Stocks in mainland China are trying to recover from five-year lows and it's starting to look like Beijing is ready to take some action. At least that is the opinion of Marko Papic, chief strategist of the Clocktower Group. He told me last week that he thinks Chinese stocks could see a short-term rally of 10% or more in the coming days, based on a Bloomberg report of Chinese President Xi Jinping possibly meeting with financial regulators. But what Papic is looking at in the markets is a rise in yields on Chinese government bonds. “One of the best trades for Chinese assets is investing in long bonds, which are the best performing in the world,” Papic said. “My question is whether there will be a recovery [the] Is the Chinese economy and stock market the end of that multi-year rally in Chinese bonds?” he said. “Something to think about for global bond investors. When yields start to rise, you'll know [it’s a] bottom [in the] Bond prices fall when interest rates rise and vice versa. According to Wind Information, yields on Chinese 10-year government bonds have remained around 2.6%, versus just over 4% for its US counterpart. If yields on Chinese government bonds were to rise, this would likely indicate that investors are moving away, Papic points out. It is not clear whether these investors are ready to buy shares yet. The Shanghai composite closed more than 1% higher on Thursday, allowing the index to recoup some of its 2014 losses on the final day. “China's recent moves to support the stock market are welcome and should likely stabilize markets, but for the time being, continued recovery from relief, we believe China will need to address the core of investor concerns, namely the real estate sector/economy and US-China relations,” research analysts at Nomura said in a note on Wednesday. They expect that if sentiment remains weak, foreign capital will still have room to sell stocks from mainland China and Hong Kong. Consumer price data released on Thursday were not encouraging, showing another month of weak demand, including in sectors such as travel. Thursday's gains also followed news that Beijing announced late the previous day that it had fired Yi Huiman as chief of the securities regulator and replaced him with Wu Qing, who once oversaw the Shanghai Stock Exchange. For Eurasia Group, such a change was a predictable outcome of Xi's high-level involvement. The analysts said Chinese officials had begun laying out a strategy earlier this year to guide domestic equity investment, and had previously acknowledged to the consultancy that this would “require a change in both the macro environment and the profitability of listed companies.” businesses. “But in January, many of these same contacts rolled their eyes at the leadership's continued focus on propaganda, security and administrative controls,” Eurasia Group analysts said in a report. “These policy signals reinforce Eurasia expectations Group of a continued incremental approach to economic and growth policies and a preference for stricter regulation of financial activities.” The ongoing debate in the markets will continue after China returns from a week-long break, the biggest holiday of the year. The Hong Kong stock exchange will only be closed on February 12 and 13 for the holiday. “For now, after liquidity risks on the short term, investors can once again focus on inflation/housing market trends this year, look for earnings growth and analyze macro policy signals,” UBS equity strategists said in a report on Wednesday. Their top picks for A-shares at the Mainland China's biggest expectations are solar energy supplier Sungrow and semiconductor equipment maker Naura Technology, both listed in Shenzhen, and Shanghai-listed Tuopu, a supplier of auto parts to Tesla. The UBS analysts expect the shares of Sungrow could more than double from Tuesday's levels, while those of Tuopu could rise 90% and Naura Technology could see gains of more than 50%. — CNBC's Michael Bloom contributed to this report.