Editor's note: To unlock their consumption potential, Chinese cities have introduced new commercial formats that leverage their unique local features. Wang Wei, former director of the Institute of Market Economy under the Development Research Centre of the State Council, told Oriental Outlook magazine that the role of service consumption in supporting overall consumption continues to grow, particularly in areas such as tourism, performances and sports, where consumers are willing to pay higher prices for these experiences. Below are excerpts from the interview. The views don't necessarily represent those of China Daily.

China's consumption market is upgrading from goods consumption to service consumption, a critical stage in crossing the high-income threshold. In recent years, travel, entertainment and sports have become the new pillars of service consumption.

Of course, the rapid growth of service consumption does not mean that goods consumption has slowed down. The demand for quality goods is increasing, and will drive continuous upgrades in the functionality and quality of goods consumption.

The two major growth areas for future consumption in China are the improvement in the quality of goods consumption and the expansion of service consumption. However, more incremental growth will come from service consumption.

Yet, on the supply side, there are shortcomings in the innovation and development capabilities of service consumption, with a mismatch between supply and demand for mid-to-high-end quality service consumption. On the demand side, the public has varying perceptions of service consumption. A series of measures can help. First, greater efforts must be made to promote the opening-up of the service sector and attracting innovative resources and high-level services from across the world to improve the quality of life of the Chinese people.

At the same time, it is necessary to further lower the threshold for private enterprises to enter the service sector.

Second, not only should investment access be further liberalized, but the free flow of human resources should also be encouraged more. Opening up the service sector helps in better allocation of resources, attracts innovative resources and meets the public's demand for services.

Third, most of the entities providing services in China are small and micro enterprises. Therefore, policies must provide targeted support to these enterprises.

Fourth, laws and regulations related to consumer rights protection must be updated to keep pace with the times. Past laws were primarily aligned with goods consumption. However, the service consumption market is more prone to issues such as information asymmetry and unequal status between large entities and consumers, leading to inadequate protection of consumer rights. It is necessary to further improve regulatory standards for the service sector, and introduce and revise laws and regulations covering services such as housing, education, healthcare and finance, to enhance the growth of the service sector.

Fifth, the paid annual leave system should be strictly implemented. The growth of service consumption requires more leisure time and a balance between work and rest. The paid annual leave system should be made more flexible to allow people to have more say in planning their holidays. For instance, they can combine paid annual leave with short holidays to achieve staggered vacations.

At the same time, workers' rights must be legally protected.