China's official manufacturing purchasing managers index, a measure of industrial activity, edged down to 51.2 in July from 51.5 in June, but analysts said that since it remained above 50 — the level separating expansion from contraction — industrial growth should remain stable and there will be little risk of a major economic downturn in the coming months.
The July performance, based on a survey of purchasing managers and released by the National Bureau of Statistics on Tuesday, was hit by weather and seasonal factors as well as growing Sino-US trade frictions, said Zhao Qinghe, a senior NBS statistician.
Despite the slight month-on-month slowdown, the manufacturing PMI had been above the 51 mark for five consecutive months.
"The index remains in expansionary territory, and the economy has largely maintained its growth momentum," said Zhao.
Fourteen out of the 21 surveyed sectors reported seeing forward growth momentum, according to survey results. Consumer goods manufacturing expanded strongly, with the sub-index measuring the sector's activity hitting 52.4 in July, up from 51.8 in June.
Indexes measuring exports and imports, however, dropped to 49.8 and 49.6, respectively, both below the crucial 50 level, largely due to the ongoing Sino-US trade confrontation, data showed.
China's economic growth may face downward pressure in the second half, but policymakers may fine-tune their policy stance to nip any slowdown in the bud, analysts said.
There will be great uncertainties arising from the trade disputes between China and the United States, said a research note from CITIC Securities. The tightening of real estate sales and credit controls may also add to downward pressure, it said.
But China may properly adjust its fiscal and monetary policies, as shown by the statement released after the State Council executive meeting on July 23, which may lead to rising infrastructure investment and credit growth, the research note added.
"The country's economic growth will hopefully remain stable in the second half and there will be little risk of a major downturn," the note said.
Liu Wenqi, an analyst at China International Capital Corporation, said that although there had been signs of loosening fiscal and monetary policies, the real effects of policy fine-tuning still need to be monitored.
China's official non-manufacturing PMI fell to 54 in July from 55 in June, NBS data showed.