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Answer:China's GDP Examined: A Service-Sector Surge

By PRABLEEN BAJPAI Updated April 18, 2022

Reviewed by JULIUS MANSA

Fact checked by SUZANNE KVILHAUG

The Chinese economy changed rapidly and grew very fast after 1978, when Deng Xiaoping introduced free-market reforms and moved away from a strict centrally planned economy.

Private enterprise spurred growth and urbanization for decades, though the pace has moderated in recent years amid a crackdown on private companies and the continued economic dominance of state-owned industries.

China's real gross domestic product (GDP) frequently grew more than 10% annually until 2010, with growth slowing to 6% in 2019 and 2.3% in 2020 amid the COVID-19 pandemic before rebounding to 8% in 2021.

1

China's economy is now the second-largest in the world, after that of the United States.

KEY TAKEAWAYS

China's dramatic growth spurt was fueled for decades by its manufacturing sector.

In recent years, the services sector has grown steadily, finally eclipsing industry in its share of China's GDP.

Growth has slowed of late, reflecting a real estate downturn, a regulatory crackdown on large privately owned companies and large-scale lockdowns in response to COVID-19 cases.

China's GDP

China's transformation from a poor country focused on subsistence farming to a highly industrialized economy with a large services sector brought infrastructure development, urbanization, rising per capita income, and a big shift in the composition of its GDP.

Notably, the World Bank now defines China as "an upper-middle-income country."

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While China remains a manufacturing powerhouse, it has a large and fast-growing service sector befitting its newfound wealth. The services sector accounted for 54.5% of China's GDP by 2020, up from 44.2% a decade earlier. The once dominant agricultural sector, in contrast , shrank from 9.3% to 7.7% of the country's GDP over the same span.

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