Chinese manufacturers enjoyed a strong end to the year 2012 with operating conditions improving at the fastest rate for 19 months, according to HSBC's latest Purchasing Managers' Index.
The index, which is seen as a key indicator to the health of the industry, reached 51.5 in December, significantly higher than 50.5 in November. The latest reading is also higher than the Flash PMI reading of 50.9 released in mid-December.
November and December's readings are in contrast to the rest of the year when the index remained below the 50 mark, which illustrates the difference between an industry shrinking or growing.
Throughout 2012, the average PMI reading has been just 49.1.
A closer look at the components that make up the index reveals the level of new orders has risen for the third month in a row. However, new export orders are down, suggesting it is domestic demand that is helping to keep the industry in positive territory.
Qu Hongbin, HSBC's Chief Economist for Greater China, says that the latest figures look positive for 2013.
"Such momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilise."
HSBC expects China to enjoy annual growth of about 8.6 per cent in 2013.
Over the coming days, PMI readings from other nations such as India and Brazil will give a more rounded view of how some of the fastest-growing economies ended the year 2012