Local GDP revisions show service sector disparities

Opinion / You Nuo

 Local GDP revisions show service sector disparities
By You Nuo (China Daily)
Updated: 2006-01-02 07:38

Some regional governments have been quick to follow the change in GDP
accounting made by the National Statistics Bureau (NSB). Some of the
regional revisions are encouraging, and others seem to suggest new
problems.

First of all, I am happy to note that, only two days after I wrote for
this column about Shanghai's unnecessary modesty in releasing its new GDP
figures, the municipal government did call a press conference and
released its initial report. Soon afterwards, Guangdong, China's largest
provincial economy, and Zhejiang, the fourth largest, announced their
results.

The regional accounting reports more or less go along with economists'
predictions. Just as the NSB did on the national level, officials all
presented a larger service industry than they had previously reported. A
larger service industry is, admittedly, a good thing, because it
generates more jobs and greater convenience for consumers.

However, despite the overall increase in the importance of the service
industry, there may be weird disparities between different regions. For
example, the service industry in some regions is still not as strong as
one would expect. Secondly, in Beijing, where ordinary consumers do not
enjoy much convenience, let alone enjoyment, the proportion of the
service industry is abnormally large.

Let's look at a national figure first. According to the NSB's revision
two weeks ago, the service industry actually makes up 40.7 per cent of
the economy of the Chinese mainland, instead of the previously reported
31.9 per cent. However, its weight in Shanghai, China's largest service
centre in finance, trade and transportation, is only 50.8 per cent of the
city's total economy, roughly 10 points higher than the national average.

Is that reasonable? Some people may point to the fact that Shanghai also
used to be China's most important manufacturing city, although less so as
other cities rapidly industrialize in the reform era. But still, in order
to act as China's hub to connect the world, Shanghai should have a larger
share of services.

Other people may argue that part of the services available in Shanghai
may actually come from its nearby cities in the Yangtze Delta. But a look
at the GDP revision of Zhejiang, Shanghai's adjacent province, shows the
result is even more discouraging. It was only revised from 39 per cent
(of the total economy) to 39.4 per cent, even lower than the national
average.

But even in Guangdong, the largest exporter of all mainland provinces,
the share of the service sector is not really impressive. It accounts for
only 44.3 per cent of the economy, surpassing the national average by
less than four points.

Overall, the above figures show that even in China's most developed
regions, there is still a lot of room for the service industry to
continue to grow. Or put in another way, they still have a long way to go
to really become the whole nation's service centres.

In an odd contrast with Shanghai, Guangdong and Zhejiang, the service
industry in Beijing is amazingly large, contributing 67.8 per cent of the
city's whole economy. Why does Beijing claim so much importance for its
service industry where everyday life is hardly more convenient than
elsewhere? How can it claim to be so when it has far fewer 24-hour stores
and bars and other services than many southern cities?

One may defend Beijing by saying that the city's previous accounting was
too careless, and that the census was conducted in a year when some of
the city's old industries, most noticeably the Capital Iron and Steel
Corp, relocated to other places, representing a major decrease in the
share of manufacturing.

But the demand for services may also come from some other directions,
considering all the banquets, gifts, free travel packages, and whatever
"activity expenses" that are required, on a daily basis, for people from
all over the country - and even abroad - to have their development
(business) plans approved, and considering all the charges that various
insiders demand for helping you and your company build "necessary
relations," and even for just showing up at the opening ceremony of your
new outlet.

I even suspect that Beijing's service sector may still be larger because
it is like a monopoly, in that this city just happens to be the site of
the central government and many of the nation's best universities and
best medical services.

Much more could be added to the city's GDP record if the NSB takes into
account all the bribes that are being given and taken, the kickbacks that
doctors get from medicine merchants, the surcharges that parents pay for
their children's education, and the "red packets" that journalists take
for reporting any obscure company's proclamation of international
importance.

Email: younuo@chinadaily.com.cn

(China Daily 01/02/2006 page4)

Hot Talks

 President's List of Do's and Don'ts for China

 How important is 'Face' (Mian Zi) to everyone?

 The Woeful Health of the Nation

 China, USA should be natural allies

 Beijing's leverage over Taiwan

Most Commented/Read Stories in 48 Hours

20071124 http://www.hellomandarin.net