'China Is Not Reforming' Says Forbes' Gordon Chang

China's second quarter has shown annual economic growth slowing down to 7.5 percent, but Forbes columnist Gordon Chang believes that even a number that high is artificial. Chang explained his view on CNBC's Squawk Box Monday morning while discussing whether or not China is looking at difficult times in its future. "It's not growing in the sevens. It's probably growing in the threes and the fours. When you look at electricity statistics, manufacturing surveys, price indices, trade data, you know, all of this is looking very, very bad," said Chang. Related: Chinese GDP Slows In Second Quarter, But Matches Estimates As Lower Inflation Boosts Figures Chang also cited that aggregate financing collapsed in China by 41.6 percent last month. "That doesn't happen in a robust economy," said Chang. Chang said that China's foreign exchange reserves won't help much as stimulus during what he calls a "local currency crisis," saying that the only thing they can do with foreign money is recapitalize their banks, which takes a long time. During a crisis, however, things move quick, he said. Chang said that renders China's foreign exchange reserves irrelevant. "The real problem here is that China is not reforming. What's happened is they've just about come to the end of their growth model, which was export heavy, investment led. And now leaders cannot make the changes that are necessary to get consumption growing," said Chang. Despite what China claims, they're still pumping stimulus money into the economy without reporting it as growth. This supports the illusion that China is creating to suggest that they're in the middle of honest economic reform, Chang said.