What a difference a quarter makes. After months of jitters over a possible hard landing in China, market watchers are quickly turning optimistic on the outlook for the world's second largest economy following a spate of reassuring data this week.
While China's gross domestic product (GDP) growth slowed to 7.4 percent in the third quarter, as expected, there were other economic indicators for September that overshot forecasts. Exports, fixed asset investment, industrial output and retail sales data confirmed the economy has bottomed, and is set for a strong comeback, said experts.
"The economy has turned the corner and is on its way up as stimulus measures have finally begun to filter through to data. Concerns over a hard landing in China, or even of further slowdown may be put to rest," Dariusz Kowalczyk, senior economist at Credit Agricole wrote in a note.
He now estimates growth will pick up to 8.1 percent in the fourth quarter, up from a previous forecast of 7.6 percent, and 9 percent in the first-half of 2013, as the full-blown effects of the stimulus measures penetrate the economy.
Kowalczyk is not alone in his upbeat view of the mainland's economy, Aaron Bowskey, CEO of China focused Marco Polo Fund Management told CNBC that recent data indicates a "huge turnaround" is underway in China.
The biggest boost to the economy will come after the upcoming leadership transition at the 18th National Congress of the Chinese Communist Party (CCP) in November, added Bowskey.
"We have a once in a decade leadership transition – that should be a major catalyst. Most of the Chinese government will be turning over to younger leaders, and we expect to see those leaders begin a major stimulus program upon arrival," Bowskey said. He forecasts further cuts in interest rates and reserve requirement ratios following the change in leadership.
Kowalczyk agrees that positive impact of the leadership transition should not be underestimated. (Read more: Steinbock: China's On the Way to Recovery)
"Once the new leadership comes into power, they will have a new set of objectives, which will mean spending more money on new projects. This will add to growth in 2013-2014," he added.
Signs of stabilization in the mainland economy are being reflected in improving business sentiment and a bounce in the country's stock market.
The MNI China Business Sentiment, a private sector survey of businesses in 32 cities, showed an improvement in its reading for October, rising to 51.52, from 51.35 in September.
Meanwhile, the benchmark Shanghai Composite - which has struggled this year – is beginning to gain traction, rising 4 percent since the beginning of September. The market posted its best session in seven days following the release of the GDP data on Thursday, closing up 1.2 percent to 2131.69.
"More and more people are giving up on being bearish on China. There is some energy in the (stock) market, with yesterday's (Thursday's) move giving it another high. You can't argue against it unless it breaks (below) 2,000," Mark Matthews, Head of Research, Asia at Bank Julius Baer.
Whilst recent data has pointed to positive impetus in the mainland economy, economists including Alistair Thornton, senior China economist at IHS Global Insight are wary on whether the momentum will continue.
"Those fearing a hard-landing will be able to sleep a little better tonight, but those positioned for a clear recovery might be disappointed. The picture is one of emerging stabilization, not the return of unbridled optimism," Thornton wrote in a report Thursday.
The on-the-ground evidence of a continued slowdown through the year is far greater than the evidence of a steady pick-up, he said.
Thornton added that plenty of the economy is still "under water," pointing to the export sector, which he believes is a real threat to the economy.
"Export growth was surprisingly good in September, but we don't hold much faith that this trend will continue - we'd expect some mean reversion over the next couple of months, and that entails export growth in low single digits," he said.
China's exports rose 9.9 percent year on-year in September versus expectations of a 5 percent gain.
Separately, the China's Commerce Ministry said on Friday that the trade data for September is not enough to confirm that a recovery in the export sector is in place, given uncertainty in the global economy.
—By CNBC's Ansuya Harjani