China's investments are increasing at their slowest pace in 10 years.

That is stirring up speculation that a new round of policy incentives, similar to a 4 trillion yuan ($634.7 billion) stimulus package in 2008, will be forthcoming.

Experts warned large-scale investments may not be the best response to the economic slowdown and that a better means of restoring growth lies in tax cuts in the short term and deepening economic reform in the long term.

The country's fixed investments increased by 20.9 percent in the first three months of the year. That was the slowest growth rate seen for those investments since 2003, according to data from the National Bureau of Statistics.

Yet the growth rate for April, scheduled to be released next Friday, is expected to show a further deceleration, and may draw near a "red line" of 20 percent, considered the lowest acceptable rate for China.

A report by the Bank of Communications Ltd suggests the growth rate for investments in April may decline to 20.3 percent because of decreasing investments into the property market and a falling Production Price Index, which is used to gauge inflation at the wholesale level.

China reported a growth rate of 8.1 percent for the first three months of the year, the fifth decrease in a row. Of that, only 2.7 percentage points were driven by investments, much fewer than the average of 5 percentage points last year.

Despite the inauspicious signs, a Chinese government work report for early March called for stronger fiscal expenditures in 2012. The expenditures were expected to increase by 14.1 percent.

An important current issue is the fact that many companies might see negative profits faced because of rising costs, Cai Zhizhou, a researcher with the Center for National Accounting and Economic Growth at Peking University, was quoted by the Economic Observer as saying.

As the issue cannot be dealt with momentarily, Cai suggested that authorities reduce taxes to help companies maintain their profits.