Based on a poll released on Monday, China's factory activity is expected to have increased in February, indicating that the flashes of domestic demand seen since the end of the zero-COVID policy are now strong enough to rekindle upstream sectors.

Domestic orders and consumption boosted output and helped the world's second-largest economy return to growth in January, and economists expect manufacturers to have consolidated that position now that the country's COVID-19 epidemic has "basically" ended.

According to the median forecast of 29 economists polled, the official manufacturing purchasing managers' index (PMI) is expected to rise to 50.5 in February from 50.1 in January.

A reading above 50 indicates monthly expansion, while a reading below 50 indicates monthly contraction. The official manufacturing PMI, which focuses on large and state-owned firms, and its services sector survey will be released on Wednesday.

Despite COVID spreading faster than economists predicted after the government abandoned its strict "zero-COVID" policy in early December, factory gate prices in China fell in January, indicating that the country's manufacturing sector was still struggling to recover.

However, optimism is growing, with Goldman Sachs predicting "a strong NBS manufacturing PMI reading of 51 in February" due to "continued improvements in steel demand and coal consumption."

China's central bank announced on Friday that the domestic economy will generally rebound in 2023, despite the fact that the external environment remains "severe and complex."

The People's Bank of China also promised to begin improving social expectations and boosting confidence, with a focus on supporting domestic demand expansion.