Service Industry in China
Autor: yy12388 • October 24, 2015 • Essay • 1,571 Words (7 Pages) • 1,212 Views
Service industry in China
Service industry, also known as tertiary industry, is the one which provides services rather than goods. The tertiary industry is mainly divided into two categories. The first is made up of companies that are in the business of making money, for instance, the banking sectors. The second comprises the non-profit segment, which includes services such as state education (Jones, 2013). In China, there are a variety of categories in service industry and the composition in 2011 is shown below.
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Furthermore, the service industry plays a significant role on the total output, which accounted for approximately 45.4% of the GDP in 2012 and this figure reached 48% when in 2013. However, compared with other countries, the percentage of value added in service industry in China is still small. The table below illustrates the share of the tertiary industry to GDP of several developed countries and China in 2012 (NBSC, 2013).
Rankings: contribution of service industry to GDP | Rankings: GDP | Country | Percentage of service industry |
1 | 1 | U.S.A | 79.70% |
2 | 5 | France | 78.80% |
3 | 6 | U.K | 78.20% |
18 | 2 | China | 45.40% |
World Average | 63.60% |
As can be shown in the table, unlike in the most developed countries, the share of service industry in China was significantly below world average and the gap was 34.30% compared with U.S.A.
The impact of service industry on Chinese economy
Service industry in China has some features such as providing invisible products, short production chain, less intermediate input and steady growth in spending. The development of service industry is significant to economic growth.
Firstly, the improvement of proportion of service industry will reduce the negative effects that the inventory fluctuation brings. As for the demand of service industry, people do not need an intertemporal payment compared to purchasing the manufactures. The short production chain is able to transfer the information of demand rapidly to the producers to avoid devoting resources and blind production. These three factors contribute to the steady growth of economic.
Secondly, service industry needs to invest human capital, which may create more employment opportunities and increase the employment rate. Higher employment rate will result in higher output and GDP growth and higher living standard of people.
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