Provinces scale back 2014 investment targets

China's economic growth rate has slowed in the past two years. Many economists have said the central government will set a 7.5 percent GDP growth target for this year, the same as in 2013.

But Craighead said that while part of the rebalancing might mean a reduced level of investment, "a bigger point" of rebalancing is "making the right investment".

He said: "There are still tons of investment opportunities in new transportation, technology, healthcare and so on that can be quite efficient."

Liu Ligang, chief China economist with ANZ Banking Group Ltd, agreed that there is still ample room in China for investment.

"The key issue for investment is how to rationalize resources. China needs to scale up investment in the service industries as it undergoes massive urbanization and an industrial upgrading process," Liu said.

China's top leadership has already demonstrated its willingness to sacrifice the nation's growth rate in return for more sustained and balanced growth.

In a December announcement by the Organization Department of the Communist Party of China, the ruling party said that it will abandon the "GDP ranking" system in provinces, counties and prefectures.

Officials in poor counties and ecologically vulnerable regions will be exempt from evaluation with reference to GDP performance.

The central government has also for the first time identified "curbing local government debt buildup" as a key goal in 2014. The effort will inevitably dent the expansion rate of investment, according to a Bloomberg report.