Authorities have looked in recent months to revive confidence in the Chinese economy, grappling with a prolonged property sector crisis and now under increasing pressure from fresh trade tensions with the United States.
The Purchasing Managers' Index -- a key measure of industrial output -- came in at 50.5 in March, according to the National Bureau of Statistics (NBS), above the 50-point mark that separates growth and contraction.
The reading for March was up from February's 50.2, and the highest in twelve months.
Manufacturing was boosted by workers' return to work after the traditional Spring Festival travel period in February and the fact that "enterprises' production and operating activities accelerated," NBS statistician Zhao Qinghe said in a statement.
The non-manufacturing PMI, which measures activity in the services sector, came in at 50.8, up from February's 50.4.
China has in recent years battled stuttering youth unemployment, stubbornly low consumer demand and a persistent property sector debt crisis.
Higher US tariffs on Chinese exports are also expected to hit domestic manufacturers in the coming months.
"The manufacturing sector faces downside risk in Q2 as the external demand weakens, driven by the tariffs and the economic slowdown in the US," Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management, said in a note.
"The big question is how much export growth will decline, and how quickly the fiscal spending will pick up to offset weaker exports," he added.
Authorities announced a raft of stimulus measures last year including rate cuts and the easing of some home purchasing restrictions.
And leaders at a key political meeting this month vowed to create 12 million new urban jobs in 2025.
They also said they were aiming for total growth this year of five percent -- the same as 2024 and a goal considered ambitious by many economists.
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