BEIJING -- China's industrial growth will stabilize and pick up pace in the second half of the year as the government's pro-growth policies gradually take effect, an official with China's industry watchdog said Wednesday.

"The central government had rolled out a string of measures to prioritize growth. We can see the huge potentials in domestic demand...and we expect the activities to pick up," Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, said during a news conference Wednesday in Beijing.

But Zhu also warned of the lingering uncertainties that may bring fresh shocks to the economy as the foundation of the recovery was still fragile.

China's industrial value-added output increased 10.5 percent year-on-year in the first half, a rate Zhu said was "not low" compared with other economies in the context of weak external demands.

As a combined result of sluggish external demands, government's control on the property sector and the self-initiated structural shift towards domestic demand, China GDP growth slowed to 7.6 percent in the second quarter, the lowest quarterly expansion in three years.

Fearing the slowdown may lead to a hard landing, the government has been moving to loosen policies, including cutting interest rates and bank reserve requirement ratios, fast-tracking investment plans to spur growth.

Preliminary figures from HSBC showed China's purchasing managers' index, which gauges the manufacturing sector, rose to 49.5 in July from 48.2 in June.

"The rebound shows that the loosening policies adopted previously have produced results," said Qu Hongbin, chief economist at HSBC China and co-head of Asian Economic Research at HSBC.

He said growth in the world's second-largest economy is expected to show obvious improvements in the coming months as the government's regulations continue to affect the market.