Study On Promotion Of Development Of Service Sector By Urbanization

‘Made in China’ is often regarded as the symbol of the low-end product, which reflect the fact that manufacturing in China is just fat, not strong. With the diminishing of demographic dividend and the recession of international markets, Chinese companies trapped in comparative advantage are struggling with depression. Service sectors play an important role in the evolution of products through value adding. A developed Chinese service industry may help China to get rid of low-end path dependency.As is observed, service sector develops better in cities which are in the high level of urbanization, but the development of urbanization and service in China lag behind because of the distortionary policy. Urbanization can spur service sector to develop, but there is no perfect evaluation index system for urbanization, thus public service, institutional factor, public infrastructure, which are essential to the development of service sector, may be neglected.So the purpose of this dissertation is to establish a comprehensive evaluation system of urbanization, then further analyze the mechanism that how urbanization promote the development of service industry at different stages of urbanization, and use PVAR model to do empirical research with the data of cities at prefecture level and above.At different stages, promotion of urbanization to service sector is different. So it suggests that each city should make its industrial development policies according to its own characteristics and development stage. Rushing plunge in modern service industries may eventually result in industrial hollowing-out or industry homogeneity.