Local GDP revisions show service sector disparities
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)