China’s service sector increasingly shouldering growth burden

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/09

China’s service sector grew by over 8 % in real terms last year, while industrial and construction output was up 6 % and primary production (mainly agriculture) just 4 %. Fuelled by high growth, the service sector last year contributed its highest share of economic activity ever, accounting for 50 % of GDP. Even so, China’s service sector is relatively small. While smaller shares can be found from African countries and petrostates, the service sector in advanced economies typically generates 70–80 % of GDP.

Structure of China’s service sector and real growth in 2015
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Source: China National Bureau of Statistics.

Finance and insurance have been the fastest growing branches within the service sector in recent years. In contrast, growth slowed last year in trade, transport, and accommodation and catering services. The “other” services category, which encompasses about 40 % of China’s service sector, has enjoyed robust growth and suggests a rapid expansion of public services. The most recent available figures from 2012 show about 60 % of “other” services are generated by public administration, education, health care and research activity.

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