"For the past few years, the services sector has already exceeded [industry] to become the key driver of China growth. The impact of slowing PMIs on GDP might not be as significant as before," he said. "The economy can still possibly see 7 percent growth," he added, noting that aside from high-frequency data such as the monthly PMIs, the country is still seeing solid job creation and wage growth.
China's broader economic data have been painting a mixed picture recently. Quarterly GDP data released last month beat forecasts by showing 7.0 percent growth, renewing long-standing concerns over data accuracy.
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Concerns about slowing economic growth on the mainland have spurred policy makers to action. In late June, the People's Bank of China (PBOC) cut interest rates and the reserve requirement ratio (RRR) for some lenders in a bigger-than-expected easing package. That marked the PBOC's fourth round of major action since November amid concerns that the government's annual GDP target of "around 7 percent" could be at risk. China last cut both interest rates and the RRR at the same time in December 2008, at the peak of the global financial crisis.
Despite the positive reading from the services sector, concerns on slowing growth may also be reflected there.
"Service sector firms in China continued to signal optimism towards the 12-month business outlook in July," the data release said, but it added, "That said, the degree of confidence remained historically weak, with an uncertain economic outlook cited as a key factor weighing on optimism."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1