In its latest quarterly business activity survey based on more than 3,300 interviews, the China Beige Book found that in the services sector, the fourth-quarter gains were not driven by consumers, but by industries meeting business needs such as telecoms, shipping and financial services.
Chain restaurants didn’t see as much growth, while travel saw no growth and hospitality recorded the weakest revenues, the report said.
The Beige Book also pointed out that compared with a surge in exports, China’s imports have stalled since an initial recovery from the shock of the first quarter.
The Chinese market remains a bright spot for companies worldwide after the country was able to control the outbreak domestically and return to overall growth by the second quarter.
But scattered Covid-19 cases, most recently in the capital city of Beijing in the last two weeks, as well as the virus’ persistent spread overseas mean the pandemic is an uncertainty for Chinese authorities and businesses.
For the fourth quarter, the China Beige Book also found sharp drops in sales growth for luxury goods, food and apparel compared to the prior quarter.
“Firms in these sub-sectors noted narrower margins as well as weaker sales volumes and hiring growth,” the report said.
Creditors were also more concerned about retail businesses. While the loan rejection rate held fairly steady among most sectors — around 10% to 20% — that of the retail industry surged to 38% in the fourth quarter, the report said.
Domestic demand is a key part of Beijing’s plan for sustainable economic growth in the coming years. China has been trying to rely more on its own consumers for growth, rather than on exports, especially amid increased tensions with major trading partners such as the US.
According to the National Bureau of Statistics’ website, China’s full-year economic data for 2020 is due out Jan. 18.