Service, consumption to play greater role in economic recovery

China's economic recovery has entered the second stage in which service industry and consumption will play greater role, according to the latest KPMG report.

The report said China's economy has continued to recover, and the actual year-on-year GDP growth rate in the third quarter rose to 4.9 percent, up 1.7 percentage points from the second quarter.

Meanwhile, China's GDP is expected to grow 2.2 percent in 2020 and 7.8 percent in 2021, according to the report.

China's economic recovery after the epidemic can be roughly divided into three stages: in the first stage, manufacturing production, investment, and exports were the main forces driving the recovery.

Now, China's economy has entered the second stage, and the recovery of service industry and consumption will play a greater role in this stage.

In the third stage, China will achieve high-quality economic development through the enhancement of technological innovation capabilities, a new "dual-circulation" development pattern, and a higher level of reform and opening-up.

In September, the manufacturing PMI reached 51.5 percent, and the service industry PMI hit 55.2 percent, indicating that the future economy will continue to pick up.

In the third quarter of this year, the contribution rate of final consumption expenditure to economic growth rebounded sharply to 34.9 percent, driving economic growth by 1.7 percentage points.

With the employment situation becoming more stable and residents' income gradually recovering, it is expected that consumption will continue to recover, supporting further growth of the Chinese economy.

"Dual circulation" development pattern, in which domestic and overseas markets reinforce each other, with the domestic market as the mainstay, will be China's medium- and long-term development strategy.

A better understanding of the pattern of "dual circulation" will be of great significance for enterprises to make strategic plan in Chinese market, the report said.