CGTN:

The service industry producer index has maintained fast growth in the first quarter. And the contribution of the service industry to economic growth is bigger than that of secondary industry. What are your thoughts on the future development of the service industry? Thank you.

Xing Zhihong:

In 2012, the service industry in China surpassed the secondary industry, becoming the largest industry in China's economy. It has contributed greatly to economic development, serving as the main driving engine. Last year, the service industry accounted for 51.6 percent of China's GDP, contributing 58.8 percent to growth. And in the first quarter of 2018, it has maintained a fast growth rate, with proportion and contribution both increasing. China has entered a new phase of economic development driven by the service industry, representing the great progress China has achieved in economic transformation and upgrading. It reflects both the law of economics as well as profound adjustments to policy. The fast growth of the service industry in China is due to the following factors: 

First, the upgrading of the consumption structure provides a wider market for the development of the service industry. In accordance with international development experience and economic theory, the growth of the service industry is closely related to residents' income. Currently, China's per capita GDP in last year has reached nearly US$9,000, becoming one of the upper-middle income economies. With the growth of income, people's need for services has made an increasing impact. One of the obvious features of consumption in China is that, in addition to material goods, more and more people are spending money on services such as tourism, culture, education and health care, which injects fresh stimulus and driving force to the development of the service industry.

Second, the division of labor is deepening. The reconstruction of the supply chain, value chain and industrial chain has accelerated China's economic transformation from an industry economy to a service economy. China has now entered the middle and later stages of industrialization, heading toward the mid- and high-end markets. And during the upgrade of the value chain, the manufacturing industry itself creates much need for services with regard to research, design, marketing, management and logistics. It can also be noted from the statistics that technology, business and logistics services have produced new growth highlights.

Third, our efforts to deepen reform and opening-up have further unleashed the growth potential of the service sector. We have been continually expanding market access to the service sector. General Secretary Xi Jinping pledged in his speech at this year's Boao Forum for Asia that China would continue to increase openness, and the service sector is a focus of this endeavor. In fact, we have already set the openness of the service sector as a priority in developing pilot free trade zones. For example, we are easing the cap on foreign ownership in financial services, and the increasing foreign investment and investment from non-government sources in education and health care have given new impetus to the service sector. Additionally, private investment is booming, with a good deal flowing into the social domain.

Four, innovation has boosted the internal forces driving the development of the service sector. New forms and models of business created by the wide application of information technology have made the most salient impact on the service sector. E-health, online sharing and online education services have risen to prominence. Those new forms and models of business have played an important role in maintaining the rapid growth momentum of the service sector. Thank you.

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