China's factory and service sector activities expanded in May amid government policies to coordinate growth and control of the COVID-19 epidemic, official data showed Sunday.

The purchasing managers' index (PMI) for China's manufacturing sector and that for the non-manufacturing sector both stood above the boom-bust line of 50 in May, indicating steady recovery in major industries, data from the National Bureau of Statistics (NBS) showed.

While the manufacturing PMI eased to 50.6 in May from 50.8 in April, it still indicated an upward trend in economic growth as counter-cyclical adjustment policies gradually took effect, said Wen Bin, chief analyst at China Minsheng Bank.

China has been walking a fine line in balancing epidemic control and economic recovery, with targeted measures introduced to help firms safely restart their businesses.

Of the surveyed manufacturing firms, 81.2 percent saw over 80 percent of their business operation resume in May, NBS data showed.

Domestic demand bounced back, with the indices measuring new orders in 12 of the 21 surveyed manufacturing industries picking up, NBS senior statistician Zhao Qinghe noted.

The sub-index gauging firms' expectations for business activities ticked up 3.9 percentage points to 57.9, indicating improved confidence among manufacturing companies.

Sunday's data also showed that the PMI for China's non-manufacturing sector came in at 53.6 in May, up from 53.2 in April.

The sub-index for business activities in the construction sector saw accelerated pace of growth in May, expanding 1.1 points from the previous month to 60.8, while that for the service sector steadily recovered, edging up 0.2 points from April.

As China further implements proactive fiscal policy after the annual sessions of the national legislature and political advisory body, the construction industry is expected to see sound growth momentum, Wen said.

China will blaze a new path of shock-resilience and positive growth cycles which will center on stabilizing employment, energizing the market, stimulating demand and achieving stable growth, according to a government work report delivered by Premier Li Keqiang at the annual national legislative session.

To that end, the country will pursue a more proactive and effective fiscal policy, aiming to reduce corporate burden by over 2.5 trillion yuan (about 350 billion U.S. dollars) this year.

Toshiyasu Iiyama, head of China Committee of Nomura Holdings, said that the tax and fee cuts are expected to benefit domestic and foreign companies alike.

The country also promised to ensure fair competition and make sustained efforts to create a market-oriented, law-based, and internationalized business environment, a move that will further improve the quality of the market economy and inject vitality into the market, Iiyama said.

The country will pursue a prudent monetary policy in a more flexible and appropriate way, using a variety of tools including reserve requirement ratio cuts, interest rate reductions and relending to enable M2 money supply and aggregate financing to grow at notably higher rates than last year, said the report.

As total social financing continues to grow, China's manufacturing PMI will likely stay in expansionary territory, investment bank CICC said in a research note.

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