Sharp increase in factory profit (2)

GDP growth will be 7.9 percent year-on-year in the last three months of the year, he said.

Wang Tao, chief China economist at UBS AG, said that investment in manufacturing might show moderate growth through 2013, while investment in infrastructure could experience higher growth. Wang forecast that China's GDP growth might be 7.6 percent this year and around 8 percent in 2013.

Indicators began to show that the world's second-largest economy picked up the pace in September. In October, exports increased 11.7 percent year-on-year, 1.7 percentage points higher than September. The HSBC Purchasing Managers' Index was above 50 in November for the first time in 13 months. A reading above 50 indicates expansion.

"The recovery in industrial activity appears to be gaining traction, supported by policy easing and stabilization in the housing market," said Zhu Haibin, the chief China economist and head of Greater China Economic Research at JP Morgan. "External demand has also improved in the near term."

Business owners also reported positive signs. Zhou Mingwang, owner of Yiwu Mingwang Jewelry, a small export company in Zhejiang province, said overseas orders have slowly come back since August for Christmas.

Government policies to help small and medium-sized enterprises are also coming through, he added.

Huang Yi, manager of Shanghai Qinfen Trading, a vehicle parts exporter, said although the situation is still "quite miserable" for many manufacturing companies, he believes that the business environment will change for the better soon.

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