An indicator of Chinese manufacturing activity beat forecasts in June but analysts warned that today's surprising result belied a slowdown in the world's second-largest economy. 

The reading comes as the country loses momentum with policymakers putting the brakes on lending following years of debt-fuelled investment that has raised fears of a financial crisis that could blow out globally. 

The purchasing managers' index (PMI), a gauge of factory conditions, came in at 51.7, the National Bureau of Statistics said, beating estimates on a Bloomberg News survey of 51. 

Anything above 50 is considered growth while a figure below points to contraction. 

It was also higher than the previous month's 51.2 and marked the eleventh month of expansion in a row.

But ANZ Research warned the acceleration was not broad-based.  It "was mainly due to higher production and the new order sub-indices, which disguised an imbalanced recovery across sectors", ANZ Research said in a note. 

"Even with higher-than-expected PMIs in June, the moderation in second-quarter GDP growth is inevitable, in our view," it added. 

In the first three months of the year China's economy expanded by a better-than-expected 6.9%, but ANZ expects growth to slow to 6.7% in the second quarter from April to June. 

The slowdown is part of a longer-term trend as China transitions from an investment and export-driven economic model to one more reliant on consumer spending. 

But the retooling has been complicated as Beijing wrestles with huge debt and excess capacity left over from massive government-backed infrastructure spending at the height of the global financial crisis.