Robust Factory and Service Activity Shows Stable Economic Fundamentals

Chinas factory and service activity picked up in March， showing new evidence of stable economic fundamentals amid government measures to spur high-quality growth.

The purchasing managers index （PMI） for Chinas manufacturing sector came in at 50.5 in March， up from 49.2 in February， the National Bureau of Statistics （NBS） said on March 31.

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

NBS senior statistician Zhao Qinghe attributed the monthly increase in the manufacturing PMI to accelerated production activity and improved domestic demand boosted by supporting government policies， including tax and fee cuts.

The sub-index for production， a major factor used in calculating PMI， rose to a sixmonth high to 52.7 in March， up 3.2 points from February.

In addition， the sub-index for new orders went up 1 point from February to 51.6 in March， the highest in half a year， showing growing momentum in market orders.

The PMI for hi-tech， equipment and consumer goods manufacturing stood at 52， 51.2 and 51.4， respectively， all above the general manufacturing PMI， showing the rising strength of new growth drivers.

Large companies saw their manufacturing PMI go down 0.4 points to 51.1， whereas the readings for small and medium-sized companies rose 3 and 4 points， respectively.

Wen Tao， an analyst with the China Logistics Information Center， said the new data pointed to signs of the countrys economic stabilization with positive market sentiment.

Moreover， the data also showed the PMI for Chinas non-manufacturing sector at 54.8 in March， up from 54.3 in February.

The service sector recorded stable performance， with the sub-index measuring business activity in the industry at 53.6， up from 53.5 in February.

Indices for the railway transport， postal service， telecom， banking and insurance sectors were all above 57， indicating robust business growth.

The sub-index for new orders in the service sector came in at 51.5， up from 50.5 in February， according to the NBS.

The construction sector recorded faster expansion， with the sub-index measuring business activity in the industry rising 2.5 points to 61.7 in March.

The sub-index for new orders in the construction sector surged to a 15-month high to 57.9， up from 52 in February.

China is trying to shift its economy toward a growth model that draws strength from consumption， services and innovation. The service sector accounted for 52.2 percent of the countrys economy last year.

The positive PMI data showed the governments pro-growth measures have taken effect， said Zhang Liqun， a researcher with the Development Research Center of the State Council.

China has implemented a slew of measures to cut the value-added tax （VAT） rates to bolster the real economy， making sure that tax burdens on all industries will only go down， not up.

In 2018， taxes and fees levied on enterprises and individuals were reduced by around 1.3 trillion yuan （$193.7 billion） as a result of multiple preferential tax policies introduced by the government.

The government work report this year unveiled a plan for large-scale tax cuts， including lowering the VAT rate in manufacturing and other industries from 16 percent to 13 percent， and the VAT rate in transportation， construction and other industries from 10 percent to 9 percent.