Pedestrians walk past the K11 Art Mall, operated by New World Development Co., in Shanghai, China, on June 28, 2013. China's President Xi Jinping said officials shouldn't be judged solely on their record in boosting gross domestic product. (Tomohiro Ohsumi/BLOOMBERG)

With China’s economy facing a number of head winds, the country’s leaders are carefully tamping down expectations and insisting that officials need to focus more on the quality of life rather than economic growth.

A credit squeeze in recent weeks has raised fears that China’s years of relying on debt to finance massive projects — and to sustain the economy through the lean times of the global recession — are coming to an end. Analysts say these financial pressures could push growth projections further down for the world’s second-largest economy.

Concerns about a slowdown in China have contributed to tough days on U.S. stock markets recently, with investors worrying that the interconnected global economy is hitting a skid just as it had seemed to be stabilizing.

A major gauge of China’s manufacturing activity dropped to its lowest level in nine months Monday. The private measure, known as the HSBC/Markit Purchasing Managers’ Index, fell to 48.2 in June, compared with 49.2 in May. Readings below 50 indicate a contraction in factory activity.

China’s leaders face a delicate balancing act as they lay out plans to reform the country’s economy. A central goal is to shift the country’s traditional sources of growth from investments and exports to consumption. That transition is likely to slow the economy in the short term, analysts say. After years of double-digit growth rates, projections for this year are hovering around 7.5 percent.

Problems in the country’s financial system, which has experienced a dramatic rise in unregulated products, are presenting immediate challenges.

Zhang Zhiwei, an economist at the Japanese investment bank Nomura, said in a recent report that there is a 30 percent probability that the growth rate of China’s gross domestic product will drop below 7 percent this year in the third or fourth quarter.

“We believe the downside risks to China’s economic outlook have risen significantly in recent weeks,” wrote Zhang, citing the recent tightening of credit.

President Xi Jinping vowed Saturday not to evaluate the performance of Communist Party officials solely based on economic data. Rather, Xi said, officials should be measured by their ability to improve the quality of life.

“We should never judge a cadre simply by the growth of gross domestic product,” said Xi, according to the Xinhua news service.

His remarks are a signal that after years of pressure on local officials to hit ambitious growth targets, expectations are shifting. Part of the concern, say analysts, is that the drive to push growth rates ever higher has caused local governments to take on unsustainable levels of debt. There are fears that local governments are relying on new debt issued through the shadow banking sector to pay interest on the debt already on their books.

China’s central bank, the People’s Bank of China, has tried to calm world markets by saying it will provide liquidity to institutions that need it.

China's manufacturing sector is showing signs of contraction.; (The Washington Post;/Source: Markit Economics)

Premier Li Keqiang said Friday that the country could still meet its 7.5 percent growth target. “China’s economic growth is on a steady track,” said Li, according to the state-run China Daily newspaper.

The country’s national bureau of statistics will report second-quarter GDP figures on July 15.