The development of the service industry can provide strong support for fostering new quality productivity.

Developing new quality productivity, creating new value, adapting to new industries, and reshaping new dynamics is an intrinsic requirement and an important focus for promoting high-quality development. The development of the service industry, especially the productive service industry, can provide strong support for fostering new quality productivity because promoting the development of new quality productivity requires not only enhancing scientific and technological innovation capabilities but also providing a better market foundation, more efficient factor allocation, and more comprehensive talent support for the transformation of scientific research results. The high-quality development of the service industry itself will also become a part of the new quality productivity.

It is important to avoid a misconception in the development of the service industry, which is to oppose the increase in the proportion of the service industry to the development of the manufacturing industry. In fact, without advanced and high-quality service industries, it is difficult to have advanced manufacturing industries. The high-end parts of the manufacturing industry, such as research and development, design, patents, and brands, all fall within the category of productive services. As the degree of economic digitization continues to deepen, more and more parts of the service industry directly support the development of advanced manufacturing industries, and the boundaries between the service industry and the manufacturing industry are becoming increasingly blurred. Many parts of the service industry, whose value is included in the price of manufactured goods, show that the development of the service industry and the manufacturing industry are not contradictory. More important than statistical data is the connotation of their development.

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By looking at the differences in the structure of the service industry between China and the United States, it can be seen that the development of the productive service industry is an important driving force for increasing the proportion of the service industry in GDP and is also the main manifestation of the competitiveness of the service industry. The difference in the proportion of productive services in the GDP of China and the United States is greater than that of life services, and the gap mainly comes from the high-end part of productive services. These findings are expected to provide direction for the service industry to help the development of new quality productivity.

The main difference in the structure of the service industry between China and the United States lies in the productive service industry. In 2023, the added value of China's service industry (the tertiary industry) accounted for 54.6% of GDP. As early as the 1940s, the proportion of the tertiary industry in the United States' GDP was close to 60%, and the current tertiary industry accounts for 81.6% of the United States' GDP. In addition to the gap in total volume, the difference in the structure of the service industry between China and the United States is more worth paying attention to. Nearly 60% of the nearly 30 percentage point gap in the proportion of the service industry between China and the United States comes from the productive service industry.

According to the concept standards of the National Bureau of Statistics, productive services can be understood as an intermediate service department, mainly providing services for the production activities of various market entities; while life services are mainly used for the final consumption of residents. Currently, productive services involve 16 national economic industry categories, mainly including: wholesale industry, transportation, warehousing, postal and express services, information transmission, software and information technology services, finance, leasing and business services, scientific research and technical services, ecological environmental protection and environmental governance, etc. Life services involve 13 industry categories, mainly including: retail industry, accommodation and catering industry, real estate industry, tourism, resident services, repair and other services, education, health and social work, culture, sports and entertainment industry, etc. According to the latest available data, we correspond the industry categories of the United States' service industry to the above industry categories, and get that the productive services of China and the United States account for 31.4% and 47.7% of their respective GDPs respectively [due to data availability restrictions, the data of China's tertiary industry sub-industries is 2021. In addition, China's wholesale and retail are combined for statistical purposes, and when calculating the proportion of China's productive services in GDP, 50% of wholesale and retail is used to estimate the proportion of wholesale trade in GDP]. The proportion of China's productive services in GDP is 16.3 percentage points lower than that of the United States.

