Ser­vice in­dus­try leads China’s GDP growth

China Daily (USA) - - BUSINESS - By LI XIANG lix­i­ang@chi­nadaily.com.cn

Con­sump­tion de­mand likely to help main­tain la­bor mar­ket sta­bil­ity

Chi­nese com­pa­nies in the ser­vice sec­tor saw stronger profit growth in the first three quar­ters thanks to ris­ing de­mand for ser­vices and steady price rises, data from the Na­tional Bureau of Sta­tis­tics showed on Tues­day.

The com­pa­nies saw their op­er­at­ing profit rise 31.4 per­cent year-on-year in the first three quar­ters, which was 8.6 per­cent­age points higher than in the first eight months, ac­cord­ing to the bureau.

The profit growth of the ser­vice sec­tor was faster than that in the in­dus­trial sec­tor, which saw 22.8 per­cent growth year-on-year.

Bureau spokes­woman Liu Ai­hua said the ser­vice sec­tor was a “bright spot” for the Chi­nese econ­omy when all other ma­jor eco­nomic in­di­ca­tors pointed to a slight con­trac­tion in Oc­to­ber.

The rapid rise in de­mand for ser­vices has led to a steady price rise, which con­trib­uted to the “out­stand­ing” per­for­mance of cor­po­rate prof­itabil­ity in the ser­vice sec­tor, Liu said at a news con­fer­ence in Bei­jing.

The ser­vice sec­tor’s pro­por­tion of China’s GDP has been ris­ing steadily, sur­pass­ing 50 per­cent in 2015, in­di­cat­ing an im­proved eco­nomic struc­ture.

Qu Tian­shi, an econ­o­mist at ANZ Group, said the ro­bust profit growth in the ser­vice sec­tor re­flected chang­ing con­sump­tion trends in China.

“Con­sump­tion de­mand has been shift­ing grad­u­ally from goods to more ser­vices. This will also help main­tain la­bor mar­ket sta­bil­ity dur­ing the pe­riod of eco­nomic trans­for­ma­tion,” Qu said.

An in­dex track­ing busi­ness ac­tiv­ity in the ser­vice sec­tor stood at 53.5 per­cent in Oc­to­ber, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics. A read­ing above 50 in­di­cates ex­pan­sion while a read­ing be­low that re­flects con­trac­tion.

Sec­tors in­clud­ing ho­tels, re­tail, avi­a­tion lo­gis­tics, de­liv­ery, telecom­mu­ni­ca­tions and in­for­ma­tion tech­nol­ogy showed even faster ex­pan- sion, with their busi­ness ac­tiv­ity in­dex ex­ceed­ing 55 per­cent, data from the NBS showed.

De­spite the slight con­trac­tion in eco­nomic ac­tiv­ity in Oc­to­ber with slower growth of in­dus­trial pro­duc­tion and in­vest­ment, economists said that the ser­vice sec­tor will con­tinue to be a ma­jor fac­tor driv­ing the coun­try’s eco­nomic growth as more poli­cies are ex­pected to be rolled out to sup­port house­hold con­sump­tion.

Li Xun­lei, chief econ­o­mist at Zhong­tai Se­cu­ri­ties Co Ltd, said that, in or­der to un­leash its con­sump­tion po­ten­tial, China needs to fur­ther im­prove its so­cial se­cu­rity net­work and so­cial wel­fare in­clud­ing pub­lic ed­u­ca­tion, el­derly care and health­care.

Re­duc­ing house­holds’ fi­nan­cial lever­age in the prop­erty and fi­nan­cial sec­tors will also sup­port con­sump­tion ex­pen­di­ture and the ex­pan­sion of de­mand for ser­vices, Li added.

Con­sump­tion de­mand has been shift­ing grad­u­ally from goods to more ser­vices.” Qu Tian­shi, an econ­o­mist at ANZ Group

XU CONGJUN / FOR CHINA DAILY

Ground staff load cargo at Nan­tong Air­port, Jiangsu prov­ince.

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