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City can learn from others to boost services
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CHENGDU has an advantage in directing its growth because the city can learn directly from the experiences of its coastal counterparts. Developing the service sector along with manufacturing is perhaps the most important aspect.
“China’s growth will hinge on the quality of development of its service sector in the coming years,” Yao Wei, an economist at Societe Generale, said in a recent media briefing.
While many people are fretting about China’s economic slowdown, Yao said services can serve to stabilize the overall growth. Services may actually do much more than that.
In some foreign cities, the output of services, which include finance, commerce, logistics, design, consulting, exhibition, tourism and legal advice, contributes up to 80 percent of total gross domestic product. In Shanghai, the proportion of services in the economy had been lifted to 62 percent by the end of last year, and more than 80 percent of foreign investment in Shanghai was channeled into the service sector.
Some authorities take years to realize the weight of services in accelerating economic growth and creating jobs without harming the environment. The service sector is regarded as the greenest industry around the world.
In the capital of Sichuan Province, local authorities have learned the message. In May, the Chengdu government rolled out a guideline aiming to strengthen the service sector and make Chengdu the core city to provide services in western China. Reform and innovation will be the driving forces to steer Chengdu’s service sector toward growth of a higher standard, according to the guideline.
The government set a target that the service sector will account for at least 52 percent of the city’s economic output by the end of next year, with the proportion growing to 60 percent by 2020.
“Chengdu has been appointed the center of commerce, finance, logistics and telecoms in southwestern China,” the guideline said. “Strong infrastructure has been built to pave the way for further development of the city’s service sector.”
Li Xia, deputy director and chief economist at the Chengdu Economic and Information Center, said Chengdu needs to bring more added-value services and rely less on the older, more traditional ones.
“It depends on how the city deepens the national strategy of reform and innovation, and how the city nurtures the core assets of services — that is, human resources,” Li said.
Chengdu’s service sector should also go beyond serving only a single city, but a cluster of areas in western China, Li said.
Indeed, Chengdu has already been a front-runner in developing its services. It has a solid financial base, with many major global banks operating branches in the city. It is a transport hub, home to the busiest airports and bus stations in China’s western areas. It opened China’s first municipal Bureau of Exposition, with a staff dedicated to promoting the convention and exhibition industry. It was among the first cities to operate 4G telecom services, and it was the fourth city on the Chinese mainland to permit 72-hour visa-free stays, after Beijing, Shanghai and Guangzhou.
Good services are a promise of good economic performance.
In the first five months of this year, Chengdu’s trade expanded 8.9 percent from a year earlier to US$22.3 billion. The pace was far faster than the national average of a 0.2 percent increase.
Besides, in a latest study by the Asian Development Bank, Chengdu topped the list of China’s most livable cities. It was followed by Guangzhou, Ningbo and Changsha among the 33 cities being covered in the study.
Yu Jianwei, director of the Institute of Economic Development at Sichuan University, said “it showed that Chengdu obtained due attention from the international community and key global organizations, which would benefit the city in attracting more investment and professionals.”
No doubt, the service sector, which enables people to live, eat and move in a better way, was a major contributor for Chengdu to get that honor.
Last year, the production of the service sector in Chengdu amounted to 457.4 billion yuan (US$73.7 billion), up 8.8 percent from a year earlier and ranking the city third among provincial capitals in China. Taxes derived from the sector surpassed 100 billion yuan, strengthening the city’s status as a rising star in services.
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