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Upbeat PMI: Now time to wean China off stimulus?

Upbeat news on China's massive manufacturing activity sector on Tuesday raises the question of whether it's time to wean the economy off growth-supportive measures.

China's factory growth rose to a six-month peak, with the official Purchasing Managers' Index (PMI) rising to 51 in June from 50.8 in May amid improving demand both at home and abroad.

Read MoreChina's twin PMIs show factory rebound under way

The final reading of the HSBC/Markit PMI for June meanwhile rose to 50.7 from 49.4 in May, breaking above the 50-point mark that divides growth in activity from contraction for the first time since December.

"You're seeing a fairly steady flow of stimulus measures and it does seem the economy is responding," said Bank of Singapore Chief Economist Richard Jerram. "The PMIs are now at levels where stimulus eases off, so we could expect to see such measures slow in coming months."

The breakdown of the HSBC survey showed the sub-index for new orders, which reflects demand for China's exports, hit a 15-month high of 51.8 in June.

Chinese authorities have rolled out a series of targeted economic measures over recent weeks, also referred to as a "mini stimulus," to support growth in the world's second-largest economy.

Read MoreIs it time to go outright bullish on China?

Last month for instance, the level of reserves banks must hold with the central bank was cut for banks that have sizable loans to the farming sector and small-and-medium sized firms.

Late Monday, China said it would relax the rules used for calculating the amount of deposits that banks can re-lend as loans in what is seen as the latest in a package of measures to support a slowing economy.

China's economy grew at annual pace of 7.4 percent in the first quarter, slowing from 7.7 percent in the final quarter of last year.

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Beijing has an official full-year growth target of 7.5 percent, which analysts say is likely to be hit with the stimulus measures.

"The official PMI is certainly very positive, and also in terms of China's growth target being achieved," Greg Matwejev, director, currency hedge fund sales and trading, told CNBC.

David Mann, head of regional research for Asia, at Standard Chartered Bank in Singapore, said that while Tuesday's twin PMI data were certainly positive, it was still too early to call it a day on the stimulus measures.

Read MoreChina further relaxes bank lending rules

"I think there still will be small targeted stimulus measures," he said.

"It does look like there is a broad-based improvement in the PMI which is encouraging but the turn higher is something they [policymakers] would want to build on before they start taking away stimulus," Mann added.