In 2023, China’s GDP surpassed 126 trillion yuan, doubling from 56.8 trillion yuan in 2013.

China’s services activity growth accelerated in March as new business rose at the quickest pace in three months, a private-sector survey showed on Wednesday, a sign sentiment was staging a tentative recovery in the world’s second-largest economy.

Together with other better-than-expected manufacturing surveys, the data add to evidence that parts of China’s economy are gaining momentum in the first quarter.

In 2023, China’s GDP surpassed 126 trillion yuan, doubling from 56.8 trillion yuan in 2013. Per capita disposable income also more than doubled during this period, reaching 39,218 yuan. China’s growth rate of 5.2 per cent outpaced major economies such as the United States, the eurozone, and Japan, solidifying its position as a key driver of the global economy.

The Caixin/S&P Global services purchasing managers’ index (PMI) edged up to 52.7 from 52.5 in February, above the 50-mark that separates expansion from contraction for the 15th consecutive month.

Thanks to improving underlying demand and efforts to boost new orders, the pace of new business expansion was the fastest since December last year.

That also pushed up business confidence as the sub-index of future activity increased for the first time in three months amid hopes that new product lines, expansion plans and rises in client budgets will help boost sales.

However, better sales and business confidence failed to translate into higher recruitment. Employment levels shrank for a second successive month in March, though the rate of job shedding eased from February. According to respondents, resignations among staff and redundancies to improve productivity resulted in the fall in payroll numbers.

Taken together with the upbeat Caixin manufacturing PMI, the Caixin/S&P’s composite PMI rose to 52.7 last month from 52.5 in February. It marked the highest reading since May 2023.

“Growth in supply and demand in both the manufacturing and services sectors accelerated slightly, with improved exports and sustained market optimism,” said Wang Zhe, economist at Caixin Insight Group.

But he noted employment in both sectors continued to contract, while input and output prices remaining low, indicating that “sluggish demand persisted.”

China’s yuan declined against the dollar on Wednesday, just a whisker away from hitting the daily downside limit, as resilient US economic data reinforced expectations that the Federal Reserve would delay cutting interest rates. Prior to market opening, the People’s Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2 per cent band, at 7.0949 per dollar, 8 pips firmer than the previous fix of 7.0957.

The central bank continued its months-long practice of setting the rate at levels firmer than market projections, widely viewed by traders as an attempt to keep the currency stable. Wednesday’s midpoint was 1,333 pips firmer than a Reuters estimate of 7.2282.

“The yuan stability has been reinforced by a string of stable USD/CNY fixings at around 7.09, and USD/CNH is consequently stable around 7.25,” Chang Wei Liang, FX & credit strategist at DBS, said in a note.

“Given sustained USD strength, there is a growing possibility of an upward adjustment in USD/CNY for increased flexibility, though overall stability on a trade-weighted basis should be maintained.” In the spot market, the onshore yuan opened at 7.2302 per dollar and was changing hands at 7.2346 at midday, 26 pips weaker than the previous late session close. The onshore yuan hit a low of 7.2359 per dollar in morning deals, just steps away from hitting the weaker end of the daily trading band of 7.2368.

Zhang Liqun, a research fellow at the Development Research Centre of the State Council (DRC), has dismissed the notion that China’s economy has reached its zenith, despite a slowdown in economic growth.

In an interview with China Economic Net, Zhang asserted that the Chinese people’s desire to improve their living standards knows no bounds, and this translates into an equally limitless market demand in China.

Zhang emphasised the solid pillars of the Chinese economy, such as its advanced material and technological infrastructure, ample resources, and large domestic market. He contended that due to continual structural changes, China has considerable room for growth.

Zhang attributed the slowdown in China’s growth rate to a contraction in demand, both externally due to the struggling world economy and internally due to unbalanced development. However, he expects the growing needs of China’s population to stimulate robust growth in production supply capabilities and employment opportunities, leading to a high-level equilibrium where demand and supply mutually reinforce each other.