China’s economy is making significant progress in shifting the focus from manufacturing, investment, and exports to service and consumption as the service industry now takes up more than 50 percent of its GDP, American economist Stephen Roach said.
The highlight of the world’s second-largest economy is not the slowing GDP growth rate but the transformation of its GDP mix, said Roach, who is a senior fellow at Yale University, in an interview with Public Broadcasting Service in late January.
The shift to consumption will make major progress over the next three to five years, he said.
According to the economist, the shift to consumption will increase due to the strategy of three “building blocks” -- more job creation, higher real wages, and social safety net.
The far more labor-intensive service industry will create more jobs, while urbanization will increase real wages, he said.
In addition, relaxing of the one-child policy is a major development in improving the social safety net, giving Chinese families more confidence in consumption, he said.