New Driving Force from the Service Industry to Create a New Engine for Growth

New Driving Force from the Service Industry to Create a New Engine for Growth

—Series Report V on the Economic and Social Development Achievements since the 18th CPC National Congress 

Source: National Bureau of Statistics 

Published on: September 20, 2022 Characters: 4845

Since the 18th CPC National Congress, the CPC Central Committee headed by Comrade Xi Jinping has attached great importance to the development of the service industry, and launched a series of reforms to foster and promote the development and growth of the service industry and to improve its quality and efficiency. Over the past ten years, the scale of China's service industry has continued to expand, its structure has been continuously optimized, new momentum has emerged, the happiness industry has benefited people for their livelihood, and the service industry has steadily transformed from high-speed development to high-quality development.

I. Steady Growth in the Total Volume to Take up of Half of the National Economy

Since the 18th CPC National Congress, the CPC Central Committee and the State Council have attached great importance to the development of the service industry, and have successively issued a series of policies and measures to encourage, support and cultivate the service industry economy. There has been a virtuous development in the service industry which takes up of half of the national economy, and it has become the main force to support and stimulate economic development.

(I) Consolidation of the pattern of the service industry as the "main force" for growth

Since the 18th CPC National Congress, China has accelerated the transformation of the economic development mode, continued to deepen the adjustment of the economic structure, continuously optimized and upgraded the industrial structure, and achieved rapid growth in the service industry which has become increasingly important in the stable development of the national economy. From 2012 to 2021, the added value of China's service industry increased from RMB 24.4856 trillion to RMB 60.968 trillion. Calculated at constant prices, the AAGR from 2013 to 2021 was 7.4%, which was 0.8 and 1.4 percentage points higher than the AAGR of the gross domestic product (GDP) and the secondary industry respectively. In 2012, the added value of the service industry accounted for 45.5% of GDP, surpassing the secondary industry for the first time. It has remained above 50% since 2015, and reached 53.3% in 2021, 13.9 percentage points higher than the secondary industry. From 2012 to 2019, the contribution rate of the service industry to GDP increased from 45.0% to 63.5%, an increase of 18.5 percentage points. In 2020, under the impact of the COVID-19 pandemic, the service industries of contact and aggregation were greatly affected. The contribution rate of the service industry to economic growth has dropped to 46.3%, but it still ranks first among the three industries. Following 2020, the service industry has shown strong resilience in fighting against the pandemic, and its contribution rate increased to 54.9% in 2021, providing important support for the sustainable and stable recovery of China's economy.

(II) Highlight of the role of the service industry as the "main channel" for job creation

Since the 18th CPC National Congress, with the continuous improvement of industrialization and urbanization in China, the scale of employment in the service industry has expanded rapidly, and the proportion of its employed persons has steadily increased, and thus it has become the leading force in job creation. From 2013 to 2021, the cumulative number of employed persons in the service industry increased by 83.75 million, with an AAGR of 3.0%, or an average annual increase of 9.31 million. In 2021, there were 358.68 million people employed in the service industry, accounting for 48.0% of the total number of people employed in the country, an increase of 11.9 percentage points over 2012.

(III) The enhancement of the role of the service industry as the "main platform" for expanding investment

Since the 18th CPC National Congress, China has accelerated the implementation of various policies and measures for structural adjustment, mode transformation, and upgrading. The investment strategy of the three industries has become more optimized, and the ability of the service industry to attract investment has been further improved. From 2012 to 2021, the investment in fixed assets in the service industry (excluding rural households, the same below) increased from RMB 16.7781 trillion to RMB 36.2877 trillion, with an AAGR of 8.9% from 2013 to 2021, and its proportion in total fixed asset investment remained at more than 60%, reaching 66.6% in 2021. With the continuous reduction of the negative list for foreign investment access, the construction of pilot free trade zones and the comprehensive pilot program of expanding opening up the service industry have been further advanced, and the service industry has become a hot field for attracting foreign investment. In 2021, the actual use of foreign investment in China's service industry reached RMB 906.5 billion, a year-on-year increase of 16.7%, accounting for 78.9% of the total actual use of foreign investment, an increase of 30.7 percentage points from 2012;  the service industry accounts for 91.2% of newly established foreign-invested enterprises, among which the year-on-year growth rate of newly established foreign-invested enterprises in the scientific research and technical service industry reached 42.0%. The high-tech service industry is gradually becoming the key field of foreign investment.