The difference in the proportion of life services between China and the United States mainly comes from the medical and health and real estate fields, and these two sub-industries can explain more than 80% of the difference in the proportion of life services between China and the United States. In addition, the difference in the proportion of most life services between China and the United States in GDP is not obvious. With the increase in income and the extension of residents' life expectancy, it is expected that China's medical, health, and elderly care fields will usher in extensive development. The difference in the proportion of added value in the real estate industry between China and the United States is not as large as the statistical data shows. Due to various reasons, the contribution of China's real estate to the economy is underestimated. If estimated according to the broad口径 (merging the added value related to real estate in the construction industry and the added value of the real estate industry has comparable statistical口径 with different countries), the contribution of China's real estate industry to the economy is equivalent to that of the United States and Japan. This further indicates that the difference in the structure of the service industry between China and the United States is more reflected in the difference of productive services. It is worth mentioning that it is difficult to completely and clearly divide productive services and life services because some industry categories belong to both productive services and life services. For example, industries with public service characteristics (meteorological, seismic, marine, surveying and mapping, and other professional technical services, education, health and social work, etc.), and some industries have the characteristics of providing services for both production and life (transportation, mobile telecommunications services, vocational education and training services, etc.). According to the classification standards of the National Bureau of Statistics, there are 76 industry categories with both productive and life service characteristics, and China's productive services involve 348 industry categories, and life services include 288 industry categories. The above-mentioned cross fields only account for 11.9% of all industry categories and do not affect our observation of the overall structural characteristics of China and the United States' service industry.

The development of productive services may simultaneously increase the proportion of the service industry in the economy and labor productivity.

Generally speaking, the labor productivity of the service industry is lower than that of the manufacturing industry. However, the United States has maintained high labor productivity while increasing the proportion of the service industry. Currently, the per capita GDP of the United States has broken through 80,000 US dollars, and 84% of the employed population in the United States is engaged in the tertiary industry. Data from other developed countries also show that the higher the income of a country, the higher the labor productivity of the service industry, and the closer its service industry labor productivity is to the labor productivity of the secondary industry. By vertically analyzing the process of the service industry's proportion increasing in the economy of the United States, we find that the development of productive services is one of the main driving forces for increasing the proportion of the service industry in the United States' GDP.Over the past few decades since 1947, the proportion of the U.S. productive services sector in GDP has been on an overall upward trend, especially in its high-end segments such as the information industry, professional and business services, and the financial industry. However, some industries, like transportation and warehousing, have seen a decline in their share. In the consumer services sector, aside from a significant increase in the share of the healthcare and real estate industries (thanks to the appreciation of land value brought about by economic development, the real estate industry has in fact absorbed some of the outcomes of the development of productive services), other consumer services have seen relatively flat changes or even a slight decline.

Overall, the development of productive services has contributed more to the increase in the share of the U.S. service industry. After the basic living needs of residents are relatively well met, the room for increase in the added value of consumer services also tends to be limited. However, productive services, especially scientific research and professional and technical services, can provide higher added value. In the era of accelerating information technology and digital economy, the latter may even grow exponentially. For a long time, the proportion of the U.S. productive services sector in GDP has been increasing in tandem with per capita GDP. The share of the U.S. productive services sector in GDP increased from 39.5% in 1977 to 47.7% in 2023 [the calculation method is consistent with the previous text, and data for some minor industry categories before 1977 were not disclosed], while its per capita GDP (calculated in constant prices) increased from $30,337 to $66,755.

China should pay more attention to the high-quality development of productive services.

In recent years, China's productive services sector has accelerated its development. From 2010 to 2021, the share of China's tertiary industry in GDP increased from 44.3% to 53.5%. Among them, the information transmission, computer services, and software industry saw the largest increase in share, with a cumulative increase of 1.79 percentage points in GDP; the share of leasing and business services, finance, and scientific research and technical services in GDP increased by 1.37, 1.56, and 0.83 percentage points respectively. The above industries contributed more than 60% to the increase in China's tertiary industry share.

Data source: National Bureau of Statistics of China, U.S. Bureau of Economic Analysis, calculated and organized by the author.

Nevertheless, the gap between China's productive services sector and the United States remains significant, especially in high added-value industries. Specifically, China's information services and software industry accounts for 3.9% of GDP, 3.3 percentage points lower than the United States; China's scientific research and technical services account for 2.5% of GDP, while the United States is as high as 5%; China's leasing and business services are 3.8 percentage points lower than the United States in the same field (leasing services and intangible asset leasing, legal services, corporate and enterprise management services, administrative and support services). Looking at the above three industries together, China is 9.6 percentage points lower than the United States, which explains 58.9% of the difference in the share of productive services between China and the United States.

