By Mark Magnier, Lingling Wei and Peter Evans 

BEIJING--China's slipping economic momentum is driving the government to seek new sources of growth and pushing multinationals and Chinese companies to look for a Plan B to prosper in the world's second-largest economy.

The slowdown has long been a fact of life in China: For months, Beijing had been preparing the ground for Tuesday's report of 7.4% growth in 2014 with a "new normal" mantra. The growth rate was the slowest in decades.

Foreign and domestic companies alike are adjusting to a less vibrant economy that has meant sometimes huge drops in sales and missteps in product mixes that can have drastic consequences.

Unilever PLC is one company that has endured a difficult six months in China.

The maker of Dove soap and Lipton tea said Tuesday that its sales in China plunged 20% for a second consecutive quarter.

Unilever said Chinese consumers are becoming less willing to pay more for branded goods and that it is pushing to expand into smaller cities as growth slows in the major population centers.

"The quality of sales [in big cities] and the economic slowdown are making us do these adjustments." said Chief Executive Paul Polman.

General Motors Co. President Dan Ammann said last week at an investor conference that the auto maker is now focusing on selling cars in smaller Chinese cities, targeting the car parts and accessories market and changing its mix to sell more higher-margin SUVs and Cadillacs. "This market is maturing rapidly," Mr. Ammann said.

Others are countering the slump by making painful cuts in staff and production, which slows further the flow of money and economic activity.

Zhen Jiangke, 47 years old, who works in Beijing at a petrochemical company, said his employer is targeting cuts of 10% in the company workforce, forcing him to tighten his belt.

"I'm buying nothing, since my income is so low," Mr. Zhen said, adding that conditions are likely to get worse in the petrochemical industry as production costs rise. "I'm not very optimistic," he added.

Many economists expect growth to slow further this year, with Beijing likely to maintain its measured approach to boost growth. Chinese leaders' priority is to prevent a hard landing without fueling more bad debt and shift the economy toward services and consumption.

"We should expect growth numbers starting with a 6 to come through in 2015--we expect 6.8% growth in 2015, slowing to 6.5% in 2016," said Andrew Colquhoun, head of Asia-Pacific sovereign coverage at Fitch Ratings, in a research note.

Despite its fears of racking up more debt for wasteful projects, the government still wants to stimulate what it deems as worthy sectors and businesses.

For instance, Beijing is trying to route credit to entrepreneurs, farmers, needed infrastructure, where investments are likely to lead to higher growth. But that is proving tricky: Some companies are reluctant to borrow, and bankers shy away from extending loans to smaller companies they fear won't pay them back, analysts say.

"A lot of the companies that are heavily indebted are state-owned enterprises, but unfortunately they are the ones that have access to credit," said Julian Evans-Pritchard, an economist with research firm Capital Economics. "So they kind of push out private firms."

Meanwhile, many companies in problem sectors--such as the overbuilt real-estate market, which accounts for some 25% of GDP if steel, cement and related industries are included--still hope easier borrowing conditions will spur new business.

Jiang Yixiong, manager of online store Fujian FOCH group, which makes and services plumbing equipment, said business has slowed over the past six months amid the housing glut.

"I think if the government could ease credit conditions, it would be a big help to companies like ours," he said.

And Beijing can do only so much even for sectors it views as crucial, such as agriculture.

China's Finance Ministry is speeding up its plan to give farmers four billion yuan ($644 million) in subsidies they can use to purchase equipment, for instance, according to officials with knowledge of the move, which was originally slated for release later this year.

"The funds are being frontloaded now to boost spending," one of the officials said. Still, the Finance Ministry is unlikely to increase the overall amount of subsidies to farmers this year, the official said.

In November, China's top-planning agency announced seven transport, oil pipeline and related infrastructure projects it wants local governments to carry out during the first quarter.

But many local governments shy away from carrying out Beijing's directives, fearful of adding to already-high debt and hampered by new rules to rein in shadow-banking lending. Local government debt amounted to was 17.9 trillion yuan in mid-2013, up 67% from the end of 2010, according to the National Audit Office.

Some analysts are skeptical that the projects will break ground in time. "With no funding in place, all those project approvals are meaningless," said Peng Junming, a former central-bank official who runs private investment firm Junfan Investment Co.

Mr. Jiang, the worker at the plumbing company, said it is perfectly natural that China adapt to the new normal of lower growth. "It's the law of market economics," he said. "Economies go up and economies go down."

Kersten Zhang, John Stoll and Ted Mann contributed to this article.

Write to Mark Magnier at mark.magnier@wsj.com, Lingling Wei at lingling.wei@wsj.com and Peter Evans at peter.evans@wsj.com

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