The Shanghai market looks like it is seeing the bright side in tonight’s news that China’s manufacturing sector is growing faster than investors had been led to expect.

According to the government’s official statistics, industrial activity in China — as reflected by the purchasing managers index (PMI) — edged up to 55.2 in November. Consensus forecasts were for a much more subdued rise to 54.8 at the most, with many economists expecting the index to remain steady at 54.7.

Input prices, a gauge of wholesale inflation, surged to 73.5 from an October level of 69.9.

Although the news initially knocked Chinese stocks lower, the key Shanghai Composite index remained above the key 200-day moving average — revealing that while few global traders are comfortable with the hint of persistent inflation in China, they are still happy to see signs that Chinese factories are still pumping out products at a fast rate.

Last month, traders loved the PMI for revealing that the Chinese export economy remains alive and well. But this time around, too strong a number could spark fear that Beijing will have to move in before the end of the year to raise interest rates or otherwise cool the economy before it generates truly out-of-control inflation.

Since Shanghai still has technical support — for now — it could bode well for all your favorite Chinese assets, from the iShares FTSE/Xinhua China 25 Index ETF (NYSE:FXI) to individual stocks like Baidu, Inc. (NASDAQ:BIDU) and even relatively unloved names like Trina Solar Ltd. (NYSE:TSL).

And ultimately, because China remains a significant bellwether for emerging markets in general, as Shanghai goes tonight, so will the iShares MSCI Emerging Markets Index ETF (NYSE:EEM) go tomorrow.

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

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