China's leadership is serious about reigning in credit and will probably allow a sharper growth slowdown, a report released by Credit Agricole Corporate and Investment Bank said on Tuesday.

"We forecast 2014 growth at 7.2 percent and expect even lower readings going forward," said Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB.

The reason for the forecast is that China's debt-driven growth model needs to change, Kowalczyk said. This has been acknowledged by the latest central bank's monetary policy report, which stated that deleveraging will be a protracted process. Lowering reliance on credit will be difficult given that the credit intensity of growth is rising, said the report.

China needs to accept a slower pace of expansion or risk a debt crisis in the next several years, Kowalczyk said.

An alternative would be transforming its growth model to one driven by consumer spending financed by income and savings, while such a transformation will take a long time, he added.

The institution expects the government to gradually lower growth targets to 7 percent in 2014 and 6.5 percent in 2015.

Having re-accelerated over the summer of 2013, growth momentum declined again in the fourth quarter of 2013 as the withdrawal of stimulus measures began. Industrial output growth eased and so did investment and government spending. Exports also decelerated. Business sentiment indexes for manufacturing and services softened.

New social financing growth stabilized at a much lower level than in the fourth quarters of 2012 and 2013, while the central bank guided money market rates higher, reducing the potential for expansion. Kowalczyk said he expects year-on-year GDP growth to have picked up to 7.9 percent in the fourth quarter of 2013, and predicted that it will stabilize at the same level in the fourth quarter of 2014.