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This paper constructed the index system of service industry competitiveness and compared the competitiveness of service industries in Liaoning province and developed coastal provinces by the factor analysis method. The results showed that in comparison with developed coastal provinces and Liaoning province, Liaoning province service industry competitiveness ranked 8th. In addition through the factor analysis we get the economic factor, input factors, development factors and potential factors and calculated the weight of each factor and indicator constitute. Based on the analysis results countermeasures are put forward to further enhance the development of service industry in Liaoning.