II. Continuous Improvement of Industrial Structure to Demonstrate New Coordinated Development

Since the 18th CPC National Congress, China's service industry has experienced steady and high-quality development, driven the increasingly coordination and optimization of industry structure, industrial structure, and regional structure, and played a positive role in stabilizing growth, adjusting structure, benefiting people's livelihood, and promoting development.

(I) Flourishing modern service industry

Since the 18th CPC National Congress, with the in-depth advancement of supply-side structural reforms and the rapid development of information technology, the modern service industry has accelerated its advancing steps, and has become an important driving force for the growth of the national economy, the transformation of production and lifestyle, and the transformation and upgrading of industries and coordinated development. In 2021, the added value of the information transmission, software and information technology service industry, financial industry, leasing and business service industry respectively accounted for 7.2%, 15.0% and 5.8% of the added value of the service industry, an increase of 2.3, 0.6 and 1.4 percentage point from 2012. From 2013 to 2021, the AAGR[2] of operating income of enterprises above designated size [1] in Internet and related services, software and information technology service reached 30.1% and 19.5% respectively, far exceeding the AAGR of 11.9% of service enterprises above designated size. China is accelerating the promotion of green and low-carbon transformation, and the energy-saving and environmental protection service industry keeps emerging. From 2013 to 2021, the average annual operating income of environmental sanitation management enterprises above designated size related to ecological resource monitoring, environmental treatment, and the comprehensive utilization of urban and rural domestic waste increased by 22.5%, 13.4%, and 17.8% respectively.

(II) Continuously deepening of industrial integration

In recent years, there has been three times of continuously deepening of industry integration and development in China. As a typical representative, supply chain management provides integrated supply, manufacturing, logistics, sales and other upstream and downstream chain services, which effectively reduces enterprise costs and improves enterprise efficiency. In 2021, the operating income of supply chain management service enterprises above designated size reached RMB 132.4 billion, which is 3.0 times that of 2018. The division of labor is sub-divided to promote the professional development of relevant sectors in the primary and secondary industries, and human resources services developed rapidly. At the end of 2018 (the time of the fourth national economic census), there were 186,000 human resource service enterprise legal entities, of which labor dispatch enterprises accounted for 68.3%; from 2013 to 2021, the AAGR of operating income of human resource service enterprises above designated size was 18.9%, 7.0 percentage points higher than the AAGR of all service enterprises above designated size.

(III) Healthy growth of productive and life service industries

Since the 18th CPC National Congress, China's productive service industry has accelerated towards specialization and helped boost industrial transformation and upgrading; the consumer service industry has continued to extend to high-quality service to improve the quality of general public life. In 2020, there reached 290,000 productive service enterprises above designated size in China, with 26.88 million employees, total assets of RMB 110 trillion, and operating income of RMB 84 trillion; among them, the operating income of the information service industry increased by 18.0% year-on-year, 6.8 percentage points higher than that of production service industry year-on-year, and its role in promoting manufacturing industry upgrading and efficiency improvement has continued to increase. There reached 330,000 life service enterprises above designated size, with 28.5 million employees, total assets of RMB 140 trillion, and operating income of RMB 32 trillion; among them, the upgrading services that meet the physical and mental health needs of residents grew rapidly, including life and households, health, sports, culture, etc., with operating income increasing by 9.3% year-on-year, 7.6 percentage points higher than the life service industry year-on-year.

(IV) The accelerated development of the central and western China

Since the 18th CPC National Congress, the regional development pattern of the service industry has become more optimized and coordinated. In 2021, among the 31 provinces (autonomous regions and municipalities directly under the central government) in China, there were 21 regions where the added value of the service industry accounts for more than 50% of the regional GDP, a sharp increase as compared to only 4 regions in 2012. In particular, Central and Western China has benefited from policy support such as industrial transfer and upgrading, the vitality and resilience of economic development has continued to emerge, and the quality of service industry development has improved significantly. From 2013 to 2021, 7 of the top 10 provinces (autonomous regions) with the highest AAGR of the added value of the service industry are located in Central and Western China, with an AAGR higher than 8.8%; in 2021, 7 of the top 10 provinces (regions) with the highest year-on-year growth rate of the added value of the service industry are located in the Central and Western China, and all of their growth rates are higher than the national rate.

III. Multiple New Highlights of the Driving Force to Activate a "New Engine" for Economic Growth

Since the 18th CPC National Congress, new entities in the service industry have been given full display of vitality, new drive force has grown vigorously, new consumption has led to consumption upgrades, and the industry has been further opening up. The service industry has become a new engine for the long-term sustainable and healthy development and optimization and upgrading of the national economy.

