China's economy showed further signs of weakness last month, with industrial output posting its slowest growth in 17 years.

This places further pressure on the government as it tries to steady the ship while battling a trade war with the US.

Chinese authorities have for years been attempting to transition the world's number two economy from a reliance on state investment and exports to a more stable model driven by consumption.

But the tariffs stand-off has been complicating that mission of late. 

Retail sales actually beat expectations, rising 8.6% year-on-year in May, the National Bureau of Statistics (NBS) said today. That compares to an 8.1% increase forecast in a Bloomberg poll of analysts. 

But the NBS also said industrial output rose just 5%, the slowest increase since 2002, and missing a 5.4% analyst forecast. 

Fixed-asset investment growth also underwhelmed with 5.6% growth. 

The readings are likely to fan speculation that authorities may launch another round of stimulus. 

Beijing has rolled out huge tax cuts and other measures this year to try to blunt the impact of a trade war, which has seen the US impose tariffs on hundreds of billions of dollars worth of Chinese goods, causing worries for exporters. 

China's exports beat gloomy forecasts to rebound somewhat in May, though imports sank more than expected, according to official data released earlier in the week.

But the overall downward trend gives Xi little room to fight back forcefully against the US, which is using tariffs as leverage to try to force China into opening up its economy.

China's economy grew by 6.4% in the first quarter of 2019, according to official data. 

The International Monetary Fund earlier this week said it was lowering its China economic growth forecasts for 2019 and 2020, citing "uncertainty" over the trade war.

It now expects 6.2% growth this year and 6% in the next, down from previous forecasts of 6.3% and 6.1%, respectively. 

ANZ said expectations of a US Fed rate cut would give Chinese policymakers room to adjust reserve requirement ratios and money market rates, adding that it expected Beijing to do so.