Services seen as bright spot for economy

Amid the sustained recovery in consumer spending, China has employed an array of policy measures to foster greater openness within the services sector, as the country aims to further boost consumption by improving the provision of more quality services, officials and experts said on Friday.

By expanding well-paced openness in the services sector, where market demand is robust, but quality supply falls short, the world's second-largest economy seeks to bolster a bright spot in domestic demand and fuel economic growth, they added.

Their comments came after the release of the better-than-expected consumer price index, the main gauge of inflation, by the National Bureau of Statistics on Friday, which signaled a strengthening of consumer confidence and demand as prices rose compared to the previous month, coupled with a widening year-on-year growth rate.

From a month-on-month perspective, the CPI has reversed its decline of 0.2 percent in June to register an increase of 0.5 percent in July, said Dong Lijuan, a statistician with the bureau, adding that the CPI grew 0.5 percent on a year-on-year basis, accelerating by 0.3 percentage point from the previous month's pace.

Looking into the second half of the year, the burgeoning travels in the summer time, accompanied by the typical consumption boon in the fourth quarter, the country's CPI is likely to sustain a "mild recovery", the People's Bank of China, the country's central bank, said in a report on Friday.

To further bolster the positive trend in consumer spending, particular attention will be directed toward enhancing the services sector, a critical cornerstone in unlocking latent consumption potential, officials said.

Growth in the retail sales of services has consistently outpaced that of goods since the government began releasing the data in August last year, indicating a shift in consumer behavior.

In the first half of this year, retail sales of services witnessed a year-on-year growth of 7.5 percent, surpassing the growth rate of goods retail sales by a margin of 4.3 percentage points, the NBS said.

Notably, the influx of international top-tier service enterprises into China's market is expected to improve services supply and catalyze domestic demand, they added.

To this end, the country will update the industry catalog that names more sectors encouraging foreign investment, especially those related to services consumption, Tang Wenhong, assistant minister of commerce, said at a news conference.

Moreover, the negative list for foreign investment will be trimmed as appropriate to allow the orderly expansion of openness in services such as telecommunications, education, culture and healthcare, Tang added.

Just a week ago, China's top leaders, at a meeting of the Political Bureau of the Communist Party of China Central Committee, also pledged to make boosting consumer spending a greater policy focus, with the services sector high on the agenda.

The recovery in the consumer services sector, including domestic and international tourism, food services, dining out and entertainment, is robust, said Daniel Zipser, senior partner at global consultancy McKinsey & Co.

Services consumption expenditure in China accounted for 45.6 percent of total consumer spending, official data showed.

However, in developed countries, the share of services in total consumer expenditure typically hovers around 70 percent, a figure far higher than the current level observed in China, said Sun Xuegong, director-general of the department of policy study and consultation at the Chinese Academy of Macroeconomic Research.

This disparity underscores the vast untapped potential for the expansion of services consumption within China, Sun added.

Zhang Ming, deputy director of the Institute of Finance and Banking, which is part of the Chinese Academy of Social Sciences, said that with a projected scale exceeding 1 trillion yuan ($139.46 billion) the distribution of consumption vouchers through methods, such as deficit increases or special treasury bond issuances, has the potential to catalyze spending across various sectors.