Service sector key to future growth

In terms of consumer services, if China's urbanization rate can be raised from the 36 percent at present to 50 percent by 2020, about 400 million farmers will be added to the urban population, which will dramatically boost the demand for lifestyle-related services.

The growth in domestic consumption also represents huge potential for the development of the service industry. In 2013, the retail sales of consumer goods amounted to 23.4 trillion yuan, and this is expected to jump to 45 to 50 trillion yuan by 2020.

To promote the repositioning and reform of the service industry to ensure the realization of 55 percent, it is essential to further open up the service sector. The government should prioritize smashing the administrative monopoly and strengthening anti-monopoly reform in the service sector. At the same time, it should loosen the price control system so that the market decides the allocation of resources to the service industry.

Enhancing the quality and improving the capacity of the domestic free trade zones, and under the "Belt and Road" Initiative accelerating the construction of bilateral and multilateral trade zones with other countries and regions would also provide boosts for the development of the service industry in China.

The tax system needs to be reformed to encourage small- and medium-sized enterprises in the service sector, and there should also be support for the regulated development of non-government financial organizations, such as community banks and e-finance companies, as well as accelerated reform of the education system to lower the threshold for social funds going to occupational education.

Finally management over the negative list for foreign investments has been critical to speeding up the opening of the services market and realizing its development. Now it is time to roll out the negative list management across the country, which can be carried out over one or two years.

The author is president of China Institute for Reform and Development.