China
China's services sector gains steam to cement economic recovery
  ·  2023-04-24  ·   Source: Xinhua News Agency

Yu Shufen serves food for customers in her homestay in Nangou village, near Beidahu Ski Resort, northeast China's Jilin Province on February 11, 2023 (XINHUA)  

Driven by improving consumer sentiment and pro-growth policies, China's services sector is picking up its pace of growth, lending steam to the economic recovery from COVID-19.

The country's value-added services output increased 5.4 percent year on year in the first quarter of 2023, with its pace of growth accelerating 3.1 percentage points from the fourth quarter of 2022, data from the National Bureau of Statistics (NBS) shows.

The recovery in the services sector, which contributed 69.5 percent of overall GDP growth in the first quarter, has been a bright spot in economic operations since the beginning of this year, according to NBS spokesperson Fu Linghui.

Contact-based services sectors, hit hard by COVID-19 restrictions, are gradually getting back on their feet. The accommodation and catering sector surged 13.6 percent year on year in the first quarter, in sharp contrast to a decline of 5.8 percent in the previous quarter.

Passenger flows and logistics in China are normalizing fast. The value-added output of the transportation, warehousing and postal sectors rose 4.8 percent year on year in the first quarter, reversing a decline of 3.9 percent from the last quarter.

The vitality of China's services sector can also be seen in the reemerging hustle and bustle across the country.

Approximately 24 million domestic tourist trips were made in China on the day of the Qingming Festival, which this year fell on April 5, up 22.7 percent from last year, according to the Ministry of Culture and Tourism (MCT).

The country's major online travel agency Trip.com Group has predicted that the number of tourist trips made during the upcoming May Day holiday will total about 200 million, exceeding the figure recorded in 2019.

According to a report from the China Tourism Academy in February, about 4.55 billion visits will be made to domestic attractions this year, a year-on-year rise of 73 percent, and domestic tourism-related revenues are projected to surge 89 percent from last year to 4 trillion yuan (about $581.8 billion).

Cinemas nationwide reported the second-highest box office figure on record during the weeklong Spring Festival in January, and dine-in consumption increased by 15.4 percent from last year.

Solid efforts have been made to support the country's services industries since the beginning of the year.

In April, the MCT launched a campaign to boost consumption in the culture and tourism sectors. The campaign, which will continue until the end of this year, includes measures to subsidize consumer costs and ease the difficulties weighing on small and micro enterprises.

The country's industry associations and platform enterprises in the catering sector will launch over 70 activities in 2023 to stimulate consumption, according to the Ministry of Commerce.

The recovery in services consumption will pick up speed, and some savings accumulated during the pandemic are expected to be expended as China's COVID policy optimization and pro-consumption measures restore consumer confidence, said Ricky Wong, vice-president of KPMG China.

With policies taking effect, the services sector will retain its recovery momentum, and market expectations will keep improving, said Bruce Pang, Greater China chief economist of the real estate and investment management services firm JLL.

China has set a GDP growth target of around 5 percent for 2023. Earlier this month, the International Monetary Fund projected 5.2 percent growth for China this year, up from 3 percent last year. The World Bank, meanwhile, expects China's GDP growth to rebound to 5.1 percent in 2023.

The foundation for the rebound in the services sector, however, has just started forming and is not yet solid, Fu said, calling for efforts to expand domestic demand, enhance residents' incomes, improve the consumption environment and promote the healthy development of the services sector.

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