Services seen growing fast in December

Sector buoyant, despite manufacturing slowdown

China's services sector recorded its fastest expansion in three months in December, according to a private survey released Tuesday, adding to signs that the Chinese economy remains resilient despite lackluster manufacturing activity.

The HSBC China Services Purchasing Managers' Index (PMI), which focuses on smaller private firms, rose to 53.4 in December from the previous month's 53.0, well above the level of 50 that separates expansion from contraction.

A sub-index measuring employment was especially buoyant, hitting an 18-month high in December, the HSBC survey found.

An official survey of services activity, focused on large State-owned enterprises, was released by the National Bureau of Statistics on Thursday, with the services PMI ticking up to 54.1 in December from the previous month's 53.9.

The strength of the services sector was in stark contrast with the struggling manufacturing sector, which grew at a slower pace during December, according to both the official and the HSBC PMI surveys.

The services sector is relatively environmentally friendly, and is expected to continue outshining the manufacturing sector, which is subject to increasing restraints on energy use and emission reduction targets, Zhuang Jian, a senior economist at the Asian Development Bank in Beijing, told the Global Times on Tuesday.

The robust services activity also offers a source of optimism amid China's slowing growth, as the economy shifts away from export and investment-led growth.

"The services sector continued to hold up well amid the manufacturing downturn, providing some counterweight to the downward pressures on the economy," Qu Hongbin, chief China economist at HSBC in Hong Kong, said in a note e-mailed to the Global Times on Tuesday.

China's economy is expected to fall short of the official annual growth target of around 7.5 percent that was set for 2014, and economists estimate the economy will grow at an even slower pace in 2015.

China's GDP growth is projected to moderate to about 7.2 percent this year, Lian Ping, chief economist at Bank of Communications in Shanghai, told reporters on Tuesday while releasing his bank's outlook for the Chinese economy in 2015.

Despite problems such as deflationary pressures in the factory sector and onerous local government debt, optimism remains intact thanks to a set of favorable factors and potential dividends from economic reforms, Lian remarked.

However, Xu Gao, Beijing-based chief economist at China Everbright Securities Co, noted that the services sector cannot be insulated from the manufacturing industry, the stability of which provides the foundation for the healthy development of services.

Reinvigoration of the manufacturing sector will be vital for stabilization of the economy, Xu told the Global Times on Tuesday.

As for trade in services, analysts believe the country's services trade deficit will continue in the future, although a set of government support measures have been announced to push for growth in services trade.

China's trade services deficit is projected to hit $195 billion in 2015, with transportation services and outbound tourism being the main sources of the deficit, according to Bank of Communications' Lian, who also forecast that goods trade will record a surplus of $420 billion this year amid continuing sluggish imports.

In the first 11 months of 2014, China's services trade deficit expanded by 10.4 percent year-on-year to $133.2 billion, financial news portal caijing.com.cn reported over the weekend, citing Zhou Liujun, head of the Ministry of Commerce's services trade department.

A reversal in the services trade deficit is unlikely in the foreseeable future as the country still lags behind its global peers in the services arena, said Zhuang of the Asian Development Bank.