Business conditions in the world's workshop are becoming less depressing, HSBC's preliminary survey of purchasing managers has signalled.
The bank's "flash" purchasing managers index, which questions factory bosses on topics such as the level of new orders and their hiring plans, hit a reading of 49.7 for May.
While any reading below 50 shows contraction, that was its highest level since last December.
The better than expected result from the closely-watched survey came partly from a rebound in new export orders, hinting that Chinese factories may finally be starting to benefit from a recovery in Western consumer demand that has already helped Korean companies.
HSBC economist Qu Hongbin said:
The improvement was broad-based with both new orders and new export orders back in expansionary territory.
The People's Bank of China, the central bank, has also been engineering the renminbi lower against the dollar while the Japanese yen has strengthened.
The Hang Seng China Enterprises Index has gained 0.6 per cent since the data was released.
Economists had expected the closely watched survey to produce a reading of 48.3
经济学家原本预期中国5月PMI指数为48.3。数据发布后，恒生中国企业指数(Hang Seng China Enterprises Index)应声上涨0.6%。