The development of the service sector in the People’s Republic of China has
not kept pace with the country’s overall economic development. The share of
employment in services is still lagging behind that of output and is also below
the international norm. Moving from traditional services to modern business services
has been the focus in recent decades, but the current structure is still dominated by
low-end, traditional industries. In addition, due to the ongoing government strategy
to make pilot reforms industry by industry, state-owned service providers still have
a large market share, especially in some important service industries, and there are
great disparities in development among non-state-owned service providers across
various industries. Complicated institutional restrictions and a lack of effective
institutional support and regulatory enforcement require in-depth reforms if the
sector is to realize its potential. Strategic measures and policy options for promoting
the sector in the next 10 years are suggested.