Should China Develop Manufacturing or Services?

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Industry and policymakers must do away with overly simplistic assumptions about the economy as China enters a new stage of development, writes a leading Chinese economist. China’s economy is at a critical juncture, sparking ongoing debates in academia about the optimal paths and goals for this transition. A key question is whether China should prioritize development of the manufacturing or services sector. Some local governments have even set targets for how much of their GDP output will stem from manufacturing, effectively pitting manufacturing against services. However, in my view, manufacturing and services are not mutually exclusive. People who deem it so are not only making a mistake in their economic analysis — they are also failing to grasp what is needed for the next step in China’s economic development. China’s per capita GDP is transitioning from that of a middle-income country to a high-income country. This necessarily requires changes to the country’s economic str ………………………………