Understanding of Servicification Trends in China Through Analysis of Interindustry Network Structure

Abstract

This study analyses the core changes in the entire industrial structure of China from 2002 to 2015. First, utilizing the input–output model (or interindustry relation model), we evaluate the production-inducing effects across the various manufacturing and service sectors. Employing standard centrality measures that are often used in network analysis , we identify the status of various industry sectors together with their structural roles on the input–output network and track the evolutionary paths as they change over time. Furthermore, the clustering analysis of industrial sectors also examines critical changes in the overall industrial structure. We will discuss the policy implications of these evolutionary paths and explore the trends and sources of Chinese economic development regarding manufacturing and service productions. As a result, it can be seen that the production-inducing effects in the manufacturing sectors—particularly, chemical, electric power, and primary metal products—play the core role in driving the economy. On the other hand, the distribution sector like the traditional wholesale and retail services still shows unstable connections with other industries. However, the sectors like finance and transportation, which constitute another axis of the service industry, have strengthened their connection with the manufacturing sectors since 2012. Moreover, the real estate and lease and the other business support services continue to absorb production resources, deepen their linkages with the key service industries (e.g., transportation), and the various manufacturing sectors. In conclusion, China still has manufacturing as a central driving force for economic development, but with the increasing integration with the service sectors, both manufacturing and service industries show an apparent convergence in their production activities.