"The slowdown also coincides with the government signalling a shift towards greater tolerance of corporate defaults by allowing China's first on shore corporate bond default in recent times," added Colquhoun.

Fitch uplifted China's growth forecast from previous 7.0 percent to 7.3 percent for 2014 last week.

More flexibility of currency

Infographic: Five key words from Li's govt report

Yuan exchange rate's floating range widened

The People's Bank of China (PBOC) is signalling that this weekend's widening of the RMB's, or Chinese yuan, trading band means that the currency's days as a "one-way bet" are over, and fundamentals stills point to a stronger currency over the medium term, said Mark Williams, Chief Asia Economist at Capital Economics, in the China Economic Update report.

The PBOC announced Saturday that the renminbi's daily trading band against the US dollar will be widened from the current one percent to two percent from Monday. The move will meet market demands and further liberalize the renminbi exchange rate, said the central bank in a statement.

"The message from the PBOC in its accompanying statement is that this will allow greater two-way movement of the currency in future. This is of course true in terms of how far the renminbi can, in principle, move in any given day. In fact, a two percent band would be enough to contain all but the most extreme moves of any free-floating currency," said Williams in his China Economic Update report.

With China still a strong draw for inward investment of all forms and the current account surplus likely to rebound, market pressures will in most circumstances push the renminbi towards the strong-side of its band, said Williams.

Colquhoun also noted:" We view the PBOC's tolerance of greater exchange-rate volatility as a financial-stability measure, aimed at deterring some speculative activity driven by perceptions of inevitable yuan appreciation."

The credit rating company rates the China sovereign "A+" with a stable outlook.