China's economic growth of 7.7 per cent has disappointed investors, who were hoping for 8 per cent.
The National Bureau of Statistics in Beijing says the Chinese economy expanded 1.6 per cent in the first quarter of 2013, below analyst expectations of 1.9 per cent.
That kept the annual growth rate down at 7.7 per cent, below economist forecasts that centred on an 8 per cent rise in a survey of 41 analysts by Bloomberg.
China's annual growth rate has also slowed from 7.9 per cent in the last quarter of 2012.
Westpac's senior international economist Huw McKay says the loss of momentum has come as a big surprise, but he is more positive on the medium term outlook and does not expect the Chinese authorities to be panicked into cutting interest rates to boost the economy.
"Forecasts will be revised lower.
Does that change our opinion about the trajectory that commodity prices will take this year and the Australian dollar? Yes, there'll be some short term volatility in commodities and the exchange rate as a consequence of this reading," he said.
"We're not going to change our overall opinion on the shape of world growth." Monthly industrial production figures also came in weaker than expected, with an 8.9 per cent rise over the year to March compared to a median forecast of 10.1 per cent.
Those figures also showed a deceleration from a 9.9 per cent gain over the first two months of 2013.
ING's head of Asian economic research, Tim Condon, says the weakness in industrial production will see many analysts cut back their expectations for Chinese economic growth this year.
"Industrial production is unexpectedly weak and that's the source of weakness in GDP," he told Reuters.
"Based on this, the consensus GDP forecasts are going to be headed lower, and we'll certainly be looking at ours." Retail sales were the only figures to match expectations, rising 12.6 per cent from a year earlier.
The Australian dollar has been heavily sold off in response to the weaker than expected data, falling well over half a cent to 104.35 US cents by 12:39pm (AEST).