An Empirical Study on the Relationship between Services Economy and Economy Growth in China

With the rapid development of economy in China, the role of services economy in the national economy growth becomes more and more important. In this paper, we make an empirical analysis of the relationship between services economy and economy growth using unit root test, co-integration test, Granger causality test based on the relative data of them collected from 1978 to 2008 in China. The results show that there is a long-term stable equilibrium relationship between services economy and economy growth, and the services economy and economy growth are the Granger causality of each other. The economy growth increased 0.8167% as that of the services economy increased 1% in China. Thus the development of services economy plays an important role in Chinese economy growth. Based on these results, policy recommendation for improving services economy development in China has been described.