China’s services sector activity expanded at its fastest pace in more than three years last December, which analysts said signals stable growth in the world’s second-largest economy.
The Caixin services Purchasing Managers’ Index, a major private survey, rose to 53.9 in December, from 51.9 in November 2017, according to survey results released by Caixin Media on Jan 4. It is the highest reading since August 2014. A reading above 50 indicates growth, while a reading below that signals contraction.
In a similar trend, the Caixin Composite PMI, which covers both the manufacturing and services sectors, rose to 53 in December, compared to 51.6 in November, the highest in a year.
New orders and export business have increased strongly, leading to increased employment, according to the results of the services survey. New business increased at its fastest pace since May 2015, the survey shows.
“The growth in total new orders and new export business supported optimism among manufacturers and service providers toward the business outlook for the year ahead,” Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said after the publication of the Caixin report.
“Although China’s economic growth continues to face downward pressure, it remains resilient. However, special attention should be paid to whether future policies will become tighter than expected.”
China achieved higher-than-expected GDP growth of 6.9 percent in the first nine months of last year, and the whole-year growth could be around 6.8 percent in 2017, according to various economist forecasts, showcasing the global growth engine’s economic resilience.
But to ward off potential financial risks and achieve more sustainable growth, last year the country tightened financial regulation, strengthened environmental protection, and moved to strictly control property prices, which had soared in recent years, measures that have also dampened growth.
Analysts have forecast that growth this year could slow slightly. Zhu Baoliang, a senior economist at the State Information Center, said at a recent forum that economic growth could dip to 6.5 percent this year.