China’s Services Sector Expands in December

Investing.com– China’s services sector expanded in December at its fastest pace in seven months, driven by higher domestic demand, despite a decline in export businesses, according to private purchasing managers index data released on Wednesday.

The Caixin services PMI recorded a value of 52.2 in December, surpassing expectations of 51.4 and up from 51.5 in November. A reading above 50 indicates expansion, marking the fastest expansion in services since May 2024.

According to service providers, promotional efforts and improved underlying demand contributed to the increase in new sales. Notably, sales growth was buoyed by higher domestic demand, while new export business fell for the first time since August 2023, amid weakening foreign interest, as reported by Caixin.

Recent PMI data indicated that the manufacturing sector experienced slower-than-expected growth in December, suggesting diminishing effects of stimulus measures.

China has pledged to implement more proactive fiscal stimulus measures and adopt moderately looser monetary policies in 2025.

In light of U.S. President-elect Donald Trump’s threats to impose steep import tariffs when he assumes office on January 20, there are concerns about increased economic pressure on China. Beijing is anticipated to introduce more targeted fiscal stimulus in response to these tariffs this year. Recent reports indicate the country may lower interest rates to boost fiscal spending and support economic growth.

“Sentiment in the Chinese service sector remained positive at the end of 2024 as firms were generally hopeful that business development efforts and supportive government policies can sustain sales growth in 2025,” the report concluded.