Trend analysis based on the updated indicator.
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According to the latest data provided by DataTrack, the GDP output value of "Other Services" in China's tertiary industry for the fourth quarter (representing the full year) of 2024 was reported at 23 trillion 201.4 billion RMB, experiencing a sharp contraction of 23.9% compared to 30 trillion 501.0 billion RMB in the same period of 2023. This drastic decline contrasts sharply with the macro trend of 5.0% overall GDP growth announced by the National Bureau of Statistics of China, indicating that during the process of economic restructuring, the service industry is undergoing severe sector divergence and output value re-evaluation internally.
Delving into the industrial structure, "Other Services" typically encompasses public administration, social security, education, health and social work, as well as some cultural, sports, and entertainment industries. Unlike the steady performance of wholesale and retail trades and emerging digital services, this sector is highly dependent on government public expenditure and private non-rigid consumption. Although recent economic census data indicates an increase in the number of employees in some resident lifestyle service industries, the overall scale of output value has shrunk significantly, highlighting a phenomenon of "volume increase and price decrease" driven by declining per-customer transaction values and restricted public budgets.
Regarding the in-depth attribution of the sharp contraction in output value, the market generally believes it is closely related to the macro environment's "tightening belts" policy and weak domestic demand. Media outlets such as Business Today cited analysis indicating that, in addition to the negative wealth effect brought about by the plummeting number of employees and the wave of salary cuts in the financial industry, local governments' drastic cuts in non-essential fiscal expenditures to resolve massive debt pressure are the core culprits dragging down the output value of public administration and education, science, culture, and health. This implies that although authorities are focusing on promoting high-quality development, under fiscal pressure, some traditional service industries that rely on subsidies are the first to bear the brunt.
Looking ahead, in the short term (1-2 months), coinciding with the traditional consumption and Spring Festival peak season, some cultural and entertainment as well as resident repair service industries may have opportunities for seasonal recovery, but it will be difficult to reverse the overall declining trend in the output value of other services. In the medium term (3-6 months), the potential risk lies in the fact that if the real estate market continues to bottom out and no substantial dawn is seen in the resolution of local debt, government public expenditure may be further constrained. Investors and the market should pay close attention to whether targeted fiscal transfer payments or consumption stimulus policies will be introduced subsequently; otherwise, the shrinkage of this sector may become a long-term hidden danger dragging down the comprehensive recovery of China's domestic demand.
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