The growth of the services sector should be accelerated and opened wider to private and foreign investors, the State Council has said.

Market access for such sectors as telecommunications, railways and civil aviation - by far largely state-owned - will be increased and more competition encouraged to diversify investment, the Cabinet said in a document released yesterday.

The country will establish an "open, fair and rule-based" market access system, according to the document, which urged local governments and departments to encourage foreign investment and improve the legal framework in the sector.

 

Private investors are encouraged to "raise the proportion of non-State output in the national services industry".

 

No domain should be off-limits as long as the law does not forbid the entry of non-State investors, the document said.

 

The State Council said the services trade should be encouraged to change the foreign trade growth pattern, which comprises mainly exports of low-end manufactured goods.

 

Some local governments were criticized for tilting toward heavy industries and ignoring the services sector, which made up 40.2 percent of China's gross domestic product (GDP) last year. It generally accounts for about 70 percent in developed economies.

 

The service sector will shift the growth of the economy from an industry-driven pattern to one that relies on domestic demand, reducing pressure on the environment and exports.

 

The sector is important for China as it makes efforts to change its economic growth pattern, reduce consumption of energy and resources and create jobs, the document said.

 

Given those benefits, "developing the services sector is imperative for China," Liu Xiahui, an economist with the Chinese Academy of Social Sciences, told China Daily.

 

"But for the moment, it still has to rely on the industrial sector to generate more tax revenues and achieve a high rate of economic growth."

 

Liu said while the general services industry, such as the catering trade, has grown fast, many regions are not developed enough to accommodate high-end value-added services, such as finance. "We cannot ignore our economic reality."

 

"But I do hope the country can make bigger strides in developing the services sector, which is in line with China's future needs," Liu added.

 

As one of the steps, the State Council urged more input into sectors oriented toward people's livelihood, such as real estate, non-State nursing homes for the aged and culture.

 

The cabinet put special emphasis on the services industry in rural areas, urging an increase in farmers' incomes and a relaxation of the urban household registration system.

 

(China Daily March 29, 2007)