China's stabilizing influence

But good news has been fairly even across the economy. The export outlook may also be improving as demand from developed economies grows and the government continues with plans to eliminate overcapacity.

"The rise of the official PMI was mainly driven by 'new orders' suggesting the ongoing sequential recovery starts to be driven by external demand even although domestic demand is still the main driving force," added Lu.

Good news for China can be viewed as good news for much of the region.

The increasingly large economy has an ever-growing impact on the rest of the world and particularly on those nearby economies with particularly close links. The prospect of a hard landing in China is enough to scare even the sturdiest of policymakers.

In a recent paper, Moody's Analytics economists painted a scary picture of what a hard landing in China would look like. Although less severe than the 2008 global financial crisis, the impact would be severe.

An output gap of about 5 percent of GDP in the Chinese mainland would have a severe effect on economies such as Singapore, Taiwan, Hong Kong, Malaysia, Thailand and South Korea.

Singapore, for example, could see output drop by as much as 10 percent of GDP. South Korea's output could drop by about 6 percent. The others would be somewhere in the middle.

Less affected would be other countries, such as Japan, India, New Zealand, the Philippines, Indonesia or Australia. Japan could see a gap of 5 percent while Australia would likely lose out on about 1 percent of its GDP.

"China clearly has a big impact but any hard landing there would affect the rest of Asia less than the 2008/09 global financial crisis," says Moody's Chan.

Part of the reason for this lower impact is the role China plays in export markets. China is the biggest export destination for many products but it is not always the final one.

Electronics and components, for example, are exported to China and assembled into full products that are then shipped to sellers in the US, Europe or even back to the countries from which the components originally came.

Continuing demand abroad for products that pass through China would temper a hard landing.

In other words, growth in the US would slow slightly but it would not come close to pushing the country into any kind of recession, according to Moody's Analytics.

Countries such as Malaysia and Thailand would suffer more because they rely on China to purchase about 12 percent of their exports. The domino effect would also hit private consumption in those countries, not only as a result of lower wages and lost jobs but also because of the negative effect of bad news coming from China.

This is a worst-case scenario that would exacerbate a shift already underway.

"For the most part, the emerging market universe is undergoing a serious re-pricing of risk via higher borrowing costs, equity market losses and major FX depreciation," says Ghosh.