A robust services sector will not stop China's economy from slowing into the middle of the year, analysts said, after modest government stimulus was seen as a signal authorities want to steady growth to keep their reform drive on track.
Two surveys today showed that growth in the service sector offered some relief after a run of disappointing data this year.
But they did little to alter the view that the world's second-largest economy has lost more momentum than expected in 2014.
China's government said yesterday it would accelerate construction of rail projects and cut taxes for small firms, the first concrete action this year to boost activity.
"The scale of the stimulus is modest, likely aimed at smoothing GDP growth at around the 7.5% target, rather than another round of massive stimulus," HSBC economists said in a report.
The targeted moves showed authorities wanted to stop growth falling below 7% without undermining efforts to reshape the economy, the economists said.
The official services Purchasing Managers' Index (PMI) dipped to 54.5 from February's 55, but still held well above the 50 level that divides expansion and contraction.
The Markit/HSBC Services PMI rose to 51.9 in March from February's 51.
"The data shows that China's non-manufacturing industry still maintained a relatively fast growth rate," said Cai Jin, a vice president at the China Federation of Logistics and Purchasing, which compiles the official PMI.
That contrasts with a run of weaker indicators this year. On Tuesday, two surveys showed manufacturing struggled in March, with activity at smaller, private firms contracting for a third month, and exports unexpectedly dropped in February.
The Chinese government wants to reduce the economy's dependence on exports and enhance the role of consumption, although it is unclear how much growth it might be willing to sacrifice.
Services made up 46.1% of gross domestic product in 2013, having overtaken manufacturing as China's biggest employer in 2011.
Finance Minister Lou Jiwei has said a healthy labour market was more important than reaching the government growth target. Employment is a priority for China's leaders, because it helps them maintain social stability.
Both service-sector PMIs showed the rate of jobs growth increasing, while Tuesday's Markit/HSBC manufacturing PMI showed a fifth successive contraction in the employment sub-index.
