Down 12.3% in the past 90 days, the iShares China Large-Cap ETF (NYSEArca: FXI) did not need any more bad news. Yet that is exactly what the largest China ETF and its smaller rivals got late Tuesday when Goldman Sachs, previously bullish on Chinese equities, lowered its 2013 target for the China Security Index 300 by 15% to 2,380 from a previous estimate of 2,800.

If there is any good news, it is that 2,380 represents 8% upside from current levels. The bad news, however, is not contained to FXI. For example, the Market Vectors China ETF (NYSEArca: PEK) tracks a basket of derivatives contracts designed to give investors exposure to CSI 300 Index. Foreign investors have limited access to China’s A shares market and PEK is the only U.S.-listed ETF that offers that exposure. [A Look at the China A Shares ETF]

Making matters worse, Goldman also trimmed its earnings growth outlook for CSI 300 constituents to 6% from 10%, reports Ansuya Harjani for CNBC. Goldman’s downbeat view on Chinese stocks comes after the bank trimmed its GDP outlook for the world’s second-largest economy late last month. Goldman lowered its second-quarter China GDP growth forecast to 7.5% from 7.8% while paring its 2013 and 2014 estimates to 7.4% and 7.7%, respectively, from 7.8% and 8.4%.

Rising yields on U.S. Treasurys and a slowing domestic economy could prompt outflows of so-called hot money from China, said Goldman, according to CNBC. That after investors are already pensive about Chinese banks in the wake of last month’s SHIBOR situation that saw Chinese interbank lending spike to record highs. Surging SHIBOR rates prompted concerns about liquidity within China’s banking system, which has contributed to a 14% tumble for the Shanghai Composite since early June.

SHIBOR-induced concerns about investors taking money out of Chinese stocks makes any number of China ETFs vulnerable due to the fact many of these funds have substantial allocations to financial services stocks. FXI and PEK devote 52.4% and 40.5% of their respective weights to the financial services sector. [SHIBOR Woes Could Slam These ETFs]

As Goldman said there is “no rainbow” ahead for mainland Chinese stocks, implying investors will need to be patient and tolerant of slower Chinese growth. If there is any glimmer of hope, it is that Chinese equities are cheap. PEK has a P/E ratio of 12, according to Market Vectors data, indicating the fund is inexpensive relative to broader emerging markets benchmarks.