Reform brightens China's economic prospects

The central government may raise the fiscal deficit target to 3 percent of GDP, from 2.3 percent in 2015, and use public-private-partnership cooperation, policy bank lending and local government debt swap program, Zhu said. Monetary policy will continue to be accommodative, with one rate cut and four cuts to the reserve requirement ratio.

But the economy still faces uncertainties, Lian said, citing the grim global economic outlook, impacts from U.S. rate hike, slowing industrial growth caused by overcapacity reduction and producer deflation, and flagging property investment.

A deeper and more prolonged property destocking process that may drag down industrial activity and investment appeared to be the top downside risk, Wang of the UBS said.

For the financial markets, investors worried that capital outflow may lead to tightening liquidity and sharp depreciation of the yuan, she said but added the probability is very low due to the government's effective regulation.