Finance & Economics

China’s Services Activity Growth Eases

In April, China recorded a slowdown in the expansion of the local service sector, but at the same time, the dynamic of the growth was demonstrated by new orders.

Business sentiment improved in the mentioned Asian country last month. Against this background, positive expectations regarding the prospects of China’s economic system in the current year have strengthened. In this case, the recovery of the Asian country’s economy is implied.

The Caixin/S&P Global Services purchasing managers’ index (PMI) in China in April was fixed at 52.5. It is worth noting that in March this indicator in the Asian country was 52.7. Of particular note is the fact that the PMI in China has remained in growth territory for the 16th month in a row. The 50-point mark separates the ascending dynamic from the descending one.

Currently, China’s economic system, which is the second largest in the world, is showing growth exceeding preliminary expectations regarding the degree of intensity of the corresponding process. At the same time, the Asian country still faces several problems. The growth of the local economy is affected by such negative factors as the downturn in the local real estate sector, which turned out to be deep and prolonged, and weak domestic demand.

Wang Zhe, senior economist at Caixin Insight Group, says that the successful start of 2024 for Beijing is consistent with the index of business activity in the manufacturing industry and the sphere of services, which demonstrates the tendency of increase for several months in a row.

The total volume of new orders in the Chinese services sector in April reached the highest levels since May last year. The increase in the number of export orders is due to rising overseas demand and the intensification of tourist activity. The corresponding dynamic has demonstrated the fastest pace in the last ten months.

In April, the business confidence of Chinese service providers in the coming 12 months reached its highest level since the beginning of 2024.

Last month, companies in the Asian country faced pressure amid rising material costs. An increase in labor and energy expenditures was also a factor in the impact on these firms. Against this background, companies have raised prices for their customers.

Wang Zhe says that consistent efforts must be made to ensure the prompt and effective implementation of the political strategy, maintain the current dynamic of the process of economic recovery and improve overall market expectations.

It is widely believed in the expert community that the Caixin survey is more focused on smaller companies that focus on export activities.

The Caixin/S&P’s composite PMI, which tracks both the services and manufacturing sectors, reached 52.8 in China in April. In March, the corresponding figure was 52.7.

In the first quarter of 2024, the gross domestic product (GDP) of the Asian country grew by 5.3% year-on-year. The relevant data were released last month by the National Bureau of Statistics. Against the background of positive information about China’s GDP growth in the first quarter of 2024, hopes for a sustainable recovery of the local economy have strengthened.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.