The world's second largest economy, China, is doing "much better" than the recent slew of discouraging monthly economic data might suggest, according to Stephen Roach, a professor at Yale University and former non-executive chairman of Morgan Stanley Asia.
Recent economic indicators including the latest HSBC China purchasing managers index (PMI)—which fell into contractionary territory for the first time in seven months in May - have reignited investor concerns over the outlook for the economy.
"I think the economy is much better than superficial assessment seems to indicate. The growth rate was a little slower in the first quarter than people thought, but the mix is a good one," Roach told CNBC Asia's "Squawk Box" in Chengdu, China, on the sidelines of the Fortune Global Forum 2013.
While China's gross domestic product growth slowed to a worse-than-expected 7.7 percent in the first quarter, the services sector outpaced that of the overall economy, growing 8.3 percent over the same period, which Roach believes is a very encouraging sign.
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"I see something you don't. China is moving methodically to put in place a pro-consumption economy; they are focusing on building out their services sector, increasing urbanization which levers their per capita income three-fold over the old rural employment model and, eventually, they will focus on social safety net," he said.