Despite concerns about slowing growth in China, a survey focused on small and mid-size businesses topped expectations on Tuesday due to a solid upturn in new export orders, Caixin/IHS Markit said in a press release.
The Caixin China manufacturing PMI for July came in at the four-month high of 51.1, topping a Reuters analyst poll of 50.4.
In June, the Caixin manufacturing PMI came in at 50.4, up from May's 49.6, which was an 11-month low.
"Panelists widely commented on an improvement in market conditions and strong foreign demand. Notably, new export sales increased at the second-fastest rate since September 2014," the press release said.
Levels above 50 signal an expansion, while levels below 50 indicate contraction.
Caixin's survey tracks small and medium-sized enterprises instead of the large companies and state-owned enterprises (SOEs) on which the official gauge focuses.
China reported Monday that its official manufacturing PMI for the month of July came in at 51.4 — just shy of expectations. Official services PMI meanwhile fell to 54.5 in July from 54.9 in June.
China reported second-quarter GDP growth of 6.9 percent that topped expectations, but market watchers are expecting the economy to slow due to tightening policies in the property market and the government's deleveraging campaign.
Although operating conditions in the manufacturing sector improved in July, suggesting that China's growth momentum will be sustained, financial regulation tightening is unlikely to be relaxed, said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a Caixin subsidiary.
—CNBC's Leslie Shaffer contributed to this report.