OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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A Snapshot of China's Service Sector

The share of the tertiary sector in China’s value added has increased steadily, overtaking the share of the secondary sector in 2013. With increasing incomes, the share of services is expected to grow further as at higher incomes a larger share of income is spent on services. In addition to final demand, intermediate demand can be another driving force for service industries. As liberalisation leads to a greater role for the market in allocating resources, service industries are expected to become more competitive and therefore it may become cheaper to outsource services than to produce them in-house. Liberalisation will likely also lead to greater specialisation to remain competitive, thereby making specialised services available for outsourcing. This will likely spur the development of some high value-added logistics services such as warehousing or order handling. By the same token, professional services such as accounting or engineering are also likely to benefit from a greater reliance on the market and greater competition. In the envisaged transition from “made in China” to “created in China”, the service sector is expected to play a prominent role. To that end, the service sector is gradually being provided a more even playing field as privileges for manufacturing industries are being withdrawn and a more equal treatment of producers across sectors is being adopted. This paper provides a snapshot of the service sector, its size, the ownership of its firms, and productivity across types of firms depending on ownership, sector, age, size and geographical region. This Working Paper relates to the 2015 OECD Economic Survey of China www.oecd.org/eco/surveys/economic-survey-china.htm.


Keywords: professional services, regulation, firm-level analysis, state-owned enterprises, transport, distribution, logistics, China, services, labour productivity
JEL: L90: Industrial Organization / Industry Studies: Transportation and Utilities / Industry Studies: Transportation and Utilities: General; L81: Industrial Organization / Industry Studies: Services / Retail and Wholesale Trade; e-Commerce; L84: Industrial Organization / Industry Studies: Services / Personal, Professional, and Business Services; L11: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Production, Pricing, and Market Structure; Size Distribution of Firms; L80: Industrial Organization / Industry Studies: Services / Industry Studies: Services: General; J24: Labor and Demographic Economics / Demand and Supply of Labor / Human Capital; Skills; Occupational Choice; Labor Productivity; L50: Industrial Organization / Regulation and Industrial Policy / Regulation and Industrial Policy: General
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