ABSTRACT
The services sector was neglected in most communist (socialist) countries,
including China, prior to the economic reforms. Therefore, there has been
tremendous scope for its expansion even before China’s accession to the WTO.
As we discussed in Chapter 3, a shift in labour force from agriculture to
manufacturing has already been taking place during the past decades. Most
observers predict a tremendous growth of employment in the services sector
following accession. Due to the underemphasis or neglect of consumer services
in socialist countries, the share of this sector in GDP is rather low. Also,
producer services (e.g. sales, marketing, management, and consultancy services)
were either underdeveloped or included under manufacturing. Similarly,
business-related services such as finance and insurance are still quite small
(see Figure. 6.1). Furthermore, the sector is quite heterogeneous, and many
services are labour-intensive, non-tradeable and within proximity of consumers,
features which lend themselves to greater labour absorption.