There is also a significant room for improvement in the competitiveness of China's productive services sector. Taking the financial industry as an example, in 2023, the added value of China's financial industry accounted for 8.0% of GDP, even higher than that of the United States (7.3%), but "big but not strong". In terms of trade in services, China's trade surplus in financial services was only $647 million in 2023, while the United States' trade surplus in financial services was $113.6 billion, which is the primary source of the United States' service trade surplus. This indicates that there is still a significant room for improvement in the competitiveness of China's financial industry. The 2023 Central Financial Work Conference called for improving the quality and efficiency of financial services to the real economy. The financial industry still has a lot to do in supporting technological innovation and industrial upgrading, and green transformation.

China's service trade deficit also comes from the productive services sector. In contrast, the United States has advantages in productive service areas such as finance, intellectual property royalties, and other business services, with surpluses of $113.6 billion, $82 billion, and $108.42 billion, respectively. Currently, China's deficit under intellectual property royalties is $31.75 billion; other business services have a trade surplus of $3.803 billion, which is still a significant gap compared to the United States. Therefore, although the United States has a huge scale deficit in goods trade, it is also important to see that the growth of the United States' service trade has largely promoted its balance of payments. In 2023, the United States' service trade surplus was nearly $280 billion, while China's deficit exceeded $220 billion.

Service trade, digital trade, and other fields are new growth points in international trade in recent years. High-quality development of productive services will help China actively align with high-level economic and trade rules, which is of great significance for improving China's competitiveness in new trade formats. The World Trade Organization (WTO)'s "World Trade Report" estimates that by 2040, the share of global service trade in global trade will reach 50%. Currently, global service trade accounts for 30% of the total trade volume, and China accounts for 12%. In service trade, the proportion of digital trade [the World Trade Organization defines digital trade as trade that is digitally ordered or digitally deliverable] is continuously increasing and has broad development prospects. Currently, high-income countries account for 82.6% of the share in digitally delivered service trade. China is one of the countries in the world that produce the most data, and the potential to be mined and released is huge. According to statistics from the International Data Corporation (IDC), the data created by China's population of more than 1.4 billion exceeds 20% of the total global data volume.

The essence of high-quality development of the service industry is more important than form.Focusing solely on the proportion of services or manufacturing in GDP is of limited significance; instead, there should be a greater emphasis on the connotations of high-quality economic development. The high-quality development of the service industry and the manufacturing industry are closely linked. It could even be said that without advanced and high-quality services, it is difficult to have advanced manufacturing. This year's "Government Work Report" specifically mentioned "accelerating the development of modern productive services" when discussing the implementation of "vigorously promoting the construction of a modern industrial system and accelerating the development of new quality productive forces."

In 2023, China's high-tech product export volume accounted for 25.1% of the total goods export amount. Among them, the export volume of information and communication products was $498.52 billion, achieving a surplus of $335.87 billion. However, it should also be objectively recognized that these export amounts include the production capacity of foreign-invested enterprises in China. Chinese companies still need to strive to obtain more added value from the sales of these products, especially the high added-value service parts such as intellectual property rights and brands.

The global production layout's "nearshore reshoring" trend in recent years is largely based on the improvement of technological innovation levels, enhancing enterprises' production response capabilities to customized product demands. To address similar challenges, Chinese enterprises need to have stronger internationalization and innovation capabilities. Driven by multiple factors such as rising labor costs, changes in the international environment, and the restructuring of the global value chain, Chinese enterprises have taken a new round of "going global" steps, which require productive services to "escort and protect" them. In this process, enterprises not only need to move towards the high end of the global value chain through technological innovation, product innovation, and brand building but also need the support of professional services such as business services, finance, and law. The transformation of our country from a manufacturing power to an innovation power is a systematic project that requires the coordination and cooperation of various industries and fields.

In summary, the service industry plays an indispensable role in the cultivation and development of new quality productive forces, especially high added-value productive services, which is an important direction for China's service industry to support high-quality economic development in the future. With the increasing importance of data elements, coupled with the accelerated development of information technology and major transformations such as energy transition, China's super large-scale market is expected to play more advantages, providing rich application scenarios for new technologies and products, and creating a better economic and social environment for continuous innovation.