China's industrial output falls lowest in 17 yrs

China's economy showed further signs of strain in July with output at its factories falling to its lowest level in 17 years, while investment and retail sales slowed, official data showed Wednesday.

The figures are the latest to highlight how the world's second-largest economy is being battered by an escalating trade war with the United States and slowing global demand.

Industrial output increased 4.8 per cent on-year in July, down from 6.3 per cent in June and marking the weakest pace since 2002. It was also well below the 6.0 per cent forecast by economists in a Bloomberg News survey.

"Given the complicated and grave external environment and the mounting downward pressure on the economy at home, the foundation for sustainable and healthy growth of the economy still needs to be consolidated," said Liu Aihua, a spokeswoman for the National Statistics Bureau, which released the data.

The data also showed China's billion-strong army of consumers were showing signs of becoming more frugal.

Retail sales, which have long been a bright spot for the economy, slowed to a 7.6 per cent rise last month, sharply down from 9.8 per cent in June.

The news highlights the battle China's leaders have in trying to navigate the country's economy from exports and government investment to one driven by domestic consumption.

Fixed-asset investment increased 5.7 per cent in January-July, slowing from 5.8 per cent in January-June.

Growth in gross domestic product slowed to 6.2 per cent in the second quarter of the year -- the weakest pace in almost three decades.

The economic malaise makes it more difficult for President Xi Jinping to fight back forcefully against Washington -- which is using tariffs as leverage to try to force Beijing into opening up its markets.