China's economic outlook has left analysts and investors divided, reports Li Xiang in Beijing.

It seems more evident than ever that the Chinese economy is at a critical crossroads, with inflation soaring to the highest level in three years while other economic indicators point to a slowdown in growth.

The latest economic data has created a dilemma for policymakers. They have to maintain sustained growth while taming feverish domestic prices. Inflation, fueled by surging food prices, hit 6.4 percent in June and could run out of control if the central bank loosens its monetary-tightening stance. However, the risk of an economic "hard landing" leaves Beijing with limited room for further policy maneuvering.