The purchasing managers index (PMI), a barometer of manufacturing activities, stood at 51.2 percent in September, up 0.3 percentage point from August. This was the second consecutive month of increase after four straight months of decline, said the China Federation of Logistics and Purchasing (CFLP). The index came in at a 29-month low of 50.7 percent in July.

Meanwhile, this was the 31st straight month in which the index was above the boom-and-bust line of 50 percent. A reading above 50 percent indicates economic expansion.

The new orders sub-index, an effective gauge of domestic demand, stood at 51.3 percent in September, compared with 51.1 percent in August. The input prices subindex, a measure of how much factories pay for raw materials and other intermediary goods, dropped to 56.6 percent, down 0.6 percentage points from August.

"Evidence is emerging that the Chinese economy is finding its feet despite a worsening global economic outlook," said Zhang Liqun, a researcher with the Development Research Center of the State Council.

Inflation is likely to abate in the rest of the year, but efforts are still needed to soothe financing woes of smaller businesses, he said.

China's economic growth is slowing gradually and the chances of a "hard landing" are small, said Lu Ting, an economist with the Bank of America Merrill Lynch.

"But China should be prepared for the worst of a eurozone crisis," Lu said. "The weakness in the global economy will be felt by China's exporters in the coming months."

Meanwhile, the PMI for the non-manufacturing sector, an indicator for economic activities in the service industry and other non-manufacturing businesses, rose to 59.3 percent in September from 57.6 percent in August.