Xi Jinping may have signaled a huge transformation for China's economy

More specifically, he gave a speech about the death of highly indebted industrial state-owned enterprises to make room for new more privately owned service industry companies, a painful process to be sure.

Which is why it isn't surprising that since this talk began in earnest, at the end of 2015, Chinese officials spoke in little detail, especially regarding

But with companies getting less and less productive, while needing more and more borrowed money to survive, and the country's debt-to-GDP ratio climbing toward 300%, the government likely feels it doesn't have a choice.

This year, last year, and forever

Plus, economic conditions are much better than they were this time last year. You'll recall that in winter 2016, the Chinese stock market had just finished taking the entire world on a wild ride, and the talk at the World Economic Forum in Davos was that China might not last the year without a credit event.

Across Wall Street, yuan short sellers sharpened their knives.

The government survived by easing monetary policy and using its $3 trillion in foreign currency reserves to stabilize the Chinese yuan, despite the fact that the dollar's surge toward the end of 2016 pushed its value down.

Now things are looking more stable. A few February data points to illustrate:

Expectations are remarkably positive... Focused on the current strength in orders, managers appear little concerned with risks US President Donald Trump might impose tariffs, or the domestic property slowdown crimp demand," wrote Bloomberg economist Tom Orlik in a recent note.

Even with all that underlying good news, it's been hard to take talk of economic transformation seriously, as debt continues to build. Total social financing, a measure that the Chinese government invented in 2011 to figure out how much debt non-state entities (like individuals and private companies) have taken on, has kept growing.

TSF came in at

In January outstanding credit grew

So, credit is still expanding — at a slower pace than last year when the government was combating a downturn, but still fast. Banking regulators have reiterated that they're going to crack down on financial risks in recent weeks, but that's all talk we've heard before.

However, Xi's speech, spelling out more details on plans for layoffs from the sprawling state-owned industries, is different and new.

But it's also incredibly difficult and dangerous to China's social contract. China's totalitarian government has promised its people economic prosperity in exchange for their political and social freedom. It has to deliver before its people lose faith.