(I) The unleashing of vitality of new entities in the service industry

Since the 18th CPC National Congress, China has deepened the reform of "replacing business tax with value-added tax" and "streamlining administration, delegating power, strengthening regulation, and improving services", continuously lowered market access thresholds, and strove for optimizing the business environment. The vitality of innovation and entrepreneurship in the service industry has been continuously strengthened, and there has been a significant increase of market players. From 2012 to 2020, the number of legal entities in China's service industry increased from 7.23 million to 21.66 million, with an AAGR of 14.7% from 2013 to 2020, 1.1 and 5.6 percentage points higher than the AAGRs of all legal entities and the secondary industry, respectively. In 2021, there were 7.26 million newly established enterprises in the service industry, accounting for 80.3% of the total number of newly established enterprises. Service industry has become the main source of newly established enterprises. As of the end of 2021, there reached more than 100 million registered self-employed businesses across the country, of which the service industry accounts for 90.2%.

(II) "Internet Plus" stimulating new momentum in the service industry

In recent years, China has actively promoted the "Internet Plus" strategy to help the integration and advancement of the Internet and various industries, and to cultivate and strengthen the new momentum of the service industry.  In 2021, mobile Internet data reached 221.6 billion GB, 252 times that of 2012; the Internet penetration rate increased from 42.1% to 73.0%. As of the end of 2021, China had built and opened a total of 1.425 million 5G base stations, and constructed the world's largest 5G network. The total number of 5G base stations accounts for more than 60% of the world. E-commerce has entered a golden era. In 2021, the national e-commerce transaction scale reached RMB 42 trillion, with an AAGR of 20.3% from 2013 to 2021. Driven by e-commerce, the express delivery industry has grown rapidly as well. From 2013 to 2021, the national postal business revenue and express business revenue increased by an average of 22.9% and 28.9% respectively; in 2021, the national express business volume reached 108.3 billion, which is 19 times that of 2012.

(III) New consumption to boost consumption upgrading

In recent years, under the background of the deep integration of 5G, artificial intelligence, and the Internet of Things, healthy consumption, green consumption, and online consumption have developed rapidly. Domestic brands have become a consumption trend, and cost-effective consumption has become the mainstream. From 2015 to 2021, the AAGR of online retail of physical goods reached 25.4%, which is 17.5 percentage points higher than the AAGR of total retail of social consumer goods; in 2021, the proportion of online retail of physical goods in total retail of social consumer goods is 24.5% of the total retail of social consumer goods,15.3 percentage points higher than 2014; relevant data shows that in the past five years, the proportion of searches for Chinese brands has increased from 45% to 75%, which is three times that of overseas brands.

(IV) In-depth expansion of the opening up of service industry

Since the 18th CPC National Congress, China has accelerated the construction of a new system of open economy. The service supply capacity and demand level have been significantly enhanced, and both the scale and quality of the opening up of the service industry have been improved. From 2012 to 2021, China's total import and export of services increased from RMB 3.0422 trillion to 5.2983 trillion, with an AAGR of 6.4% from 2013 to 2021. The structure of trade in services continued to be optimized, and the competitiveness of imports and exports of knowledge-intensive services was significantly enhanced. In 2021, the import and export of knowledge-intensive services reached RMB 2.3259 billion, with an AAGR of 9.3% from 2013 to 2021, and its proportion in the total import and export of service trade increased from 33.6% in 2012 to 43.9% in 2021.

IV. The Accelerated Development of the Happiness Industry to Display a "New Picture" of Better Life among People

Since the 18th CPC National Congress, China's happiness industry has accelerated its development, and people's livelihood and well-being have greatly advanced. According to the "Human Development Index (HDI)" released by the United Nations, China scored from 0.699 in 2012 to 0.761 in 2020, developing from a "medium-ranked country" to a "high-ranked country" in terms of HDI rating.

(I) Coordinated development of "digital + culture"

Since the 18th CPC National Congress, China's cultural industry has entered a new stage of comprehensive innovation and development. "Digital + culture" has spawned a large number of new business formats in the cultural field, cultural innovative products of museums are becoming popular, and new cultural innovative products have become a new highlight of consumption. In 2020, the added value of the national cultural and related industries reached RMB 4.4945 trillion, accounting for 4.4% of GDP, an increase of 0.6 percentage points over 2014; among them, the added value of the cultural service industry reached RMB 2.8874 trillion, accounting for 64.2% of the added value of cultural and related industries, an increase of 15.6 percentage points over 2014.

