"The growth slowdown has been even sharper than we forecast, especially evident in April industrial production," Goldman said in a research note to clients.

"In addition, inflation is not coming down as rapidly as we hoped," the US bank said. It predicts China's annual inflation will peak at 5.6 percent in June, with average annual inflation hitting 4.7 percent in 2011.

If China's inflation does indeed hit 5.6 percent in June, it would be the highest since July 2008, when inflation ran at 6.3 percent.

For 2012, Goldman reduced its economic growth forecasts for China to 9.2 percent, from the initial 9.5 percent.

Goldman said it expects China to keep its monetary policy tight until the third quarter of this year, even though growth seems to be "clearly below trend".

Speculation that China's economy, the world's second biggest, could be breaking sharply has gained traction after its April factory output disappointed some investors by growing 13.4 percent, compared with forecasts for 14.7 percent.

But not all economists think the data suggests an acute slowdown is at hand.

HSBC, for instance, noted that even though April's industrial output was softer than expected, it is still a solid growth pace of over 13 percent, and does not point to a "hard landing" in the economy.

Copyright Reuters, 2011