Domestic demand drives China’s post-pandemic recovery

Activity across China’s services sector grew sharply in August, in a sign of improved domestic demand as the country’s economic recovery continues to gather pace.

An official gauge tracking the country’s non-manufacturing sector beat expectations to hit 55.2 in August, compared with 54.2 in July, the country’s National Bureau of Statistics said on Monday. A reading above 50 indicates expansion compared with the previous month.

Improved performance in the services sector suggests that China’s broader economic recovery, which has been powered by state-supported industrial growth, is feeding through into businesses that were hit hard by the coronavirus outbreak and subsequent measures to contain its spread.

The country’s gross domestic product returned to growth in the second quarter as new cases of coronavirus slowed to a trickle, but concerns have lingered over continued weakness in retail spending, which fell in July for the seventh straight month.

Iris Pang, chief economist for greater China at ING, pointed to a boom in domestic tourism after the government eased restrictions,…

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