China’s Service Sector Exceeds Expectations in December Growth


  • China’s service industry surpassed expectations in December on the back of stimulus-fueled local demand, according to a private survey by
  • The Purchasing Managers’ Index (PMI) registered a growth of 52.9, exceeding the forecast of 51.6, and landscaping an upbeat end to China’s service sector’s year.
  • Furthermore, the Caixin survey detailed an optimistic business perspective for service sector companies in 2024, complemented by a rebound in Chinese consumer expenditure.
  • However, the services sector’s expansion appears precarious with foreign orders only modestly improving and sales prices stagnating amid domestic competition.
  • The Caixin survey, focusing primarily on private, smaller enterprises presents a contrasting view to the official reading, encompassing state-run larger enterprises.

Servicing China’s Growth

As per, China’s service sector grew beyond the expected parameters in December. credited to ongoing stimulus measures. These effects led to rocketing local demand whilst simultaneously calming the chaos in overseas orders, revealed in a private survey released on Thursday.

The Purchasing Managers’ Index (PMI) surged to 52.9 in December, trouncing predictions of 51.6, indicating an upgrade from November’s 51.5.

Positive Market Trends

The buoyant end-year reading underscores the resilience of China’s service sector which has so far been successful in eluding the manufacturing industry’s contraction. The analysts at Caixin stated that service sector enterprises reported improved market conditions and continued betterment in the business environment, leading to a rise in employment and inflation rates.

According to the Caixin survey, service sector companies demonstrated optimism towards their 2024 prospects.

There are apparent signs of recovery seen in Chinese consumer spending recently with local media claiming that the celebratory new year holiday in 2024 saw a greater number of travelers compared to pre-COVID times.

Contrasting Forecasts

The analysts caution that though the service sector growth is encouraging, stability is yet to be established with overseas orders simply ticking along and sales prices offering little push amidst strong domestic competition.

Interestingly, the data projected by Caixin is at odds with government readings released earlier which hint at a stagnation in the services sector in December.

However, it’s worth noting that the Caixin and the official surveys differ in their outlook by the nature of their focus where the former surveys smaller private businesses while the latter is centered around larger state-managed entities. Investors rely on both surveys for a comprehensive understanding of the Chinese economy.

The Manufacturing Standpoint

On another note, the manufacturing sector which represents a major chunk of China’s economy is still wrestling with a state of contraction in December. Conversely, the showed consecutive growth for the second month, the sector remains on a shaky ground according to analysts.

In Quest of Economic Recovery

The Chinese economy’s recovery post-COVID in 2023 was less than satisfactory, triggering investors to advocate for more stimulus measures.

So, while the government has kept a steady flow of liquidity into the economy, it has largely remained cautious about fiscal stimulus, a step that investors propose could be instrumental in fostering economic growth.

These market fluctuations and insights will inevitably impact global trading and in particular, forex trading, specifically with assets tied closely with Chinese economy like currency pairs involving the Renminbi and shares of Chinese companies.

PIP Penguin