Based on a provincial panel threshold regression model with per capita GDP as the threshold variable,this paper explores the correlation between per capita GDP and the proportion of employment in the service industry in different stages of China’s economic development.The results show that no matter the development stage,there is always a positive correlation between the two.The results also show that the more advanced the economic development stage,the bigger and more obvious is the regression coefficient.The empirical results based on stochastic frontier analysis (SFA) modeling indicate that the development of the service industry can always contribute to the improvement of national economic efficiency by creating employment opportunities and enhancing efficiencies in related industries.The more developed an economy is,the more significant is the effect.The results of descriptive statistics suggest that there is no empirical factual basis to support the belief that it is normal for China to have a low service industry proportion at its current economic development stage.This paper seeks to illustrate the negative influence of an underdeveloped service industry on China’s economy,and to encourage leapfrog development of the service industry in China.