Global rating agency Fitch said risks of a hard landing for China's economy and of a further sharp depreciation of the yuan have receded in the near term.
"There are signs of stabilization in the Chinese economy... the policy response in China will allow the country to manage its growth gradually to a sustainable level and avoid a hard landing," according to Fitch Ratings' latest report on economic risks in the Asia Pacific.
The report came in as China's GDP growth held steady at 6.7 percent for a third straight quarter, with encouraging signs including rising rail freight volume and industrial profits.
Major research institutions and investment banks have upgraded their forecast for the country's full-year GDP growth. China's central bank economists Ma Jun said China will for sure realize its growth target of 6.5 to 7 percent this year.
Thanks to ongoing industrial overhauls and effective macro regulation by the government, a hard landing has become increasingly unlikely.
But Fitch noted that reliance on credit expansion to support the economy contributed to meeting near-term growth targets but added to long-term macroeconomic imbalances.
Fitch said "the risk of a sharp depreciation of the yuan is less imminent," citing a slower path for interest-rate hikes in the United States as a supportive factor.
It expects the yuan fixing against the dollar to be allowed to depreciate gradually.
The Chinese currency, the renminbi or the yuan, ended its losing streak on Wednesday as the central parity rate strengthened 39 basis points to 6.7705 against the U.S. dollar, according to the China Foreign Exchange Trading System.