About 20 percent of China's economy is shrinking and 80 percent is growing moderately, according to independent economist Andy Xie.
Xie told CNBC Asia's "Squawk Box" on Friday that a credit bubble in China's economy is deflating slowing, leading to weaker growth momentum.
"20 percent of China's GDP is shrinking and 80 percent is still growing moderately," Xie said.
China, the world's number two economy, has not had a great start to the year. Economic data paints a picture of a slowing economy, with this week's HSBC purchasing managers' index showing manufacturing activity continuing to contract.
Adding to concerns about the economic outlook was the first corporate bond default by a Chinese firm, Shanghai Chaori Solar Energy Science and Technology, last month.
That default led to some talk about whether China is facing a 'credit event' or a 'Lehman' moment, a reference to the collapse of the U.S. investment bank in 2008 that contributed to the global financial crisis.
"China's credit event is not like the one we saw in the U.S.," said Xie.
"When a credit bubble deflates, an economy is going to be in difficult shape for a long time. China is in better shape than most because China still has an export machine that depends on global demand. Household consumption is small part of GDP (gross domestic product) but it is stable," he added.
Xie said China's economy was probably not growing at the 7.5 percent rate the government targets this year, but would not be drawn on an estimate.
China's economy grew 7.7 percent in the final quarter of last year from a year earlier, compared with a 7.8 percent expansion in the third quarter.
Xie added that stimulus measures to bolster the economy were probably aimed at boosting sentiment.
Beijing late on Wednesday unveiled plans to accelerate spending on railways, upgrade housing for low-income households and lower tax rates for smaller companies.
"What I see is that whatever stimulus measures come out over the next few months and years will be mostly about stabilizing sentiment," Xie said.
John Woods, head of fixed income and senior portfolio managers at Citi Investment Management, added: "I am positive about the stimulus. It is a re-hash of previous stimulus, however, if it's the first of many it will be fine-tuned."