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Peter Esho is the chief market analyst with City Index.

Much has been said about the recent data coming out of China. Not only has the aggregate rate of growth fallen below 8 per cent, but recent anecdotal evidence in iron ore prices in particular has also been pointing to weakness.

City Index remains bullish on the overall Chinese growth story and sees the current economic softening as most likely being an intentional, government-driven slowdown rather than a bust.

We don't currently subscribe to the doomsday scenario that China is about to drift into insignificance and the points to back our investment thesis are summarised below. Our view is based on a long-term ideology.

First of all, the structure and strategy around the Chinese economy cannot be viewed in the same way as Western developed economies. An investment view on China needs to consider one of the most important underlying elements - the ability of the central government to navigate its way through challenges.

The Communist Party needs the economy and associated flows of capital in order to sustain its existence. For many Chinese, this is the only system of government they have known. The US and European economies can withstand a severe financial shock without a shock to the underlying system of government, but in China the same does not hold.

The Communist Party will do all it can in order to sustain social and political order and the economy is to a large extent the most important part. A collapse in China's economy could see a collapse in the system of government, something the ruling party cannot tolerate.

So, the allocation of resources and fiscal approach is not purely driven by short-term economics.

China's planners are in the late stages of forming the next major economic shift - outwards from coastal cities towards the less developed rural communities. More on this point shortly.

China knows its coastal cities will soon start to lose their competitive cost advantage to other economies in Southeast Asia and even places like Mexico. This means more investment in social housing, public infrastructure and industry to ensure a more even allocation of employment opportunities and social order should the recent migration towards coastal centres reverse.

Balancing out an economy as vast and diverse as China's isn't an easy task and a lot of hard work to ensure sustainable growth has been put into place during 2012.

The intensity in infrastructure investment, which was initiated in 2009 due to the threat from global forces, has largely phased out but not disappeared. This has seen the iron ore price, for example, fall from around US$180 per tonne to around US$90-100 recently.

The commonly quoted spot price for iron ore, unlike copper or gold, for example, isn't the best measure - it's one reference point. Many iron ore producers in Australia, for example, negotiate various prices based on grades and shipping rates to individual steel mills.

China's steel mills would have to drastically stop consuming for the iron ore price to remain below US$100 per tonne. The marginal cost of production, when excluding huge capital costs, is currently at around US$50 per tonne.

To put the current spot iron ore price into perspective, Australian potato growers are currently getting around $240 per tonne of produce sold into the wholesale market. A tonne of wheat is trading at a similar amount in European markets.

A ramping down of China's steel industry would see large job losses throughout the whole construction industry and large social unrest when applying the impact throughout the whole Chinese economy. This brings pressure from local and provincial governments towards the central government, a threat which should not be underestimated.

China is the largest global manufacturer of steel, around 10 times the size of Russia, around 15 times the size of Germany and 100 times the size of Australia's steel industry.