The Growth of China’s Services Sector and Associated Trade

The document analyzes the structural transformation of the Chinese economy, noting that the tertiary industry's share of GDP rose from over 20% in 1978 to around 40% by 2007. While trade in services is growing rapidly—exceeding US$190 billion in 2006—China remains a net importer with a deficit primarily driven by transportation, insurance, and royalties. The authors argue that the service sector's development is inextricably linked to urbanization and the creation of productive cities. They identify challenges including weak international competitiveness in high-end producer services and a reliance on foreign direct investment that targets the domestic market rather than offshoring. The paper recommends relaxing migration restrictions to cities and increasing competition from both domestic and foreign sources to drive innovation and productivity.

• China's tertiary industry has experienced significant growth, with its share of GDP increasing from over 20% in 1978 to approximately 40% by 2007, and an annual average value-added growth rate of 10.8% during that period.
• Trade in services in China is expanding rapidly, with total trade exceeding US$190 billion in 2006, which is 2.7 times the size it was in 2001.
• China is a net importer of services, recording a deficit exceeding US$8.8 billion in 2006, largely due to transportation, insurance services, and royalties and license fees.
• Foreign direct investment (FDI) in the service sector reached US$19.5 billion in 2006, with over 70% of this capital utilized by the business services sector.
• China's international competitiveness in services is considered weak, with revealed comparative advantages (RCA) limited primarily to resource- and labour-intensive sectors like tourist and construction services.
• The 11th Five-Year Guidelines set specific targets for 2010, including increasing the service industry's share of GDP by 3% compared to 2005 and reaching a total trade in services volume of US$400 billion.
• Investment in anti-pollution projects grew at an annual average rate of 21% during the 10th Five-Year Plan, rising from over 110 billion yuan in 2001 to over 238 billion in 2005.
• Research suggests that between one-half and two-thirds of Chinese cities were undersized, and relaxing migration restrictions could increase output per worker by reducing the loss currently estimated at 30% for undersized cities.
• China's liberalization of services under GATS is more advanced for cross-border supply (Mode 1) and consumption abroad (Mode 2) than for commercial presence (Mode 3) and the movement of persons (Mode 4).

APA

Liping, Z., & Evenett, S. J. (2010). The Growth of China’s Services Sector and Associated Trade. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/sts_4_growth_china_services_sector.pdf

Chicago

Liping, Zhang, and Simon J. Evenett. The Growth of China’s Services Sector and Associated Trade. International Institute for Sustainable Development, 2010. https://www.iisd.org/system/files/publications/sts_4_growth_china_services_sector.pdf.

Wikipedia

{{cite report |last1=Liping |first1=Zhang |last2=Evenett |first2=Simon J. |title=The Growth of China’s Services Sector and Associated Trade |publisher=International Institute for Sustainable Development |date=July 2010 |url=https://www.iisd.org/system/files/publications/sts_4_growth_china_services_sector.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{liping2010growth, author = {Liping, Zhang and Evenett, Simon J.}, title = {{The Growth of China’s Services Sector and Associated Trade}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = jul, url = {https://www.iisd.org/system/files/publications/sts_4_growth_china_services_sector.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }