HSBC downgraded its Chinese GDP growth forecast on Thursday to 7.4 percent from 8.2 percent.

And its predicted growth rate for 2014 was also lowered to 7.4 percent from 8.4 percent and the Chinese stock market rating was adjusted to "n

The government prefers to focus on reforms for achieving long-term sustainable growth, rather than immediately stimulating the economy, according to Qu Hongbin, the chief China economist for HSBC.

"While reforms can boost long-term growth prospects, they will have a limited impact in the short term," and enterprises' income will be "sensitive" to the economic slowdown, he added.

The bank also released its preliminary reading for the June Purchasing Managers' Index on Thursday. The PMI dropped to 48.3 from 49.2 in May, its lowest level in nine months.