Beijing banks on services jobs in economic reform
Bloomberg in Beijing
Seven years ago, Cheng Shuangping quit her assembly job at an electronics company on the mainland to move to Beijing to work as a waitress and a clothing saleswoman before managing a foot-massage spa.
"The assembly work was boring and the pay was meagre," Cheng, 34, said at Oriental Foot Massage near the Olympics stadium. Now, she earns about 6,000 yuan (HK$7,400) a month, or four times her pay in her home city of Hefei, in Anhui province.
Services employment has climbed for four years, according to surveys by HSBC Markit Economics, while official data shows manufacturing jobs shrinking for the past eight months.
Creating more jobs like Cheng's will be key to limiting unemployment and meeting the Communist Party's goal of an economy driven more by consumer demand and less by exports and investment. China estimated its proportion of workers in services industries at 35.7 per cent in 2011, less than Japan's level in 1955, according to International Monetary Fund data.
"Authorities should take measures including liberalising the financial sector and tackling monopolies in some key industries such as telecoms to boost services' job creation and consumption," said Joy Yang, chief Greater China economist at Mirae Asset Financial Group in Hong Kong.
"This should help economic rebalancing but the process could be long."
Services had the biggest share of the mainland's employment in 2011 for the first time, larger than agriculture's 34.8 per cent and manufacturing's 29.5 per cent, according to the most recent labour ministry data. The gains have helped the Communist Party maintain social stability by keeping a lid on unemployment, estimated by a research centre at more than 8 per cent in urban areas in July.
"The robust services job growth is helping to create a resilient job market," said Xu Gao, chief economist at Everbright Securities in Beijing, who previously worked for the World Bank. At the same time, future prospects aren't so bright because of slowing economic expansion, Xu said.
Employment growth in services is important because of a direct link with boosting consumption, the IMF said in a 2010 working paper, noting gains that other export-dependent nations had previously made.
In South Korea, the share increased to about 65 per cent in 1995 from 30 per cent in 1961. Japan's level rose to about 60 per cent in 1987 from 1955's 38 per cent.
The typical country at China's income level has close to half of its workers in services, according to Mark Williams, an economist at Capital Economics in London, who previously advised the British Treasury on China.