Key data released this past weekend showed an easing of China’s deflationary pressures for the month of August.

The consumer price index was 0.1% higher year on year in August, lower than a Reuters poll of analysts who predicted a 0.2% increase.

Most importantly, though, the index emerged out of the negative territory of -0.3% recorded in July.

The producer price index, on the other hand, fell 3% from a year earlier, against a 4.4% drop in July. The drop in factory prices was the smallest in five months.

Analysts maintain that China will need to implement more policy support to shore up consumer demand, with a slowing labour market recovery and household income expectations uncertain.

So where does the world's second largest economy go from here?

On Money in the Market, Hongbin Jeong speaks to Tao Zhang, China Markets Editor, Bloomberg, to find out more.