The figures haven't been kind to China lately. Gone are the days of double digit growth, trade data have weakened, credit markets have overheated and fears of a housing bubble remain. But despite the bearish headlines, the long-term picture for China looks quite good and a slowdown might actually be healthy, according to HSBC.
"This is a long term play," James Emmett, global head of trade and receivables at HSBC told CNBC. "Absolutely there is long term sustainable growth. But it is the evolution and the change that needs to take place, and some of the reforms that need to take place which will be key as to how quickly that happens."
Emmett told CNBC that decades of double digit growth for China had become unsustainable, and the recent slowdown for any company exporting to China is part of a natural cycle as the economy rebalances.
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"We are inherently moving into new phase form the Chinese perspective. I think that is around the suitability of development. I think it is around the stability of development, I think the government is very focused on that," he said.
China's gross domestic product (GDP) slowed in the second quarter, coming in at 7.5 percent year-on-year, down from 7.7 percent in the first three months of the year. It followed disappointing import data for China, which missed expectations by a wide margin last week. Imports declined 0.7 percent year-on-year in June, against a forecast of a rise of 8 percent.
The bad news prompted analysts from Societe Generale to downgrade their outlook for China's growth to just 4-5 percent in seven years.
The poor run of data comes at a time when the country's new leadership is stepping up regulation, curbing an overheated credit market and switching an export-focused economy into a consumer-driven one. But critics still remain, with James Chanos of Kynikos Associates telling CNBC on Wednesday at the Delivering Alpha conference that's he's not convinced that the Chinese authorities know what they are doing.
"It's been a great place to be short," he said, adding that he has made money in the last few years in the banking, real estate, cement and steel sectors.
Responding to the latest data from the country, he said that the rebalancing that is frequently talked about just isn't happening. "It's a very complex economy. It's not subject to pushing buttons and pulling levers as everybody thinks it is," he said.
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Some Western companies are already adapting to the slowdown in China and trying to reduce their risks.
"There has been a big hiccup with luxury in China," Giles English, co-founder of watchmaker Bremont which exports to China said. "It's about spreading your risk in the country, so you get some teething problems but [trade] will come back."
Emmett said it wasn't just the luxury goods sector that could thrive in China's consumption-led future. He sees opportunities for foreign companies in pharmaceuticals, hi-tech, capital goods and services.
China's domestic consumption remains "resilient", according to an International Monetary Fund (IMF) report on the country released on Wednesday. The IMF predicts China's economy will grow 7.75 percent this year and that internal demand will offset any "lingering weakness in the external environment".
"[IMF] directors underscored the importance of transitioning to a new growth path that is more consumption-based, inclusive, and environmentally friendly. They welcomed the authorities' reform strategy in this direction, which charts a path toward mitigating risks, rebalancing growth, and addressing income disparities, thus safeguarding China's important contribution to global growth," the Fund said in a press release.
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There was also encouraging news on foreign direct investment (FDI) on Wednesday. FDI in China for June jumped 20.1 percent from a year ago, the Commerce Ministry said, which is the largest monthly gain since March 2011.
But China's future is not all about consumption, according to HSBC. China's important role as the world's factory will remain and the country will need serious amounts of new infrastructure, the bank believes. China's railway network is still shorter than the U.S. rail network in 1880 and there are more than 80 Chinese cities with a population of over 5 million that still have no subway system.
"People need to grasp the scale of China," Peter McIntyre, head of the U.K.'s trade and receivables sector at HSBC told CNBC. "So it's not just to treat China, in many respects, as an Asian market but as many markets in what is an enormous country...I still see a tremendous growth opportunity."
—By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81.