Business / Industries

Services to give economy long-term boost

By Wei Tian in Shanghai and Hu Yuanyuan in Beijing and He Wei in Guangzhou (China Daily) Updated: 2014-04-17 07:20

Restructuring and upgrading also expected to offset slow growth

The Chinese economy carried on with its restructuring and upgrading in the first quarter of the year despite the slowest expansion in 18 months, a highlight amid pessimistic data which is expected to offset further downward pressure on growth over the long term.

Although observers see uncertainty in future gross domestic product growth following the 7.4 percent figure reported on Wednesday, there are remarkable figures on the service sector and consumption side which bring some comfort.

Services to give economy long-term boost
Services to give economy long-term boost 
By the end of March, the service sector was the major driver of the world's second-largest economy, contributing nearly half (49 percent) of the growth, data from the National Bureau of Statistics shows.

The service sector share picked up 1.1 percentage points from the same period last year and was 4.1 percentage points higher than the manufacturing sector. The statistics bureau said the importance of the service sector is still climbing.

In the meantime, consumption was growing at a steady pace amid the weakening momentum of investment growth. Consumption accounted for 64.9 percent of the first quarter's GDP growth, 1.1 percentage points more than the same period in the previous year.

"Even though it's too early to say the Chinese economy has transformed from a manufacturing-driven one to one that is service-driven, or from being investment-driven to consumption-driven, this change is indeed happening, and is becoming more obvious," statistics bureau spokesman Sheng Laiyun said during a news conference.

"GDP growth in the first quarter beat analysts' estimates, mainly because of higher-than-expected growth in the service sector," said Yang Weixiao, a senior analyst with Lianxun Securities Co Ltd.

Yang said more reforms in the pipeline will release larger consumption demand, which will be the major support to the "twitch" of slowdown during the economic transition.

According to Nielsen Holdings, China could see a boost in household consumption from today's 35 percent of GDP to between 45 and 50 percent by 2020.

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