A key gauge of manufacturing rose, according to data from the China Federation of Logistics and Purchasing.

The Purchasing Managers' Index (PMI) rose to 50.3 in July from 50.1 in June,.

Zhao Qinghe, senior economist with the National Bureau of Statistics, said this is the tenth consecutive month that the PMI has hovered around 50.5. A reading above 50 indicates expansion while a reading beneath 50 indicates contraction.

"This demonstrates our manufacturing sector has generally been operating steadily," Zhao said.

He noted that a sub-index measuring corporate confidence rose to 56.4 percent from June's 54.1

He attributed the rise in confidence to a series of "mini-stimulus" measures adopted since early July, including removing administrative procedures, reducing the tax burden for small businesses, and accelerating rail construction.

Guan Qingyou, assistant dean of the Minsheng Securities Research Institute, noted that the small enterprises' index rose to 49.4 in July.

"Manufacturing in June improved slightly, and economic growth in the third quarter should stabilize," he said.

Qu Hongbin, HSBC's chief China economist, said weak domestic and foreign demand and slow manufacturing growth will hit employment figures.

Wang Yuqi contributed to the story