A worker catches up on auto parts orders at a factory in Fuzhou, East China's Fujian Province on June 24, 2024. The local national high-tech industrial development zone has been implementing supportive policies to bolster the upgrading of conventional manufacturing to intelligent manufacturing. Photo: VCG

The composite purchasing managers' index (PMI) of China stood at 50.5 in June, down 0.5 percentage points from the previous month, still higher than the 50-threshold, indicating the overall production and operation of Chinese enterprises continued to expand, official data showed on Sunday.

A reading above 50 indicates expansion, while a reading below reflects contraction.

The PMI for manufacturing sector came in at 49.5, unchanged from last month, data from the National Bureau of Statistics (NBS) said.

As for the sub-indexes, the production index was 50.6 in June, down 0.2 percentage point from the previous month, indicating that manufacturing production activities continue to expand.

Meanwhile, the gauge for new orders came in at 49.5 in June, slightly down 0.1 percentage point from that recorded in May, which indicates that the prosperity index of the manufacturing market demand slightly dropped.

In June, the PMI for non-manufacturing sector came in at 50.5, down from 51.1 in May, NBS data showed.

"China's overall economy maintained an expansionary trend, but the foundation for sustained recovery and improvement still needs to be solidified," said Zhao Qinghe, an NBS statistician.

The PMI for the equipment manufacturing sector stood at 51 in June, maintaining expansion for the fourth straight month, underscoring that the country's manufacturing transformation and upgrade continues to be boosted, with the development of new quality productive forces picking up momentum, Zhao said.

Wen Bin, chief economist from China Minsheng Bank, said the lack of effective demand remains a major constraint the Chinese economy's economic recovery.

Both fiscal policies and monetary policies need to strengthen, Wen said, noting that the central bank may cut interest rates and reserve requirement ratio in the third quarter this year.

Amid the country's continuous opening-up, the authorities are expected to step up efforts in stabilizing foreign investment, including deepening opening-up of key sectors, improving policy implementation and enhancing free investment, Wen said.

According to latest data released by the Ministry of Commerce, foreign direct investment in the Chinese mainland, in actual use, totaled 412.5 billion yuan ($57.94 billion) in the first five months this year, 28.2 percent lower than that of the same period last year.

The momentum of Chinese economic recovery remains unchanged. The economy is expected to grow by around 5.3 percent in the second quarter of the year, as macro-policies continue to produce effects, Cao Heping, an economist from Peking University, told the Global Times on Sunday.

The current development of the economy has many advantages. Along with the implementation of the government's supportive policies, multiple indexes including industrial manufacturing, exports and retail sales continue to rebound, laying a solid foundation for the high-quality development of the economy and the achievement of pre-set yearly GDP growth target at around 5 percent, Cao said.