HSBC lowered its China GDP forecast from 8.2 percent to 7.4 percent for this year as the new leadership's preference for reform over stimulus to sustain growth may have a limited impact in the short term.

"Three months into the job Beijing's new leaders are clearly determined to use the reform process rather than stimulus to sustain growth," Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC Holdings Plc, said during a telephone conference today.

"With weaker numbers released recently, Beijing has shown little enthusiasm for launching new stimulus, indicating a greater tolerance for slower growth," he said.

Qu said reforms including financial, fiscal, deregulation, and urbanization should invigorate the private sector and improve efficiency, lifting growth prospects in the medium to long term.

"Few would disagree that financial and fiscal reforms are the only solution to local government debt, shadow banking and other structural problems," he said.

However, he also said in the short term some reforms will negatively affect demand and growth will slow before regaining momentum in 2015.

The economy is expected to expand 7.4 percent in 2013 and again in 2014, while inflation will increase 2.5 percent this year and 2.6 percent the following year, according to HSBC.