Promoting the recovery of life service-related consumption such as catering and accommodation since the COVID-19 pandemic now serves as the biggest challenge and the sector boasts one of the highest growth potentials in China, analysts said after the release of this year's Government Work Report.

Hampered by the pandemic, the level of life service consumption in the country is still relatively low. For instance, revenues of accommodation, tourism and box office receipts last year were lower than the levels seen in 2019, when there was no pandemic.

The contribution of consumption to economic growth has increased steadily and has become the main driving force for the stable recovery of the national economy. China's final consumption expenditure contributed 65.4 percent to economic growth in 2021, driving GDP growth by 5.3 percentage points, said the National Bureau of Statistics.

China will continue to expand domestic demand and promote the sustained recovery of consumption. The government will promote in-depth integration of online and offline consumption, and encourage development of new consumption formats and models, said this year's Government Work Report, which was issued on March 5.

"We should attach more importance to the promotion of life services consumption, as goods consumption can be globalized, while life service consumption is mostly localized. Thus, it has a significant potential to help stimulate domestic demand," said Zhu Di, a researcher at the Chinese Academy of Social Sciences.

"Tourism, accommodation, culture, entertainment and leisure were sectors that were greatly affected by the pandemic. Besides, the quality of the supply of life services in the market is not perfect, and the offerings can't meet some high-quality demand from middle-income groups. The supply of life services consumption needs to get further improved," Zhu said.

In fact, many cities have taken action to promote the recovery of life services consumption. This year, the Beijing Municipal Commerce Bureau will improve digital marketing and supply chain management of the sectors related to life services, including catering, convenience stores, vegetable retailing and domestic help services, said the bureau. The upgrading project was officially launched on March 4.

Beijing will also add more convenience outlets that are located within 15-minute walking distance of major residential areas. Those stores include pharmacies, photography and printing services, community flower shops, and tea houses and cafes, the bureau said.

Meanwhile, the government will help improve the income distribution system and promote the income growth of residents through multiple channels. The government will give more support in land use and planning in the building of kindergartens and elderly care centers in communities, and support the domestic services sector to expand in scale and raise its service quality, the Government Work Report said.

"In the past two years, under the impact of the pandemic, the recovery of residents' consumption has relatively lagged behind. Currently, the consumption growth rate in China is still lower than the level seen before the pandemic, and the growth of life services consumptions such as travel, catering, accommodation and culture still faces certain challenges," said Liu Rihong, an official of the State Council, China's Cabinet, and a member of the drafting group of the Government Work Report.

Xiang Dong, deputy head of the Research Office of the State Council, said: "Expanding domestic demand includes expansion in consumption and investment. China stands as the fastest-growing consumer market in the world and boasts remarkable room for further growth. China's per capita service consumption expenditure accounts for 44 percent of total consumption expenditure, which apparently lags behind compared with developed countries."

With the pandemic increasingly coming under better control and vaccination rates rising in China, the consumption market is foreseen continuing its recovery this year, and the consumption structure and categories will continue to upgrade, experts said.