Core Viewpoint - The development of service consumption is essential for enhancing people's well-being and is a crucial strategy for boosting overall consumption in China. The service sector's contribution to economic growth is significant, with a steady increase in its share of the national economy. From 2020 to 2024, per capita service consumption expenditure in China is expected to grow at an annual rate of 9.6% [1][2]. Group 1: Growth Potential of Service Consumption - There is substantial growth potential in service consumption in China, as indicated by the shift in consumer behavior from goods to services, similar to trends observed in developed economies like the U.S. and Japan. In 2024, the share of per capita service consumption expenditure in China is projected to be 46% [2][3]. - The service sector's retail sales increased by 5.3% year-on-year in the first half of the year, outpacing the growth rate of goods retail sales. The value added by the service industry grew by 5.5%, contributing 60.2% to economic growth [2][3]. Group 2: Demand and Supply Dynamics - Service consumption encompasses various sectors, including dining, accommodation, childcare, and entertainment, with increasing demand in areas like elderly care and childcare. For instance, from January to July, retail sales in tourism, transportation, and leisure services showed double-digit growth [3][4]. - Despite strong demand, there are significant supply shortages in service consumption, particularly in areas like elderly care and childcare, where the enrollment rate for children under three is below 10%, compared to an OECD average of about 36% [4][5]. Group 3: Policy Measures to Stimulate Consumption - Recent policy initiatives, including the establishment of service consumption and elderly care re-loan tools by the People's Bank of China, aim to enhance consumer spending and stabilize domestic demand. A series of financial support measures have been introduced to promote consumption [5][6]. - The implementation of personal consumption loan interest subsidies and service industry loan interest subsidies is designed to lower the cost of consumer credit, thereby encouraging residents to utilize financial leverage to increase consumption [6][7]. Group 4: Financial Policy Directions - Future financial policies should focus on maintaining liquidity and reducing financing costs to create a favorable environment for consumption. This includes enhancing structural monetary policy tools and increasing financial support for key service consumption sectors [7]. - Expanding financing channels and reinforcing policy coordination among fiscal, employment, and social security policies are essential to improve residents' consumption capacity and willingness [7].