Growth in gross the domestic product (GDP) - the most commonly used indicator for the size of an economy - slowed to 6.2 percent in the second quarter, down from 6.4 percent in the first three months of the year, according to figures released on Monday by the National Bureau of Statistics.
While the slowdown to 6.2 per cent is a 27-year low, it raised concerns as the once resilient Chinese economy did not dip below 6.4 per cent even during the 2009 world economic crisis during which the largely export dependent country came under heavy pressure due to steady fall in its foreign trade.
China's trading partners and financial markets are closely watching the health of the world's second-largest economy as the Sino-US trade war gets longer and costlier, fuelling worries of a global recession.
Net exports contributed to 20.7 per cent to output growth in the first half, down from 22.8 per cent in the first quarter. Growth in factory output decelerated to 6% in the first half, down 0.1 percentage points from the first quarter.
Retail sales jumped 9.8% - the fastest clip since March 2018 - and confounding expectations for a slight pullback to 8.3%. Analysts had expected growth to cool to 8.3 percent in the month from the 8.6 percent pace recorded in May.
Trade pressures have intensified since Washington sharply hiked tariffs on Chinese goods in May.
The slowing economy makes it more hard for President Xi Jinping to fight back forcefully against the USA - which is using tariffs as leverage to try to force Beijing into opening up its economy.
Until now, China's leadership is tolerating the continued deceleration in the economy while the official unemployment rate remains low, and monetary policy has remained supportive without flooding the financial system with cash.
Forecasters had expected China's economy to rebound in late 2018 but pushed back that target after President Donald Trump hiked US tariffs on Chinese imports to pressure Beijing over its efforts to develop advanced technologies.
For the manufacturing sector, investment accelerated a notch to three per cent in the first half, while infrastructure investment also picked up to 4.1 per cent.
Fixed-asset investment for the first half of the year rose 5.8% from a year earlier, compared with a 5.5% increase forecast by analysts and 5.6% in the first five months of the year.
Value-added industrial output, which measures production at factories, mines and utilities, rose 6.3% (link in Chinese) year-on-year in June, up from 5% growth in the previous month. Gains were led by a 17.2% surge in auto sales. Property development investment slowed for a second month in June, dragging down the growth of newly started property construction and inventory.
The growth was in line with the government's annual target of 6-6.5 percent set for 2019. It rose 10.1% from a year earlier, accelerating from a 9.5% gain in May but still slower than in April, Reuters calculated.