Thursday, January 30, 2014
China's GDP: services are largest sector for the first time in the modern era
This doesn't have much to do with Chinese law, but I think it's a pretty interesting development. From my friend Dan Rosen at the Rhodium Group (copied here with permission):
Full year 2013 China GDP was released on January 29. The total was just over $9 trillion USD for the first time, at CNY 56.9 trillion (2013 average CNY/USD rate: 6.313). That’s up 7.67% over 2012 (and is the level the United States was at in 1992, in 2009 dollars; versus just about $16 trillion today). Here is a significant fact: as of the end of 2013, China’s services sector is officially the largest segment of its economy for the first time in the modern era, at 46%, versus 44% for industry and manufacturing and 10% for primary activity such as farming. That updraft in the share of services started in about 2006, and should keep going for, oh, I’d say about another 20 years before flattening out. That’s a pretty important change in the structure of growth, and one that Xi Jinping’s Plenum reforms both recognize and react to, on the one hand, and aim to bolster and sustain on the other. Remember: investment in services sector capital stock doesn’t just mean ice rinks, movie theaters, hospitals and schools, but also the injection of value-adding services activity into manufacturing giants like China Aluminum, which to date have been all about smelting and little about sales and marketing, R&D, environmental engineering, new applications development and other white collar multipliers of profit.