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Telecom, railway services sector to open wider

By Xin Zhiming (China Daily)
Updated: 2007-03-29 09:40

The growth of the services sector should be accelerated and opened wider
to private and foreign investors, the State Council has said.

Market access for such sectors as telecommunications, railways and civil
aviation - by far largely State-owned - will be increased and more
competition encouraged to diversify investment, the Cabinet said in a
document released yesterday.

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The country will establish an "open, fair and rule-based" market access
system, according to the document, which urged local governments and
departments to encourage foreign investment and improve the legal
framework in the sector.

Private investors are encouraged to "raise the proportion of non-State
output in the national services industry".

No domain should be off-limits as long as the law does not forbid the
entry of non-State investors, the document said.

The State Council said the services trade should be encouraged to change
the foreign trade growth pattern, which comprises mainly exports of
low-end manufactured goods.

Some local governments were criticized for tilting toward heavy
industries and ignoring the services sector, which made up 40.2 percent
of China's gross domestic product (GDP) last year. It generally accounts
for about 70 percent in developed economies.

Opinion: Grow service industryThe service sector will shift the growth of
the economy from an industry-driven pattern to one that relies on
domestic demand, reducing pressure on the environment and exports.

The sector is important for China as it makes efforts to change its
economic growth pattern, reduce consumption of energy and resources and
create jobs, the document said.

Given those benefits, "developing the services sector is imperative for
China," Liu Xiahui, an economist with the Chinese Academy of Social
Sciences, told China Daily.

"But for the moment, it still has to rely on the industrial sector to
generate more tax revenues and achieve a high rate of economic growth."

Liu said while the general services industry, such as the catering trade,
has grown fast, many regions are not developed enough to accommodate
high-end value-added services, such as finance. "We cannot ignore our
economic reality."

"But I do hope the country can make bigger strides in developing the
services sector, which is in line with China's future needs," Liu added.

As one of the steps, the State Council urged more input into sectors
oriented toward people's livelihood, such as real estate, non-State
nursing homes for the aged and culture.

The cabinet put special emphasis on the services industry in rural areas,
urging an increase in farmers' incomes and a relaxation of the urban
household registration system.

(For more biz stories, please visit Industry Updates)

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