China's Caixin services PMI rose to a near seven-month high in December

Beijing - China's services sector expanded at its fastest pace in seven months in December, driven by rising domestic demand, an unofficial survey showed, but orders from overseas fell, pointing to growing trade risks for the country amid growing global economic uncertainty.

Data released by Caixin on Monday (January 6) show that the Caixin China General Services Business Activity Index (services PMI) recorded 52.2 in December 2024, up 0.7 percentage points from November and the highest since June 2024.

The figure beat market expectations, with a median forecast of 51.4 in a Bloomberg survey of economists. The survey also chimes with official data released last week by China's National Bureau of Statistics, which showed the services PMI surged 1.9 percentage points to 52.0 in December.

In recent months, China has introduced a series of fiscal and monetary measures, such as large-scale trade-in subsidies for cars and home appliances, after these measures to boost consumption and stimulate the economy, domestic demand has improved to a certain extent.

Wang Zhe, a senior economist at Caixin Think Tank, pointed out that since the end of September, the combination effect of a series of stock and incremental policies has continued to be released, positive changes have increased, the overall stability of the national economy, and the main goals of economic and social development are expected to be successfully achieved throughout the year.

However, from the Caixin China services PMI sub-data, the increase in demand is mainly driven by domestic demand, external demand is in a state of contraction, the new export orders index fell below the critical point, is the first contraction since August 2023, and is a two-year low. The sample companies reported that overseas customers were less interested in China's services sector.

Us President-elect Donald Trump, who will take office in the middle of this month, has promised to impose tariffs on goods from China, making the trade uncertainty and potential risks faced by enterprises significantly increased, and the business expectations index of service companies fell to a low position in December.

Wang Zhe believes that the external environment faced by China in 2025 will be more complex, and the policy level should prepare in advance and respond in time, and the subsequent policies should be inclined to increase residents' income and improve people's livelihood, especially to improve the consumption ability and willingness of vulnerable groups.