A turning point at last for China's economy?

News of a pick-up in China's factory activity suggests the world's second-largest economy is regaining its momentum, analysts told CNBC.

Factory activity expanded at the fastest pace in five months in May thanks to rising new orders, official data showed on Sunday. The official Purchasing Managers' Index rose to 50.8 in May, from April's 50.4, beating market expectations of 50.6.

The upbeat data comes after policy makers announced plans to further ease monetary policy on Friday by cutting reserve requirements for banks that lend to the agricultural sector and small enterprises. They undertook a similar move last month for banks in rural areas.

Read MoreChina factory activity hits 5-month high in May

Martin Lakos, division director, Macquarie Private Wealth told CNBC Asia's "Rundown" on Monday that China seems to have reached a turning point.

"We're still of the view that... in the third or fourth quarter we might see quarterly growth of 7.7 percent, which would average the year at 7.4 to 7.5 percent, which is what the authorities want," said Lakos.

Cyclists in the city, Shanghai, China, Asia
Juergen Stumpe | LOOK | Getty Images
Cyclists in the city, Shanghai, China, Asia

Growth in Asia's largest economy slowed to 7.4 percent in the first quarter of the year from 7.7 percent in the final quarter of last year, sparking debate over whether the economy could achieve the government's 7.5 percent growth target for 2014 if it weakens further.

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Many economists are worried about the prospect of a sharp slowdown in China as policy makers attempt to transition towards a consumption-based economy. Authorities are trying to dampen growth in frothier parts of the economy without undermining overall growth and leading to an economic hard landing.

Concerns about China's property market are starting to ease amid signs of cooling this year. In April, annual growth in average new home prices slowed to an 11-month low as the government's tightening measures appear to have taken affect.

According to Seng Wun Soon, regional economist at CIMB bank, policy makers appear to have avoided the risk of a sharp economic slowdown.

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"There are signs of it [a soft landing] working," he said. "I think the policy planners are comforted that they are seeing signs of a slowdown in property sector as it will take the heat off the rest of the economy but at the same it's trying to balance that."

But according to Selina Ling, head of treasury research at OCBC bank, investors might not have seen the worst of it yet.

"The official concern now is more on job creation rather than headline growth. So I think over the next quarter or two we'll get growth sinking further towards the 7 percent handle - I think the policy makers will be okay with it," she said.

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Shares on both the Shanghai and Hong Kong market saw stellar returns of above 4 percent in May, but Ling said it might be a bit too soon to turn more positive on China.

"I'm still a little bit cautious about China - I think the economic data is going to be a little bit choppy because I don't think the numbers have truly bottomed yet - think it will be a two step forward one step back situation," she said.

CIMB's Soon also warned investors that economic data out of China was unlikely to go in a straight line.

"Export orders recovered but were still below 50 [and] domestic orders came through but that's on stimulus as well - so it is... uneven numbers, which suggest it's still going to be a bumpy reading going ahead but generally we're going in the direction that steam is coming off the economy," he added.