BEIJING -- With services now forming the bedrock of the Chinese economy, the country has elevated the sector's strategic importance to new heights as President Xi Jinping set the direction for high-quality development of the industry.

In an instruction conveyed at a national conference on the service sector held on Tuesday and Wednesday this week, Xi, also general secretary of the Communist Party of China Central Committee and chairman of the Central Military Commission, called for "breaking new ground" in the high-quality development of the service sector.

The conference, the first of its kind at the national level and held as the country entered the pivotal 15th Five-Year Plan period (2026-2030), heralds a stronger policy focus on the development of a sector serving as both the largest pillar of China's economy and a major source of employment.

Official data showed China's service sector had surpassed 80 trillion yuan (about $11.65 trillion) in added value last year, making up 57.7 percent of the country's GDP. It also contributed 61.4 percent to economic growth, up 3.7 percentage points from the 2024 level, and accounted for around half of total employment.

As the Chinese economy undergoes a structural evolution toward high-quality development, Xi's latest call will solidify the role of the service sector in supporting industrial upgrading, enabling innovation, tapping vast demand and stabilizing the broader economy, amid heightened external volatility.

For all the sector's strength in underpinning growth, authorities are taking note that challenges such as remaining entry barriers in certain fields, an uneven supply structure and a shortage of high-end services, are becoming more salient. Rectifying these imbalances is now a strategic necessity to unlock the next phase of high-quality economic development.

Underscoring demand-driven development, reform breakthroughs and technology empowerment, as well as opening-up and cooperation in his instruction, Xi urged carrying out initiatives to expand capacity and upgrade quality in the service sector, which has also been written into this year's government work report and an outline of the 15th Five-Year Plan.

While placing strong emphasis on China's manufacturing prowess, Xi has also attached great importance to boosting the service sector, which creates value by providing essential support for both business production and household life. During his local inspections in recent years, Xi has visited financial and technology service businesses, elderly care service providers and cultural tourism spots, highlighting his care for the development of the sector.

Under Xi's leadership, China has rolled out new measures to boost the service sector. The Ministry of Commerce and eight other departments recently jointly issued the 2026 work plan for enhancing the quality and accessibility of service consumption, focusing on upgrading service consumption infrastructure while addressing key livelihood concerns like care for the elderly and young children.

In his latest instruction, Xi called for advancing producer services toward greater specialization and the higher end of the value chain, fostering high-quality, diverse and accessible consumer services, and building more "China Services" brands.

Producer services support the production activities of a wide range of market players, spanning areas such as R&D and design, inspection and certification, and information technology services, all in high demand as China revs up advanced manufacturing.

During an inspection last month of the Xiong'an New Area, a much-anticipated "city of the future" in North China's Hebei province, Xi called for efforts to promote the clustered development of emerging industries and industries of the future, actively develop producer services, and support the transformation and upgrading of traditional industries.

The producer service sector is increasingly emerging as a focal point for investment in services, supported by its deep integration with advanced manufacturing, policy-driven tailwinds and substantial room for demand expansion, noted Cheng Xiang, an analyst at Shenwan Hongyuan Securities.

On the consumer side, as China's urbanization rate continues to rise and the middle-income group steadily expands, households are placing greater emphasis on service consumption, which boasts huge potential in unlocking domestic demand.

From cultural and tourism industries to elderly care services, Xi has on various occasions laid out policy priorities for a broad spectrum of livelihood-related consumption sectors.

In a speech at the Central Economic Work Conference in December last year, Xi stressed that unreasonable restrictions in the consumption sector should be removed to unlock the potential of service consumption in areas such as culture and tourism, sporting events, catering, and health and wellness.

Addressing the Central Urban Work Conference in July 2025, Xi urged efforts to vigorously develop livelihood-related service sectors including healthcare and domestic services to adapt to changes in population and demand structures.

By upgrading consumption patterns, addressing personalized demand, and expanding inclusive, high-quality service supply with targeted offerings, China can unlock the full potential of service consumption, which will enhance the resilience of domestic circulation as spending priorities shift from acquiring more goods to accessing better services and experiences.

At the same time, the continued development of the service sector also calls for deeper opening up to international participation.

In a letter to the 2025 China International Fair for Trade in Services (CIFTIS), Xi said that China will accelerate the opening of its service market and promote high-quality development of service trade.

In recent years, China has steadily eased restrictions on foreign investment access and advanced the orderly opening up of sectors like telecommunications, internet services, education, culture and healthcare.

It has also sought to promote innovation in its service trade through the regular hosting of major platforms, including the CIFTIS. Meanwhile, the pilot initiative for the comprehensive opening up of the service sector has been expanded to 20 regions, spanning eastern, central, western and northeastern China.

With this latest push from China's leadership, a fresh round of measures to open up, expand and upgrade the service sector is set to follow, analysts said, predicting that the sector would gain renewed momentum and reinforce its role as a strengthening force for the resilience of the broader economy.