chapter  2
The transition to producer services in China: opportunities and obstacles
ByPETER W. DANIELS
Pages 23

China’s service industries will be the nation’s most significant force for promoting economic development and the main channel for solving China’s employment problems.

(Hu Jintao, President of the People’s Republic of China 2004)

There is a growing roster of research on aspects of the services and economic development in Asia (see, for example, Kwan-yui 1998; Daniels 1998, 2001; Daniels and Qui 2007; Daniels and Harrington 2007; Daniels et al. 2005, 2012). This has increasingly embraced China where rapid economic growth has boosted average per capita income which has, in turn, been translated into burgeoning demand for consumer services (for recent discussion, see Peilin 2011). Service industries have become one of the key activities participating in the dramatic expansion and transformation of China’s large and numerous city-regions, especially those located along and adjacent to its coastal regions (Luo 2001; Gong 2002; Yang 2004; Lin 2005; Zhang 2006) but also increasingly in the central and western regions (Yeh 2011; Li 2011).1 Others have argued that there is still much to understand about what determines the wide inter-regional variations in the types of services available and access to them (Wang 2009) or, even if a tertiarization trend is present it is not significant, as measured by the service real value-added ratio or service employment and consumption (Cheng and Blanchard 2009). Indeed, and perhaps surprisingly, Cheng and Blanchard suggest that there is even evidence for some concurrent “detertiarization” in so far as the services share of China’s exports and imports is falling (Cheng and Blanchard 2009). Whatever the truth of the situation, less in doubt is the fact that the “Golden Age” for the development of the Chinese service sector commenced only very recently (Institute of Finance and Trade Economics 2004) and at a rate that has put it ahead of, or catching up rapidly, all the other dynamic Asian economies and the Triad economies on several knowledge-based economy indicators (Schaaper 2004).2