China is betting on its services sector as the engine of economic growth, with experts from Peking University highlighting its significant role in enhancing consumer spending and urbanisation. This shift is seen as a necessary response to the ongoing tensions from US tariffs, pushing for a robust support system for services to uplift the economy.
To stimulate consumerism, China has injected a substantial fiscal stimulus of 300 billion yuan (approximately $41.46 billion), broadening its subsidy programme to encompass services. Unlike one-off purchases, the services sector boasts a ‘stickiness’ that promotes sustained demand. In 2024, household services expenditure surged to 13,016 yuan, marking a 7.4% year-on-year increase, representing 46.1% of household expenditures. By 2035, the Guanghua School of Management aims to elevate household spending’s contribution to GDP to 60%, positioning services as a key growth driver.
As China transitions its economic foundation towards services, global investors should keenly observe the emerging growth opportunities. If policies are successfully executed, the services market could emerge as a critical area for investment, influencing global supply chains and sectoral growth.
China’s focus on urbanisation and services marks a significant pivot from its traditional reliance on manufacturing and exports. This shift not only promises changes within China’s economy but also holds implications for global economic dynamics, fostering new partnerships and competition through enhanced service-focused interactions.
China is focusing on its services sector to spur economic growth, with Peking University experts advocating for its potential to boost consumer spending and urbanisation. A fiscal stimulus of 300 billion yuan aims to enhance service consumption, which made up a significant portion of household spending in 2024. This transition marks a shift from manufacturing, influencing global market dynamics and investment opportunities.
The prioritisation of the services sector reflects China’s strategic move to enhance its economic resilience, particularly in the face of international challenges. With significant fiscal investment and projections for increased household spending, the emphasis on services will likely redefine both domestic economic structures and global market relationships. Investors should remain vigilant as these developments unfold, as they could herald a new phase of economic identity for China.
Original Source: finimize.com
