China's PMI sees hefty rebound in Aug

Ma Jun, chief economist at the Deutsche Bank Great China, raised China's GDP growth forecast to 7.7 percent in the second half.

"If PMI readings keep growing at the current level, the industrial output growth could increase to 9.7 percent in the third quarter, and that will eventually shore up GDP," he said.

With businesses intending to replenish inventories, China's GDP growth will accelerate in the third quarter, said Barclays China economist Chang Jian.

The data have also boosted the confidence of entrepreneurs. CFLP data showed the business outlook sub-index for August climbed by 300 basis points to 59.4 percent.

Despite the strong recovery signs in the short term, economists warned the long-term prospects remain uncertain.

Liu Yuhui, an economist at the Chinese Academy of Social Sciences, said healthy growth is still restrained by excessive reliance on investment, overcapacity and spiraling debts.

Zhang Liqun, a researcher at the Development Research Center of the State Council, said the country is at a critical stage of structural reform. Companies, especially small businesses, have to make strong efforts to cope with the new conditions.

Having faced a prolonged slowdown in the past two years, the Chinese government resolved to rebalance its outdated growth model by pursuing structural reforms instead of initiating massive stimulus programs.

In mid-August, Premier Li Keqiang underscored the role of reform in promoting sustainable growth, pledging to keep the economy from big fluctuations and maintain steady performance.

"To achieve sustainable and healthy development, we should stick to rebalancing the economy while keeping growth, employment and inflation within a reasonable range," he said at a meeting in Lanzhou City in Gansu Province, which was attended by provincial heads from the country's western regions.