China’s manufacturing sector experienced a positive upswing in business conditions for the second consecutive month, while the service sector continued to exhibit vibrant activities, according to official data released by the National Bureau of Statistics (NBS) on Monday.
The Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 49.3 in July, up from 49 in June and 48.8 in May. The index, a crucial indicator of economic activity, demonstrated a notable improvement, though it still remained below the benchmark of 50, which signals expansion. Conversely, a reading below 50 indicates contraction.
NBS statistician Zhao Qinghe revealed that among the 21 surveyed industries, 10 reported expansion in July, indicating a broad overall improvement in the manufacturing climate. He expressed optimism about the sector’s trajectory, given the steady upward trend in PMI values over the past few months.
Simultaneously, the non-manufacturing PMI, which gauges activities in the service and construction industries, stood at a healthy 51.5 in July. This marked the seventh consecutive month where the non-manufacturing PMI remained above the crucial threshold of 50, signaling robust growth in these sectors.
Zhao Qinghe emphasized that both the manufacturing and non-manufacturing businesses have maintained a stable outlook. He pointed to the sub-indexes measuring market expectations, which have consistently remained in the high-climate zone, indicating continued optimism in the Chinese economy’s recovery prospects.
Despite these positive indicators, Chinese companies still face challenges due to a complicated external environment. Major economies like the United States and European countries continue to experience manufacturing contraction, leading to difficulties for Chinese factories in the form of reduced overseas orders and demand.
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Addressing the challenges ahead, Chinese policymakers recently held a high-level meeting where they identified new hurdles confronting the economy, including insufficient domestic demand and operational difficulties for some enterprises. In response, they pledged a series of measures to counter these headwinds.
The measures proposed by the Political Bureau of the Communist Party of China Central Committee include improving tax and fee reductions, supporting innovation, bolstering the real economy and small firms, promoting consumption, encouraging private investment, and making timely adjustments and optimizations to real-estate policies.
Despite the challenges, China remains confident in achieving its annual economic and social development targets. The National Development and Reform Commission affirmed that the Chinese economy will maintain a stable and sound trend in the second half of the year.
In the second quarter of the year, China achieved a 6.3-percent increase in GDP, bringing the first-half growth rate to 5.5 percent. The country has set a full-year growth target of around 5 percent.
As the year progresses, all eyes will be on China’s ability to navigate through external challenges while fostering stable economic growth and enhancing its position as a major global economic player.