China’s service activity expanded at its slowest pace in six months in December, with Reuters citing a drop in new business and weaker foreign demand. The RatingDog China General Services PMI dropped to 52.0, only slightly above the benchmark of 50 which would signal a contraction.
The survey suggests the service sector is still growing but is consistently losing momentum. Given the key role the service sector plays in consumption-led growth, this downward trajectory does not bode well for an economy which Chinese leadership has pledged to move towards being consumer-driven.
That said, business sentiment does seem to be on the rise, jumping to a nine-month high. This may be a direct result of recent media coverage of ambitious government plans to boost domestic demand. Whether this sentiment is realized, or the downward trajectory will continue, will determine the success of said plans.