China's manufacturing sector paints mixed picture in July

Data released earlier on Monday showed that China's official Manufacturing Purchasing Managers' Index (PMI), a survey that tracks the health of large and state-owned companies, came in at 49.9 in July, versus the 50.0 logged in June. The July reading was slightly below forecasts at 50.0.

In a separate survey, Caixin's China July manufacturing PMI, which tracks smaller-scale private firms compared to the official gauge, rose above the key 50 level for the first time since February 2015, rebounding after 16 months of contraction. The index reported a 50.6 reading for July, compared with 48.6 in June.

Caixin's sub-indexes of output, new orders and inventory all surged past the neutral 50-point level that separates growth from decline. Renewed rise in total new business was the major driver which more than offset a slight decline in foreign demand. Output also increased in July after three straight months of decline, and the rate of expansion, though modest, was the fastest seen in two years.

"Data indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a Caixin Insight Group subsidiary.