Xi Jinping backs services sector to power China’s next growth phase

President Xi Jinping has signalled a renewed focus on China’s services sector, calling for a demand- and tech-led strategy to reshape growth and create jobs, as policymakers met to chart the path forward.“The focus must be on demand-driven development and reforms as well as empowerment by technologies,” Xi said in a message to a two-day conference on the sector that concluded on Wednesday, according to state-run news agency Xinhua.Highlighting the role of services in tackling some of China’s biggest challenges, Xi said the sector had grown in scale and quality in recent years, supporting upgrades and people’s livelihoods and stabilising employment.“Moving forward, we shall promote specialisation and professionalism for producer services to scale the value chain. For consumer services, we shall make them more diversified and accessible,” Xi said.China’s total services output grew 5.4 per cent year on year in 2025, outpacing overall economic growth of 5 per cent and accounting for 57.7 per cent of gross domestic product, according to the National Bureau of Statistics (NBS).The bureau also reported especially strong performance in accommodation, catering, culture, sports and entertainment in the first two months of 2026, when the business activity index for each surpassed 60 per cent.But the transition from a manufacturing-led economy to a knowledge- and service-driven growth model remains far from complete. Service sector value-added accounts for more than 70 per cent of GDP on average for Organisation for Economic Cooperation and Development countries.