THERE is a huge confusion over what the Chinese government is doing to reduce the country's debt, but financial experts are in agreement that there is no outright deleveraging happening yet.

Deleveraging, which points to a concerted effort to reduce a nation's debt to GDP ratio, is tough to achieve without potentially inducing recession. Yet China's economy is geared for growth at a rate of 6 to 7%, say panellists at The Asset 12th Asian Bond Markets Summit in Shanghai.

"It is not technically deleveraging. Credit is growing but the growth rate is coming down from double-digit rate to high single digit," says Brian Murray, group chief economist, group investment department, AIA Group.

Corporate debt in China has generally stabilized. Household debt level is up with mortgage growth last year expanding 30%, says Andrew Fennell, director, Asia-Pacific Sovereign Ratings, Fitch Ratings.

"Mortgage growth started at a low base five to 10 years ago, but it's accelerating rapidly," adds Fennell. "It is still behind most developed countries.There is still a buffer. But if it is growing at that level, it would not take long to reach the same level as Japan and the US" he notes.

This could mean that debt could be flowing into other sectors of the economy as China scales back loans to non-financial corporations. With credit being managed to grow in other sectors, opportunity is apparent for investors.

"Credit is moving to new economy, and as investors you want to be exposed to that," says Murray. China's response to 2008 crisis was to increase spending and this was positive to the global economy

But even with an attempt to deleverage, China is expected to deliver growth, says George Yang, SVP, head of rates and credit trading, Sinopac Securities.

"Even if China is trying to deleverage it can sustain a growth rate of 6-7%," he adds.

What is clear among panellists at the bond summit is that China is ushering a new era of balanced growth. According Sophia Zhou, portfolio manager fixed income department, E Fund Management, something has to give.

"A balanced China means a smaller trading surplus," she notes.

Fennell agrees: "China can maintain a broadly balanced external position, but cannot do without a slower growth trajectory. If China rebalances to consumption it means a lower savings rate. China has also maintained a high investment rates."