Bears point to China's 'debt trap', excess manufacturing capacity, real estate troubles, reduced infrastructure and commodities demand, as well as the pressure to weaken the currency.
"Misreading China’s course risks missing important developments and major business opportunities."
Leonie Lethbridge, ANZ Regional Chief Operating Officer in Shanghai
In contrast, pandas (or bulls) focus on China as the world's second-largest economy and the materiality of present day growth rates compared with the past. GDP growth of 7 per cent produces an annual increase of more than $US800bn - a larger impact than the 10 per cent uplift in GDP seen five years ago.
But this analysis, by both bears and pandas, fails to recognise China will grow at a pace of its own choosing. It will avoid a hard landing but reduced growth rates are a consequence of design and choice, not of unmanaged or unmanageable forces.
This is nowhere clearer than in Shanghai, with the recent abolition of the bureaucratic management system that drives departmental and district bureaucrats on the quantum of growth – a powerful lever and now a generational change in growth management.
To speak of the percentage growth rate or even the quantum of growth of GDP growth is to speak at cross purposes with the conversation China's policy makers, the Chinese market and even Chinese consumers are seeking. The risk is one of two ways of thinking passing like ships in the night.
Misreading China's course risks missing important developments and major business opportunities. The real conversation is one of the nature of the growth and of reform, if not revolution, in the Chinese economy, market and society.
China is being reformed in three fundamental ways.
1. The increasingly urbanised middle class is expanding rapidly and is being encouraged to consume with increasing intensity. This is a group which will increase from the present 300 million people, a population already larger than that of either the USA or Indonesia, to 500 million over the next five years. Importantly though, China's consumers are being enabled and encouraged to consume, invest and access global markets for goods and services.
As a case in point, in the first five weeks of the year and leading up to Chinese New Year, 315 tonnes of gold (105 per cent of global mine output for the period) passed from offshore miners - typically Australian - through the Shanghai Gold Exchange into private hands.
This reflects demand has grown with the relevant regulations, infrastructure and encouragement being put in place by the Central government. From the convenience of their homes or the next-door Starbucks, individual Chinese investors can easily purchase gold online at local banks.
Not only does this reverse historic restraints on purchase of the metal, it taps a deep cultural affinity for gold both as a form of investment and wealth protection, as well as jewellery.
In 2009 China's Central Television, the main state-owned television company, conducted an advertising campaign - the dulcet tones of the voiceover highlighting the ease and benefit of purchasing gold. The effect is a more than doubling of China's share of global private sector demand for the commodity. (see ANZ Research's new gold report.)
2. China is increasingly focussed on environmental sustainability and quality of supply. Air quality, soil pollution and food safety are major social, political and health issues. Air Quality apps are installed on smartphones across China. Demands on resources, including energy and water stress are of concern for both China's government and the people.
Two of four Central Government investment priorities directly address issues of pollution and sustainability.
On the other side of the coin, for consumers, this concern means actively buying foreign food products as a proxy for safe and high quality product.
The China fresh fruit market is valued at $80 billion per year, growing at 15 per cent annum. However markets occupied by online entities such as FruitDay.com which supply 90 per cent foreign grown produce are growing at 40 per cent per annum.
Somewhat interestingly given the recent food-poisoning controversy, when Australians are eating Chinese berries, Chinese consumers are increasingly buying Australian cherries, mangoes and apples online.
3. China's growth model is one increasing driven by mass entrepreneurship and innovation. Technological innovation is being harnessed to serve many ends, including giving access to new markets and tackling resource efficiency and pollution.
Premier Li Keqiang's Tianjin World Economic Forum speech mentions innovation no less than 33 times. This is seen as the key to a vigorous micro economy, high employment rates especially for young people, and a more equitable income distribution.
In short, the central government is vitally concerned about actions needed for China to avoid the Middle Income Trap. It is and will take broad-based and coordinated actions to achieve this.
Financial innovation and liberalisation is a theme of the Shanghai Free Trade Zone, which also aims to encourage two-way investment flows across the China border and to internationalise the RMB. Long term, sustained reform is inherent in the Chinese economy and life.