China's Service Sector Value Added Up 5.2% in H1, State Council Issues Capacity Expansion and Quality

The service sector is the largest industry in China's national economy. In the first half of this year, the value added of the service sector reached 41.4 trillion yuan, up 5.2% year-on-year, 0.5 percentage points faster than the overall economic growth rate. It accounted for 59.5% of GDP, up 0.3 percentage points from the same period last year. In the first half, the service sector contributed 66.1% to economic growth, nearly 6 percentage points higher than a year earlier. In the second quarter alone, the value added of the service sector was 20.76 trillion yuan, up 5.1% year-on-year, contributing 69.4% to economic growth and pulling GDP growth by 3.0 percentage points.

By industry, the value added of information transmission, software and information technology services, and leasing and business services increased by 10.7% and 11.9% year-on-year respectively, together contributing nearly one-quarter to economic growth. The value added of the financial industry grew by 6.7%, contributing over 10% to economic growth. In the first five months, the operating revenue of service enterprises above the designated size increased by 6.6% year-on-year, accelerating by 0.2 percentage points from the first four months.

Productive service-related industries maintained rapid growth. Among them, the operating revenue of research and development, loading/unloading and warehousing, and business services enterprises increased by 16.8%, 15.4% and 10.3% year-on-year respectively. Service trade performed well, with the deficit narrowing by about 20%. In the first five months, total service imports and exports reached 3.10 trillion yuan, up 6% year-on-year. Service exports were 1.23 trillion yuan, up 15.9%, of which knowledge-intensive service exports grew by 12.2%. In the first five months, the actual use of foreign capital in the service sector accounted for 72% of the national total. During the 15th Five-Year Plan period, as demographic changes, industrial structure transformation and consumption structure upgrading deepen, the development space for the service sector will become broader. In the first five months, the operating revenue of digital technology application enterprises above the designated size increased by 8.4% year-on-year. In the first half, fixed asset investment in high-tech services grew by 7.5%, of which investment in information services increased by 15.5%.

In the first half, the value added of wholesale and retail, accommodation and catering industries maintained expansion. In the first five months, the operating revenue of resident services, repair and other services enterprises above the designated size increased by 5.7% year-on-year. In the first five months, the operating revenue of culture and arts enterprises and sports enterprises above the designated size increased by 11.8% and 11.9% respectively. In the first five months, the operating revenue of strategic emerging service enterprises above the designated size increased by 6.1% year-on-year. In the first half, the transaction value of e-commerce trading platforms grew by 3.5%. The transaction value of key charging platforms increased by over 30% in the first half. In April this year, the State Council issued the Opinion on Promoting Capacity Expansion and Quality Improvement of the Service Sector. In June, the service sector business activity index stood at 50.4%, up 0.1 percentage points from the previous month. The business activity indices for telecommunications, broadcasting and satellite transmission services, internet software and information technology services, monetary financial services, and insurance were all in the high prosperity range above 55.0%. The Expanding Consumption 15th Five-Year Plan has deployed measures to improve service consumption quality and benefit the people.

The intermediate demand from manufacturing digital transformation for productive services remains strong, with demand for research and development, inspection and testing, modern logistics, supply chain management, cloud computing, and business consulting steadily expanding. The institutional opening of the service sector is accelerating, and the rapid export of digital services and the booming inbound tourism will form new growth points for service trade.