China's Service Trade and Service Industry Growth - An Empirical Analysis from the Aspect of Factor Intensity

China's service industry has grown rapidly since 1997, and meanwhile the service imports and exports also increased at a great speed, indicating a link between China's service trade and service industry GDP. This paper separates services into three categories by factor intensity and conducts an empirical analysis with vector error-correction (VEC) models. The results find that there is a long-run relationship among China's service industry outputs, labor-intensive service trade, capital-intensive service trade and knowledge-intensive service trade. Among the three types of services, only labor-intensive service exports, capital-intensive imports and knowledge-intensive imports have an impact on the growth of China's service industry.