China's HSBC flash PMI shows expansion in June

Supportive measures

China has unveiled a series of modest policy measures in recent months to give a lift to economic growth, which dipped to an 18-month low in the first quarter.

Such measures include targeted reserve requirement cuts for some banks to encourage more lending, quicker fiscal spending and hastening construction of railways and public housing projects.

But the recovery has been patchy, and a strong rebound is seen as unlikely.

Exports remain uneven as recoveries in the United States and the European Union do not appear to be giving their usual robust boost to export-reliant Asian economies.

Investment growth also continues to falter, in particular in the real estate sector. Average new home prices in China fell for the first time in two years in May, while new construction slumped by nearly a fifth, adding to the drag on the economy.

Moreover, the preliminary PMI survey's sub-index for employment pointed to jobs still being shed, though the pace of contraction eased from May.

Chinese leaders have ruled out the possibility of any massive stimulus to pump prim the economy as they tolerate a slower growth rate while pushing ahead with structural reforms.

Premier Li Keqiang said last week that China's economy would continue to grow at a medium to high pace in the long term without strong stimulus.

With no big stimulus seen in the offing, economists expected China to launch incremental fine-tuning steps, especially in the property sector, to encourage steadier economic growth.

"Besides quicker roll-out of 'already in the pipe line measures' and greater fiscal support, the government may have to offer more explicit housing demand support," Tao Wang, an economist at UBS, said in a note to clients.

Feb manufacturing PMI drops to 50.2	China's manufacturing PMI rises to 50.3% in March