By Norihiko Shirouzu and Elias Glenn
BEIJING (Reuters) - China's manufacturing sector expanded for the sixth month in a row in January as the world's second-largest economy continued to benefit from record bank lending and a construction boom.
The improvement in the industrial sector could give the government more room to tackle high debt levels in many parts of the economy this year, though analysts are not sure if current growth levels can be sustained amid growing risks at home and abroad.
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U.S. President Donald Trump and a top economics adviser on Tuesday unleashed a barrage of criticism against China, Germany and Japan, saying the three key U.S. trading partners were engaged in devaluing their currencies to the harm of American companies and consumers.
On the election campaign trail, Trump had threatened to slap heavy tariffs on U.S. imports of Chinese goods.
A slowing property market could also dent China's industrial activity this year, dampening demand for building materials from glass to steel.
The official Purchasing Managers' Index (PMI) released on Wednesday stood at 51.3 in January, dipping marginally from 51.4 in December but slightly better than economists had expected.
The reading remained well above the 50 level which separates expansion from contraction on a monthly basis, indicating that China's factories had carried solid momentum through from a rebound in the second half of 2016, which helped fuel a global manufacturing revival.
"Today's PMI readings suggest that China's economy continued to perform well last month," Julian Evans-Pritchard, Singapore-based China economist for Capital Economics, said in a research note.
"China's recent recovery appears to remain largely intact for now."
Still, "the more important question is whether or not the current strength will be sustained. We doubt that it will be given how reliant the recent recovery has been on support from monetary and fiscal policy that is now being withdrawn," Evans-Pritchard said.
A breakdown of key PMI indexes showed production and new order growth remained solid last month, though the pace of expansion eased for both from December.
Production remained fairly robust, with the output index at 53.1 compared with 53.3 in December.
However, export orders grew at only a marginally better pace, with the index edging up to 50.3.
Even as Trump ramps up his criticism of China, it has lagged an export recovery which is being seen by some of its North Asian neighbors. South Korea on Wednesday reported its shipments rose in January for a third consecutive month and at the fastest pace in nearly five years.
Persistent export weakness has forced Beijing to rely on higher infrastructure spending to boost growth, which along with a housing frenzy has boosted demand for building materials.
Rising commodity prices and stronger demand have in turn boosted profits for industrial firms, and helped revive inflation expectations worldwide.
However, some analysts question whether the growth rate can be maintained once the impact of earlier stimulus measures begins to wear off and as the property market starts to cool, which is widely expected.
Indeed, economists at ANZ noted that growth in construction services seems be faltering, though at 61.1 the index remained above last year's average of around 60.
The factory PMI figures were seasonally adjusted, but economists and investors are generally cautious about China data early in the year due to the timing of the long Lunar New Year holidays, when many factories and offices shut.
If the economy remains on solid footing, China's leaders are expected to turn their attention to containing financial risks this year, accepting slightly lower growth of around 6.5 percent compared with 6.7 percent in 2016.
The central bank is also moving very gradually to a tightening policy bias, raising the prospect of higher borrowing cots later in the year.
A separate reading on the services sector showed the pace of growth picked up in January from the previous month.
The official non-manufacturing PMI stood at 54.6 in January, up from 54.5 in December, and well above the 50-point mark.
The services sector accounted for over half of China's economy last year and for the majority of growth, as rising wages give Chinese consumers the opportunity travel and eat out more.
Policymakers are counting on growth in services to offset the stubborn weakness in exports that is dragging on the economy.
(Reporting by Norihiko Shirouzu; Editing by Kim Coghill)