A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

The improving non-manufacturing figure is in line with China's manufacturing PMI, which also rose in July to 50.3 percent from 50.1 percent in June, a news agency reported.

Cai Jin, Vice Chairman of the CFLP, said that the slight increase indicated a good start for China's economy in the second half of the year. "Although challenges remain, China's economy has the foundations for steady growth," Cai said.

China's non-manufacturing PMI is based on a survey of about 1,200 companies in 27 industries.


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