The services sector will be tomorrow’s fastest-growing industry in China, boosted by the internet and various forms of new technology, and will offer a growing abundance of opportunities for domestic firms.
But for the services sector to fully play its part in pumping up the economy, the government may need to give more policy focus and support for what could be the primary driver of China’s economic growth in years to come.
China could become known globally for its services rather than other sectors, something that has long been associated with developed economies, notably the US.
With China’s economic development entering a new era, its services sector is going digital, focusing more on brand-building and favoring chain stores, as well as becoming integrated into the capital market.
There are three categories typical of the new services sector: software and information technology services and information transmission; rental and commercial services; and scientific research and technical services. And data from the National Bureau of Statistics shows that the combined value added of the three categories grew by 15.8 percent year-on-year in 2017, 7.8 percentage points more than for the overall services sector.
The new services sector also includes internet-remodeled housekeeping, nursing and other lower-skilled services, and there is a growing belief that this will result in positive changes to the structure of the Chinese economy.
Nevertheless, the services sector, and services related to daily living needs in particular, seem to have gained a disproportionately small amount of attention from the government, considering its huge contribution to the economy as measured by job creation and percentage of GDP.
In specific terms, the government should streamline the approval process and reduce the approval time for businesses in the new services sector, as well as lowering the financial requirements for new services businesses to be set up. Such efforts will help in creating a fairer and more favorable business climate in the services arena, ranging from high-tech services to warehousing and housekeeping.
Also, the government is expected to guide local businesses in formulating standards for new services, which will help with the sector’s development. The government could mull over ways to delegate local standard formulation in the sector, and set up funds specially for this effort.
The government should institute an effective mechanism for attracting talent to the services sector. This could involve easing home-registration rules for employees of internet and other high-tech firms, relaxing policies for enrolling their children in schools, and offering relevant businesses tax cuts to encourage the firms to retain employees.
Furthermore, the government could lead efforts to build an encompassing big data system for the new services sector, enabling the authorities to keep track of the latest trends so as to fine-tune policy focus. Companies could also use the system to verify the professional ethics and skills of all participants in the new services sector, allowing for worry-free consumption of the various new services.
China’s services sector still lags behind that of developed countries, especially the US, but with more government assistance it could make great strides. Since US services firms don’t necessarily move faster than their Chinese counterparts in terms of embracing new technologies such as artificial intelligence and robotics, Chinese-run services firms would have an opportunity to become future industry heavyweights.
It’s anticipated that more policy support would funnel capital into various niche areas of the new services sector, in which none of the firms have got listed so far. Such efforts could help even lower-skilled services become new calling cards for the Chinese economy.
The article was compiled based on a group interview on Sunday with Yao Jinbo, CEO of Chinese classifieds site 58.com and a deputy to the 13th National People’s Congress, about his motions submitted during the ongoing annual two sessions. firstname.lastname@example.org
– Global Times