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Despite several rounds of stimulus, China's economy weakened dramatically in the first quarter according to a survey conducted by China Beige Book, which showed a slowdown in both hiring and capital expenditures.

"This is a really big break from what we've seen in past years," said Leland Miller, president at China Beige Book International. "The story for two, three years has been labor market stability despite the fact the economy's been slowing down. Job growth in Q4 and into Q1 particularly has been very, very weak which means that firms are looking at the economic environment and they're saying we don't want to hire here."

According to the survey, just 23% of companies are expanding their workforces, and the second quarter outlook also looks weak. Beyond hiring, both borrowing and spending are anemic, despite government stimulus.

Miller notes that since the second quarter of 2014, capex (capital expenditure) growth has crashed by over 40%. Borrowing did tick up slightly, but only to the second lowest level ever recorded in the survey.

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"Everyone always says stimulus will save China. How is stimulus going to work, if people don't want to borrow, and they don't want to spend?" asked Miller.

He added there are speed bumps on China's road to move more toward a consumption economy, as retail spending weakened again.

"Consumption trends are simply not going to save China. This idea that 1.3-billion Chinese are out there spending and doing a lot of it, and that will keep China roaring at the same growth levels, I think that's proving to be a deep fallacy."

Miller believes China's GDP is half of what the Chinese government states. "There's no way China is anywhere near 7% GDP," said Miller.

The China Beige Book surveys more than 2,200 firms and 160 bankers across China.