As fiscal and tax reforms proceed, the country will redistribute tax incomes between central and local governments more evenly, which is largely expected to ease the fiscal burdens of local governments. The newly released reform blueprint will also allow local governments to turn to the bond market for funding, giving them one more channel to add liquidity.

"Though the interest rate liberalization is due to trigger narrower interest margins, the effect of that and the expectations of more bad loans has already been absorbed by the market. In the future, we should only see the share prices of Chinese banks go upward."

As the urbanization drive advances, restrictions on residency certificates, known as hukou, are expected to be relaxed in small and midsized cities.

"We expect hukou controls to relax gradually in the next five to 10 years, and that will fuel demand in service industries and infrastructure," said Fan, adding that as some Chinese families will also be allowed to have a second child, more demand in the property sector is also foreseeable.

Also, as the country's capital account is expected to open up, a move long-expected by overseas investors, and with the liberalization of the exchange rate mechanism, the renminbi is expected to appreciate.

Meanwhile, Fan said the domestic market is not going to see a strong rebound in the short term, as the recent resumption of IPOs will pressure it.

Grace Chai in Hong Kong contributed to this story.