This 'Wild Beast' May Mean Volatile Markets: Strategist

KKR's Big Bets for 2013

Henry McVey, head of global macro & asset allocation at KKR & Co., shares his view of the world in 2013, as well as how the rest of the globe is looking at the "fiscal cliff" debate taking place in the U.S.

China is a "wild beast," but there are signs the economy is starting to stabilize, KKR's Henry McVey told CNBC on Tuesday.

"What they're going to quietly try to do is to stabilize the economy by focusing on liberalization of reforms," KKR's head of global macro and asset allocation told "Squawk on the Street." He noted that there have already been moves to liberalize refining, financial services, and real estate.

McVey added that investors shouldn't hold their breath for a quick bout of monetary stimulus to juice growth, which has created bubbles in the past.

Exports to Europe have been slowing, which McVey said is a structural phenomenon, while exports to the rest of Asia are doing okay.

In real estate, the second major market in China, the strategist said officials "don't want real estate to go up too much because it creates social unrest but they can't have it go down too much because it will hurt the banks."

(Read More: Will 2013 Bring More Pain or Gain for China Stocks?)

Overall, McVey said China's economy is in transition and the market will be more volatile.

"As investors, we should be rooting for 7.5 percent growth that's stable with increasing GDP capita to stop some of the income inequality," he said.