Benchmark equity indices in mainland China and Hong Kong closed higher on Monday as resurgent hopes for a significant public stimulus boost captured investors' attention more than did the release of a batch of poor activity and spending data. Weakness was evident nearly across the board and continued a trend of disappointing news from the world's second-largest economy in recent months. Industrial production expanded by an annual 6.5 percent in April, dropping from 7.6 percent in March and falling notably short of expectations while fixed investment data suggested a slowdown to 8.3 percent in April from 9.4 percent the previous month. Retail sales and fixed asset investment also underperformed forecasts. "This slowdown as a result of weakening demand is also reflected in the prices of key industrial commodities like iron ore," said Sebastian Lewis, content director for Greater China at S&P Global Platts in an email to CNBC on Monday, pointing out that the price of iron ore had dropped 30 percent since February alone. Partially offsetting the weakness, record steel output implied a positive read-through for construction while property development activity registered higher investment figures.

A Chinese flag flies in front of cranes at a construction site in the Fun City apartment complex, developed by China Vanke Co., in the Fangshan district of Beijing, China. Tomohiro Ohsumi | Bloomberg | Getty Images

In sum, slowing domestic consumption growth and softer external demand appear to have driven the slowdown from the start of this quarter, said Julian Evans-Pritchard, China economist at Capital Economics, in a note to clients on Monday. "For now at least, infrastructure and property investment are holding up, helping to stave off a sharper deceleration," Evans-Pritchard explained. "But we doubt the current strength in these areas can be sustained given that policy is being tightened and the property market is starting to cool," he added ominously. Chinese authorities have recently doubled down on efforts to rein in debt and prevent potential asset bubbles in areas such as property. Effects have been clearly seen in the short-term debt market where yields on five-year government bonds last week hit a two and a half year high, closing above those on 10-year bonds in a rarely seen example of yield curve inversion between the securities, as regulators focus on discouraging the use of borrowed money to buy government debt.