SCIO briefing on China's economic performance in first quarter of 2023
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E-mail China.org.cn, April 28, 2023
Voice of China, China Media Group:
Since the beginning of this year, the service industry has rebounded at a faster pace. What are the primary reasons for that? How do you interpret such a rebounding momentum? What's your prediction for the service industry's growth prospects in the next phase? Thank you.
Fu Linghui:
Since the beginning of this year, the rebound of the service sector has been a highlight of economic performance. As a crucial component of the national economy, the service sector accounts for more than half of the Chinese economy. In recent years, the growth of the service sector has slowed due to COVID-19 and other factors, having an adverse impact on economic growth and employment. As the effect of the pandemic has gradually ceased since the beginning of this year, policies to stabilize growth have taken effect at a faster pace. Meanwhile, production and life have returned to normal. The demand for services, especially contact-and-gathering-based services, has been unlocked more rapidly, and the growth of the service sector has markedly rebounded, providing strong support for economic growth and creating more jobs.
In the first quarter, the value-added output of the service sector rose by 5.4% year on year, up 3.1 percentage points from the last quarter. The service sector's contribution to economic growth reached 69.5%, becoming a key factor in supporting economic growth. In terms of structure, first, contact-and-gathering-based services rebounded rapidly. The notable increase in people's consumption of catering, shopping, tourism, and accommodation has led to growth in the relevant service sectors. In the first quarter, the value-added output of the wholesale and retail sector increased by 5.5% year on year, 5.2 percentage points higher than in the last quarter. Additionally, the value-added output of the accommodation and catering sector was up 13.6%, while the value-added output in the fourth quarter of last year was down 5.8%.
Second, the transportation sector has recovered rapidly. As production and life have returned to normal, the flow of goods and people has increased significantly. The growth in travel and transportation-related sectors has sped up. In the first quarter, the value-added output of the transportation, storage and postal service sector increased by 4.8% year on year, while in the fourth quarter of last year, it had decreased by 3.9%.
Third, the modern service sector has demonstrated sound growth momentum. With the rapid development of the digital economy in China, the demand for information technology has been expanding, which has driven rapid growth in relevant sectors of information services. In the first quarter, the value-added output of the information transmission, software and information technology service sector grew by 11.2% year on year, notably higher than the growth rate of the entire service sector. At the same time, the financial sector has kept strengthening its efforts to serve the real economy and actively satisfied the reasonable financing needs of enterprises, which has resulted in growth of value-added output in the financial sector. In the first quarter, the value-added output of the financial sector increased by 6.9% year on year.
With the rapid rebound in the service sector, enterprises' expectations in the service sector have improved markedly. Since the beginning of this year, the business activity index for services has stayed within the expansion range for three consecutive months, with the index in March standing at 56.9%, 1.3 percentage points higher than that in February, suggesting a favorable expansion trend in the service sector. The service sector has a large capacity for employment, and the recovery in the service sector will positively affect stabilizing and expanding employment.
However, we should also notice that the rebound in the service sector is still primary and in the recovery process. The foundation is not yet solid. In the next phase, we will work on expanding domestic demand, boosting personal incomes, improving the environment for consumers, and increasing the supply of quality services to promote the healthy development of the service sector. Thank you.
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