The Asian Development Bank has lowered its forecast for China's 2013 economic growth to 7.7 percent from 8.2 percent in April, one day after China reported disappointing growth in the second quarter.
"Continued tepid demand from the major industrial economies coupled with slower growth in China are weighing on the outlook for the developing Asia," the bank said in its latest Asian Development Outlook Supplement.
It trimmed the region's 2013 growth forecast to 6.3 percent from the previous 6.6 percent.
"The drop in trade and scaling back of investment are part of a more balanced growth for China," said ADB chief economist Changyong Rhee. "China's knock-on effect of its slower growth pace is definitely a concern for the region. But we are also seeing more subdued activity across much of the developing Asia."
On Monday, the National Bureau of Statistics said China's gross domestic product expanded 7.5 percent from a year earlier in the second quarter, the same as the government's target for the year that's usually considered the bottom line.
The growth rate, which has eased for two consecutive quarters, triggered concerns as China had been seen as a beacon of strength in a world beset by economic slowdowns.
Stephen Green, an economist at Standard Chartered, said: "We believe the economy has not yet reached its lowest gear as far as headline numbers are concerned.
"This is a cyclically weak patch in the midst of a long-expected structural slowdown."
The ADB report said China is likely to see its economy expand 7.5 percent next year after growth of 7.8 percent in 2012. The report noted that import and export growth had slowed given weak external demand, but robust consumer confidence may support growth momentum in the world's second-largest economy.
"Slower growth in China has subdued the outlook for the entire East Asia region," the report said. "Turbulence in the domestic interbank market in late June elevated funding costs and made financial institutions more averse to risk. This could further weaken investment in the remainder of the year, undermining growth at least in the short term."
China was on the edge of a credit crisis last month when commercial banks reported liquidity crunches. The potential risks were averted several days later after the central bank injected cash into major banks.
On Monday, Standard Chartered Bank cut its forecast for China's growth in 2013 to 7.5 percent, down from its previous 7.7 percent. Such a projection was the lowest among a slew of financial institutions, including the World Bank and the International Monetary Fund, which also downgraded their forecasts over the past two months.
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