China’s Economy Rebalancing Just Fine
Services now account for 50% of China’s GDP, up from 42% 10 years ago, according to World Bank data. This continuing shift may indicate the government’s planned move toward services, innovation, and household consumption as the new economic drivers is going along to plan.
Source: World Bank, World Databank, as of 2015.
Bloomberg reports there are already more than 300 million people working for chinese services companies in retail, restaurants, hotels, and real estate. But the size of the service sectors in both developed and developing nations around the world suggests China still has significant room to grow.
The United States, for example, derives almost 80% of its GDP from services, according to Central Intelligence Agency data. Japan and Germany get more than 71% each, while the United Kingdom and France are both near 80%.
Fellow emerging market countries Brazil, Russia, and India also have greater service sector contributions than China, deriving 67%, 60% and 57% of their GDP from services respectively.
This is a lead China wants to follow, with the country’s 13th Five-Year Plan making raising the service sector’s contribution to GDP a priority. It’s anticipated by China’s leaders that growth driven by consumption and services can drive it to become a high-income nation.
– Business Insider