DAVOS, Switzerland When the global economy nearly choked on toxic debt three years ago, China and its massive investment stimulus was hailed as a savior that helped avert a disaster.
Fast forward to 2012 and business and economic elites gathering in Davos have a more sober take on the Asian juggernaut, now seen as a source of hope and opportunity but also possible unpleasant surprises.
The world's second-largest economy is still expected to grow this year at a clip that would make most of the world jealous, but concern that Beijing may mismanage a soft landing gets mentioned in the same breath as other risks, such as the deepening of the euro zone crisis or weak U.S. recovery.
"There is a mix of hope and concern. People worry on two fronts. One is that China is still far too export dependent and that makes it very vulnerable," said Nariman Behravesh, chief economist at IHS Global Insight about the prevailing mood of discussions about China in Davos.
"The second worry is the housing situation. It is tricky because there are very few countries that were able to deflate a housing bubble without creating some other damage."
Most economists expect China to grow at 8 percent or more this year, slowing from 9.2 percent in 2011 but in keeping with Beijing's aim to steer the economy away from double-digit export-led growth to more sustainable expansion.
Armed with the world's biggest foreign reserves, deep fiscal pockets and a room for credit easing, Beijing is uniquely placed to cope with possible European recession and downbeat markets.
But the relatively low-key Chinese presence at the annual gathering of the rich and powerful, mainly because it coincided with the Lunar New Year public holiday, may also be a sign that China's focus is on domestic challenges.
HOPE AND WORRY
And the list of challenges Beijing faces in the Year of the Dragon is quite daunting.
For one, even as Beijing shifted policy course from tightening to pro-growth policies it may have underestimated the scale of the slowdown engineered in the once-red hot property market and the dent to foreign demand from debt-ridden Europe.
The debt amassed by regional authorities during the property boom and massive spending on grand infrastructure projects is another worry.
"It's a 'unknown unknown'," says John Quelch, dean of the China Europe International Business School in Shanghai. "Everybody knows it exists but no one knows exactly what the overhang is."
That debt overhang means Beijing is unlikely to follow up its massive 4 trillion yuan ($630 billion)spending plan that gave China and its Asian trade partners a boost in 2010 but raised concerns about bad debts and overcapacity with another stimulus on a similar scale.
Analysts also point out that China's estimated $1.6 trillion shadow banking system makes it hard for the authorities to effectively influence economic activity and deflate asset bubbles created by unregulated lending.
In addition, as growth slows China is getting closer to the 8 percent level many economists say is necessary to keep absorbing millions of migrant workers heading for China's cities and maintain social peace.
A revolt staged by a village of 15,000 against official corruption and rural land grabs highlighted a risk of social unrest that Beijing dreads.
Finally, China is navigating rough economic waters in the year of Communist Party leadership change and even though this has been long prepared and scripted, some analysts say it raises the prospect of China's focus shifting more inward.
All that said, for global businesses China remains a huge draw with its enormous population, continuing urbanization, growing middle class and rising incomes.
That sentiment was summed up by Boston Consulting Group Chief Executive Hans Paul Buerkner. Asked about top risk in China, India and other major Asian economies he said: "The biggest risk for Western companies is not to get engaged and worry too much about setbacks."
In fact, if China manages to ensure a soft landing, slower, but steady growth can make executives, like Renault-Nissan (RENA.PA) CEO Carlos Ghosn, more comfortable.
"We think we have been in a certain way hoping for growth to be more moderate, because we were all finding ourselves with a double problem. Lack of capacity - we could not build capacity in China fast enough. And second, pressure on the price of commodities," Ghosn told CNBC television.
"Six or seven percent growth of the car market will still add one million cars in China. It's good enough for us."
But while businesses with global ambitions cannot ignore China regardless of cyclical swings, China insiders say investors should not count on China to fill the void by belt-tightening Europe and deleveraging United States by consuming more.
"China domestic consumer spending amounts to about $2 trillion a year. Consumption in the United States amounts to about $10 trillion a year," said Quelch. "To expect Chinese consumers to spend more and thus to save the world economy is simply unrealistic. ($1 = 6.3390 Chinese yuan)
(Additional reporting by Kelvin Soh, Editing by Jon Boyle; For full Reuters coverage from Davos, go to: www.reuters.com/davos)