Will Tertiary Industry Be the Driving Force of China’s Economic Growth?

Li Gang (李钢)
Institute of Industrial Economics, Chinese Academy of Social Sciences (CASS), Beijing, China
Abstract: Based on the analysis of inner motive of industrial structure evolution in developed countries after World War II and the contribution of primary, secondary and tertiary industries to economic growth at similar economic development stage as China is, this paper argues that the rising proportion of tertiary industry in developed countries after World War II is mainly caused by the price hikes in tertiary industry. During a similar economic development stage as China is, the secondary industry in both the U.S. and Japan contributed more than 60% to economic growth, thus became the driving force in real sense. This paper analyzes the change of industrial structure after 1978 and points out the gap in industrial structure when calculated by fixed price and current year’s price. From 1978 to 2009, China’s industrial priority was mainly transferred from primary industry to tertiary industry in fixed price terms but shifted from primary industry to secondary industry in terms of current year’s price. With a contribution rate of 68.8%, China’s secondary industry is the chief driver of economic growth since 1978 and will continue to be so till 2020. As the tertiary industry can hardly be such a driver, the increase in tertiary industry proportion is insignificant to real economic growth, so it is not necessary for China to put tertiary industry as the starting point of industrial upgrading. Instead, China shall try every means to improve the international competitiveness of secondary industry so as to promote the qualitative and rapid growth of Chinese economy by tapping into its quality-oriented demographic dividend.
Keywords: economic growth, industrial structure, primary, secondary and tertiary industry

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