Manufacturing has been a staple of the Chinese economy for decades but recently declining growth in manufacturing has caused great investment concern. This down trend in manufacturing however is not a sign of negative growth, but an indication of a shift in trade from foreign to domestic. Instead of focusing on exports, Chinese services are capitalizing on the rapidly growing domestic demand. BBC reports:
The non-manufacturing purchasing managers index (PMI) rose to 56.7 in June from 55.2 in May.
The services sector accounts for almost 43% of China’s overall economy.
“The index shows stable and steady growth momentum of China’s services sector,” said Cai Jin, vice president at China Federation of Logistics and Purchasing.
There have been fears that the world’s second-largest economy may see a further slowdown in growth in the near term.
One of the key reasons for those fears has been the slowing demand for China’s exports, a big driver of its growth, from key markets such as the US and eurozone.
At the same time, there have been concerns that domestic demand in China was not growing fast enough to offset the decline in exports.
However, analysts said that the latest data on the services sector indicated that demand may be starting to pick up in China.