There's Been A Distinct Shift In The Way Top Investors Are Talking About China

There was a noticeable change in the way that the rockstar investors were talking about China at this year's annual CNBC/Institutional Investor Delivering Alpha Conference. It was more skeptical than ever.

China's 7.5% GDP growth number, released Tuesday night, was discussed throughout the panel on global opportunities, and all comments related to that number and its country were bearish.

They sounded like this:

"China came out with it's very predictable 7.5%," said Mary Callahan Erdoes, head of JP Morgan Asset Management.

"China is a value trap... or a value add value trap," said Paul Marshall, CEO of Marshall Wace.

""If you're looking for bubbles to avoid... Chinese internet stocks," said Jane Mendillo, President and Chief Executive Officer, Harvard Management Company.

It isn't uncommon for people to wonder about data coming out of China, but in the three years that Business Insider has attended this conference, we've never seen a panel with absolutely no China bulls on it.

There is good reason for investors to go dark. Despite President Xi's promise to rebalance the economy, real reforms have yet to take shape.

"They want to walk this sort of very delicate balance between stimulating to ensure a basic seven, eight, nine percent nominal rate of GDP growth, and then on the other side, pushing through some reforms," says Standard Chartered's Head of China research Stephen Green told Marketplace.

And this is what that stimulating has looked like recently, according to Dr. Ed Yardeni is the President and Chief Investment Strategist of Yardeni Research, Inc.:

The Chinese government is no longer providing massive economic stimulus to prop up China's growth rate. Instead, the government is targeting spending in a more rifle-shot approach. That's the official mini-stimulus story. It just doesn't jibe with the latest "social financing" data, which show that China's economy continues to be flooded with credit. It worked in the past, and it should work now. But one day, it won't work, and the economy could sink rather than float on the sea of credit. Let's review the latest data:

(1) Social financing rose $320 billion during June. That's not an annualized number. It is the amount of borrowing by all sectors just during that one month. On a ytd basis, it totals a staggering $1.7 trillion compared to $1.6 trillion over the same period last year.

(2) The totals above include bank loans, which increased $175 billion during June and $934 billion ytd. Chinese bank loans totaled a record $12.6 trillion during June, 64% more than the loans held by US commercial banks.

Meanwhile, Xi is cracking down on corruption in China. That means the wealthy aren't flaunting their wealth as much at home, and they may want to hold off on buying that NYC condo they were dreaming about.

Investors are taking notice.