China’s economic growth rate last year was its lowest in 25 years and is continuing to decrease. But while the “old China” is in decline, newer sectors of the economy are flourishing. Heavy industry and low-end manufacturing are suffering from the end of the construction boom, the global commodity price slump and shrinking world trade. In China, these sectors are dominated by state-owned enterprises.
By contrast, steady 8 per cent real expansion in the services sector since 2012 has been pulling up overall growth. This is reflected in services overtaking manufacturing as a share of the total economy in 2012, as measured by nominal output. Services now make up more than half of the economy.