3.

Ou's commission, the highest authority monitoring China's economic and social development, is an active organizer of the event. The organizing committee said financial service, logistics, tourism and intermediary service are the major areas of government concern.

"The sectors are essential to the development of China's industrialization," said Ou.

But China's tertiary service is lagging far behind the world's average level.

Total output of China's tertiary services accounted for just 32.3 per cent of the country's entire economy. But the average rate for a developing country is about 45 per cent. The average rate in the industrialized world is as high as 60 per cent.

But economists said domestic enterprises should be well prepared to face the challenges brought by foreign rivals.

"When external pressures intensify, an improvement in industrial infrastructure is crucial to the development of the national economy. But now the underdevelopment of the tertiary industry has become the bottleneck of China's economy," said Chen Zifang, an economist specializing in the service industry.

Mao Yishi, head of the Unirule Institute of Economics, said China's accession to the WTO has heaped further pressure on the service sector and it will play a key role in guaranteeing the healthy development of China's economy.

He said the country had been relying heavily on investment, consumption and foreign trade as stimuli for economic growth. But the downturn of the world economy, the depression of consumer demand, and worries about losses means the government is increasingly looking to the service sector to achieve sustainable economic growth.

A grave employment situation in China and the flow of rural people to cities are two more reasons why China should pay more attention to the service industry, he added.

Mao also urged the government to adopt specific measures to enable domestic capital to enhance its competitiveness.

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