Services Get Policy Boost

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Manufacturing has long been the big story in China, but services are set to get an official boost, with a new “leading group” for the sector being set up at the National Development & Reform Commission (NDRC) – with similar orders for provincial governments – by the State Council. According to the FT:

    “The move is a signal of Beijing’s increasing determination to expand the role in the economy played by the service sector in order to create non-agricultural jobs, cap sensitive export growth and ease strains on resources and the environment.

    The cabinet policy restates Beijing’s target of raising the proportion of gross domestic product accounted for by services by 3 percentage points between 2005 and 2010.

    Services accounted for about 39.9 per cent of GDP in 2005, but the proportion fell to around 39.3 per cent last year, say state media.

China Daily notes that this move, and the related guidelines, represent a “substantial breakthrough” in the fight against monopolies and that they call for “encouraging competition and investment in telecommunications, railways and airlines.”

This may seem a heady mix of added-value activities and market competition, but it is another signal of the government’s desire to make progress in the management of a range of difficult economic, social and political challenges. As is often the case, policy comes before progress.

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