China's factory activity picked up its pace a tad in the May, twin surveys showed on Monday.
The official purchasing managers' index (PMI), which surveys large companies, rose to 50.2 from 50.1 in April, in line with the forecast from a Reuters poll, and above the 50-mark separating expansion from contraction.
The final HSBC PMI print, which focuses on small and medium sized enterprises, stayed in contraction for a third month at 49.2, but beat the 49.1 figure in April.
The news spurred a rally on the Shanghai Composite, which traded 2.8 percent higher at mid-day, as investors bet on further easing from policymakers.
"The improvement of both PMIs is due to the recent pro-growth policies launched by Chinese authorities," Liu Li-Gang and Zhou Hao, analysts at ANZ Research, said in a note.
"Along with the reserve requirement ratio (RRR) and interest rate cuts, the government has rolled out more supportive fiscal policies," they noted, citing the 1 trillion yuan ($160 billion) local government debt swap plan, lower bond issuance requirement for corporates and local government financing platforms.
"In addition, the banking regulator has also allowed commercial banks to extend maturities on construction loans to developers short of cash," they added.