Economic upswing expected
Experts call for promoting vitality of services sector amid positive signals
Despite the persistent challenges posed by a slump in the property sector and its impact on domestic demand, experts said they expect a notable economic upswing in China in 2024, fueled by a gradual recovery in services consumption and investment.
They said the government should promptly introduce policies that tap into the vitality of the services sector, such as further advancing the opening-up of the services sector, refining service supply and encouraging consumption of services.
Their comments came as a private survey released on Thursday showed that China’s services activity in December expanded at the fastest pace in five months, indicating that economic recovery is gaining further momentum.
The Caixin China General Services Purchasing Managers’ Index increased to 52.9 in December from 51.5 in November, media group Caixin said. A PMI reading of above 50 points to expansion, while one below that mark indicates contraction.
Caixin’s composite PMI, which includes both manufacturing and services activities, came in at 52.6 in December from 51.6 in the previous month, recording the highest level since May.
“The latest figures signal the continued economic recovery trend, especially with the services sector gradually regaining vitality after COVID-19 disruptions,” said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation’s e-commerce research institute. “The services sector has become a crucial force bolstering the growth of the world’s second-largest economy.”
Expanding service consumption is an essential means of supporting economic growth, said Hong, adding that service consumption and investment are expected to become new growth engines.
Data from the National Bureau of Statistics showed that retail sales of services in China grew by 19.5 percent year-on-year in the first 11 months of 2023, outpacing the 7.2 percent growth in retail sales of products during the same period. Investment in high-tech services jumped 10.6 percent in the first 11 months of last year, significantly higher than the 2.9 percent growth in fixed-asset investment, data showed.
Hong called for further steps to boost the development in services consumption and investment, including ramping up efforts for further opening-up of the services sector, improving service standards and enhancing service supply.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, said he believes that expanding domestic demand and stimulating consumption will be key priorities among the nation’s economic tasks this year.
“It is advisable for the government to take measures such as raising income levels, improving the consumption environment and strengthening the protection of consumer rights,” Wang said.
The tone-setting Central Economic Work Conference, which was held in Beijing last month, called for efforts to stimulate consumption and expand productive investment to create a virtuous cycle of mutual promotion between consumption and investment.
Lin Xianping, secretary-general of Hangzhou City University’s cultural and creative research institute, said the country should take more steps to tackle issues related to employment and boost new types of consumption.
Bai Wenxi, vice-chairman of the China Enterprise Capital Union, said that China’s economy will likely register steady growth this year, given the continuing economic recovery trend, improved consumer sentiment and stronger policy support.
Gary Rosen, CEO of the China division of Accor, a French hospitality group, said that China is expected to become the world’s biggest tourism market and he expects increasing growth opportunities in the market.
“China is moving closer to becoming the world’s biggest tourism market by 2035,” Rosen said. He added that while people are spending less on certain items, they have continued to act on their pent-up demand for travel after COVID-19.
He said that Accor plans to expand its footprint in the country and further diversify business growth in the region.
During the three-day New Year holiday, 135 million domestic trips were recorded, up 155.3 percent year-on-year, marking an increase of 9.4 percent compared with the same period in 2019.
During the holiday, domestic tourism revenue reached 79.73 billion yuan ($11.14 billion), triple the figure of last year and an increase of 5.6 percent over the same period in 2019, according to the Ministry of Culture and Tourism.