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BEIJING, Feb. 3 (Reuters) – A burgeoning private sector maintained its pace of growth in January, although growth slowed slightly, a private study released on Sunday said, offering continued support to the world's second-largest economy after slowing manufacturing sector.
The Caixin / Markit PMI has declined slightly from 53.9 in December to 53.6 in January, but well above the 50.0 mark between growth and contraction.
Foreign sales continued to support the sector, with new export activities recording the strongest growth in more than a year, thanks to the efforts of Chinese service companies to attract foreign customers. Overall, new orders also increased from 52.3 in December to 52.6.
The resilience of the services sector, which accounts for more than half of China's gross domestic product, is essential to counter the current slowdown in the manufacturing sector.
Chinese factories have been affected by long-term restructuring of industries, pollution repression and trade tensions between China and the United States.
"Overall, China's economic growth was weighed down by a weakening of domestic demand in January, although exports have improved slightly, with Sino-US trade talks showing signs of progress," Zhong Zhengsheng said. director of the macroeconomic badysis of the CEBM group.
China's policies to support domestic demand and the evolution of the trade war "will remain essential to the prospects of the Chinese economy. Given that the government has refrained from energetic stimulus policies, it may be difficult to reverse the downward trend of the economy at the moment, "Zhong said.
Caixin's PMI for composite products and composite manufacturing, also released on Sunday, went from 52.2 in December to 50.9 in January. The January manufacturing PMI, announced Friday, was 48.3, the lowest level since February 2016.
Last year, Beijing took a series of measures to encourage growth – reducing the levels of liquidity that banks must keep as reserves to stimulate lending, reducing taxes and fees and accelerating infrastructure spending.
It is essential to resolve trade tensions with the United States to improve the confidence and prospects of Chinese exporters.
Illustrating the resilience of the service sector in China, service companies increased their numbers in January. Inflationary pressures eased as operating costs and production costs increased at a slower pace.
Caixin's optimistic readings for services were in line with an official poll released on Thursday, which showed the sector had resumed for a second straight month in January. (Report by Ryan Woo, edited by Richard Borsuk)
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