But the labor market is also in a transition, due to the aging population and declining labor force. In the surveyed cities, the demand for labor has exceeded the supply of labor since late 2012. Last year, the demand for labor in cities decreased by 2.2 percent, but the supply of labor plunged by 4.4 percent; twice as much.

China is not suffering from the kind of deflation that is impacting the economies of Japan and some European countries. It continues to have substantial growth potential for a decade or two. In the near-term, however, the big picture remains foggy due to cyclical factors and structural transition.

As so many times before, the Chinese New Year tends to blur the January and February data, which distorts long-term trends. What is more interesting is the relationship between consumer inflation and manufacturing data. Until the early 2010s, the two went hand in hand. Since then, they have diverged.

After three decades of growth fueled by investment and net exports, Chinese producers suffer from overcapacity; hence, the negative manufacturing data. In contrast, Chinese consumption demand and consumer confidence remain solid, and fueled by strong wage growth in the non-manufacturing sectors.

Until recently, the focus of Chinese growth was on GDP. The goal was to create a strong economy. Even today, China could grow faster but the government chooses not to. Now the emphasis is not on growth for growth's sake, but on GDP per capita. The objective is to achieve better living standards for more Chinese people.

A single-minded obsession with the slowing of growth in China is misguided. As long as the labor market remains resilient and structural reforms deepen, the living standards of individual Chinese will continue to rise robustly. And that's what really matters.

The author is research director of international business at the India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China).