Study on the Affecting Factors of Service Industry in China

This paper studies the affecting factors of service industry in China by using the Granger Causality test, Johansen cointegration test and impulse response function. We found that the economic growth and the increase of employment of service industry can promote the development of the service sector in China. And the growth of the service industry does have a positive effect on urbanization process of China, but we didn't get the positive and consistent result in the opposite direction.