China's manufacturing activities rebounded to a year's peak in March, signaling a steady economic expansion aided by the warming-up market demand, according to the official Purchasing Managers' Index (PMI) released on Sunday.

However, March's sudden rise didn't erase economists' worries about a continued cooling economy. There is still space for easing monetary policy to support industrial businesses depending on the changing situation, they said.

The PMI, a gauge to indicate manufacturing expansion, jumped to 53.1 in March, the highest since April 2011, compared with 51 in February and 50.5 in January, according to the National Bureau of Statistics (NBS) and China Federation of Logistics and Purchasing (CFLP) which jointly released the data.

This figure is based on a survey of managers from more than 800 companies in 28 industries. A reading above 50 means expansion, and a number below 50 shows contraction.

March's PMI indicated that economic growth was rebounding at a faster pace thanks to the increase in new overseas orders amid the easing European debt crisis, according to Zhang Liqun, a senior economist at the Development Research Center of the State Council.

According to the NBS and CFLP statements, a sub-index of new orders climbed to 55.1, a 15-month high, from February's 51. In the meantime, the output index reached 55.2 in March, which was at a peak since May 2011, indicated an accelerating production in the industrial sector.

"But the economic growth may still slow in the coming months because there is a gap between the PMI figure and the real business situation," said Zhang.

HSBC Holdings Plc released its own PMI survey that gave a reading of 48.3 in March, further dropping from February's 49.6, signaling a fifth successive month-on-month deterioration in manufacturing operating conditions.

The Hong Kong-based bank said that a continually slowing growth dragged down by weakening new export orders is likely to prompt further easing monetary policies.

"We still expect at least another round of cuts in the required reserve ratio (RRR) of 100 basic points in the first half and additional tax breaks and fiscal spending," said Qu Hongbin, Chief Economist of Asian Economic Research at HSBC, said in a research note.