Shanghai Pudong Software Park's outsourcing promotion center offers consulting services. [Photo/CHINA DAILY]

In his Government Work Report on Thursday, Premier Li Keqiang stressed the importance of supporting the service industry with preferential policies. In fact, the government should set up a more ambitious goal of the service industry in the 13th Five-Year Plan (2016-2020).

The transition from an economy dominated by manufacturing to one dominated by services will not only help to achieve the 7 percent GDP growth target at a time when exports and investment are losing steam, it will also help China avoid the middle-income trap.

In fact, the service industry has already grown quickly during the 12th Five-year Plan period (2011-15). Last year, the output of China's service industry was more than 30.7 trillion yuan ($4.9 trillion), 48.2 percent of GDP, 5.6 percentage points higher than the secondary industry.

The government should make it a binding target of the 13th Five-Year Plan that the proportion of the service industry in the economy should be no lower than 55 percent, with a better projection reaching 60 percent, so a service-led economy may take shape by 2020. This would mean the service industry output rising from 30.7 trillion yuan in 2014 to 50 trillion yuan by 2020, and the service trade volume reaching $1.2 trillion by 2020, almost double the $568.6 billion in 2014. Meanwhile, the proportion of services in foreign trade would increase from 12.3 percent in the first half of 2014 to 20 percent in 2020.

It is feasible to meet the target of 55 percent by 2020, because of the opportunities arising from industrial restructuring, the continuing urbanization drive and growing domestic consumption.

China has witnessed a new wave of scientific and technological innovation while its industry is undergoing restructuring, this has stimulated the growth of the service industry through the boosting of research and development and design services, as well as logistics and sales.