Expansion in services will see jobs market take off and give China sustained growth

Acrowd of celebrities descending on a seaside Chinese town made famous by a beer brand seems like an unusual way to mark a signifi cant economic shift but, even if it was unintentional, that is exactly what happened. The weekend of Sept 21 was a busy one in Qingdao, the seaside city in East China's Shandong province. It is there that Wang Jianlin, the richest man in China, wants to build a world-class movie town.

To mark this decision, Wang flew in some of the world's most famous movie stars. Leonardo DiCaprio and Nicole Kidman were there. Harvey Weinstein and Kate Beckinsale were there. So were Ewan McGregor, John Travolta, Zhang Ziyi, Jet Li and Tony Leung. They were essentially just co-stars because Wang was the real star of this particular show.

Wang owns Dalian Wanda Group, a conglomerate with interests in entertainment, hotels, and real estate that also happens to be the largest owner of cinemas in the world after it bought AMC Entertainment's theaters in the US.

Wang had brought all the celebrities to China for a big party to announce an $8-billion (6 billion euros) mega studio and theme park. The tentatively named Qingdao Oriental Movie Metropolis and its 20 films studios and theme park would add significantly to the services column in China's GDP calculation.

More than 60 movie stars, including Leonardo DiCaprio, attended the opening ceremony of the Oriental Movie Metropolis in Qingdao, eastern China, on Sept 22. The Chinese government is keen to expand the service sector and reduce reliance on manufacturing for economic growth. Provided to China Daily

This year is particularly signifi cant in that it is likely to mark a turning point in the development of the Chinese economy. For the first time in recent history, the service sector is expected to zoom past industry. Last year, services accounted

for 44.6 percent of gross domestic product while industry was responsible for 45.3 percent. Figures for 2013 are not out yet but services have been growing at a faster rate than industrial production.

"The service sector is not that mature compared with the industrial sector," says Zhao Hong, a researcher at the East Asian Institute of the National University of Singapore. "It is still small but has potential because China is adjusting its economic structure."

Services account for a larger portion of economic output in the more developed economies. About two-thirds of European output is services, and in the US it is about three-quarters.

In China it is less than half, and that to some extent is also why the government is so keen on expanding the service sector. More services mean less reliance on manufacturing for growth. Also, services typically generate more jobs. At the same time, higher spending on services would signal that the Chinese consumer is ready to start splashing out.

Gross domestic product is made up of the value of all goods and services produced in an

economy. In simple terms, it is measured by adding consumption, investment, government purchases and net exports. The consumption category is further divided into goods and services.

Services include products such as insurance, healthcare, tourism and others. Filming a movie would be a service, as would be editing it. A typical tourist on a trip during the week-long National Day holiday at the beginning of October could have bought airline or train tickets (both services) and hotel rooms (another service).

This push toward expanding the service sector was visible again about a week after the celebrity-heavy party in Qingdao. On Sept 29, the China (Shanghai) Pilot Free Trade Zone was officially launched in a much more subdued fashion. In an area of 29 square kilometers, the government plans to allow for full convertibility of the yuan and freer flow of capital, and banks that qualify will be allowed to do offshore business.