China should foster the growth of the service sector through more positive policies to achieve sustainable development of the national economy and strengthen the competitiveness of domestic businesses against foreign rivals, senior economists have urged.
"When external pressures intensify, an improvement in industrial infrastructure is crucial to the development of the national economy. But now the underdevelopment of the tertiary industry has become the bottleneck of China's economy," said Chen Zifang, an economist specializing in the service industry.
Mao Yishi, head of the Unirule Institute of Economics, said China's accession to the World Trade Organization (WTO) has heaped further pressure on the service sector and notice from the State Development Planning Commission (SDPC) has shown the need for urgent development.
The notice, which was made public on Monday by the State Council, is the only one specially formulated for the tertiary industry by the central government in the past 10 years. It provides a blueprint for the service sector during the 10th Five-Year Plan period from 2001 to 2005.
It says the State will ease restrictions on market access; open sectors of foreign trade, tourism, banking, insurance, and others gradually; encourage big cities to allocate more resources to subsidiaries; encourage capital from various channels to the service sectors; and speed up reforms of railways, airlines, telecommunications, and public utilities.
Statistics show the average growth rate of the tertiary industry from 1991 to 1998 was just 15 percent. This was lower than the 20 percent of the manufacturing industry and its share in the gross domestic product in 1998 was about one third, almost 30 percent lower than the average of developed countries.
Zhang Xueying, a senior expert of industrial economics with the State Information Centre, said the service sector will play a key role in guaranteeing the healthy development of China's economy.
He said the country had been relying heavily on investment, consumption and foreign trade as stimuli for economic growth. But the downturn of the world economy, the depression of consumer demand, and worries about losses meant the government was increasingly looking to the service sector to achieve sustainable economic growth.
Unemployment resulting from fierce competition with foreign companies following China's WTO membership and the flow of rural people to cities are two other reasons why China should pay more attention to the service industry, he added.
Economist Mao also urged the government to adopt specific measures to enable domestic capital to enhance its competitiveness.
