The world's second-largest economy grew by 7.6 percent in the three months ending in June over a year earlier, down from the previous quarter's 8.1 percent, data showed Friday. That was the lowest since the first quarter of 2009 during the depths of the global financial crisis.
China's slowdown could have global repercussions, especially at a time when the United States and Europe are struggling. Lower Chinese demand could send shockwaves through Asian economies that supply industrial components to its vast manufacturing industry and exporters of oil, iron ore and other commodities such as Australia, Brazil and African nations.
Other indicators, though, including strong June bank lending, which is closely tied to business activity, suggest the low point of the decline might be past, analysts said.
"The Chinese economy has already bottomed out in the first two quarters," said Xiao Li, an economist at Industrial Bank in Shanghai.
"It is not certain whether or not there will be a strong upward rebound. But at least the economic growth rate will stop coming down," Xiao said.
The slump raises the threat of job losses and political tension. That comes at a politically difficult time for the ruling Communist Party, which is trying to enforce calm ahead of a planned once-a-decade handover of power to younger leaders.
China's export growth has fallen steadily and consumer spending has weakened despite stimulus measures that include two interest rate cuts since the start of June. The government also is pumping money into the economy through higher investment by state-owned industry and more spending on low-cost housing and other public works.
Quarterly growth was in line with the government's official target of 7.5 percent for the year, which private-sector forecasters say China still is likely to achieve.
"The growth rate of 7.6 percent is already an achievement because the economic situation facing China has been complex and severe," said Sheng Laiyun, a government spokesman, at a news conference. "We have seen tepid domestic and external demand."
Sheng rejected suggestions by some analysts that the slowdown might be deeper than reported and that Beijing ordered companies to make the economy look healthier by inflating data on electric power consumption, a key industrial indicator.
"I want to say right here they are wrong," Sheng said.
China's rapid economic growth has decelerated steadily for eight quarters, the longest slowdown since the government began reporting such data in 1992, according Yu Bin, a Cabinet researcher. He said the previous record was six quarters.
The slowdown is due in part to government controls imposed in 2010-11 to cool overheating and inflation fueled in part by Beijing's huge stimulus in response to the 2008 crisis. Chinese leaders reversed course last year and began easing controls after global demand abruptly plunged.
The government is moving cautiously after its 2008 stimulus pushed up inflation and spurred a wasteful building boom. Authorities have said curbs imposed on building and home sales to cool surging housing prices will remain in place, even though pumping up the country's slumping construction industry offers a quick way to boost growth.
Some parts of Beijing's response to the slump threaten to set back efforts to reduce reliance on exports and government investment and to nurture more self-sustaining growth driven by domestic consumption. Premier Wen Jiabao said this week that sustaining investment should be China's priority, an acknowledgement that efforts to boost consumption are taking longer than expected to gain traction.
June retail sales growth declined to 12.1 percent adjusted for price changes, down from the previous month's 13.8 percent growth, the National Bureau of Statistics reported. Growth in factory output edged down to 9.5 percent from May's 9.6 percent.
In a reflection of efforts to spur the economy with higher investment, growth in spending on factories, real estate and other fixed assets accelerated to 23.2 percent in June, up from the previous month's 20.1 percent.
The first half "saw the bottom of the cycle and growth is set to rebound" later in the year, said Credit Agricole CIB economist Dariusz Kowalczyk in a report.
China's relative strength compared with Western economies conceals severe pain in some segments of the economy. Retailers in some areas say monthly sales have fallen by as much as half and the Chinese shipbuilding industry association says orders in May were down by almost half as shippers facing weak trade put off buying new vessels.
Wen, the country's top economic official, has promised more bank lending and other aid to small businesses that generate most of China's new jobs and wealth. Entrepreneurs say they have yet to receive help.
AP researcher Zhao Liang contributed.