The China's Service Industrial Structure Change In The Perspective Of Industrial Linkages

This paper puts forward the hypothesis of "self-enforcing" mechanism of services development by contrasting the services developing experience of China and industrialized countries firstly. That is to say, the mode of services development driven mainly by the external industrial linkage will transfer into that driven mainly by the internal industrial linkages, especially for the producer service's linkage when the services have developed into a certain period. After affected by the "self-enforcing" mechanism of services development, the services industrial structure will take place the significant changes which the relative shares of producer services, public education and health services arise, but those of traditional consumer services and administrative services decline. Especially the relative shares of communication, computer and softer related to ICT are increasingly.The hypothesis of "self-enforcing" mechanism of services development has been tested by the main developed countries'experiences of services development generally. This is because that the industrialized process and information technology progress bring the pressure of industries transfer for these countries. To increase the global industrial competitiveness, on the one hand, most of developed countries move some of simple links in the production chain, such as industrial processing, assembling, and so on into developing countries, on the other hand, they concentrate their attention on the producer services. They raise the intermediate inputs demands for the producer services through developing advanced manufacture and other new high-tech industries, which in turn increased the demands for the public education, health and administration services. The mixing of manufacture and ICT stresses the trend highly. Some of traditional services are remolded by ICT, which promotes their efficiency and reduces the relative shares accordingly or they are replaced by other new industries.The heterogeneity growth in sub-sectors of services has brought forth the structure change of the services. It is the services'inter-linkages with other sectors that have caused the heterogeneity growth. The prevail analysis of industrial relationship emphasized on the interaction between the industries and services greatly, not enough on the sub-sectors of services. This paper in Chapter 3 firstly gives a theoretical analysis framework of service industrial "self-enforcing" development mechanism, then, Chapter 4 documents the mathematical economical models of services development driven by the producer services, in which the producer services act as the intermediate inputs of other sectors'production in order to examine its relation of employments and value added to that of other sectors. By doing this, we can understand the mechanism of leading to the services'structure change well through the increasing producer services'scale.Whether has China undergone the similar process driven by the "self-enforcing" mechanism of services development or not? This paper in Chapter 5 carries on the empirical study on the relative shares that all kinds of services act as the intermediate inputs of other industries or the services'industrial linkage degrees to manufactures, agricultures and services by using the existed China's input-output tables. The empirical results are that the relative shares of that all kinds of services, especially for the producer services, act as the intermediate inputs of other industries are much lower, or the services'industrial linkage degrees to manufactures, agricultures and services are a little lower. Due to the limited input-output tables, this paper then builds the econometrics model to test the manufacture and agriculture's inducing effects on services'outputs by using the time series data of China's services, manufactures and agricultural outputs. The results are that the manufacture and agricultural inducing demand elasticity coefficients to services are less, especially for the latter. What's more, the services' feedback elasticity coefficients to manufactures and agricultural outputs are also smaller. These results show that China's services' outputs aren't used as the intermediate inputs of manufacture and agriculture too much and their industrial linkage degrees are much lower. So, it is suitable to tell that the "self-enforcing" mechanism realizing degree of China's services development is much low, not as that in western developed countries.Why is there the low "self-enforcing" mechanism realizing degree of services development in China? I think there may be two reasons. Firstly, it is related to China's traditional development strategies that governments at all levels give priority to the development of heavy industry in order to enforce the industrial catching-up goals, and the resources are allocated by the administrative means in the process of production, exchange, distribution and consumer. Therefore, services factors are fixed in state-owned sectors at all levels and can't move freely. The barriers of factors entering and exiting between different departments and regions cause the serious consequence that the economic linkages in all kinds of industries are only the abstract administrative linkages and so the services development is absence of the external space.Secondly, it is related to China's economy growth mode in socialism market economy system. Although since the reform and openness of China to the outside world, governments at all levels have began to attaches great importance to services increasingly, Chinese traditional agriculture's production of lower productivity doesn't bring out much inducing demands for intermediate inputs of producer services and so do the Chinese local firms without independent innovations which only produce in OEM mode in the global industrial value chains. The high value links in the global industrial value chains, such as R&D, designing, marketing, are controlled or captured by the multinational corporations of developed countries. So, the simple processing and assembling actions don't create much inducing demands for intermediate inputs of producer services.Due to the less external industrial linkages, the engine of services factors moving freely is limited and weak. According to the empirical results of Chapter 6 in this paper, Chinese dualistic employment system at present hinders services forces factors moving freely and the industrial linkages between the services and other industries significantly. What's more, the social consciousness of better scholarly attainments, better the official position and government official standard lead to the entrepreneurship absent in the service industries of China. Some of present tax and industrial policies also keep the entrepreneurs from entering into the service sectors.It is the low self-enforcing mechanism realizing degree of service development that causes the un-reasonable service industrial structure which embodies the whole low industrial spread effects of services to other industries on one hand, and the low inducing demand elasticity coefficient to manufacture's TFP promoting, even the negative demand elasticity coefficient to agriculture and service-self on the other hand, especially significant for service sectors of high shares of state-owned economies. These empirical results are showed in Chapter 7 of this paper.Therefore, Chapter 8 of this paper concludes that the industrial policies of promoting service self-enforcing mechanism realized should involve that we should have a more highly specialized division of labor and a more roundabout production process in order to increase the industrial linkage demands for producer services as the intermediate inputs in manufacture and agriculture, especially by using the ICT to remake the traditional agriculture and manufacture and separating the producer service actions from the links in the production of agriculture and manufacture through splitting and outsourcing to make them grow in a cluster and scale mode on one hand; on the other hand, we should adopt the industrial regulation, free market competition policies and other complementary policies to promote the service factors to enter and exit freely and all service sectors to development coordinately, especially by changing the social consciousness of government official standard and dualistic employment system to lead the innovative factors moving into the producer service sectors and realize the self-enforcing mechanism of service development.