(II) The accelerated construction of a pension service system

With the furthering of an aging society, the demand for elderly care services continues to grow. Since the 18th CPC National Congress, the central government has invested a total of nearly RMB 30 billion to accelerate the construction of a pension service system covering both urban and rural residents. By the end of 2021, there reached a total of 340,000 elderly care institutions and facilities of various types, and the total number of beds has doubled compared with 2012. It has basically achieved full coverage of community elderly care service facilities; the lagged rural elderly care service is being dealt with. The county-level support service institutions for the extremely poor have achieved full coverage, and mutual-aid service facilities have grown from scratch to more than 130,000, providing entertainment, catering, chronic disease management and other services for rural elderly residents; by the end of 2021, the national basic pension insurance coverage exceeded one billion people.

(III) The acceleration of the building of a leading sports nation

"Competitive sports symbolizes a powerful nation, and national prosperity is demonstrated in the prosperity of sports." Since the 18th CPC National Congress, the CPC Central Committee headed by Comrade Xi Jinping has attached great importance to sports development, raised national fitness to a national strategy, and accelerated the building of a leading sports nation. In 2020, the total output of the national sports industry reached RMB 2.7372 trillion, with an added value of RMB 1.0735 trillion. Wherein, the total output of the sports service industry reached RMB 1.4136 trillion, with an added value of RMB 737.4 billion, accounting for 68.7% of the added value of the sports industry; from 2013 to 2021, the operating income of sports enterprises above designated size increased by an AAGR of 8.4%; and as of the end of 2021, the number of sports venues across the country reached 3.97 million, and the per capita sports venue area reached 2.4 square meters.

(IV) The continuous enhancement of public services

Since the 18th CPC National Congress, China has vigorously promoted education, culture, medical care, social security, and other inclusive, basic, and comprehensive construction for people's livelihood, and has made new achievements in children care, education, and medical care. As the supply-side structural reform of public services is furthered, the level of equalization of basic public services has continued to increase. Education and cultural life both flourishes. In 2021, the consolidation rate of nine-year compulsory education and the gross enrollment rate of senior high school reached 95.4% and 91.4% respectively, 3.6 and 6.4 percentage points higher than in 2012; by the end of 2021, there were 3,215 and 5,772 public libraries and museums respectively, 139 and 2,703 more compared with the end of 2012. Health care programs are advancing steadily. By the end of 2021, there were 1.03 million medical and health institutions, 9.45 million beds, and 11.24 million health workers across the country, 80,000, 3.72 million, and 4.57 million more compared with the end of 2012. The basic insurance covers more than 1.3 billion people. Since start of the COVID-19 two years ago, China's vaccination has progressed in an orderly manner, its nucleic acid detection capabilities have been greatly improved, and a strong line of life defense has been established. As of the end of 2021, a total of 2.84 billion doses of COVID-19 vaccines have been reported nationwide, and the total detection capacity of nucleic acids has reached 41.68 million copies per day.

Since the 18th CPC National Congress, China's service industry has fully displayed its vigor and vitality, and has become a pillar industry to promote high-quality economic development. At present, China is accelerating the construction of a new development pattern with the domestic market as the mainstay while letting domestic and foreign markets reinforce each other. With the further improvement of the policy support system and the continuous upgrading of the new round of technological revolution, the release of market vitality and innovation power is accelerated. China's service industry will usher in a larger market and more opportunities. The quality and efficiency of the service industry is expected for further improvement with higher quality, higher efficiency, better structure, and high competitiveness, and the industry will continue to provide solid support for the high-quality development of China's economy.

Note:

[1] The scope of service industry enterprises above designated size includes: legal entities with an annual operating income of RMB 20 million and above in transportation, warehousing and postal services, information transmission, software and information technology service industries, water conservancy, environment and public facility management industries, and legal entities in health industry; legal entities with an annual operating income of RMB 10 million and above in the real estate industry (excluding real estate development and operation), leasing and business service industries, scientific research and technical service industries, and education; legal entities with an annual operating income of RMB 5 million in resident services, repairs and other services, culture, sports and entertainment, and social work. It excludes legal entities in the financial industry, wholesale and retail industry, accommodation and catering industry, and real estate development and operation industry. The following categories of industries and sectors above designated size refer to enterprises in related service industries and sectors that meet the above standards.

[2] The annual average operating income growth rate is calculated based on the annual report operating income growth rate of service enterprises above designated size from the base year to 2021, and the operating income growth rate in 2021 is calculated according to the bulletins of operating income growth rate from January to December 2021, the same below.