The government said Thursday its official purchasing managers' index (PMI) climbed to 50.3 in July from 50.1 in June.

A reading above 50 signifies expansion, while an index reading below 50 means the manufacturing sector is contracting.

While the official figures boosted Asian shares on Thursday, a separate, closely watched corporate survey showed a drop in activity.

HSBC's purchasing managers' index fell to 47.7 last month from 48.2 in June, confirming a preliminary version released last month.

Analysts say the official data mostly covers big state-owned enterprises while the HSBC survey reflects the state of small and medium private companies.

Experts have been worried about China's economy - the world's second largest after the US. It did not rebound as many had hoped and grew by a mere 7.8 percent in 2012, its worst performance in 13 years.

This year, the trend has continued - the economy expanded by just 7.5 percent in the second quarter, from 7.7 percent in the first quarter.

Beijing is trying to tackle overcapacity in industries such as steel, cement and shipbuilding while making sure the economy does not lose too much momentum.

ng/rc (Reuters, AP)