CHINA’S economic activity slowed in July, with investment growing at its slowest pace since the turn of the century, as the country grappled with the painful restructuring of its older industrial sectors.

    The weaker-than-expected data Friday covering investment, lending, retail spending and factory output follows a run of poor numbers this month, keeping alive hopes the government will unleash more stimulus this year to meet ambitious economic growth targets.

    “In light of persistent headwinds from the external sector, weak business sentiment, and a cooling property market, we believe that policymakers need to accelerate policy easing and reforms,” Jing Li, an economist at HSBC, wrote in a note.

    The increased stimulus hopes cheered investors, with China’s blue-chip CSI300 Index ending at it highest close since early January.

    China’s pace of fixed-asset investment slipped to 8.1 percent in January-July, the weakest growth since December 1999, and down from 9 percent in the January-June period. Analysts had expected it to rise 8.8 percent.

    The retreat was led by a 22.9 percent decline in mining, suggesting the government’s goal of cutting production in older industrial sectors is working.

    China’s investment and net exports are slowing, with the government increasingly expected to boost headline growth through fiscal policies rather than interest rate cuts, analysts say.

    Investors remain wary about the growth outlook amid painful reforms in the State-owned enterprise sector. Private investment, which accounts for about 60 percent of overall investment, grew 2.1 percent, compared with 2.8 percent in the first half. Meanwhile, growth in investment by State firms cooled to 21.8 percent in January-July from 23.5 percent.

    The property sector, one of the few bright spots in China’s economy, also showed signs of struggle with real estate investment growth slowing to 5.3 percent from 6.1 percent.

    The worsening investment trend was also seen in bank lending numbers with central bank data Friday showing a slump in new yuan loans.(SD-Agencies)