China's purchasing managers' index was 49 in June, up 0.2 percentage points from May, indicating a marginal improvement of its manufacturing industry.

However, the PMI has been below the critical point for three months since April, meaning the prosperity index for China's overall manufacturing industry is still weak. According to National Bureau of Statistics data, the indexes of production and new orders in equipment manufacturing and such high-tech manufacturing sectors as automobiles, aerospace equipment, electrical machinery, and computer communication electronic equipment are in the expansion range, while real estate has failed to meet development expectation, and the weak external demand has produced a negative transmission effect on domestic demand.

The June PMI shows that the employment index fell by 0.2 percentage points to 47.4, highlighting the country's employment situation has not fundamentally improved. The current high youth unemployment rate is not only a projection of the insufficient vitality of supply and consumption sides, but also a reflection of the systemic weakness of overall economic recovery. Stabilizing employment is of particular importance to stabilizing the economy.

As the external market is still full of uncertainties, China's internal demand is unlikely to ease in the short term. China should be highly wary of the weakening of its export engine, although the impact of weakened external market on its domestic economic circulation is generally under control.

Based on the June PPI and consumer price index alone, it is difficult to conclude that China will face production and life deflation, but it does reflect insufficient production and life demand. The low-level CPI reflects people's insufficient demand, but it also provides the authorities more room for monetary adjustment.

The government can implement precise policies to inject impetus into both ends of production and consumption, thus consolidating its economic foundation and maintaining its economic recovery momentum.