China wants to create a more services-oriented economy to reduce its traditional dependence on manufacturing.

Services accounted for less than 40% of GDP in 2006 and the share is
declining slightly — unlike in more developed western nations.

According to the Financial Times, the State Council recently outlined areas where officials should promote tertiary industry in an official policy document.

Businesses in favoured areas such as software development and
outsourced services should be given preferential access to utilities
like electricity and water while localities should be banned from
excluding service companies from elsewhere in China from entering their
markets.

Western companies have long pushed for greater access to service
industries, but Beijing remains concerned about the ability of domestic
service companies to compete.

Nevertheless, as China's own services industry evolves, these
objections are likely to reduce and lead to a gradual opening to
foreign rivals, just as has happened with the country's banking sector.

According to the Financial Times, the importance of non-industrial
activity in China was highlighted in late 2005, when Beijing made a 17
per cent upward revision to official GDP based on a nationwide census
that recorded previously ignored service sector activity.


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