SCIO press conference on national economic performance in H1 2023

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CMG Voice of China:

In the first half of the year, the service sector including accommodation and catering achieved rapid growth. What are the reasons for this? How do you view the development trends of the service sector going forward? Thank you.

Fu Linghui:

Thank you for your questions. The service sector was an outstanding highlight of economic growth in the first half of the year. Since the beginning of this year, China has fully resumed normal order in its social and economic activities. With the effective implementation of policies to stabilize growth, employment and prices, the recovery of its service sector has gathered pace significantly. The modern service industry has seen overall sound development, with new growth drivers developing rapidly, and the expectations of service enterprises have been generally stable. In the first half of the year, the added value of the service sector increased 6.4% year on year, which was significantly higher than the same period last year as well as the whole of last year.

First, the contact-based service industry grew rapidly. With an increase in residents going out to shop, dine and travel, related service industries have accelerated recovery. In the first half of the year, the added value of the accommodation and catering industry, wholesale and retail industry, transportation, warehousing and postal industry increased 15.5%, 6.6% and 6.9% year on year, respectively, all maintaining a rapid growth.

Second, the modern service industry has shown a robust growth trend. Digital development continues to deepen, and the demand for information services is expanding, driving growth in related industries. In the first half of the year, the added value of the information transmission, software and information technology services industry increased 12.9% year on year. Business activities have accelerated recovery, and the demand for services such as exhibitions and tourism has increased, leading to fast growth in related service industries. In the first half of the year, the added value of the leasing and business services industry increased 10.1% year on year.

Third, the new drivers for the development of the service sector have been strengthened. With technological innovation driving growth, the high-tech service industry has seen rapid development. During the January-May period, the revenues of the technology service industry and high-tech service industry increased 12.4% and 11.9% year on year, respectively. In the first half of the year, fixed-asset investment in the high-tech service industry increased 13.9% year on year.

Fourth, the expectations of service enterprises have been generally stable. In June, the Services Business Activity Index stood at 52.8, which has remained in the expansion range for six consecutive months. As for market expectations, the expected index of business activities in the sector was 60.3, 0.2 percentage point higher than the previous month, indicating that service enterprises are optimistic about market prospects.

The service sector has recovered rapidly for several reasons. First, the country has fully resumed normal order in its social and economic activities, creating favorable conditions for the development of the service sector, especially for contact-based services and services involving social gathering. Second, economic activities such as the flow of people and logistics have become more active, significantly driving the growth of related service industries. This year, there has been a significant increase in the tourism and travel activities of residents, and the box offices of cultural performances and films have expanded rapidly. Third, the service sector has seen remarkable innovative progress, with new business forms and models developing rapidly. Technological innovation has significantly driven the growth of the high-tech service industry such as research and development, and the integration of online and offline business activities has accelerated. New service models such as online retail and livestreaming have grown rapidly, injecting new impetus into the development of the service sector. Overall, the service sector has been on track for a sound recovery, which is favorable for boosting production, improving people's livelihoods, expanding employment, and promoting stable economic growth. In the next stage, as domestic demand potential is gradually released and market confidence strengthens, the service sector will continue its good momentum of steady growth. Thank you.

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