Robust performance of the services sector offsets slowdown pressures on GDP
That appears to be the typical response of observers of the Chinese economic growth trajectory these days.
As the world's second-largest economy－82.71 trillion yuan ($11.91 trillion) in 2017, up 6.9 percent－weans itself off exports and increasingly becomes consumption-driven, sectors like services are hogging as much limelight as traditional growth engines like manufacturing and infrastructure, areas that some believe are troubled now.
"Stable income growth will support consumption growth at a steady level, providing a sound base for the overall economy this year," said Liu Aihua, spokeswoman for the National Bureau of Statistics.
For economists, concerns over a potential debt-bubble-burst no longer hold terrors, it seems. Focus is now on the success of the reform and opening-up policy, and fresh measures to sustain high growth rates by nipping potential risks in the bud and stoking expansion of emerging business segments.
Among such measures, the push to services has caught economic pundits' attention. For, within services, segments like extracurricular education are seeing enormous demand and recording runaway growth.
This is raising hopes that the annual gross domestic product or GDP growth targets－around 6.5 percent for 2018－will likely be achieved no matter what, experts said.
Skeptics may question such views, but a quiet street in western Beijing appears to bear silent but clinching testimony that experts' optimism about the Chinese economy is well founded.
A crowd of young parents and their kids converges here on a Saturday morning in November. They are eager to find their way through a passage that leads up to a modern shopping mall. The main gate is still closed, but a cavernous tunnel-like passageway leads the tykes and their parents to the third floor.
Their destination is an area that is home to more than 20 kids training centers. These new-age for-profit business ventures target children aged 3 to 16. There are baby swimming centers, painting workshops, dancing classrooms and so-called robot innovation centers.
Gao Ruixue, a young mother, watches from across a glass wall her 5-year-old daughter tiptoe gingerly in a ballet classroom. "Fortunately, we were not late this time," she said.
It's a big deal for parents such as Gao to be able to find a place for their kids in training centers like this one. They spend a great deal of money, energy and time to ensure that. In doing so, they help keep the wheels of macroeconomy turning.
Gao drives 15 kilometers to bring her daughter to the 9 am ballet class. During the two-hour class, parents such as Gao sit and wait outside the arena.
The scene is more or less the same outside every center: Long lines of parents on benches, and groups of parents standing because there are not enough chairs to sit on. They have small talk, a shared sense of achievement and a bit of anxiety.
"I just paid 28,000 yuan toward next year's tuition fees for my daughter. It's for 90 hours, but the price could have been higher had I paid it late," said Gao.
As soon as the dancing class finishes, she whisks her daughter away to another center next door, this time for an English-language class.
Not surprisingly, Gao's smartphone embeds her family bank account, which she accesses every now and then to pay this bill or that. Gao and her husband pull in some 40,000 yuan in post-tax monthly income, of which 30 percent, or 12,000 yuan, is spent on the girl's training bills.
And 10,000 yuan, or a quarter of their monthly income, goes toward mortgage repayment. "A second child is on our minds, but we're not sure if we should try, given the financial implications," Gao said.
The significance of the thriving new-age learning centers gets amplified in the shopping mall where fashion stores and the like have shuttered due to high rents.
But executives of learning centers are unfazed. "We have more than 1,000 kids on our rolls," said Wang Yuxuan, a sales consultant of the ballet training center. "We don't worry about the rent. We will open a new branch next year as the membership keeps growing."
According to a Tencent research report based on a survey of 1,500 Chinese families, about 22 percent of families' annual income goes toward children's expenses on average. And education accounts for the largest part of that chunk.
Children's extracurricular education as a consumption item is growing at 21 percent annually. Children-related consumption in China is likely to be a 4.5 trillion yuan market this year, Tencent said in its report.
If that comes to pass, it would be equivalent to more than 10 percent of total retail sales in China, which are expected to grow nearly 9 percent this year to 40 trillion yuan.
This, economists agree, spells glad tidings. For, China's exports and fixed-asset investment are facing slowdown pressure this year.
Consumption has thus come to be seen as one of the pillars on which headline GDP growth rests, economists said.
Data from the National Bureau of Statistics showed that in the first three quarters of this year, per-capita spending in China reached 14,281 yuan, up 8.5 percent year-on-year. The growth rate itself is higher too－it was 7.5 percent in the first three quarters of 2017.
Almost 11 percent of residents' per-capita spending was on education, cultural and entertainment-related consumption, NBS data showed.
Chinese residents' per-capita disposable income rose to 21,035 yuan in the January-August period from 19,342 yuan a year earlier.
Some economists believe traditional economic sectors could still drive growth to around 6.5 percent, this year's target. NBS data showed new business activities relating to knowledge capability, economic vitality, innovation and the internet economy have been growing stronger, easing concerns over risks exerting downward pressure on growth.
"The internet economy, especially e-commerce, maintains exuberant growth momentum, along with emerging consumption patterns like niche online shopping," said Ye Jingyi, a senior economist with the NBS.
China remains the world's largest e-commerce market with online sales in the first quarter of this year reaching $307.4 billion, up 35.4 percent year-on-year.
In the US, online retail sales in the first quarter reached $123.6 billion, up 16 percent year-on-year, according to a report from PwC, a global professional services network.
Goldman Sachs forecast that this year, consumption in China may contribute 4.9 percentage points of the expected GDP growth rate of 6.6 percent, higher than 4.5 percentage points last year. But consumption is likely to slow next year, and is estimated to contribute 4.3 percentage points of the GDP growth.
The "still-solid labor market and steady wage growth" could support the positive expectation on Chinese consumption in 2019, said MK Tang, an economist with Goldman Sachs.
As per NBS data, unemployment rate fell marginally this year. "Our wage tracker suggests nominal wage growth stabilized at around 7.2 percent year-on-year this year, after moderating for three to four years since 2013. This should offset some of the downward pressures," Tang said.
Recent surveys by the NBS and the central bank suggested that the consumer confidence level edged down of late, as reflected in fewer urban bank depositors willing to consume.
According to a Goldman Sachs report, expectation of further weakening in fixed-asset investments, especially in infrastructure, is likely to accelerate policy support measures to protect growth.
"Worries about a possible comeback of the debt-driven growth model, or a diminished economic role of private enterprises, weigh heavily on investors' minds. Policymakers need to strike a fine balance between averting a sharp slide in growth and preventing a fast debt buildup," GS said in its report.