At the same time, the country should also push for the opening-up of the service market through expanded public services, so as to give the market and nongovernment players a bigger role in the supply of public services.

    Considering the series of structural contradictions and challenges the country now faces in its push for industrial transformation led by the service sector, it also needs to accelerate structural reforms in the investment, financial, fiscal, taxation and educational realms to eliminate the existing obstacles.

    For example, necessary reforms should be launched to change the status quo whereby nongovernmental capital represents a very low proportion of the funds for the provision of educational, health, and cultural services. Moreover, reforms in taxation could give more emphasis to taxes in the consumption sector. Financial reforms would provide small and medium-sized businesses easier access to capital input.

    Without removing the obstacles that lie in the way of the entry of non-governmental capital to these areas, it will be difficult for the country to form a services-dominated industrial structure.

    The author is president of the China Institute for Reform and Development based in Hainan province, South China.