Interviewed at his Yiwu office in July, trader Sun Fayou said that he had not received a single order in two straight weeks. Such a lull, he said, had never happened before.

“It was definitely the hardest year in the past decade because of the slow recovery of the European economy,” said Sun, adding that he expects to see at least a 30 percent drop in sales revenue this year. He desperately hopes that the global economy recovers as quickly as possible.

His wish may be coming true.

After witnessing a slowdown in the last two quarters, China's economy seems to have returned to positive terrain, with its key manufacturing gauge rising to a 16-month high in August on the back of strong new orders.

The indicator also gave enough proof that there's been a steady improvement in China's overall economic conditions and that the government measures have helped steer the world's second-largest economy out of its longest period of slowdown.

The manufacturing Purchasing Managers' Index, which reflects factory production activity, rose to 51.1 in September from 51 in August, the third month in a row of growth, according to official statistics. A reading above 50 indicates activity in the sector is accelerating.

The increase was supported by new orders, which rose to 52.8 in September — the highest reading in more than a year — compared with 52.4 in August.

New export orders rose to 50.7, up 0.5 of a percentage point.

“Although we didn't get the recovery of export orders for the Christmas season, we're quite delighted to know that the number of orders is coming back slowly as expected, which will bring us a better year in 2014,” said Du Deyue, general manager of Yiwu Xinxin Balloons Co Ltd.

Industry insiders said that Yiwu's advantage when it comes to cheap commodity products has been eroded, and that the region's products should be upgraded and have higher quality standards.

“The gradual increase in the costs of labor and materials has forced companies in Yiwu to raise their prices to make profits, which have also been reduced sharply because of less demand from overseas,” said Xiao Wen, a professor in the international economics department of Zhejiang University.

Xiao added that it's time to enhance the quality of the products and to start directly targeting larger companies for regular cooperation projects, instead of relying on individual buyers.