China's manufacturing activity expanded at the fastest pace in a year in March, an official factory survey showed on Monday, in a positive sign for the world's second-largest economy as it deals with an escalating US trade war.

The official purchasing managers' index (PMI) was 50.5 in March versus 50.2 in February, above the 50-mark separating growth from contraction. It was the highest PMI reading since March 2024.

The non-manufacturing PMI, which includes services and construction, accelerated to 50.8 from 50.4.

China has kept its economic target for this year unchanged at "around five percent", despite new tariffs from US President Donald Trump, which threaten to hit the massive export sector, a key driver for the US$18 trillion economy.

The government has pledged more fiscal stimulus, increased debt issuance, further monetary easing and put even greater emphasis on boosting domestic demand to cushion the impact of the trade war.

Trump has imposed a cumulative 20 percent tariff on all Chinese imports since returning to the White House in January.

The US president is also preparing to announce "reciprocal" tariffs on Wednesday, a move designed to address trade imbalances, which could hit Chinese goods with additional levies. (Reuters)