"China's growth model faces tightening constraints from the rapidly increasing burden of leverage in the economy and from the deteriorating ability of the economy to absorb additional investment profitably," said Fitch. "Continued growth of investment faster than overall GDP could see further erosion of China's current account surplus as the capacity of domestic savings to finance investment becomes more constrained."

Barclays Plc has joined many other financial institutional in estimating 7.3 percent first-quarter growth, down from 7.7 percent from the fourth quarter last year. The bank said on Wednesday that it believes the PBOC has already loosened credit controls. It estimated that new loans totaled 1.1 trillion yuan in March, compared with 644.5 billion yuan in February.

World Bank pares 2014 outlook

Economy still in upward phase despite weak figures

The World Bank said on Monday that Chinese economic growth will ease to 7.6 percent this year from 7.7 percent in 2013.

Tax cuts for small firms

Beijing unveiled new tax cuts for small businesses on Wednesday, amid widespread expectations that first-quarter economic growth was the weakest since 2009.

The Ministry of Finance said enterprises with annual taxable income of less than 100,000 yuan ($16,000) will enjoy a corporate income tax rate of 20 percent, instead of the regular 25 percent. Their revenue will also be cut in half when calculating taxable income. The cut is effective until Dec 31, 2016

Up to 75 percent of businesses in China are small and micro. They contribute around half of the country's total taxation.

Tax rebates targeting small businesses first started in 2010, when the taxable income threshold was set at 30,000 yuan. It was raised to 60,000 yuan in 2011.

It's estimated that more than 6 million small businesses will benefit from the latest tax cut. The reduction is one of a series of pro-growth measures promised by Premier Li Keqiang last week.

Li also promised to speed up the renovation of shantytowns. The country will for the first time set up a unit under the China Development Bank that specifically focuses on accounting and financing government-backed housing projects. Financial institutions, including lenders, pension funds and insurers, will be encouraged to buy bonds issued by the unit.

Beijing will also speed up railway investment, partly through the setting up of a national rail development fund that allows the participation of private capital.

Economy shows 'optimistic changes': Li

Manufacturing under lingering pressure