BEIJING (Reuters) – China should step up support for its burgeoning services sector to boost consumption, which top leaders made a priority this year to spur growth amid U.S. tariff disputes, economists from Peking University and a former central bank adviser said.
As China’s policy tone has tilted toward boosting household consumption, authorities have doubled the fiscal stimulus to 300 billion yuan ($41.46 billion) on an expanded consumer goods subsidy scheme for electric vehicles, appliances and other goods.
“I have a specific suggestion that the scheme could expand to the services sector. This can be done right away,” Yan Se, associate professor and deputy director of the Institute of Economic Policy at Peking University, told a meeting on Wednesday.
“You may not buy another television this year after you bought one last year, but the services industry is different… It has stickiness and it’s not one-off,” Yan said.
Official data on Monday showed home appliance and audio-visual device sales grew 10.9% in January-February from the same period a year earlier, slowing from December’s 39.3% jump and 22.2% growth in November.
In 2024, China’s household services consumption expenditure was 13,016 yuan per capita, up 7.4% year-on-year and accounting for 46.1% of total household consumption expenditure, official data showed.
Liu Qiao, dean of Guanghua School of Management at Peking University, said China’s household services spending was low relative to annual economic output.
He said that it would be crucial for China to raise the household spending component of annual economic output to nearly 60% by 2035 from less than 40% currently, and predicted that services consumption to account for about 60% of total household spending by then.
“The service industry will be a main force of employment in the future,” said Chen Yuyu, director of the Institute of Economic Policy Research at Peking University.
“Even if we have achieved good results in the manufacturing sector today, we should be aware that what China needs is a strong and innovative manufacturing industry, not a manufacturing industry that accounts for a large share of the GDP,” Chen said.
Separately, Liu Shijin, a former adviser to China’s central bank, told a forum last week that China should focus on boosting services consumption and speed up urbanisation to boost the incomes of rural migrants.
“When we talk about insufficient consumption, the key issue is the lack of services consumption. Goods consumption is more or less stable, but services consumption is directly related to the level of urbanisation,” Liu said.
($1 = 7.2353 Chinese yuan renminbi)
(Reporting by Ellen Zhang and Kevin Yao. Editing by GErry Doyle)
