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Is the Chinese Economy Moving in the Direction of Tertiarization?

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  • Dazhong Cheng
  • Jean‐Marc Blanchard

Abstract

Drawing upon output, employment, consumption and trade data, this article examines whether there is an economic tertiarization trend in China 's economy and evaluates the common factors driving current trends. It shows that the tertiarization trend is evident for the overall economy and most regions in terms of the service nominal value‐added ratio and service employment and consumption. However, the tertiarization trend is not significant in terms of the service real value‐added ratio, and there is even some concurrent “detertiarization” because of the decreasing proportion of services in imports and exports. Indeed, China's tertiarization trend is far behind its industrialization trend. The rise in the relative prices of services explains the rising proportion of household service consumption expenditure and further illuminates why the service real value‐added ratio has not grown. The main cause for the growing percentage of service employment is the lag in service labor productivity growth in interaction with the price inelasticity of service demand. “Cost disease” has appeared in service consumption.

Suggested Citation

  • Dazhong Cheng & Jean‐Marc Blanchard, 2009. "Is the Chinese Economy Moving in the Direction of Tertiarization?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(6), pages 88-105, November.
    • Handle: RePEc:bla:chinae:v:17:y:2009:i:6:p:88-105
    DOI: 10.1111/j.1749-124X.2009.01175.x
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    References listed on IDEAS

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    1. Ronald Schettkat & Wiemer Salverda, 2004. "Demand Patterns and Employment Growth, Consumption and Services in France, Germany, the Netherlands, the United Kingdom and the United States," DEMPATEM Working Papers wp13, AIAS, Amsterdam Institute for Advanced Labour Studies.
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    Cited by:

    1. Luigi Bonatti & Andrea Fracasso, 2010. "Global Rebalancing and the Future of the Sino-US Codependency," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(s1), pages 70-87.
    2. Daniel Schiller & Martijn J Burger & Bas Karreman, 2015. "The Functional and Sectoral Division of Labour between Hong Kong and the Pearl River Delta: From Complementarities in Production to Competition in Producer Services?," Environment and Planning A, , vol. 47(1), pages 188-208, January.

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