An unofficial index measuring China’s service sector activities shows that due to a decrease in tourist numbers leading to slower growth in new businesses, the growth rate of China’s service sector activities in December dropped to its lowest level in six months.
Released on Monday, a heavyweight private sector survey indicates that the RatingDog China Service Purchasing Managers’ Index dipped slightly to 52 in December, marking the fourth consecutive month of slowing growth.
The growth rate of new business was the slowest in six months. New export business, after experiencing expansion last month, shrank again, with the survey attributing this mainly to the reduction in tourist numbers.
Yao Yu, the founder of the rating agency RatingDog, stated that the decrease in tourist numbers—especially those from Japan—is the “primary” reason for the renewed decline in new export orders. Tensions between Japan and China have escalated in recent weeks following comments by Japanese Prime Minister Sanae Takashi on the Taiwan issue.
China’s official service sector activity index for December crept up slightly from 49.5 in November to 49.7, but still remains in the territory indicating contraction in industry activity.
The survey released on Monday also revealed that the employment sub-index has contracted for the fifth consecutive month, with layoff rates reaching the fastest pace since September last year amid cost pressures and business restructuring.
Driven by rising raw material and labor costs, input costs have climbed for the tenth month in a row. However, despite this, companies have decreased sales prices, as the survey suggests that heightened competition has limited their pricing power.
Yao Yu stated that overall, the service industry showed moderate growth and higher expectations by the end of 2025. However, he added that employment contraction and fluctuations in external demand remain key constraining factors.
China’s economy has long been challenged by structural issues such as a prolonged slump in the real estate market and deflationary pressures. Additionally, weak domestic consumer spending has left the Chinese economy continuously exposed to overseas risks, particularly as global trade partners express growing concerns as China’s trade surplus surpasses $1 trillion.