China's manufacturing hits 2-year high as demand perks up

The report found that production grew at its fastest pace in more than five years as strong domestic demand more than offset a slight drop in new export orders.

Data on China's huge manufacturing industry, which employs many millions of workers, is closely watched for indications on the state of the broader economy, which last year expanded at its slowest rate in a quarter century.

"Owing to the global economy's feeble recovery, the import and export situation is still grim," said Zhao Qinghe, an analyst at the National Bureau of Statistics.