The Chinese economy is either reaping the whirlwind and falling into a deep slump, or continuing a 35-year megaboom — depending on who you ask.

The collapse of the country’s stock market this year has reinforced the pessimistic view of China’s growth model, but not everyone is bearish.

Analysts at Morgan Stanley are pretty positive about the country’s “new economy,” according to a note sent out over the weekend. In short, services and consumer growth are still going to power ahead, even as heavy industry and manufacturing slump.

It’s a similar case to the one made by Min-Lan Tan, regional head of UBS Wealth Management’s chief investment office in Asia-Pacific, at a roundtable event in London earlier in November.

She argued that China had a “2-speed economy,” and that rapid advances in emerging services sectors could pick up the slack to sustain roughly 6.5% growth for the next 5 years. The basic message was that there are still major opportunities for investors, and the reality is a long way from the gloom and doom that they might think.

To show the performance of the “new economy,” Morgan Stanley’s researchers take the consumer discretionary, healthcare and IT firms from the MSCI China index of stocks, and compare it to the companies from the same index in the energy, materials and industrial sector:

The result is pretty stark. New China has generally outperformed the old since the financial crisis, but particularly since the end of 2012.

The authors provided some of the most recent financial data for the firms in the “new” and “old” economies, showing just how enormous the division is. One appears to be an economy pretty much in recession, while the other is undergoing what can only be described as a boom:

Within MSCI China, in 3Q15, revenues for Consumer Discretionary, Healthcare and IT grew yoy by 22%, 15% and 20%, respectively. Net profit grew by 39%, 23% and 35%. In comparison, Energy, Industrials and Materials’ 3Q revenues declined by 32%, 1% and 16%, respectively. Net profit declined by 79% for Energy, 32% for Industrials and 67% for Materials.

It all comes down to a question of whether you believe that this new economy can genuinely make up for the slump in the old economy. China’s growth story is, in terms of its scale and speed, probably the most impressive episode of economic development in human history. Can it really double down on that and move so quickly from its industrial revolution to a modern, services-driven economy?

Morgan Stanley Measures like electricity production, which have previously been used to track the growth of the economy, look dreadful — but they’re biased towards heavy industry and manufacturing.

Michael Pettis is one of the sharpest minds in the world looking at the Chinese economy, and he has a better claim to seeing the Chinese slowdown coming than most. He’s mostly concerned with the shape of China’s balance sheets, arguing that the way the country’s expansion was fuelled makes a further slowdown inevitable, and that its current levels of GDP are impossible to keep up.

This quote from a late 2014 blogpost sums up Pettis’ relative scepticism:

I have studied most of the major growth miracles of the past 100 years (and directly experienced some), and in every case there have been pessimists that predicted a difficult adjustment process with much slower growth. In every such case, however, these pessimistic predictions were met with general incredulity (and for some odd reason almost always written off as “wishful thinking”) but while I have indeed found that the pessimists have always been wrong, it always turned out that they were wrong because actual growth turned out to be much worse than they predicted.

This isn’t actually too far from Min-Lan Tan’s view — although she thinks China’s current growth rates will be kept up in the near future, she also agreed that the current rates of growth in China are unsustainable over the long term.

What’s going on in the Chinese economy right now is so hard to measure and understand that there’s huge disagreement over what’s happening in the economy right now, let alone what’s going to happen next.

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