Boosting China's Services Sector: Path to Economic Growth

Economists urge China to enhance support for its services sector to stimulate consumption and economic growth amid trade tensions with the U.S. Increased fiscal stimulus and consumer goods subsidies have been discussed, with a focus on expanding aid to the services sector. Services spending is viewed as key to long-term economic development.

In a bid to invigorate economic growth, economists from Peking University and a former central bank adviser have called for increased support for China's burgeoning services sector. This initiative is seen as essential to boost consumption amidst ongoing tariff disputes with the U.S. China's government has already committed to a fiscal stimulus doubling to 300 billion yuan, aimed at expanding subsidies for consumer goods, including electric vehicles and appliances.

Yan Se, an associate professor at Peking University, proposed that these subsidies extend to the services sector. His argument suggests that unlike the finite needs in consumer goods purchasing, the services industry offers continuous and recurring consumption, critical for sustained economic growth.

Following a slight reduction in growth of sales for home appliances, momentum is shifting towards enhancing household services consumption. As part of a long-term vision, experts like Liu Qiao foresee the services sector accounting for 60% of China's household spending by 2035, up from its current role as a mainstay for employment and potential driver of urbanization-led income boosts for rural migrants.

(With inputs from agencies.)