China’s service sector expanded by 7 percent year-on-year in the first half of the year, driven by the fast growth of information technology, transportation and financial service companies, data from the National Bureau of Statistics showed on July 15.
The service industry continues to be a strong driver of the economy, outperforming the overall GDP growth of 6.3 percent in the first half of the year as well as industrial growth of 6 percent during the same period.
The software and information technology sector was biggest contributor to the expansion of the service industry, growing by 20.6 percent year-on-year in the first half of the year, while transportation and financial services saw growth of 7.3 percent, according to the NBS.
Economists said that the robust growth of the service sector reflects the resilience of the Chinese economy which has seen an improved structure. The service sector contributed to 60.3 percent of the overall economic growth in the first half of the year, official data showed.
“The quality of economic growth is improving along with the process of the supply-side structural reform,” said Xu Hongcai, an economist with the China Center for International Economic Exchanges.
“This was reflected by data which showed that the service industry accounted for 54.9 percent of GDP, up 0.5 percentage point year-on-year. Consumption also accounted for 60.1 percent to the overall economic growth,” he said.
Meanwhile, companies in the service sector saw faster revenue growth from January to May, which rose 10.1 percent year-on-year. Technology companies in the service sector saw their revenue grow by more than 12 percent year-on-year.
Wang Xinzhe, chief economist at the Ministry of Industry and Information Technology, said the software and information technology service sector is the most concentrated area of research and development and its steady growth is driving the development of traditional industries such as manufacturing.
“This has also helped push forward the development of the nation’s digital economy and its integration with the real economy,” he said.
Companies are also expressing rising confidence in the Chinese economy and their growth prospects. A survey by global auditing and consulting firm KPMG found that about 77 percent of the surveyed 125 CEOs from companies headquartered in the Chinese mainland and Hong Kong are upbeat or very upbeat on domestic economic growth despite possible global economic headwinds.
The CEOs are increasingly confident in the growth prospects of their companies, with most expecting to see top-line revenue growth and an increase in headcount over the next three years, the survey showed.
Despite the slower-than-expected GDP growth of 6.2 percent in the second quarter, the resilience of the Chinese economy has strengthened, said Steven Zhang, chief economist with Morgan Stanley Huaxin Securities Co Ltd.
Policies in the second half of the year should focus on stimulating effective demand and channeling more funds into the economy to help reduce smaller companies’ financing costs, he said in a research note.