© 2016 Informa UK Limited, trading as Taylor & Francis Group. This paper presents a review of services sector development in China. It is found that Chinas services have recently emerged as the dominant contributor to economic growth and job creation. Trade in services has also increased dramatically, although China maintains a huge deficit. In comparison with economies at a similar stage of development, however, Chinas services sector is lagging behind. Both GDP and employment shares of the services sector are relatively small. Services trade also accounts for a relatively small share of Chinas total trade. In particular, Chinas new services are underdeveloped. As per capita income rises and resultant urbanization accelerates, the countrys services sector is expected to expand further and hence play a key role in rebalancing Chinas economy away from its over-reliance on manufacturing and exporting. To reach this goal, further reforms and prudent government policies are needed.