Illustration: Luo Xuan/GT

Pressure from the China-US trade war will not stop China from changing its industrial structure. Instead, it will only motivate the country to upgrade its services sector in preparation for the forthcoming expansion of consumption.

Over the years, the Chinese economy has witnessed a surge in the services sector. Data from the fourth national economic census showed that there were a total of 14.49 million enterprises in the tertiary sector as of the end of 2018, up 164 percent from the end of 2013.

Thanks to the rapid development of the services industry, China's domestic consumption demand has also grown quickly. According to the National Bureau of Statistics, total retail sales of consumer goods in China jumped 9 percent year-on-year to 38.1 trillion yuan ($5.76 trillion) in 2018, while US retail sales rose 5 percent to $6.04 trillion during the same period. Since China's consumption was already equivalent to 95.36 percent of the US total last year, many observers and economists believe China will be able to overtake the US to become the world's largest consumer market this year.

While it is a relief to see the Chinese manufacturing sector show signs of recovery, there is no denying that the services sector has become a leading driving force for China's economic growth. In 2018, the value gained from China's services sector accounted for 52.2 percent of total GDP. The fact that it has become China's biggest industrial sector has laid the foundation for China to advance toward the goal of developing a competitive services sector globally.

Moreover, whether or not China can cultivate a strong services industry also determines if it can further expand its consumer market and increase imports in the future. Only by making the Chinese market bigger and more promising can we enhance bargaining power in the international trade and economic systems. In that sense, upgrading the services sector in an all-round way is of great significance to China's future trade environment.

It should be pointed out that China is still far from being a services trade power. In 2018, China's services trade deficit hit $292.2 billion, the highest in the world and accounting for 41 percent of the global trade services deficit. By comparison, although the US has the highest goods trade deficit in the world, it also possesses the largest services trade surplus. 

Nevertheless, China's services sector and trade both have great potential. So does its huge consumer market. With the application of high technologies such as 5G, high-tech services industries like those concerning information transmission, software and information technology will see further development, contributing to the steady expansion of the Chinese consumer market - which the world cannot afford to lose.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn
Newspaper headline: China to upgrade services sector as economy transforms