Dynamic Quantitative Analysis on Chinese Urbanization and Growth of Service Sector

This paper is based on the index number of value-added of tertiary industry and town population/total population ratio during the years of 1978-2010 in China. It have made sophisticated researches on the relationship between development of domestic service industry and urbanization by applying ADF test, cointegration test, error correction model, Granger causality test, finally drawing the conclusions as follow: (1) urbanization is the important power of service industry. (2) The level of urbanization has Granger causality relationship with the development of service industry recently, but the effect is one direction, which means the promotion of urbanization level improves the level of service industry.