The iShares FTSE China 25 Index Fund (NYSEArca: FXI) was up more than 1% in early U.S. trading Monday and threatening to break out to a new 52-week high after more solid manufacturing data from the world’s second-largest economy.

The final reading for the HSBC Purchasing Managers’ Index rose to 51.5 in December, well above the preliminary reading of 50.9 published in the middle of the month and November’s final reading of 50.5, Reuters reports. The growth was the best since May 2011 while an index for new orders suggests continued strength in the new year.

“Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize,” said Hongbin Qu, HSBC’s chief economist for China. “This, plus Beijing’s reiteration of keeping pro-growth policy in place into the coming year, should support a modest growth recovery of around 8.6% year-on-year in 2013, despite the ongoing external headwinds.” [Small-Cap ETFs for China’s Shift to Domestic Consumption]

The China ETF underperformed developed markets through most of 2012 but has shot higher since early September on signs the economy is gaining momentum. FXI was up 14.6% for the three months ended Dec. 28, according to investment researcher Morningstar. [Don’t Ignore the China ETFs]

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