GUANGZHOU: South China's Guangdong Province is being urged to increase efforts to develop its production service industry - the businesses providing services to the manufacturing sector - to further its overall economic strength.

Citing a survey on local residents' evaluation of the province's major service industries, Ding Li, a researcher with the Guangdong Academy of Social Sciences, said yesterday that Guangdong has relied "too heavily" on the consumer service industry.

According to the survey, which was recently conducted by the Guangdong provincial economic and social research center, local residents are relatively pleased with the province's consumer service industry.

"The consumer service sector here, including food service, entertainment and real estate, has seen fast and sound development in the last two decades, contributing a lot to the province's GDP (gross domestic product) growth," Ding said.

The service industry has played a major role in the province's economic development, generating added value of more than 1 trillion yuan ($128.2 billion) last year, which accounted for 43 percent of the GDP.

However, as Guangdong, a major manufacturing hub in South China, still relies heavily on the manufacturing industry for economic growth, production-demand services, such as logistics, information technology and banking, should be strengthened, Ding said yesterday in an interview with China Daily.

Compared with Zhejiang and Jiangsu, two economic powerhouses in East China, Guangdong has lagged behind in developing its banking and financing sectors, according to Ding.

Last year, the per capita added value of the banking industry in Zhejiang reached about 1,377 yuan ($176.50), while the Guangdong figure was only 732 yuan ($93.80).

"Demand for production-driven services in Guangdong, including banking, logistics and telecommunications, has moved to neighboring Hong Kong," Ding said.

As a result, many small companies in the Pearl River Delta region tend to seek financial and logistics services overseas, Ding said.

"We must make further efforts to develop the production-demand service industry, to help our local private enterprises expand," Ding said.

Li Zibiao, director of the Guangdong provincial economic and social research center, agreed.

"Enhanced production service development will definitely serve as a strong engine for the province's overall economic growth," he said.

He explained: "Unlike Zhejiang, a province relying on domestic-oriented enterprises for economic development, Guangdong has too many overseas-invested businesses. That's why the banking business for enterprises here has been slowed down."

(China Daily 07/19/2007 page5)