China's manufacturing activities set a 17-month record high in September, an official survey showed, indicating a stable economic rebound.
China's Purchasing Managers' Index for the manufacturing sector rose to 51.1 percent in September from 51 percent in August, the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing said on Tuesday.
A reading below 50 indicates contraction, while anything above signals expansion.
It was the third consecutive month for the index to climb month on month, and September's figure was the highest recorded since May 2012.
Zhang Liqun, researcher at the Development Research Center of the State Council, said the index edged up slightly, but the growth rate was not dramatic, indicating weak rebound momentum.
The sub-index for new orders climbed to 52.8 percent, up 0.4 percentage points month on month.
The sub-index for new export orders gained 0.5 percentage points month on month to reach 50.7 percent in September, while the sub-index for production hit 52.9 percent, up 0.3 percentage points from the previous month, setting a four-month high.
The sub-index for purchasing quantity was 52.5 percent, an eight-month record high. The sub-index for purchasing prices of major raw materials was 54.5 percent, up 1.3 percentage points from the previous month.
Enterprises are more confident in the future of the market, as is reflected in their active purchasing, said Zhao Qinghe, a senior NBS statistician.
However, despite the overall positive signs, growth is imbalanced as large and medium-sized enterprises are improving, but small companies are still having difficulties, Zhao said.
J.P. Morgan China economist Zhu Haibin echoed Zhao, saying that it seems the recovery is still mainly related to large enterprises, while small enterprises still face a challenging business environment.
A breakdown by enterprise type shows that the large enterprise PMI rose to 52.1 in September, PMI for medium-sized enterprises edged up to 49.7, while the small enterprise PMI fell to 48.8.
Zhu attributed the recent recovery in growth momentum to several factors.
First, a shift in economic policies since July, including balanced emphasis on consumption and investment and clarification on the growth floor, helped boost market confidence and support market activity, Zhu said in an email.
Noticeably, manufacturing investment, which has continued to decelerate over the past two years, started to recover in August, he added.
Second, the lagging effect of strong credit growth in the fourth quarter of last year and the first quarter of this year started to take effect, along with the central bank's efforts to crack down on the speculative component in credit and its improved support of credit to the real economy, he said.
Third, external demand has benefited from improved growth outlook in advanced economies, especially in the Eurozone, Zhu said.
Kuang Xianming, director of the Research Center for Economy with the China Institute For Reform and Development, said the September manufacturing PMI readings suggests further economic stability in the third quarter.
China's economy climbed 7.7 percent in the first quarter, but slowed to 7.5 percent in the second quarter. The data for the third quarter is due on Oct. 18.
The government has set China's full-year economic growth target at 7.5 percent for this year after its economy expanded 7.7 percent in 2012, the slowest pace in 13 years.