Chinese economic growth showed signs of flagging in data released today as Beijing faces trade tensions with the US as well as debt and pollution battles at home.
Industrial output and retail sales in the world's number two economy slowed last month, while the central bank shied away from raising borrowing costs despite another hike by the US Federal Reserve.
"External instabilities and uncertainties are increasing," the National Bureau of Statistics said.
The figures come as weeks of negotiations between Beijing and Washington show no signs of a breakthrough, with Donald Trump due on Friday to decide on whether to impose tariffs in billions of dollars worth of Chinese imports.
The US president stoked trade war fears by suggesting he will impose the measures, saying "China could be a little bit upset" in an interview on Fox News.
China has pledged any tariffs will void progress made in the recent talks and has drawn up its own list of US targets.
"The trade friction does not solve any problem, it only makes the problem more complicated," the NBS said.
The NBS said today that output at Chinese factories and workshops expanded 6.8% year-on-year, from 7% in April and short of estimates in a Bloomberg News survey.
The retail sector also slumped, providing some concern for leaders who are looking for consumers to drive economic growth and move away from the export and state investment-driven model.
Sales growth slowed to 8.5% from 9.4% in April. It was also well short of the 9.6% forecast by analysts and maintained a downtrend seen over the past 12 months.
The People's Bank of China decision not to lift the amount it charges to lend to banks indicated officials may be changing policy to combat slowing growth, analysts say.
The Fed hiked rates and lined up another two this year as the US economy picks up. Previous moves by the US Fed has prompted a similar move by Beijing.
Analysts said that China's new leadership was greeted by a much more challenging environment in 2018 and they added that Beijing would likely lower rates and pick up spending in coming months to shore up growth.
Expansion in fixed-asset investment sagged to 6.1% for the first five months - from 7% in the three months from January to April.
It marked the slowest pace since 1999 when data collection began, according to Bloomberg News.
But despite the economic indicators falling, the statistics bureau said China's economy was on the right track for continued growth in the second half of the year and it predicted growht of about 6.5% for the full year.
