The Purchasing Managers' Index (PMI) of China's manufacturing sector rose for the fourth straight month in March to 52.4 percent, up 3.4 percentage points from a month earlier, the China Federation of Logistics and Purchasing (CFLP) announced Thursday.
It was the first time the PMI rebounded above 50 percent since July 2008, when the index fell to 48.4 percent.
A reading of above 50 suggests expansion, while one below 50 indicates contraction.
The PMI includes a package of indices that measure economic performance. The survey, jointly conducted by the National Bureau of Statistics (NBS), covers purchasing and supply managers of more than 700 manufacturers across China.
March indices measuring new orders, output, purchasing and new export orders all increased more than 4 percentage points from February, according to the CFLP.
The output index rose to 56.9 percent in March, up 5.7 percentage points from the previous month. The new order index jumped 4.2 percentage points to 54.6 percent.
The index measuring new export orders rose 4.1 percentage points from February to 47.5 percent. The figure, although still below the threshold of expansion of 50 percent, showed the depth of decline has been narrowing.
"The continuous rebound of the PMI not only shows the government economic stimulus package has begun to take obvious effect, but also indicates a stabilizing and warming economy," said NBS head Ma Jiantang.
Since late last year, China has announced several aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan ($584.8 billion) economic stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.
In an effort to boost economic growth, the People's Bank of China, or the central bank, has cut interest rates five times and reduced banks' required reserve ratio four times since September.
Zhang Liqun, researcher with development Research Center of the State Council, said the rising trend of the PMI indicated improvement in overall economic performance.
"The fact that the PMI rebounded above 50 percent in March, especially that the indices for output and new orders have stood above 50 percent for two consecutive months since February, implied future acceleration in the country's economic growth," Zhang said.
He expected a better performance of industrial output in March compared with the 5.2 percent year-on-year growth in the first two months combined, adding China's economic growth would further improve in the second quarter with stimulus policies continuing to pay off.